Bangladesh: Preparing the Third Urban Governance and Infrastructure Improvement (Sector) Project

Transcription

1 Technical Assistance Consultant s Report Project Number: July 2014 Bangladesh: Preparing the Third Urban Governance and Infrastructure Improvement (Sector) Project Volume 2: Annexes Prepared by Hifab International AB, Sweden BETS Consulting Services Ltd., Bangladesh KS Consultants Ltd., Bangladesh For Local Government Division Local Government Engineering Department Government of the People s Republic of Bangladesh This consultant s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. For project preparatory technical assistance: All views expressed herein may not be incorporated into the proposed project s design.

2 * Asian Development Bank Government of the People s Republic of Bangladesh Local Government Division Local Government Engineering Department Consultancy Services for Preparing Urban Governance and Infrastructure Improvement - ( BAN) TA-8339 BAN Volume 2: Annexes Joint Venture of F I N A L P R O J E C T R E P O R T Hifab International AB, Sweden BETS Consulting Services Ltd., Bangladesh KS Consultants Ltd., Bangladesh 20 April 2014

3 Disclaimer The views expressed in this report do not necessarily reflect the official views of the ADB and GoB Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project i

4 Final Project Report Volume 2: Annexes TABLE OF CONTENTS LIST OF FIGURES...III LIST OF TABLES... IV LIST OF ABBREVIATIONS... VI GLOSSARY OF THE BANGLA TERMS USED IN THIS REPORT... XI 1 SUMMARY SECTOR ASSESSMENT MUNICIPAL DEVELOPMENT SECTOR DEVELOPMENT PLAN DEVELOPMENT COORDINATION CONTRIBUTION TO THE ADB RESULTS FRAMEWORK FINANCIAL ANALYSIS & FINANCIAL MANAGEMENT ASSESSMENTS ECONOMIC ANALYSIS STATUS ON CURRENT LOAN FINANCING TO POURASHAVAS SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY GENDER ACTION PLAN PROCUREMENT CAPACITY ASSESSMENTS & MARKET ANALYSIS PROCUREMENT PLAN SOCIOECONOMIC BENCHMARK REPORTS TOR FOR CONSULTANTS ADVANCE CONTRACTING MDS TOR FOR CONSULTANTS ADVANCE CONTRACTING GICD NOTE ON PPP COMMENTS-ANSWERS VARIOUS MINUTES, POWERPOINTS, ETC. INCLUDING TRANSLATION OF STEERING COMMITTEE MINUTES TARGET TOWNS SELECTION (SCORING TABLE) URBAN DEVELOPMENT REVIEW RISK ASSESSMENT LIST OF AFFECTED PEOPLE (SOCIAL SAFEGUARDS) TRANSLATION OF MUNICIPALITY EVALUATION FORM (MLGRD&C) Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project ii

5 List of Figures Figure 1.1 : Problem Tree Relating To... 9 Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project iii

6 List of Tables Table 1.1: Sector Results Framework (Municipal Infrastructure and Water Supply Sector, )... 8 Table 2.1: Growth of Urban Population in Bangladesh...10 Table 2.2: Poverty Head Count Ratio by Divisions, Table 2.3: Physical targets and achievements of PPWS&H sector in municipalities during Table 2.4 : Table 2.5 : Development Resource Allocation for the Local Government Division under the Urban Sector in the Sixth Plan (Current Prices)...23 Municipal Governance and Services Project (MGSP) Project Costs by Component...28 Table 2.6 : Third Urban Governance and Infrastructure Improvement Project () Resource requirements (not necessarily the project cost)...29 Table 2.7 : Proposed Resource Allocation for All Pourashavas in the Country Project Costs by Component...29 Table 2.8 : Proposed Resource Allocation for All City Corporations in the Country Project Costs by Component...30 Table 3.1 : Development Projects Implemented by LGED...31 Table 3.2 : Development Projects Implemented by DPHE...32 Table 5.1: Weighted Average Cost of Capital (WACC) Calculation for Pourashavas...38 Table 5.2: Proposed Estimated Water Tariff Structure for Sample Pourashavas Table 5.3: Consolidated as well as Combined FIRR of 3 sample Pourashavas...41 Table 5.4: Calculated Financial Rate of Return (FIRR) of the Revenue-generating Components Table 5.5: Inherent Risk Summary...67 Table 5.6: Control Risk Summary LGED and DPHE...68 Table 5.7: Control Risk Summary SamplePaurashavas...69 Table 6.1: Economic Benefits in Selected Roads Table 6.2: Economic Benefits in Selected Drains Table 6.3: EIRR and Sensitivity Analysis Table 7.1: Status of Pourashava Loans with BMDF Table 19.1: Hierarchy of Urban Local Governments Table 19.2: Functions prescribed in the Local Government (Pourashava) Act, Table 19.3: Preparation of Master Plan for Pourashavas by LGED Table 19.4: Master Plan Preparation Status for Study Pourashavas Table 19.5: By-Laws for Residential Building Table 19.6: By- Laws for commercial Building and Godowns: Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project iv

7 Table 19.7: Building Plans Approved and Rejected in Last Five Years in the Study Pourashavas Table 19.8: Preparation process of PDP Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project v

8 LIST OF ABBREVIATIONS ADB: Asian Development Bank ADD: Average Daily Demand (water supply) ARV: Annual Rental Value AP: Affected Person (Resettlement) BBS: Bangladesh Bureau of Statistics BC: Bituminous Carpeting BDT: Bangladesh Taka BMD: Bangladesh Meteorological Department BMDF: Bangladesh Municipal Development Fund BME: Benefit Monitoring and Evaluation BRAC: Bangladesh Rural Advancement Committee BRM: Bangladesh Resident Mission (ADB) BT: Bitumen Topped (Road) BUET: Bangladesh University of Engineering and Technology CBO: Community Based Organization CCA: Climate Change Adaptation CDTA: Capacity Development Technical Assistance CEO: Chief Executive Officer CPS: Country Partnership Strategy (ADB) CTEIP: Coastal Towns Environment Improvement Project DANIDA: Danish International Development Agency DFID: Department for International Development (UK) DMF: Design and Monitoring Framework DPHE: Department of Public Health Engineering DPP: Development Project Proforma Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project vi

9 DWASA: Dhaka Water Supply and Sanitation Authority EA: Executing Agency EARF: Environmental Assessment Review Framework EIA: Environmental Impact Analysis EIRR: Economic Internal Rate of Return EMP: Environmental Management Plan ESSIS: Environmental, Sanitation and Slum Improvement Section EU: European Union FWC: Female Ward Councilor FGD: Focus Group Discussion FS: Feasibility Study FY: Fiscal Year GAP: Gender Action Plan GC: Gender Committee GICD: Governance Improvement and Capacity Development GDPA: Gender Development & Poverty Alleviation GIZ: Deutsche Gesellschaft für Internationale Zusammenarbeit (German Agency for Technical Cooperation) GoB: Government of Bangladesh GPD: Governance Program Development HBB: HBB roads. There are typically three alternative treatments used on feeder roads in Bangladesh. These are: earth, Herring Bone Brick (HBB), and Bituminous treatment on HBB 1 HH: Household HIES: Household Income and Expenditure Survey IA: Implementing Agency ICB procurement: International Competitive Bidding procurement 1 Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project vii

10 IEC: Information, Education and Communication IEE: Initial Environmental Examination IIS: Infrastructure Improvement Section IRP: Iron Removal plant ISC: Inter Ministerial Steering Committee IWA: International Water Association JICA: Japan International Cooperation Agency KfW: German Development Funding Agency KAP: Knowledge, Attitude and Practices LGD: Local Government Division LGED: Local Government Engineering Department MDS: Management Design and Supervision MDG: Millennium Development Goals MGD: Million Gallons Per Day M&E: Monitoring and Evaluation MFF: Multitranche Financing Facility (ADB) MIDP: Municipal Infrastructure Development Plan MOF: Ministry of Finance MOU: Memorandum of Understanding MPRC: Municipal Performance Review Committee MST: Mobile Support Teams MTS: Model Tax Schedule, 2003 NPSWSS: National Policy for Safe Water Supply and Sanitation NCB procurement: National Competitive Bidding procurement NGO: Non-Governmental organization NSAPR: National Strategy for Accelerated Poverty Reduction NRW: Non-revenue Water Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project viii

11 O&M: Operations and Maintenance PAM: Project Administration Manual (ADB) PD: Project Director PDP: Pourashava Development Plan PIU: Project Implementation Unit / Pourashava Implementation Unit PMO: Project Management Office PME: Performance Monitoring and Evaluation PPP: Public-Private Partnership PPTA: Project Preparatory Technical Assistance PRAP: Poverty Reduction Action Plan PRSP: Poverty Reduction Strategy Paper PS: Pourashava (plural: PSs) PTW: Production Tube Wells PWSS: Pourashava Water Supply System RAJUK: Rajdhani Unnayan Katripakkha QCBS: Quality- and Cost-based Selection RUMSU: Regional Management Support Unit SDP: Sector Development Program SEWTP survey: Socio-economic and Willingness-to-Pay survey SFYP: 6 th Five Year Plan SIC: Slum Improvement Committee SIDA: Swedish International Development Agency SPs: Sample pourashavas (Naogaon, Lalmonirhat, Magura) STWSSP: ADB-funded Secondary Towns Water Supply and Sanitation Project SWM: Solid Waste Management TA: Technical Assistance TLCC: Town Level Coordination Committee Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project ix

12 TLWS&SCC: Town Level Water Supply and Sanitation Coordination Committee TNA: Training Needs Assessment TOR: Terms of Reference TPP: Technical Project Proforma TOT: Training-of-Trainers UGIAP: Urban Governance Implementation Action Plan UGIS: Urban Governance Improvement Section ULB: Urban Local Body UMSU: Urban Management Support Unit UPPRP: Urban Partnership Poverty Reduction Project funded by UNDP WACC: Weighted Average Cost of Capital WB: World Bank WHO: World Health Organization WLCC: Ward Level Coordination Committee WTP: Willingness-to-Pay WWC: Women Ward Councilor Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project x

13 GLOSSARY of the Bangla terms used in this report Crore: 10 million (= 100 lakh) Ghat: Boat landing area along a river Hat, hut, or haat: Market (bazaar) operating certain afternoons during the week when sellers establish temporary shops. There are also some permanent shops in a Hat. Markets usually represent a significant source of income for municipalities Hartal: General strike Khal: Drainage ditch/canal Khas or khash: land/property belonging to government Kutcha, katchha or kacca: Structures built without bricks and mortar or without concrete Lakh or lac: 100,000 Moholla or mohalla: Sub-division of a ward Mouza: Government-recognized land area Mouza map: Cadastral map of mouza showing plots and their numbers Nasiman: A 3-wheeler motorized vehicle Parshad: Councilor Pourashava or Pourashava: Municipality Pucca or Puccha: Structures built with bricks and mortar or concrete Semi-pucca or semi-puccha: Structures built partly with bricks and mortar or concrete Thana: Police station Upazila: Administrative unit below the district level. A district is called a Zila Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project xi

14 Figure 0-1: Geographic Location of he Target Pourashavas Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project xii

15 Figure 0-2: Target Pourashavas and Land Contours Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project xiii

16 Figure 0-3: Target Pourashavas and Poverty Map Volume-2: Annexes, Final Project Report: Preparing Third Urban Governance and Infrastructure Improvement Project xiv

17 1 SUMMARY SECTOR ASSESSMENT 1.1 Existing Situation of Urban Sector Introduction 1. Bangladesh has a population of nearly million (Census 2011). Whilst the proportion of the population enumerated as urban (less than a quarter of total population) is modest, Bangladesh is a rapidly urbanizing country, with a projected urban population of over 50% by Of the total urban population, 60% reside in the four largest cities: Dhaka, Chittagong, Khulna and Rajshahi. 2. The urban sector includes many sub-sectors. The constraints identified in Bangladesh have focused on: i) accelerating, unplanned and uncontrolled urbanisation, (ii) severe deficits in urban infrastructure provision and basic service delivery, (iii) planning instruments that are inadequate, lack an implementation-orientation and/or are un-enforced, (iv) the growth in urban poverty and lack of inclusiveness in municipal planning, (vi) severe constraints in local government capacity and governance structures, and (vii) weak and fragmented urban sector institutional frameworks at national and local level. 3. In general terms the rapid urbanisation has occurred because of: (i) natural increases in the urban population, (ii) territorial expansion of the urban areas and reclassification of rural areas as urban, and (iii) considerable rural-to-urban migration. Other relevant of issues of analysis is of the Urban Sector will include (i) Population density, (ii) Insufficient service delivery, (iii) Absence of efficient Urban Local Bodies (ULBs) Urban Transport 4. There is a marked contrast in the characteristics of urban transport between Dhaka, parts of other major cities and transport in secondary towns. Dhaka is characterised by unsustainable levels of traffic congestion resulting from: (i) rapid motorization and the unrestrained growth and use of private cars, (ii) a weak, under-provisioned, road network, (iii) weak traffic management, (iv) lack of traffic demand management, and (v) negligent development of efficient and effective public transport systems and services. Pedestrian environments are under-provisioned, effectively unregulated unsafe and very unpleasant. By contrast, transport in secondary towns, whilst also characterized by weak traffic management, poor pedestrian facilities and under-provision in public transport services, is considerably less constrained at present and does not yet exhibit the rapid growth of private vehicle use and ownership Drainage and Flood Management 5. Bangladesh is located in the low-lying deltaic floodplains at the convergence of three Himalayan rivers, heavy monsoon rainfall combined with poor drainage often results in periodic flooding. Water-logging and drainage congestion are common throughout Bangladesh, exacerbated by a combination of under design and provision, poor O&M and perennial clogging resulting through inadequate solid waste management systems, open dumping and the unregulated dumping of septic tank feral sludge. Page 1 of 423

18 1.1.4 Water Supply 6. Water supply is constrained nationally. Whilst it is estimated that 95% of the urban population has access to a water supply, only 30% of households drink tap water and fewer than 20% have their own house connections. Situated mainly in a river delta, Bangladesh has exploitable surface water in most parts of the country. For coastal areas, however, river water is often turbid, polluted and salty and fluctuates significantly in quantity and quality between wet and dry seasons. In practice ground water has provided the major source of drinking water and is tapped by shallow and deep wells. Nationally it is estimated there are 7 million tube wells, although the poor often still have no access close to their homes. However, this supply is compromised through arsenic contamination of wells; as estimated 16% to 25% of all existing wells in Bangladesh are contaminated by arsenic some seriously Sanitation 7. Despite considerable improvement in sanitation coverage, urban sanitation coverage and practice remains unsatisfactory. While many households have septic tanks and sanitary latrines, much of the sludge is discharged through open drains into rivers. The use of septic tanks and pit latrines becomes increasingly unsatisfactory as the density of urban development increases, where operation and maintenance is inconvenient and/or impractical and where older tank design and maintenance are inadequate. In combination this results in waste water leakage and threatens ground water contamination, with flows into low-lying areas and open drains without treatment. This situation is exacerbated during periods of high rainfall and flooding posing significant health risks. Septic tank sludge treatment plants have been installed in 11 pourashavas recently under ADB financed Scondary Towns Water Supply and Sanitation Sector Project (STWSSP) implemented by the pourashavas with technical support from the Department of Public Health Engineering (DPHE) Solid Waste Management 8. Solid Waste Management (SWM), collection and disposal have not been well managed in Bangladesh. Many urban areas do not have comprehensively planned collection systems and suffer from a lack of equipment and resources. Improperly managed dumpsites are normal in most Pourashavas. Urban local governments are generally unfamiliar with modern SWM practice (including composting and waste-to-energy) and 3Rs (reduce, recycle and re-use) principles. Hazardous waste such as infectious hospital waste is often handled as domestic municipal waste. The situation is worse in informal housing areas, which rarely have managed collection and disposal systems, such that households often dump their wastes onto open land, water courses and in the streets. Commercial and industrial operators often illegally dump industrial waste Urban Poverty 9. According to the national Household Income and Expenditure Survey (HIES) poverty rates have declined substantially in urban areas since These falls have contributed disproportionally to the overall national level of poverty reduction that has fallen from 57% in 1991 to 32% in The comparative figures for urban areas are a reduction in poverty headcount rates (upper poverty line) from 43% in 1991 to 21% in However, urban poverty remains high. Of the estimated urban population in 2010, 21% were poor according to the upper national poverty line, and there are marked variations between divisions and towns. Of Bangladesh s six administrative divisions, the coastal divisions of Barisal and Khulna record the second and third highest incidence of poverty: 39.4% and 32.1% respectively. Progress in reducing urban poverty levels will likely be compromised by climate change impacts including the exposure of the urban poor settled in areas of high Page 2 of 423

19 vulnerability areas, and increasing climate induced migration to urban areas. 1.2 Government s Urban Sector Strategy Existing Urban Sector Strategy/Plan 10. There is no GOB urban sector plan and this has inevitably resulted in a disjointed and leaderless approach to sector management. The sector is guided through a range of national development policies and strategies with the overall GOB development framework set by the Bangladesh Sixth Five-Year Plan (SFYP) (FY ). The only attributed urban outcome, indicators and targets recorded by the SFYP is reduced urban poverty and improved living conditions through better city governance and service improvements to be measured through: (i) the percentage of city corporations expenditure raised autonomously, and (ii) the percentage of urban population with regular employment. A National Urban Sector Policy is in draft, but not endorsed as of March This emphasises the importance of a poverty-centric, multi-dimension and multi-stakeholder approach to sector interventions. 11. There is a wide range of legislation that has a direct and indirect bearing on the sector, though the historical absence of clear, comprehensive and up-to-date law has likely compounded poor urban sector performance. The primary legal framework and mandate for urban local government is set out in the Local Government (City Corporation) Act 2009 and Local Government (Pourashava) Act A new, comprehensive, Urban and Regional Planning Act has been drafted but not yet passed. In the absence of the enactment planning control (including building and environment) is covered by a number of pieces of legislation the principal of which is the Building Construction Act (1952). The Environment Conservation Act (1995) and regulation and rules arising from it have a bearing on the urban sector. All legislation faces major obstacles in the capacity and willingness of authorities to enforce rules and regulations. Bangladesh urban local government is systemically weak (including the institutional framework, organsational structure and staffing numbers and skill sets) Water Supply Sector 12. The sector has benefited from significant policy development culminating in sequential sector development plans developed by the Local Governemnt Division. The current Sector Development Plan (FY ) - Water Supply and Sanitation Sector In Bangladesh (SDP-WSS) provides a strategic framework for planning, implementing, coordinating and monitoring all activities in the WSS sector, with all WSS related national and sectoral policies, strategies and international commitments to be aligned with the SDP. The SDP-WSS sets progressive development targets of water supply and sanitation services during three strategic timeframes (short, medium and long term each of 5 years duration) and treats the rural and urban sub-sectors as distinct. The total level of investment required for moderate service levels and operating efficiencies is BDT 14,655 billion. The Bangladesh Sixth Five-Year Plan (SFYP) (FY ) reinforces water supply goals through targets for the percentage of population using improved drinking water sources (urban/rural). 13. Providing access to safe water requires public health engineering that is affordable, accessible and responsive to local communities. Government needs to be able to develop policies and legislation that can provide local government (unions, upazila parishads and WATSAN 2 committees) with the capacity to meet the needs of the users. This requires an understanding of good practice in hydrogeology and geochemistry, with local governments 2 Water and Sanitation Committee. Page 3 of 423

20 able to manage the decision-making and building and engineering work that will supply the hardware necessary for clean water. To meet WSS challenges reforms are needed to the interrelated area of: (i) institutional and organisational development in service providing agencies (WASA 3 s, DPHE 4 and private operators), and (ii) establishing a regulatory framework Future Urban Policies and Strategies 14. The outline perspective plan of Bangladesh ( ) includes issues on stabilizing urban concentration, energizing economic and social development, promotion of small towns, balanced urbanization and satellite towns, provision of housing the poor, curbing environmental pollution and devising effective urban governance. 15. The Urban Development Strategy under the Sixth FyP of Bangladesh ( ) includes the issues on improving City Governance, promoting balanced development of urban centers, urban resource mobilization, better environmental management, developing sustainable urban transportation, making provision of infrastructure and services and reducing urban poverty. 16. The SFYP objectives and strategies for Pourashavas and City Corporations are indicated below: 17. Strategies Development of effective road network to setup congestion free, safe and sound communication system. Development of pedestrian facilities in the cities. Reduction of traffic accident. Auto traffic signalization for better traffic management. Sustainable parking management. Improvement of solid waste management. Improvement of environment & infrastructure. Provision of safe water supply for the citizens. Development of recreational facilities (parks, playgrounds, etc.). Development of modern street lighting. Development of primary health facilities. Improvement of drainage system to address the problems of water-logging. Development of commercial complexes for expanding economic activities. Infrastructure development of low-income settlements. To achieve plan objectives, the following strategies will be pursued: Establishing strong elected municipalities and city corporations in all major urban centers. These entities will be given adequate operational and financial autonomy to enable them to provide the services demanded by the residents. Revamping the property tax system to make this the major source of financing the expenditures of municipalities and city corporations. Strengthening the capacities in the Ministry of local government and the 3 Water Supply and Sewerage Authorities. 4 Department of Public Health Engineering. Page 4 of 423

21 Planning Commission to support the development of municipalities and city corporations as well as monitoring their performance to ensure accountability. Planning road infrastructure development and public transportation for all the city corporation areas. Developing comprehensive layout plans comprising all civic amenities like parks, lakes and other recreation facilities in all city corporation areas. Improving urban environment by regulating disposal of solid waste. Creating strong mechanism for coordination of infrastructure development and provision of utilities in all city corporation areas. Building comprehensive databases in LGD 5 and all city corporations for urban planning. Government Khas 6 land will be used to the maximum extent possible for solving the housing problem, especially for poorer households. Abandoned houses will be turned into multi-storied buildings by the Housing and Settlement Directorate in phases for solving the housing problem. Necessary actions will be taken to strictly enforce the building code of Arrangement for soft loans for housing will be made for the poor; to this end, a special fund will be created by the government. Houses for working women will be constructed by the relevant city/town authorities. Constructions of Public Physical service structures will respond to specific needs of men and women such as, hospitals, educational institutions. Necessary action will be taken to reduce wage discrimination. 5 Local Government Division. 6 Public land. Page 5 of 423

22 1.3 ADB Sector Experience and Assistance Programme Urban Sector 18. The sector has experienced a steady increase in the level of assistance from ADB and other development partners. Since 2000 there has been increasing efforts to address weaknesses in the investment environment in secondary towns. A core lesson from previous project implementation was whilst municipal performance was sufficient to utilize investment funds, it was insufficient to generate sufficient revenues, secure human resources to ensure proper O&M of infrastructure and services or sustain good urban management practices. ADB-financed Urban Governance and Infrastructure Improvement Project (UGIIP) I and II have spearheaded these efforts with an emphasis on good governance and incentive based performance systems. A UGIIP innovation was the requirement that town-level and wardlevel coordination committees (TLCC 7 and WLCC 8 ) be established, a requirement provided under the Local Government (Pourashava) Act (2009), and the requirement to develop a Pourashava Development Plan (PDP). The UGIIP is regarded as a milestone in strengthening the governance and capacity of pourashavas, and the approach has shaped other projects supported by ADB: the Secondary Towns Water Supply and Sanitation Project (STWSSP), the Urban Public and Environmental Health Sector Development Program, and City Region Development Project. KFW and GIZ are confinancing UGIIP II while the OPEC Fund for International Development (OFID) is confinancing the STWSSP with similar approach. Other DPs \the World Bank and JICA have adopted such approaches in their municipal projects. 19. The main lessons observed from both sectors are: (i) governance reform is a milestone but the momentum of reform must be sustained, (ii) further improvement in municipal financing (own-source revenue generation) is imperative, (iii) local area development plans are critical but need to be implementation-oriented, (iv) performancebased measures are relevant to all municipal support projects and should be adopted as GOB standard practice reflecting that it is now regarded as accepted practice and it has been constructed on a critical mass of experience (involving approximately 80 pourashavas and 6 city corporations), and (v) successfully piloted governance measures provide opportunities for further refinement and application, replication by other DPs and further possibilities for joint cooperation (such as the planned ) Water Supply Sector 20. From the mid-2000s GOB policy and SDP-WSS prepared with assistance from DANIDA 9 provided the framework for DP assistance. The joint partnership Framework was signed between the Government of Bangladesh (GOB) and five major development partners (ADB, DANIDA, JICA 10, KOIKA 11 and WB) in November, The Local Government Division of the Ministry of LGRD&C prepared a Sector Development Plan (SDP) in 2010 for the Water and Sanitation sector for the period The objective tof the SDP is to provide a framework for planning, implementing, coordinating and monitoring all acivities in the sector. The SDP is a strategic planning document to meet emerging and future challenges and includes a road map for development and corresponding investment plan. 7 Town Level Coordination Committee. 8 Ward Level Coordination Committee. 9 Danish International Development Agency. 10 Japan International Cooperation Agency. 11 Korea International Cooperation Agency. Page 6 of 423

23 1.4 Sector Results Framework 21. The Sector Results Framework of Municipal Infrastructure and Water Supply Sector ( ) covering country sector outcomes, country sector outputs and ADB Sector Operation is given in Table Problem Tree 22. The problem tree in relation to the proposed UGIIP-III project is given in Figure 1.1. Page 7 of 423

24 Table 1.1: Sector Results Framework (Municipal Infrastructure and Water Supply Sector, ) Country Sector Outcomes Country Sector Outputs ADB Sector Operations Outcomes with ADB Contribution Indicators with Targets and Baselines Outputs with ADB Contribution Indicators with Incremental Targets Planned and Ongoing ADB Interventions Main Outputs Expected from ADB Interventions A. Better access to A.1 Incidence of serious A. Urban environment A.1 6 city corporations and 50 Planned key activity areas Planned key activity areas municipal infrastructure water logging, Length of and municipal Pourashavas with improved urban Municipal infrastructure (88% Improved municipal infrastructure and services in city road upgraded, urban infrastructure services infrastructure and services of funds) and services (roads, drains, water corporations and population using municipal expanded, improved through UPEHSDP, CRDP, CTIIP Institutional strengthening and supply, sanitation, SWM) Pourashavas solid waste collection and and maintained and policy reform (12% of funds) Improved governance, municipal treatment. A.2 Disaster warning system capacity, and own-source revenue Improved in 10 Pourashavas Pipeline projects with collection (6 CCs / 47 pourashava) (CTIIP) estimated amounts (USD 200 million) B. More people having improved water supply and sanitation services B.1 Urban population using improved drinking water sources. Baseline: 85% (2008). Target: 100% in (2015) B.2 Urban population using improved sanitation facilities increased. Baseline: 55% (2008) Target: 100% (2015) B. Water supply network and sanitation services expanded, improved and maintained B.1 Piped water supply systems installed in 148 Pourashavas (target148 Pourashavas, in 4 phases); and also in Dhaka and Khulna cities B.2 Number of households with improved sanitation facilities increased by 2015 Ongoing projects with approved amounts CRDP (USD 175 million) STWSSSP (USD 71 million) UGIIP II (USD million) UPEHSDP (USD 80 million) DWSSDP (USD 213 million) KWSP (USD 365 million) 1.6 Pipeline projects CTIIP DESWSP 1.7 Ongoing projects C. Reduced urban poverty and improved living conditions through better city governance and service improvements C.1 % of city corporations expenditure raised autonomously. Baseline: 38.5% (2010) Target: 51% (2015) C.2 % of urban population with regular employment. Baseline: 38.5% (2010) Target: 100% (2015) C. Municipal government utilizing new and improved urban governance and management systems C.1 Local government institutions with performance based mechanisms including climate monitoring and evaluation system C.2 Pourashava DRM Plan adopted and Pourashava DRM Committees Active C.3 Community level adaptation financial mechanism In place 330 km of rehabilitated water mains / 250km distribution mains replaced / 120 PTW rehabilitated or installed / 47 OHTs rehabilitated or installed / 583 standpipes installed / 900 km / 40 km distribution mains / transmission mains installed /54 km of new drains, 78 km of rehabilitated drains Municipal infrastructure improved UGIAPs and PDPs in 47 Pourashavas Six city corporation integrated waste treatment facilities Abbreviations: ADB = Asian Development Bank, CC = City Corporation, CRDP = City Region Development Project, OHT = Over head tank, PDP = Pourashava Development Plan, PTW = Production Tube well, STWSSP = Secondary Towns Water Supply and Sanitation Sector Project, SWM = Solid Waste Management, UGIAP = Urban Governance Improvement Action Plan - UGIIP = Urban Governance Infrastructure and Improvement Project, UPEHSDP = Urban Public and Environmental Health Sector Development Project, WSS = Water supply and sanitation Sources: ADB: (2009) Urban Sector and Water Supply and Sanitation in Bangladesh: An Exploratory Evaluation of the Programs of ADB and Other Aid Agencies ; (2012) Aide memoire of Joint Review Mission for UGIIP-2 ; (2010) RRP City Region Development Project; (2010) Country Operations Business Plan Bangladesh ; (2006) RRP Secondary Towns Water Supply and Sanitation Sector Project ; (2008) RRP Second Urban Governance Infrastructure and Improvement Project (Sector) Project ; (2009) RRP Urban Public and Environmental Health Sector Development Project. GOB (2011) Bangladesh Sixth Five-Year Plan: Page 8 of 423

25 Figure 1.1 : Problem Tree Relating To EFFECTS Low-level of economic activities Inadequate Institutional, Financial & Technical Capability of Pourashavas Limited Trust & Satisfaction of Citizens to Pourashava Services CORE DEV T PROBLEM Insufficient & Unsustainable Poura infrastructure & service delivery Weak Municipal Governance Weak Skill & Capacity Inadequate coverage of municipal infrastructure (road, drainage water supply, sanitation & solid waste management ) Insufficient operation and maintenance of municipal infrastructure Lack of participation, transparency & accountability Lack of adequate training / orientation among Poura Council (Mayor, Councilors), officials, Various Committee members, citizens Lack of adequate training / orientation among Contractors/ CAUSES Insufficient capital investment in urban infrastructure Inadequate financial support for O&M Unplanned urban development Low citizen awareness & participation esp. poor & women Weak financial management & local resource mobilization Lack of transparency & accountability Limited government support Limited own fund Limited private participation Limited government support Limited own fund Limited private particip ation Low capacity & awarenes s for urban planning Lack of land use plans and control measures Low collection of own source revenue Interventions Financial support from ADB, JICA, WB Governance improvement is supported through UGIIP-I and second UGIIP-II, JICA & WB are following suit Page 9 of 423

26 2 MUNICIPAL DEVELOPMENT SECTOR DEVELOPMENT PLAN 2.1 Background Urbanization Trend and Challenge in Bangladesh It is widely acknowledged that Bangladesh is a rapidly urbanizing country where the urban share of the population has expanded rapidly since the 1970s. A combination of socioeconomic, political and demographic factors is responsible for this. Such a rapid rate of urbanization in Bangladesh is linked to the growth of the national economy, change in the scale and nature of economic activity and distribution of income between regions and among classes, demographic patterns and governance changes. It is also conducive to the spatial redistribution of rural and urban dwellers. 24. As a matter of fact, this still predominantly agrarian country is experiencing a very high rate of urbanization over a relatively 13 small land mass of 147,750 sq. km. In 1974, urban dwellers accounted for only 8.8% of the population (Table 1). By 2011, urban dwellers represented 28% of the total population. This is also indicative of the fact that growth of urban population and labor force is increasing relative to rural population and labor force. Table 2.1: Growth of Urban Population in Bangladesh Pop n (Mill) % Pop n (Mill) % Pop n (Mill) % Pop n (Mill) % Pop n (Mill) Urban Rural Total Source: Until 2001: SFYP; 2011: BBS, % Driving Forces behind Rapid Urbanization 25. Despite the fact that the majority of the country s population still lives in rural areas, the importance of the traditional rural sector has been declining over the years. The share of the agricultural sector in GDP came down from about 60% in to only 17% in Today, the urban sector led by non-agricultural activities (commerce, trade, industry service, etc.) accounts for a relatively large share of GDP compared to its rural counterpart. Its contribution to GDP has increased from a low of 25% in 1972/73 to over 50% in Household income in urban areas is also found to be much higher than in rural areas. Report of the household income and expenditure survey conducted in indicated that monthly income per household in urban areas was Tk. 10,463 compared to Tk. 6,095 in rural areas. The distribution of income in urban areas is, however, more skewed than in rural areas. 12 This sub-section builds upon Chapter 5 of the Government s Sixth Five Year Plan (SFYP) FY 2011-FY 2015, with updates of population data published by Bangladesh Bureau of Statistics (BBS) for various years. 13 When compared with the national population. 14 Report of the Household Income and Expenditure Survey, 2005 (BBS, 2007). Page 10 of 423

27 27. Thus, the Gini coefficient in 2005 was in urban areas compared to in rural areas. This is hardly surprizing due to large scale inmigration of poor people into urban areas from economically depressed areas of the country. 28. Although rising levels of urbanization and rapid population growth in urban areas have often been considered problematic, it is a fact that in general these areas have a significantly higher concentration of the Nation s economic output than their population. Urban areas also account for a disproportionate higher share of national economic production and are the main sources of economic growth in most countries Urban Poverty in Bangladesh 29. Poverty in Bangladesh, as in many other developing countries, has long been predominantly associated with rural areas. But with rapid urbanization during the last few decades, poverty has increasingly been urbanized by way of transfer of the rural poor to urban areas. Manifestation of urban poverty is often more appalling than that of rural poverty. Urban poverty is invariably associated with poor quality housing. 30. Using the upper poverty line, Bangladesh Bureau of Statistics (BBS) estimated the Head Count Rate (HCR) of incidence of poverty as 31.5% at national level, 35.2% in rural areas and 21.3% in urban areas (Table 2). There was a reduction of HCR by 8.5% point at national level, 8.6% point in rural areas and 7.1% in urban areas during the period from 2005 to The estimates of HCR using the upper poverty line show that in 2010 Barisal division had the highest incidence of poverty, estimated at 39.4%, followed by Rajshahi division (35.7%) and Khulna division (32.1%). Chittagong division had the lowest HCR of incidence of poverty (26.2%) followed by Sylhet division (28.1%) and Dhaka division (30.5%). The incidence of urban poverty was also highest in Barisal division (39.9%) followed by Khulna (35.8%) and Rajshahi (30.7%) divisions. Table 2.2: Poverty Head Count Ratio by Divisions, Division Total Urban Rural Total Urban Rural National Barisal Chittagong Dhaka Khulna Rajshahi Sylhet Source: Bangladesh Bureau of Statistics,(Household Income and Expenditure Survey (HIES), 2005 and HIES, 2010). 31. Most of the urban poor live in slums and squatter settlements characterized by substandard living conditions. Most of those living in slums are very poor and nearly 80% of the households have income below the upper poverty line. More than 50% of the slumdwellers earn less than half of the poverty line income, while about 25% of them are in extreme poverty and destitution. More than 90% of the income earners are engaged in informal sector activities. They work mainly as rickshaw-pullers, transport workers, hawkers, day laborers, small factory workers, construction workers, etc. Many of the female members of slum households in Dhaka and Chittagong are employed in the formal sector garment factories and in very large numbers in domestic work as maids. It is worth pointing out that few among the male slum dwellers remain unemployed because of their easy access to informal sector activities. This is perhaps the most important factor stimulating rural to urban migration. Page 11 of 423

28 2.2 Policy and Strategy Framework Lessons Learned from Past Development Initiatives and Key constraints 32. Municipalities in Bangladesh have witnessed nearly two decades of urban infrastructure initiatives with Secondary Town Infrastructure Development Project (STIDP) I and II, Municipal Services Project (MSP) and the on-going Urban Governance Infrastructure Improvement Projects (UGIIPs) since The Bangladesh Municipal Development Fund (BMDF) created under MSP presented a model of supporting decentralization especially by opening up access to infrastructure funding. UGIIP I made a radical departure from earlier initiatives of STIDP by incorporating the component of Urban Governance along with the component of Urban Infrastructure and making improvement of Urban Governance as a precondition for allocation of fund for infrastructure improvement. 33. Focusing on governance improvements and a performance-based approach, urban infrastructure improvements have proved very successful as: (i) they address a wide range of areas simultaneously from improved participation of various stakeholder groups in service delivery to increased financial accountability and improved administrative procedures; and (ii) local governments feel full ownership in improving governance reforms, considering these reforms as an opportunity to improve their financial and administrative shortcomings. 34. The following lessons can be drawn: (i) The performance of the Municipalities has been particularly effective in areas where the identified governance indicators are concise and output oriented; (ii) Municipalities took grater ownership and interests in areas where their legitimacy and performance in the local public eye improve immediately; (iii) adopting governance improvements requires substantive and timely capacity-building inputs. 35. Based on an extensive review of previous projects focusing on governance improvement and performance-based approach, the following opportunities have been identified: (i) ensure that mechanisms are in place to deepen participatory planning (including women and the poor); (ii) refine the governance improvement action plan to include more qualitative achievements and ensure that the achievements will sustain beyond project implementation; (iii) inculcate the practice of responsible financial decisions and discipline through financing and repayment mechanisms; (iv) strengthen citizen s interface and accountability of the municipalities; (v) put greater focus on capacity building of institutions at the municipality level in particular; and, (vi) improve O&M planning and budgeting. 36. One of the most significant lessons is the criticality of national level support to municipalities in terms of sector wide policy support, legislative and executive actions to enable more effective functioning of Municipalities and supportive measures to improve their finance and financial management. In this regard, the Parliament has passed the Local Government (Pourashava) Act, 2009 and the Local Government (City Corporation) Act, Performance during the Period 37. The Ministry of Local Government, Rural Development and Cooperatives (MoLGRD&C) is closely involved in urban-related issues. Within the Ministry, a Municipal Performance Review Committee (MPRC) was established under the chairmanship of the Secretary, Local Government Division to monitor the performance of the Municipalities. An Urban Management Support Unit (UMSU) has been established in LGED following the 15 This sub-section builds upon Chapter 5 of the Government s Sixth Five Year Plan FY 2011-FY Page 12 of 423

29 merging of structures established under the Wold Bank-financed Municipal Services Project and ADB-financed UGIIP. UMSU provides secretarial support to the committee. UMSU developed a municipal data base and regularly monitors the capacity building initiatives undertaken by the municipalities and the progress of infrastructure development and maintenance works undertaken by the Municipalities and certain City Corporations. 38. This is part of a larger effort by the Government aimed at removing the deficiency in infrastructure maintenance and rehabilitation of ULBs by raising income and improving financial management capacity and service delivery. The concerned ULBs are implementing different development projects under Physical Planning, Water Supply and Housing (PPWS&H) Sector through Annual Development Programme (ADP). Physical targets and achievements of PPWS&H sector in Municipalities during are given in Table 2.3. Table 2.3: Physical targets and achievements of PPWS&H sector in municipalities during Item of Work Unit Target Achievement Development of Road and Footpath Km 1,326 1,307 Construction of Drains Km Construction of Bridge/Culvert M 3,595 3,463 Market Development Nos Installation of Tube- wells Nos. 3,837 3,835 Slum Improvement Family 18,320 18,320 Maintenance of Bridge/ Culvert M 1,514 1,504 Rehabilitation of Road and Footpath Km 3,218 2,805 Source: Table 5.7 of the Sixth Five Year Plan, FY 2011 FY 2015, p Apart from physical achievements, the introduction of computerized holding tax billing, water billing, and accounting in 4 City Corporations and 129 Municipalities could be considered as other milestone achievements by the Local Government Engineering Department (LGED). Another landmark initiative by LGED during the period is the preparation/ updating of Master Plans of 23 district level and 223 Upazila level Municipalities. This master planning process is ongoing and is expected to be completed during the Sixth Five Year Plan (SFYP) period. 2.3 Legal and Regulatory Framework Policies and regulations for urbanization have evolved in response to problems faced rather than on the basis of a vision and a long term road map. After partition of India in 1947 Dhaka became the provincial capital and experienced significant population increase. This led to major infrastructure development and building activities. In order to regulate and control urban development activities, the government enacted legislations and framed rules which included the Building Construction Act 1952, the Town Improvement Act 1953 and the Building construction rules The Building Construction Act 1952 provided for the prevention of haphazard construction of buildings and excavation of tanks which are likely to interfere with development in certain areas. The Town Improvement Act 1953 provided for the development, improvement and expansion of the towns of Dhaka and Narayanganj and certain areas in their vicinity. The Building Construction Rules 1953 were made to facilitate exercise of powers conferred by the Building Construction Act Adapted from Government of Bangladesh, Sixth Five Year Plan, FY-2011-FY 2015: Chapter 5: Managing the Urban Transition. Page 13 of 423

30 41. In 1959, Master Plans were prepared for Dhaka, Chittagong, Khulna and Rajshahi cities. This was a major venture for guiding the overall development of the four major cities. But in course of time, especially after independence of Bangladesh in 1971, these plans were found to be inadequate with regard to population growth and land use changes. Despite rapid urbanization in the country, there was no initiative to plan or control urban development activities during 1970 s and 1980 s. It was only after 1990 that some steps were taken to control the development of large cities. These included preparation of development plans for Dhaka, Chittagong, Khulna and Rajshahi cities and formulation of Building Construction Rules (1996), Private Residential Area Development Rules (2004) and Dhaka Metropolitan Building Construction Rules (2008). The Bangladesh National Building Code (BNBC) which was prepared in 1993 came into force in 2006 after some modification. Other legislations which are relevant for the urban sector include Bangladesh Environment Protection Act 1995 (modified in 2000) and the Wetland Preservation Act In intermediate and smaller urban centers, the Pourashavas have been responsible for preparing and implementing Master Plans and carrying out development control functions. The Local Government (Pourashava) Act, 2009 has given the Pourashava wide responsibilities in town planning and development, public health and sanitation, water supply and sewage disposal, maintenance of public infrastructure and amenities. It is now mandatory for Pourashavas to prepare Master Plans within five years, from the date of creation for new Pourashavas or from the date of enforcement of the Ordinance for already created Pourashavas. 43. One of the main reasons for haphazard urban growth in Bangladesh is the lack of proper planning. In the area of urban planning, the Local Government (Pourashava) Act, 2009 has empowered the Pourashavas to prepare a Master Plan for development, expansion and improvement of any area within its jurisdiction and impose restrictions, regulations and prohibitions with regard to the development of sites and the erection and reerection of buildings. But due to lack of technical manpower and equipment, no Pourashava has been able to prepare and implement a Master Plan on its own. 44. Development Authorities: Pourashavas were originally established for planning and management of urban areas. Later on separate planning and development organizations were created for the cities of Dhaka (RAJUK), Chittagong (Chittagong Development Authority: CDA), Khulna (KDA) and Rajshahi (RDA). The development authorities in these cities are authorized to undertake local urban planning and infrastructure and site development activities for housing, commercial and industrial use. The authorities are also empowered to exert development control functions. The effectiveness of these authorities, however, is generally limited by such factors as inadequate management and financial system, multiplicity of institutions with urban development function within their jurisdictions, uncoordinated development, lack of integration with other agencies, inadequate manpower and lack of public participation. 2.4 Institutional Framework The Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C) and the Ministry of Housing and Public Works (MH&PW) are mainly responsible for development activities under the urban sector. The agencies under the Local Government Division (LGD) of MLGRD&C are as follows: Local Government Engineering Department (LGED), 17 Adapted from Government of Bangladesh, Sixth Five Year Plan, FY 2011-FY 2015: Chapter 5: Managing the Urban Transition. Page 14 of 423

31 Department of Public Health Engineering (DPHE), City Corporations, Pourashavas, Water Supply and Sewerage Authorities (WASAs). 46. The agencies under the Ministry of MH&PW are the following: Public Works Department (PWD), National Housing Authority (NHA), 18 Rajdhani Unnayan Katripakkha (RAJUK), Chittagong Development Authority (CDA), Khulna Development Authority (KDA), Rajshahi Development Authority (RDA), Housing and Building Research Institute (HBRI), Urban Development Directorate (UDD). 47. Special purpose authorities: There are also some special purpose agencies that provide ad-hoc services to the city dwellers. These are Water Supply and Sewerage Authority, Electricity Supply Authority, Road Transport Authority, etc. There are four water and sewerage authorities in four large cities of Dhaka, Chittagong, Khulna, and Rajshahi respectively. Two other agencies involved in the development activities of Dhaka Metropolitan Area are Dhaka Transport Coordination Board (DTCB) and Bangladesh Bridge Authority (BBA). DTCB is mainly responsible for planning and development of transportation facilities within the metropolitan area while BBA is responsible for constructing flyovers, elevated expressways, etc. 48. Urban local governments: Two types of local government institutions exist in Bangladesh, e.g., urban and rural. The urban local governments are of two types. In the Divisional Level, the City Corporation functions whereas Pourashavas function in other towns. At present there are City Corporations and 321 Pourashavas in the country. Pourashavas or Municipalities again are classified according to financial strength. In addition, there are also some urban centers that are under Cantonment Boards. 49. At the local level, Pourashava is the basic planning and development authority. Through the Local Government (Pourashava) Act 2009, the Pourashava authorities are empowered to prepare Master Plan, implement development schemes and exercise building control. A Pourashava consists of a Mayor, Councillors whose number is fixed by the government and women Councillors of reserved seats. The Chairman and Councillors of a Pourashava are elected by direct election on the basis of adult franchise. The Local Government (Pourashava) Act, 2009 has given the Pourashavas wide responsibilities, but the administrative, financial and technical capabilities of the Pourashava are not adequate to meet the challenges associated with rapid urbanization in the country. 2.5 Policies and Strategies Strategies and Policies under the Outline Perspective Plan Urbanization is inevitable and helpful from the point of view of national economic growth for development. An urbanization and urban development policy must have realistic 18 The previous Housing and Settlement Directorate was renamed as the National Housing Authority (NHA) as an autonomous body in 2001 under the Ministry of Housing & Public Work (MOH&PW). 19 In late 2011, it was decided to split Dhaka into two City Corporations (CC), bringing the total of CC to Adapted from Government of Bangladesh, Outline perspective plan of Bangladesh, : Making Vision a Reality: Chapter 10: Building Physical Infrastructure. Page 15 of 423

32 goals, and be integrated into the national economic development plan. A sense of urgency has to permeate efforts to address the challenges and opportunities exhibited by urban transition. The following strategies are followed. 51. Stabilize urban concentration: The Government promotes the spatial distribution of population and future planning for township development will follow this principle. Migration controls, land use planning, investment in satellite cities, special economic zones, controls on industrial location, significant progress in improving quality of rural life, careful provision and pricing of modern services, attention to remove traffic congestion have been considered and tried. The impact has been inadequate, due largely to inconsistency in policies, lacking institutional capacity, coordination, and resources. 52. Energize economic and social development: An employment-generating development strategy and a strong resolve to regenerate the rural economy through a micro, small and medium enterprises strategy supported by renewable energy (solar and bio gas) can weaken the forces of pull and push and inhibit rural to urban migration. 53. Promotion of small towns: Dhaka, the national capital, has become a mega city. This has brought substantial pressure to bear on the limited infrastructure. Small urban centers have to use amenities in the absence of basic services, inadequate new investment, and entrenched poverty. The inability of local bodies to raise revenue is a major problem. Given the condition of many smaller towns, it is hardly surprizing that many migrants prefer to move to a bigger city, even if they have to live in overcrowded and unhygienic slums. In the long run, the pressure on bigger cities can only be stemmed if there is fresh investment in the smaller urban centers. 54. Balanced urbanization and satellite towns: Well-distributed urban growth is beneficial not only for the less developed areas of the country, but also for the population in existing metropolitan complexes, because it helps to limit the increase in their cost of living. 55. One strategy for the government to consider is the development of compact towns with arrangements for these to crisscross the major corridors of urban and industrial growth which link the large metropolitan cities. These could be in line with the proposed four satellite towns around Dhaka. Another addition to future ideas could be developing rural areas in the format of a town main street with provisions for urban amenities for the households, thereby reducing the cost of present unplanned homestead buildings, while keeping arrangements for farmyard, cattle and poultry rearing. This will save land from the development of scattered homestead building. 56. Provide housing for the poor: Another important area for any national policy plan on urbanization is the housing of the poor. The concept of urban village as a place with fixed boundaries, may help to address the challenges of low-income housing. Such a village would have one market, one clinic, one station on the transit, several primary schools and several bathing and washing facilities. Such a national policy should also provide for the conservation and improvement of housing stock in any town or city. 57. Curb environmental pollution: The fight against environmental pollution is a further aspect of an urbanization policy. It is necessary to have national plan as well as enforcement authorities, to make pollution control effective to the extent that industry (e.g., tanneries in Dhaka) is decentralised or moved from the heart of the city. Environmental Impact Assessment (EIA) is very important to abate the negative impacts of infrastructure development on environment. Also enforcing environmental pollution control standards for noise and exhaust emission must be emphasized. 58. Devise effective urban governance: Effective urban governance can provide sufficient space to city corporations, municipalities, upazila centres, neighbourhoods, and Page 16 of 423

33 communities. It also involves enhancing the capacity of city and local authorities to partner with the private sector and civil society in delivering services and promoting economic development. Governance issues in these cities are critical. In parallel with decentralization and local government reform initiatives, effective sector reforms in such areas as land, housing, water, sanitation, education, and health have to be undertaken. As lack of coordination among the activities of different organizations can create hindrance to proper urbanization, the role of the relevant organizations needs to be clarified and effective mechanisms developed to coordinate their activities Urban Development Strategy under the Sixth FYP A review of past policies, institutions and programs suggests that the urbanization strategy needs to change substantially to meet current and future challenges. In the past much of the focus has been on implementing piecemeal programs. Multitudes of local government agencies, weak planning, poor governance, inadequate resources and weak project implementation capacity have limited the progress with meeting the urban challenge. The Sixth Five Year Plan will internalize these lessons of experience and shift the emphasis to the development of sound urban institutions, improve city governance and emphasize urban resource mobilization. 60. Improving city governance: Key constraints to the effective functioning of the Municipalities and City Corporations are unclear mandate and service responsibilities, weak finances and financial autonomy, poor coordination and control among service agencies and weak management. These problems call for a major rethinking in the management of these entities and their enabling environment. 61. The ability of city managers to coordinate fiscal, regulatory and administrative systems which influence the efficiency of cities is crucial to improving the welfare of urban citizens. In this context, cities need to be managed as standalone economies where project investments are planned in the context of a coherent city strategy and better understanding of how urban markets perform overall. The Government s role in this regard will be to support initiatives to combine local level skills, resources and ideas to stimulate the local economy towards the goals of job creation, poverty alleviation and redistribution, and take proactive measures to deal effectively with changes in the national and global economics. 62. Thus, a key institutional reform during the Sixth Five Year Plan is that the Pourashavas and City Corporations will be organized to manage their functions on the basis of elected representatives. For the urban centers of Bangladesh to be dynamic growth centers it is essential that they have elected and accountable Municipalities and City Corporations with clearly defined responsibilities. They must be able to attract private investment and mobilize public resources based on service delivery and the quality of the city environment. In order to implement the strategy the Government will take steps for: Institutional reforms and decentralization of responsibilities and resources to local authorities; Participation of civil society including women in the design, implementation and monitoring of local priorities; Building capacity of all actors (institutions, groups and individuals) to improve decision-making and urban development processes; and; Facilitating networking at all levels. 21 Adapted from Sixth Five Year Plan, FY 3011-FY 2015: Chapter 5: Managing the Urban Sector. Page 17 of 423

34 63. Promoting balanced development of urban centers: In view of the severe problem of concentrated migration and economic growth, efforts must be made to select new centers away form the main centers (i.e., Dhaka and Chittagong Metropolitan areas) for location of economic activities. If urban population growth is arranged and distributed over space in cities and towns of different population sizes in balanced manner, the process of urbanization can be managed in a better way. Special emphasis, therefore, will be given to the development of urban centers of various sizes, and policies will be directed towards strengthening of economic base and allied infrastructure and services in these centers. Special attention will be paid to supporting services housing, education, health, etc., again with a view to channeling those investments which are made at these centers in the most productive manner. Creating employment opportunities in these urban areas would require integration of local economic development and poverty alleviation initiatives. In order to achieve this, the government will pursue growth paths that encourage labor intensive sectors of the economy, support small, medium and micro-enterprises (SMMEs) and enforce a regulatory framework that creates an environment conducive to investment. In addition, steps will be taken to attract private investment through investments in infrastructure and utilities. 64. Urban resource mobilisation: A major constraint on urban services is the lack of adequate funding. Even with best city governance, unless new sources of funding are found, it will be difficult to meet the demand and development need of the urban sector. Presently, much of the financing comes from the Government s own budget while property taxes and user charges for urban services are very limited. The Sixth Five Year Plan emphasizes resource mobilization through much better implementation of the property tax and stronger cost-recovery of key urban services. Policies under the Plan include steps to improve land and property valuation, better tax collection through improvements in property tax administration, and setting prices for urban services with due regards to cost. Additional efforts are to be made to reduce efficiency and eliminate corruption in the collection of property taxes. 65. Better environmental management: Strategic options in this area seek to promote cleaner environment, control pollution and protect public health from environmental hazards. Emphasis is placed on preventive actions, that is, to develop preventive polices that can forestall future environmental degradation; and on holistic and integrated approach, with particular attention to participatory planning and management, public-private partnerships, capacity building and cost-recovery. 66. Making provision of infrastructure and services: Basic infrastructure and services at the community level include the delivery of safe water, sanitation, waste management, social welfare, transport and communications facilities, energy, health and emergency services, schools, and public safety. Strategies for improved open spaces creation and management are also formulated in focusing on demand, equity and accessibility, economic efficiency, cost-recovery, and public-private partnerships 67. Reducing urban poverty: Poverty is understood to encompass many different aspects including inadequate consumption, inadequate income and asset base, and inadequate access to basic infrastructure and services. Economic growth and consequent increase in income do not necessarily lead to reduction in urban poverty. The plan strategy to deal with urban poverty focuses on equal access to and fair and equitable provision of services in urban areas (including education, employment and livelihoods). Page 18 of 423

35 2.5.3 Objectives and Strategies for the Pourashavas and City Corporations Under SFYP 68. Major objectives and strategies of the SFYP with respect to Pourashavas and City Corporations are the following: 69. Objectives (i) Development of effective road network to setup congestion-free, safe and sound communication system. (ii) Development of pedestrian facilities in the cities. (iii) Reduction of traffic accident. (iv) Auto traffic signalization for better traffic management. (v) Sustainable parking management. (vi) Improvement of solid waste management. (vii) Improvement of environment & infrastructure. (viii) Provision of safe water supply for the citizens. (ix) Development of recreational facilities (parks, playgrounds, etc.). (x) Development of modern street lighting. (xi) Development of primary health facilities. (xii) Improvement of drainage system to address the problems of water-logging. (xiii) Development of commercial complexes for expanding economic activities. (xiv) Infrastructure development of low-income settlements. 70. Strategies To achieve plan objectives, the following strategies will be pursued: (i) Establishing strong elected Municipalities and City Corporations in all major urban centers. These entities will be given adequate operational and financial autonomy to enable them to provide the services demanded by the residents. (ii) Revamping the property tax system to make this the major source of financing the expenditures of municipalities and city corporations. (iii) Strengthening the capacities in the MLGRD&C and the Planning Commission to support the development of municipalities and city corporations as well as monitoring their performance to ensure accountability. (iv) Planning road infrastructure development and public transportation for all the city corporation areas. (v) Developing comprehensive layout plans comprising all civic amenities like parks, lakes and other recreation facilities in all City Corporation areas. (vi) Improving urban environment by regulating disposal of solid waste. (vii) Creating strong mechanism for coordination of infrastructure development and provision of utilities in all City Corporation areas. (viii) Building comprehensive databases in LGD and all city corporations for urban planning. (ix) Government Khas22 land will be used to the maximum extent possible for solving the housing problem, especially for poorer households. (x) Abandoned houses will be turned into multi-storied buildings by the National Housing Authority (NHA) in phases for solving the housing problem. (xi) Necessary actions will be taken to strictly enforce the Bangladesh National Building Code (BNBC), (xii) Arrangement for soft loans for housing will be made for the poor; to this end, a special fund will be created by the government. (xiii) Houses for working women will be constructed by the relevant city/town authorities. 22 Public land. Page 19 of 423

36 (xiv) (xv) Constructions of Public Physical service structures will respond to specific needs of men and women such as hospitals and educational institutions. Necessary action will be taken to reduce wage discrimination Strategies and Policies on Water Supply and Sanitation (WSS) 71. In order to cope with the present and future demand of safe water supply and sanitation, the Government of Bangladesh has formulated and adopted several policies and strategies, some of which are named below: (i) National Policy for safe Water Supply and Sanitation, 1998 (WSS policy). (ii) National Water Policy, 1998 (NWP). (iii) National Water Management Plan, 2004 (NWMP). (iv) National Policy for Arsenic Mitigation & its Implementation Procedure, 2004 (Arsenic Policy). (v) Sector Development Framework on Water Supply and Sanitation, 2004 (SDF). (vi) National Sanitation Strategy, (vii) Pro-poor Strategy for Water and Sanitation Sector in Bangladesh, (viii) Cost Sharing Strategy for water supply and Sanitation Services, The Local Government Division of the Ministry of LGRD&C has prepared a Sector Development Plan (SDP) for the Water Supply and Sanitation Sector for the period It aims to provide a framework for planning, implementing, coordinating and monitoring all activities in the sector. The SDP is a strategic planning document to meet emerging and future challenges and includes a road map for development and a corresponding investment plan. It is prepared in line with the objectives of the Second Poverty Reduction Strategy Paper (Steps towards Change), the Sixth Five Year Plan and the Perspective Plan ( ). The SDP covers all urban and rural areas of the country and the activities of all relevant government functionaries like the Ministries and Divisions, government agencies such as, DPHE, LGED, WASAs and the Local Government Institutions. It also provides a framework for other players in the sector, like NGOs and the private sector. 73. The 15 year period of SDP includes three 5-year terms: short-term, medium-term and long-term. These terms coincide with the Sixth and the forthcoming Seventh and Eighth Five Year Plans respectively. In these three terms gradual development of the sector will be taken up. During the short-term, i.e., in the Sixth Five Year Plan period, the aim is to provide at least minimum levels of service for water and sanitation to all. In parallel, institutional strengthening will be initiated. The sector governance instruments, such as, establishing legal and regulatory framework and preparing new or revising existing policies and strategies, will be implemented. Platforms for cooperation and coordination among the sector stakeholders would also be established and a step-by-step approach towards Sector Wide Approach (SWAp) will be initiated. 74. It is expected that all the further water and sanitation related national and sectoral policies and strategies and international commitments will be aligned with SDP. The line agencies under the Local Government Division would formulate development projects under the framework of SDP, align the ongoing ones to it to the extent possible and undertake institutional development activities accordingly. Page 20 of 423

37 2.5.5 Draft National Urban Sector Policy, The draft National Urban Sector Policy was originally prepared in 2006 and submitted to the Local Government Division (LGD). Key features of the draft are described below. 76. Future Vision: The National Urban Policy envisions strengthening the beneficial aspects of urbanization and at the same time effectively dealing with its negative consequences to achieve sustainable urbanization, keeping in view the multi-dimensional nature of the urbanization process. The policy also envisions a decentralized and participatory process of urban development in which the central government, the local government, the private sector, the civil society, and the people all have their roles to play. The policy, therefore, should cover spatial, economic, social, cultural, aesthetic and environmental aspects of urban life directed towards achieving an urban reality that can ensure freedom from hunger and poverty; capacity to live a healthy life; access to education, shelter and basic services, and a secure and liveable environment at home and at the workplace. The policy will be gender sensitive and friendly to children, the aged and the disadvantaged. 77. Objectives: The major objectives of National Urban Sector Policy for Bangladesh will be to: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) Ensure regionally balanced urbanization through decentralized development and hierarchically structured urban system; Facilitate economic development, employment generation, reduction of inequality and poverty eradication through appropriate regulatory frameworks and infrastructure provisions; Ensure optimum utilization of land resources and meet increased demand for housing and urban services through public private and other partnerships; Project, preserve and enhance the urban environment, particularly water bodies; Devolve authority at the local urban level and strengthen local planning, infrastructure provision, service delivery and regulatory governments through appropriate powers, resources and capabilities functions; Involving all sectors of the community, including women and the poor, in participatory decision making and implementation processes; Ensure social justice and inclusion by measures designed to increase the security of poor people through their access to varied livelihood opportunities, secure tenure and basic affordable services; Take into account particular needs of women, men, children, youth, the elderly and the disabled in developing policy responses and implementation; Assure health, safety and security of all citizens through multifaceted initiatives to reduce crime and violence; Protect, preserve and enhance the historical and cultural heritage of cities and enhance their aesthetic beauty; Develop and implement urban management strategies and governance arrangements for enhancing complementary roles of urban and rural areas in sustainable development; and; Ensure good governance by enhancing transparency and establishing accountability. 78. Major Dimensions: Effective responses to the challenges posed by rapid urbanization and fulfilling the stated objectives will require giving priorities to the following dimensions: Page 21 of 423

38 (i) Patterns and process of urbanization. (ii) Local urban planning. (iii) Local economic development and employment. (iv) Urban local finance and resource mobilization. (v) Urban land management. (vi) Urban housing. (vii) Urban poverty and slum improvement. (viii) Urban environmental management. (ix) Infrastructure and services. (x) Urban transportation. (xi) Health and education. (xii) Social structure. (xiii) Gender concerns. (xiv) Urban children, aged, the disabled and the scavengers. (xv) Urban recreation, playground, park, open spaces and graveyards. (xvi) Cultural and aesthetic development. (xvii) Rural-urban linkage. (xviii) Law and order. (xix) Legislation. (xx) Urban governance. (xxi) Urban research, training and information. 79. It is urgently required that the Government of Bangladesh (GoB) accords approval to the draft National Urban Sector Policy. 2.6 Allocation of Investment Fund for Infrastructure Development 80. The urban sector in Bangladesh has received considerable attention of the central government in getting public investment for its efforts to quickly develop the Pourashavas infrastructure and related components. The need for getting greater attention is due to the fact that urban population is rapidly increasing. Moreover, about 50% of national GDP was produced in urban areas in In the future, with increased urbanization and industrialization, the share of urban sectors in national GDP would further increase. On the other hand, a substantial proportion of expenditure is spent in urban areas. That is why in addition to financing of development activities from their own source in urban centers, the central government would continue to provide direct development assistance to Pourashavas and City Corporations at extended rates. 81. Development budget to Pourashavas has been channeled through development of projects/programs on physical planning, water supply and being implemented by as many as 10 Ministries/divisions, particularly by Local Government Division including LGED and DPHE. These programs consist of water supply systems in large and small cities, improvement in sanitation system, development of physical infrastructure in district and upazila towns. At the national level, 13-15% of the total development expenditure was spent on physical planning and the housing sector The urban sector in Bangladesh has received considerable international development assistance both from multilateral and bilateral agencies. At present most of the larger municipal infrastructure development is financed mainly through external assistance and some government grants. Several agencies active in their support to the sector include the Asian Development Bank (ADB), the World Bank (WB), the United Nations Development Program (UNDP), the United Nations Children s Fund (UNICEF) and bilateral agencies 23 Planning Commission (2009/ /13), Annual Development Programme, GoB. Page 22 of 423

39 including Japan (JBIC and JICA), The German International Development Cooperation and UK s Department for International Development (DFID). Other donors and a large number of non-governmental organizations provide technical assistance and have supported smaller initiatives at the national and town level. 83. The Bangladesh Municipal Development Fund (BMDF) is also playing an important role in funding urban infrastructure development. It is a company formed under the Ministry of Finance of the Government of Bangladesh in The administrative authority of BMDF is now vested with the Bank and Financial Institutions Division created recently under the Ministry of Finance. The BMDF was registered in 2002 under the Companies Act, Its primary objectives are: (i) to extend financial support to the City Corporations and Pourashavas (Municipalities) referred to collectively as Urban Local Government Bodies (ULBs) with a view to strengthening their institutional and financial capacity to plan, finance, implement and operate infrastructure services; (ii) to procure, arrange, secure, receive and accept loans, aid, grants, and donations from any lawful source and to create a fund thereof and make available the same for utilization by ULBs; (iii) to provide and render financial and technical assistance and advice to ULBs seeking to develop infrastructure investment projects on a self selecting basis, and; (iv) to initiate and undertake appropriate training for company personnel as well as for staff of ULBs to promote greater efficiency on the part of company as well as to ensure better understanding by ULBs s staff of the company s procedures and operational requirements, particularly issues pertaining to, inter alia, lending and financial policies, eligibility criteria, and procurement. The Articles of Association are the detailed legal instruments to guide as to how the company would carry out its day-to-day activities. The main purpose of BMDF is to bring about qualitative improvement of urban livelihood through infrastructure development and environment improvement. The eventual target of BMDF is to assist the ULBs in becoming self-sufficient and independent. BMDF provides a mixture of loan and grant to ULBs. 84. In spite of the considerable attention by the Government there is unmet demand and rapidly growing new demand for urban services in Bangladesh. The investment financing needs of the urban sector are large. This is also reflected in the indicative resource requirements provided by line ministries. Creative means will need to be found to meet the financing requirements based on a combination of sound planning of new investments, proper attention to maintaining and better using the existing urban assets, strengthening of property tax system and user charges, partnership with private sector through outsourcing and PPP arrangements, mobilization of donor funding and assigning funds from the government s own resources. While the government recognizes the urgency of meeting the needs of the urban sector, a holistic approach to resource mobilization as stated above will be essential. 85. Based on the projected overall resource envelope and a careful assessment of relative expenditure priorities, Table 4 provides allocation of development for the Local Government Division resources under the urban sector in current and constant prices during the Sixth Five Year Plan. These are indicative targets and will be reviewed on an annual cycle in the light of actual resource availability, implementation performance and changing priorities. Table 2.4 : Development Resource Allocation for the Local Government Division under the Urban Sector in the Sixth Plan (Current Prices) Year Amount (Million Taka) Amount (Million USD) ,990 1, ,190 1, ,040 1, Page 23 of 423

40 ,870 1, ,300 1, Total: 555,390 6, Source: Table 5.12, Sixth Five Year Plan, FY 2011 FY 2015 (p. 243). 2.7 Sector Development Plan FOR MUNICIPAL DEVELOPMENT Objectives 86. The objectives of the municipal development sector development plan are as follows: (i) (ii) (iii) (iv) Improve municipal governance, Improve municipal infrastructure, Set up and enforce a performance-based budget allocation mechanism, Develop capacity of elected Pourashava representatives, officials and citizens representatives Approach 87. The approach to be followed is essentially based on incentivizing Pourashavas in such a way that they gradually improve their performance against a set of pre-set governance criteria. Under such a system, they must meet the criteria before they can enter the project and/or before funding can be released to them. 88. The Urban Governance and Infrastructure Improvement projects (UGIIP I and II) have been real trend setters in this area. A number of pipeline or recent on-going projects as below are increasingly adopting a similar approach, with their own set of customized criteria : (i) (ii) (iii) (iv) Coastal Towns Environmental Infrastructure Project (CTEIP), Northern Bangladesh Integrated Development Project (NOBIDEP), Third Urban Governance and Infrastructure Improvement Project (), Municipal Governance and Basic Urban Services Improvement (MGSP) Municipal governance Improvement 89. Governance performance criteria established for the project play a key role in improving governance. In order to incentivize ULBs, the budget allocation for infrastructure investment is linked to the performance of pourashavas to meet the criteria, although the degree of linking performance with budget allocation differs from project to project. UGIIP adopts a stringent approach, whereby pourashavas failing to meet even the minimum requirements will not be entitled to any physical investment budget allocation. The performance criteria under the UGIIP are included in the Urban Governance Improvement Action Program (UGIAP), and key activity areas under UGIAP of are spread over the following main categories: (i) (ii) (iii) (iv) (v) (vi) (vii) Citizen Awareness and Participation. Urban Planning. Equity and Inclusiveness of Women and Urban Poor. Enhancement of Local Resource Mobilization. Financial Management, Accountability and Sustainability. Administrative Transparency. Keeping Essential Pourashava Services Functional. Page 24 of 423

41 90. It may be also noted that the Ministry of Local Government, Rural Development & Cooperatives, Local Government Division has developed an evaluation form which includes the following main categories: (i) (ii) (iii) (iv) (v) (vi) Office Management. Project Implementation. Urban Amenities. Participation of Women Councillors. Fiscal Issues. Yearly Financial Transaction. 91. An annual assessment, involving scoring, is conducted by the Monitoring & Evaluation Wing of LGD. This exercise is used to decide the allocation of Special Annual Grants (not Block Grants). 92. In the light of the above, it is noted that GoB (for the purpose of allocating Special Annual Grants) as well as a number of various projects in partnership with bilateral or multilateral donors and/or lending agencies are adopting performance-based systems for development projects. Against such a background, GoB may consider: (i) (ii) Harmonize criteria used among development partners and GoB, Scale-up resource allocation by GoB. 93. LGED UMSU is responsible for providing institutional and capacity development support to urban development projects of LGED. UMSU will keep functioning as secretariat of Municipal Performance Review Committee (MPRC) in assessing performance of Pourashavas based on UGIAP. The Superintending Engineer, Urban Management Wing of LGED, will act as Director of UMSU and the Additional Chief Engineer in charge of urban management will coordinate activities between UMSU and the Project Management Office (PMO). The PMO, with assistance from various consultancy services attached to each development project will provide support to UMSU for preparing elaborate procedures for assessment of performance of ULBs in implementing urban development projects. 94. Three institutions are providing capacity-building support to municipalities and City Corporations: UMSU under LGED for municipal engineers on technical matters; National Institute of Local Government (NILG) on administrative matters; and Bangladesh Institute of Management (BIM) on financial management matters including tax collection and assessment. Considering the increasing role that UMSU needs to play, specific operating budget needs to be allocated to UMSU on a regular basis, without relying too much on project-based fund allocation by development partners. This will enable UMSU to extend its important services to ULBs in a planned and much more predictable and effective manner Municipal Infrastructure Improvement 95. Eligible Sub-Projects/Schemes 96. Types of subprojects/schemes for infrastructure improvement of City Corporations and Pourashavas will include the following: 97. Urban Transport: (i) Repair, rehabilitation and expansion of Pourashava roads, traffic junctions and foot paths. (ii) Rehabilitation and expansion of bridges and culverts. (iii) Development of river boat landing stations (jetty). Page 25 of 423

42 (iv) (v) Procurement of equipment for routine maintenance. Procurement of equipment for traffic management and road safety. 98. Drainage: (i) Repair, rehabilitation and existing drainage systems. (ii) Construction of new drains. (iii) Procurement of equipment for maintenance. 99. Solid Waste Management: (i) Procurement of collection and storage equipment. (ii) Construction of storage, treatment and sanitary disposal facilities. (iii) Support to community-based organizations for house-to-house collection Water Supply: (i) Rehabilitation/improvement/construction of piped water supply systems. (ii) Introduction of non-revenue water programs. (iii) Construction of tube wells. (iv) Procurement of equipment for metering, operation and maintenance. (v) Expansion of distribution networks. (vi) Construction of iron and arsenic removal facilities Sanitation: (i) Public and community sanitation facilities. (ii) Procurement of equipment for maintenance and sludge disposal at onsite facilities. (iii) Construction of sludge disposal facilities. (iv) Awareness campaign for better hygiene Municipal Facilities: (i) Bus and truck terminals. (ii) Parking areas. (iii) Kitchen markets and slaughter house. (iv) Municipal parks. (v) Street lighting. (vi) Urban landscaping. (vii) Construction of community centers and ward councilor offices Basic Services in Slums. Physical improvement of slums and low-cost housing Criteria for Selection of Infrastructure Improvement Schemes 104. Selection Criteria: (i) The subproject/scheme will be identified and designed in a participatory manner through the preparation of a Pourashava Development Plan (PDP) or other planning tools (if available). (ii) A demand survey will be conducted to assess the need for the subproject/scheme. (iii) The design of the subproject/scheme will ensure the least cost of capital and operation and maintenance (O&M) expenditures in achieving its objectives. (iv) An O&M plan for the subproject/scheme including an identified budget will be prepared and approved. Public, private partnerships for O&M will be included, if appropriate. (v) The subproject will meet the environmental and social safeguard requirements of development partners and the Government. Page 26 of 423

43 (vi) (vii) The subproject will meet the criteria through preparation of land acquisition (LA) plan and Indigenous Peoples Development Plan, if required. Any investment for slums/informal settlements on government owned land will be taken up only after a resolution by the Pourashava Council not to evict nor relocate the residents for an agreed period. In the case of private lands, the Pourashava Council will confirm with the landowner that there would be no eviction or relocation over an agreed period Achieving Model Towns : GoB shall encourage the development of model towns in the country, which may include following features: (i) (ii) Improved municipal service delivery 100% water supply and sanitation coverage including 24/7 piped water supply systems in core urban areas (towards 100% metered connections with volumetric tariff structure), solid waste regularly collected in core urban areas and safely disposed of at a designated site, and core urban areas free from water logging; Financial sustainability adequate O&M costs and debt-servicing fully recovered by own source revenue; (iii) Citizen participation, accountability, inclusiveness, and transparency Pourashava Development Plan, Master Plan, Gender Action Plan (GAP), Poverty Reduction Action Plan (PRAP), annual budget, and audit reports developed through consultation and disclosed to the public, and; (iv) Urban development control buildings constructed in accordance with approved plan An effective way to achieve model towns would be to incorporate the criteria of a model town in performance criteria systems used by GoB and in donor-funded international projects Implementation Arrangements 107. The Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C) will be the sponsoring ministry of the Urban Governance and infrastructure improvement projects. LGD will provide policy guidance and coordination of such projects. Such policy guidance and coordination will be provided through the Inter-ministerial Project Steering Committee (IPSC) and the Municipal Performance Review Committee (MPRC) both headed by the Secretary, LGD The main functions of the IPSC will be to: i) Review project implementation and progress, ii) Coordinate with other ministries to resolve project related problems and issues, iii) Review progress on action plans to be implemented as conditions of the project, iv) Approve the list of ULBs that will proceed to the next Phases upon the recommendation of PMO, and, v) Provide policy guidance The main functions of MPRC will be to: i) Consider and approve the elaborate procedures for performance assessment of Pourashavas prepared by each project and endorsed by UMSU of LGED, ii) Set out the formats for collection and compilation of data from Pourashavas for performance assessment by PMU, UMSU and LGED, and, iii) Consider the level of performance of Pourashava based on compiled data and take decision on entry of ULBs to next project phase(s) The Local Government Engineering Department (LGED) and the Department of Public Health Engineering (DPHE), both under the Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C) and Page 27 of 423

44 having extensive experience in managing urban governance and infrastructure improvement projects and water supply and sanitation improvements projects, will represent the central government and support the implementation of SDP A Project Management Office (PMO) will be established for the overall management of each project. Project Implementation Units (PIU) will be established in each participating ULB to implement the UGIAP and physical works The plan may also make use of Bangladesh Municipal Development Fund (BMDF) which may play a supplementary role for infrastructure provision Resource Requirements 113. Two municipal development projects that have been recently prepared, namely the WB-supported Municipal Governance and Services Project (MGSP) and the ADB-supported Third Urban Governance and Infrastructure Improvement (Sector) Project (). They, have the following per capita financial resource requirements (Tables 5 and 6 below). Cost estimates for MGSP are calculated based on data included in the Project Appraisal Document estimated the resource requirements for project pourashavas to reach the level of a model town, which are extrapolated to 30 towns based on an assessment made for three sample towns These two projects identified strikingly similar resource requirements to improve basic urban infrastructure and ensure sustainability through urban governance reform including in the area of financial management These two projects provide useful and converging paradigms. Within the framework of this SDP, it is contemplated to extrapolate their average per capita cost requirements for both infrastructure and capacity-building to respectively all Pourashavas and City Corporations in the country Also, the preparation/updating of Master Plans as and where necessary is an integral part of this SDP and will include Class A and B Municipalities. This will complement activities which have been already undertaken by LGED in this area (in 23 district level and 223 Upazila level Municipalities) and/or which are foreseen under. Table 2.5 : Municipal Governance and Services Project (MGSP) Project Costs by Component Component Name Component 1: Municipal Governance and Basic Urban Services Improvement For 26 pre-selected ULBs 25 Component 2: BMDF Demand-based Financing for Urban Services Component 3: Capacity Building and Costs Per-capita in Million USD Costs in USD Implementation Support Component 4: Contingent Emergency Response Total World Bank, 26 November Total population of the 26 ULBs = 3.4 million inhabitants; Nb: the MGSP project includes a few City Corporations alongside Pourashavas. Page 28 of 423

45 Source: Calculations based on the Project Appraisal document, World Bank, 26 November Table 2.6 : Third Urban Governance and Infrastructure Improvement Project (UGIIP III) Resource requirements (not necessarily the project cost) Component Name Costs in Million USD Per-capita Costs in USD Infrastructure and Governance Improvement. For pre-selected ULBs 26 Capacity Building and training / Support Others Total Source: PPTA Consultant Assuming that other pourashavas have the same level of resources to reach the level of a model town, the total resource requirements for 321 pourashavas in the country are estimated in Table 7. However, the figures need to be considered indicative only, because per capita resource requirements will be widely different for each pourashava depending on geographic characteristics. In particular, by virtue of a catch-up effect, per capita infrastructure requirements can be comparatively higher in pourashavas where the level of existing municipal services and infrastructure is still rather low (eg., Class B or C PSs). The same may hold true in low-density Pourashavas of a still rural nature (where the average length of drains and roads is higher due to the still scattered nature of human settlements) Thus actual requirements for the SDP will be likely higher, considering that: (i) urban population growth is still faster than the country s overall population growth, (ii) per capita resource requirements would be generally higher for smaller, low-density, and newly emerging pourashavas due to less concentration of population (while most towns under MGSP and are larger than average), and, (iii) price escalation and physical contingencies are not factored in. Table 2.7 : Proposed Resource Allocation for All Pourashavas in the Country Project Costs by Component Component Name Component 1: Infrastructure and Governance Improvement For all Pourashavas in the country 27 Component 2: Capacity Building and training / Costs Per-capita Costs in million USD in USD 1, Support Total 1, Source: Projections; PPTA Consultant Investment requirements for City Corporations are estimated in Table 2.8 below by using the same average per capita resource requirement ratio as in Table 2.7 above. 26 Total population of the 30 Pourashavas = 2.18 million inhabitants. 27 Total number of Pourashavas (PSs) in Bangladesh = 321; the population of 302 PSs only is available = million (2011). Page 29 of 423

46 Table 2.8 : Proposed Resource Allocation for All City Corporations in the Country Project Costs by Component Component Name Component 1: Infrastructure and Governance Improvement For all City Corporations in the country 28 Component 2: Capacity Building and Costs Per-capita Costs in million USD in USD 1, ,20 16 training / Support Total 1, Source: Projections; PPTA Consultant Monitoring and Evaluation 121. Monitoring and evaluation of SDP will be an important activity. The SDP will have an interface with the ongoing Sixth Five Year Plan (FYP) and upcoming Seventh FYP, as well as other subsequent FYPs. It is expected that this SDP will be further developed into a sector development program following the approval of the National Urban Policy. The PMO of each development project will provide assistance to the UMSU of LGED, and UMSU will render support to MPRC of LGD in carrying out monitoring and evaluation of various development projects to be implemented under the SDP The M&E framework will include progress in improvement of municipal governance and infrastructure, effectiveness of the performance-based budget allocation mechanism, progress towards establishing a unified set of performance criteria, effectiveness of implementation arrangement and support mechanisms, level of service delivery by City Corporations and Pourashavas including sustainability of O&M, budget used and further required, and roles of development partners. 28 Total population of all City Corporations = million (BBS, 2011). Page 30 of 423

47 3 DEVELOPMENT COORDINATION A. Development Projects and Major Development Partners: Strategic Foci and Key Activities 123. The Local Government Engineering Department (LGED) and the Department of Public Health Engineering (DPHE) are implementing urban development projects under the Physical Planning, Water Supply and Housing (PPWS&H) Sector As per Annual Development Programme (ADP) of , LGED is implementing 12 development projects with a total cost of Tk. 63,564.4 Million and project aid of Tk. 32,720.6 Million. Out of 12 development projects, 4 projects are assisted by the development partners involving Tk. 41,643.5 Million and 8 projects consisting of Tk. 21,920.0 Million are financed by the Government of Bangladesh (GoB). The major development partners are ADB, DFID, UNDP, GTZ, KfW and SFD. 29 The list of projects is given in Table 3.1. Table 3.1 : Sl. No Development Projects Implemented by LGED Project Title (Implementation Period) 1 District Town Infrastructure Improvement Project (Revised). (01/07/ /06/2012) 2 Upazila Town Infrastructure Improvement Project (Revised). (01/07/2004-1, /06/2012) 3 Poverty Alleviation Project through Urban Partnership 8,260.2 (01/07/ /03/2015) (7,675.7) 4 Second Urban Governance and Infrastructure Improvement (Sector) Project 12,600.0 (UGIIP-II) (9,740.4) (01/01/ /06/2014) 5 Construction of Loop of Khalgaon Flyover (at the End of Saidabad) (31/10/ /06/2013) 6 Important 19 Nos. Pourashava Development Project 4,519.4 (01/01/ /12/2013) 7 Important Urban Infrastructure Development Project 11,509.9 (01/01/ /06/2014) 8 Construction of Fly over Bridge in Dhaka City (Construction of Magbazar 7,727.0 Mouchak (Integrated) Fly over (31/12/ /2014) (57,223) 9 Development of Shama Sundari Cannal of Rangpur District (01/03/ /06/2013) 10 Urban Regional Development Project (01/07/ /12/2016) 13,056.3 (9,562.2) 11 Rehabilitation of Narashunda River of Kishoregonj District and Development at Kishoregonj Pourashava area (1/1/ /6/2013) 12 Upgradation of Physical Facilities of Engineering Survey Institute, Rajshahi (01/07/ /06/2014) Total: 63,564.4 (32,720.6) Source: Annual Development Programme (ADP), , Bangladesh Planning Commission (Taka in Million) Project Source of Cost Project Aid (Project Aid) 2, DFID, UNDP ADB, KfW DFID, SFD - ADB, KfW 125. As per ADP of , DPHE is implementing 11 development projects with a total cost of Tk. 30,481.2 Million and project aid of Tk. 9,980.4 Million. Out of 11 development 29 DFID = Department for International Development (UK); UNDP = United Nations Development Programme; GTZ = German Technical Cooperation (subsequently renamed as GIZ); FfW = German Development Funding Agency; SFD = Saudi Fund for Development. Page 31 of GTZ,

48 projects, 2 projects involving Tk. 11,669.8 Million are assisted by the development partners and 9 projects consisting of Tk. 18,811.4 Million are financed by GoB. The major development partners are ADB, OPEC and IDA 30. The list of projects is given in Table 3.2. Table 3.2 : Sl. No Development Projects Implemented by DPHE Project Title (Implementation Period) On-going Projects: 1 Secondary Town Water Supply and Sanitation Sector Project (GoB-ADB) (01/07/ /06/2012) 2 Water Supply and Sanitation Project in Sylhet and Barisal City Corporation (1st Revised) (01/07/ /06/2012) 3 Establishment of National HRD Center at DPHE for Water Supply and Sanitation (01/07/ /06/2012) (Taka in Million) Project Source of Cost Project Aid (Project Aid) 4,850.4 ADB, OPEC (3,427.9) 2, Special Rural Water Supply (01/07/ /06/2013) 6, Water Supply and Environnemental Sanitation Project in Kotalipara and Tungipara Pourashava (01/07/ /06/2012) Piped Water Supply and Sanitation Project at Suganagar, Bhangura and Chatmohar Pourashava under Pabna District (01/07/ /06/2012) 7 District Town Water Supply Project (01/11/ /06/2014) 4, Water Supply and Sanitation Project in Cyclone Prone & SIDR affected 1, Coastal Areas of Bangladesh (01/07/ /06/2013) (1,002.2) 9 Water Supply, Sanitation and Drainage Project of Tongi Pourashava (01/07/ /12/2014) 10 Bangladesh Rural Water Supply and Sanitation Project (BRWSSP) 6,819.4 IDA (01/07/ /06/2016) (5,550.3) 11 Environmental Sanitation and Water Supply with Piped Network in Thana 2, Sadar and Growth Center Pourashava (2nd Phase) (01/07/ /06/2015) Total: 30,481.2 (9,980.4) Source: Annual Development Programme (ADP), , Bangladesh Planning Commission B. Institutional Arrangements and Processes for Development Coordination 126. The institutional arrangements and development coordination process are quite effective in Bangladesh. As executing/implementing agencies under the Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C), LGED and DPHE are responsible for preparation, implementation and monitoring of all development projects of the urban sector. The field level activities of the urban development projects are implemented by the field level officials of LGED and DPHE either directly through the involvement of the concerned stakeholders and the private sector or in collaboration with the Pourashavas/City Corporations and other concerned specialized agencies The LGD acts as the sponsoring ministry/division for the urban development projects and provides policy direction, guidance and coordination for smooth planning, implementation and monitoring of such projects The Ministry of Planning and the Planning Commission prepare long-term development plans, five years development plans and annual development programmes (ADP). The Planning Commission is also responsible for the processing and approval of urban development projects by the National Economic Council (NEC) and other specified authorities. 30 OPEC = Organization of the Petroleum Exporting Countries; IDA = International Development Association. Page 32 of 423

49 129. The Finance Division of the Ministry of Finance (MoF) is responsible for arranging and coordinating the issue of internal funding for all activities relating to revenue and development budgets The Economic Relations Division of MoF is in charge of arranging project aid for urban development projects and coordinating with the concerned development partners on behalf of the Government of Bangladesh (GoB) The Implementation, Monitoring and Evaluation Division (IMED) conducts Monitoring and Evaluation (M&E) of urban development projects. It is also responsible for preparation of Acts/Rules/Procedures on procurement of goods, works and services and providing guidance and capacity development support on procurement issues including e- procurement In respect of coordination of donor assistance to the urban sector of Bangladesh, the Local Consultancy Group (LCG) on Urban Sector has been working as a medium of coordination and policy dialogue on urban development and governance issues within the donor community in Bangladesh. The LCG comprises British High Commission, Canadian High Commission, Royal Danish Embassy, Embassy of the Federal Republic of Germany, Embassy of Japan, Royal Netherlands Embassy, SIDA, EEC, World Bank, USAID, IMF, UNDP, UNICEF, WHO and Asian Development Bank. 31 Coordination meetings attended by donors and policy meetings attended by donors, government officials and NGOs are held every few months. The priority areas of LCG are: (1) Transparency and Accountability, (2) Access to Better Service Delivery, (3) Reduction of Urban Poverty. C. Achievements and Issues 133. The Urban Governance and Infrastructure Improvement Project III () is being formulated by the PPTA team based on the experience and lessons gained through implementation of the Secondary Towns Infrastructure Development Project (STIDP) I, STIDP II, UGIIP I and UGIIP II implemented by LGED and the Secondary Towns Water Supply and Sanitation Sector Project (STWSSP) implemented by DPHE The Secondary Towns Infrastructure Development Project I (STIDP-I) and STIDP II implemented by LGED addressed infrastructure improvement issues and institutional capacity building. But no well concerted and broad based effort was made to bring about good urban governance in the Pourashava environment UGIIP I was the follow-up project of STIDP II and UGIIP II is the follow-up project of UGIIP I. The urban infrastructure improvement under UGIIP II covers improvement of roads, bridges, drainage, solid waste management, water supply, sanitation, municipal facilities (bus/truck terminals, kitchen markets and slaughter houses) and basic services for the poor slums. The urban governance improvement includes 6 key areas of citizen awareness and participation, urban planning, women s participation, integration of the urban poor, financial accountability and sustainability and administrative transparency The outputs of STWSSP include water supply improvements, sanitation improvements and institutional development of DPHE and Pourashavas In the process of formulation of, some relevant issues are also being considered and incorporated from the World Bank supported Municipal Governance and 31 SIDA = Swedish International Development Agency; EEC = European Economic Community; USAID = United States Agency for International Development; IMF = International Monetary Fund; UNICEF = United Nations Children's Fund; WHO = World Health Organization; Page 33 of 423

50 Services Project (MGSP), ADB Supported Coastal Towns Infrastructure Improvement Project (CTIIP) and JICA 32 -supported Northern Bangladesh Integrated Development Project (NOBIDEP) The Country Partnership Strategy between the Government of Bangladesh (GoB) and Asian Development Bank (ADB) for signed in 2011 includes the sectors of energy, transport, urban, education, agriculture and natural resources and finance A Partnership Framework among the Government of Bangladesh (GoB) and Asian Development Bank (ADB), Danish International Development Assistance (DANIDA), Government of Japan (GoJ), Government of the Republic of Korea (RoK) and World Bank (WB) was signed in 2007 in order to contribute to Bangladesh s socio-economic development in the urban water supply and sanitation sector through addressing longstanding reform issues that have hampered effective operations, sound financial management and continuation of good supply of services in the sector and to cooperate to improve and expand sustainable service delivery of water, sanitation, waste water and drainage services to the people living in Dhaka and Chittagong, including slum dwellers. Khulna WASA has also been included within the scope of the partnership framework A draft National Urban Sector Policy was prepared in It covers a broad range of urban-related issues but has not yet been approved It is important to establish and maintain effective linkages and coordination among the Country Partnership Strategy, Partnership Framework and the National Urban Sector Policy. D. Summary and Recommendations 142. The development coordination mechanism for urban development in the country works moderately well, However, like the Partnership Framework signed between GoB and development partners for the urban water supply and sanitation sub-sector, the issue of signing similar Partnership Framework between GoB and development partners for urban governance and urban infrastructure improvement needs to be prepared. The draft National Urban Sector Policy prepared by GoB needs to be finalized. There is a need for coordinated investment, implementation and monitoring mechanisms of the issues included in the existing Partnership Framework already signed and other frameworks to be signed in future At specific levels, the following issues may be considered by GoB and development partners for the urban sector: Enhancing interaction between development partners and GoB on urban development through the Local Consultancy Group (LCG). Seeking to introduce similar performance based systems alongside the lines of the UGIAP; ideally a uniform system may be introduced (still making customization possible to take into account project specificities) The concept of `model towns as proposed in may be shared among different development partners and considered for adoption. In particular, the development of PDPs/Master Plans 33, establishment of a municipal planning unit (including GIS facility), the definition and enforcement of O&M plans, etc., may be included. Avoiding redundancies and seeking complementarities spatially and sectorally (e.g., 32 Japan International Cooperation Agency 33 PDP = Pourashava Development Plan Page 34 of 423

51 in focusing on specific geographic areas, in coastal areas, along road corridors, etc.) may be considered. Climate changes may be addressed as a major development issue; however, other disaster-related issues, such as, earthquake resilient cities may also be considered. Page 35 of 423

52 4 CONTRIBUTION TO THE ADB RESULTS FRAMEWORK CONTRIBUTION TO THE ADB RESULTS FRAMEWORK Level 2 Results Framework Indicators No. (Outputs and Outcomes) Targets Methods / Comments 1 Roads built or upgraded (kilometers) Households with new or improved water supply (number) 3 Water supply pipes installed or upgraded (length of network in kilometers) Source: Asian Development Bank estimates. 30, Page 36 of 423

53 5 FINANCIAL ANALYSIS & FINANCIAL MANAGEMENT ASSESSMENTS 5.1 Financial Analysis Introduction and Methodology 144. The project finances basic urban services improvements and aims to improve and establish capabilities of the Pourashavas for a sustainable administrative and financial management for the Pourashavas in accordance with Pourashava Act, Tentatively 30 Pourashavas will receive finance under the project; of which 10 Pourashavas including 3 sample Pourashavas will receive investment as priority and sample Pourashavas. The investment will be made phase wise with achieving of targets framed in UGIAP. The project Pourashavas will receive investments in three phases: First phase focuses on infrastructures to meet up immediate requirements for mobilizing revenues (e.g., roads, drainage, solid waste and market); and Second & Third phases include other infrastructure that contributes to general economic development (e.g., additional roads, drainage, solid waste, markets, street light, slum improvement, water supply, sanitation, community centre and bus-truck terminals). The total project amount is estimated to be US$ million, and the implementation period is six years (First phase 1.5 years, Second phase 2.5 years and Third phase 2 years). This financial analysis appraises the financial sustainability and viability of the subproject investments for sample Pourashavas (3 Pourashavas).34 The financial analysis was prepared in accordance with the Financial Management and Analysis of Projects (ADB, 2005) Financial sustainability and viability analysis of subprojects assesses the capacity of each Pourashava to meet future costs including capital expenditures, operation and maintenance (O&M) costs, debt service and provision for uncollectable debt. A financial discounted cash flow (DCF) analysis was conducted in real terms to determine the weighted average cost of capital (WACC), financial internal rate of return (FIRR) for revenuegenerating subprojects, financial net present value (FNPV) where applicable, to assess the financial viability of each subproject and incremental tariffs required. For non-revenue generating subprojects, the financial analysis focused on the Pourashavas financial capacity to meet recurrent costs. Economic analysis was performed separately and presented in paragraph 4 of this Volume. Financial projections for sample Pourashavas were conducted to assess their overall financial capacity to sustain and provide urban services and provide for incremental costs associated with project investments Discounted Cash Flow (DCF) Analysis and Subproject Viability 146. The DCF analysis follows standard ADB methodology and was undertaken in real terms using constant 2013 prices The analysis was conducted on a with and without project basis by estimating incremental costs and revenues over a 20 year period. Subproject capital and O&M costs were derived from the engineers estimates, including (i) capital expenditures under the project including physical contingencies and tax/duties, (ii) O&M expenditures, and (iii) additional capital expenditures to repair and rehabilitate the 34 Feasibility studies for 3 sample pourashavas were undertaken by the PPTA consultant. Feasibility studies for 7 priority Pourashavas will also be undertaken by PPTA Consultants. Studies of remaining Pourashavas will be undertaken by UGIIP II and MDS consultants Page 37 of 423

54 assets developed under the project. FIRR is then compared to the WACC. The FIRR is computed in real terms over a 20 year period, including all capital and operating cash flow and physical but not price contingencies. Interest and other financing charges during construction are excluded from the costs The WACC calculation considers various funding sources and their re-lending terms between the Government and Pourashavas, (4% cost of borrowing for revenue earning subprojects under UGIIP II, 7% cost of borrowing for water supply project under STWSSP and with 5% cost of borrowing for financing under BMDF), this being so; the re-lending rate for considered to be 6%. Based on available financing arrangements (followed by BMDF), the debt-equity ratio of the Pourashava is considered to be 15% and 85%. The equity return rate is considered at 13% that is currently given on bond issued by the Government. There is no implication of tax for Pourashavas. A domestic inflation of 7.2% 35 is assumed to convert nominal rates into real rates. This being so, the WACC was computed for the project to be 4.6% in real terms. Table 5.1 shows the calculation of WACC below: Table 5.1: Particulars Weighted Average Cost of Capital (WACC) Calculation for Pourashavas Financing Arrangements UGIIP - III Equity Debt Weights 85.00% 15.00% Nominal rate 13.00% 6.00% Tax rate 0.00% 0.00% Tax adjusted rate 13.00% 6.00% Inflation 7.20% 7.20% Real cost 5.41% -1.12% 4.60% 0.00% WACC 4.60% Source: PPTA Consultant Direct Revenue-generating Components 148. Project Assumptions a. All costs are expressed in 2013 constant prices. b. The Project is analyzed over a 20 year period. c. The value of benefits arising from water sales was calculated by multiplying the volume of water sold each year by the proposed tariffs used for each year in constant prices. The revenues and receipts for other revenue-generating components are conservatively estimated at the rates prevailing in the respective towns. d. Water losses or Non Revenue Water (NRW) in the project Paurashvas are identified to be 35-40% without project situation and it is projected with project by the year 2030 NRW would be 20%. e. The implementation period of the project is 6 years. Phase wise implementations are planned, First phase 18 months, Second phase 30 months and Third phase 24 months. The implementation period for water supply component is 48 months, for other components it is months. It is assumed the process will 35 Consumers Price Index (CPI) inflation is used as the domestic cost escalation factor in Bangladesh. Page 38 of 423

55 commence in the year 2014 and will be completed by year The year wise project implementation for revenue generating components is assessed as 20%, 30%, 30% and 20% for water and for others as 30%, 40% and 30% or 40% and 60% respectively over the period from 2016 to f. The weighted average cost of capital employed in the financial analysis is estimated at 4.60% as set out in Table 5.1 hereof. g. Collection efficiency has been assumed to be 95% of current demand and 85% of arrear demand Water Supply System: The financial analysis of water supply subprojects assumes that 45% of population of Lalmonirhat, 35% population of Magura and 50% of population of Naogaon are presently served and connected to the system. It is projected that by the year % of population of Lalmonirhat and Magura and 75% of population of Naogaon will be served and connected to the system. Revenue projections are based on the proposed volumetric water tariff, water demand & consumption36, number of connections, continual non-revenue water (NRW) management, and a billing collection target rate of 95% against current demand and 85% against arrear demand. A tariff revision is proposed to recover full O&M costs, debt service and a provision for uncollectible debt for water supply systems. This tariff proposal includes: (i) determination of effective per m3 water tariff under existing fixed rate tariff for calculating revenue until introduction of metered volumetric tariff (ii) introduction of volumetric tariff in all Towns (iii) fixation of initial volumetric tariff for all Towns; and (iv) a gradual tariff increase in subsequent years to cover O&M costs, replacement costs, debt-service, etc. Based on the said assumptions; the proposed tariff structure estimated for the Towns are shown in Table 5. 2 below: Table 5.2: Proposed Estimated Water Tariff Structure for Sample Pourashavas. Rate of Water Tariff per m3 in BDT Proposed Water Tariff in nominal term Lalmonirhat Magura Naogaon Domestic Other Domestic Other Domestic Other Effective rate under existing fixed tariff From the year of completion of investment From the 5th year of completion of investment % increase at 5 year intervals (FY ) Source: PPTA Consultants Affordability of proposed water tariff: It is estimated that with the proposed tariff the average domestic monthly water bill 37 for a household would be around BDT 120 in Lalmonirhat, BDT 113 in Magura and BDT 105 in Naogaon Pourashava. The socio economic survey revealed that the estimated monthly water bill was within the affordable limit of the consumers of the respective towns and they showed willingness to pay more than the estimated bill amount per month for uninterrupted supply of good potable water The base operation and maintenance costs for water supply are estimated by engineers considering full recovery of O&M costs. The increase in O&M costs is projected at 6.5% over the years. 36 Water demand has been projected on the basis of population projection of the respective towns 37 Monthly water bill based on 80 liter per capita consumption Page 39 of 423

56 152. Market Development: The financial analysis of market development covers kitchen market as well as pourashava-market. It is projected that the market fetches one time salami (possession money) and monthly rentals. The rates of salami and rent vary from town to town with the location of the markets. The base rates are estimated at a conservative approach. The increase in monthly rent is projected at 10% with 3 year intervals The base O&M costs for markets are estimated by engineers considering full recovery of costs. The increase in O&M costs is projected at 6.5% over the years Community Centre: The financial analysis of community centre encompasses community hall as well as shops. It is projected that the community hall fetches rentals for using the hall for convening different programs. The rate of rent varies from town to town with size and location of the centre. The shops embodied with centre also fetch one time salami and monthly rentals. In all cases the increase in rent is projected at 10% with 3 year intervals The base O&M costs for community centre are estimated by engineers considering full recovery of costs. The increase in O&M costs is projected at 6.5% over the years Bus-Truck Terminal: The financial analysis of bus-truck terminal covers facilities available in the terminal like rentals from ticket counters, shops, public toilet and parking fees from vehicles. The number of vehicles will use the terminal per day has conservatively been estimated on the basis of available information. For calculating parking fees 300 days are considered per year. In all cases the increase in rent and fees are projected at 2% over the years The base O&M costs for bus-truck terminal are estimated by engineers considering full recovery of costs. The increase in O&M costs is projected at 6.5% over the years Slaughter House: The financial analysis of slaughter house is based on fees for slaughtering of animals. The number of animals may slaughter in the house per day vary from town to town and the estimate is conservatively made on the basis of available information. The increase in slaughtering fees is projected at 10% with 3 year intervals The base O&M costs for slaughter house are estimated by engineers considering full recovery of costs. The real increase in O&M costs is projected at 6.5% over the years Based on the above parameters and assumptions the FIRRs of the respective direct revenue generating subprojects have been calculated and the results obtained have been found exceed the WACC as given in Table 5. 4 below. The project O&M costs and debt service are fully recovered as per the consolidated projections for the three sample Pourashavas. Sensitivity analysis shows that FIRRs are generally robust but most sensitive to revenue and costs fluctuation. The analysis also shows that the subprojects are financially viable and sustainable as the revenue account will be in surplus for the years of analysis Taking in to consideration of all IG components; a consolidated FIRR combining the 3 Pourashavas as well as a combined FIRR for each Pourashava has been calculated and the results are shown in Table 5.3 below: Page 40 of 423

57 Table 5.3: Sl. No. Consolidated as well as Combined FIRR of 3 sample Pourashavas FIRR in Percentage Level of FIRR Consolidated Combined for 3 Towns Lalmonirhat Magura Naogaon 1 Base case Sensitivity: Cost increase by 10% Sensitivity: Benefits decrease by 10% Sensitivity: Cost-Benefit increase-decrease by 10% (1.20) (0.42) (0.41) (2.31) 5 Cost-Benefit Ratio Net Present Value in million BDT Source: PPTA Consultants. Table 5.4: Calculated Financial Rate of Return (FIRR) of the Revenue-generating Components. FIRR in Percentage Sl. No. Description of Component and Level of FIRR Lalmonirhat Magura Naogaon 1. Water Supply System: 1.1 Base case Sensitivity: Cost increase by 10% Sensitivity: Benefits decrease by 10% Sensitivity: Cost & Benefit increase & decrease by 10% Minus 0.27 Minus 1.5 Cost-Benefit Ratio Net Present Value in million BDT Slaughter House: 2.1 Base case Sensitivity: Cost increase by 10% Sensitivity: Benefits decrease by 10% Sensitivity: Cost & Benefit increase & decrease by 10% Cost-Benefit Ratio Net Present Value in million BDT Markets Development: 3.1 Base case Sensitivity: Cost increase by 10% Sensitivity: Benefits decrease by 10% Sensitivity: Cost & Benefit increase & decrease by 10% Minus Minus Cost-Benefit Ratio Net Present Value in million BDT Community Centre: 4.1 Base case Sensitivity: Cost increase by 10% Sensitivity: Benefits decrease by 10% Sensitivity: Cost & Benefit increase & decrease by 10% Page 41 of 423

58 4.5 Cost-Benefit Ratio Net Present Value in million BDT Bus-Truck Terminal: 5.1 Base case Sensitivity: Cost increase by 10% Sensitivity: Benefits decrease by 10% Sensitivity: Cost & Benefit increase & decrease by 10% Cost-Benefit Ratio Net Present Value in million BDT Source: PPTA Consultants Detailed calculation of FIRR in excel spread sheet for all revenue-generating components are shown in Annex Financial Projections 163. FIRRs were not calculated for non-revenue-generating subprojects such as drainage, roads, bridges, street lighting and solid waste management. Instead the financial analysis focused on the capacity of project Pourashavas to sustain O&M costs of all assets developed under the project through its own financial resources. Cash flows were projected over a 20-year period Financial projections of cash flow for the three sample Pourashavas are conducted through 20 years. The projections for the sample Pourashavas demonstrate that the Pourashavas from their operating surplus can sustain the non-revenue generating components by maintaining the assets, pay arrears, providing the improved services and meeting the debt service payment obligations to the National Government Assumptions for financial projections: Holding tax: Demand will increase by 2% on interim assessment for projected increase and change in properties and the overall demand will increase by 25% at five years interval on regular assessment due to increase in assessable value of the properties; Income from non tax revenue sources are expected to increase by 5% in all cases. Other receipts/income is expected to increase by 2%. Based on previous data the establishment expenditure and O&M costs for existing (without project situation) infrastructure are expected to increase by 5% and other expenditure are expected to increase by 2% per annum across all pourashavas; Arrear electricity bills are considered to be paid in three years starting from the financial year Debt service for existing loan from BMDF and UGIIP-I 38 as well as for the project has been considered in the projection. The assumptions and basis of projections are embodied in the excel spread 38 All sample pourashavas have BMDF loan, Lalmonirhat Pourashava has UGIIP I loan Page 42 of 423

59 sheet developed and used for the projection of cash flows of the sample Pourashavas under the project Financial Projection statements in excel spread sheet for the three sample Pourashavas are given in Annex 2 hereto. Page 43 of 423

60 ANNEX 1: FIRR Tables Page 44 of 423

61 FIRR - all Pourashavas combined Page 45 of 423

62 FIRR Lalmonirhat Pourashava all combined Page 46 of 423

63 FIRR Lalmonirhat Pourashava WS Page 47 of 423

64 FIRR Lalmonirhat Pourashava Truck Terminal Page 48 of 423

65 FIRR Lalmonirhat Pourashava Community Centre Page 49 of 423

66 FIRR Lalmonirhat Pourashava Market Page 50 of 423

67 FIRR Magura Pourashava all combined Page 51 of 423

68 FIRR Magura Pourashava WS Page 52 of 423

69 FIRR Magura Pourashava Slaughter House Page 53 of 423

70 FIRR Magura Pourashava Bus and Truck Terminals Page 54 of 423

71 FIRR Magura Pourashava Auditorium and Community Centre Page 55 of 423

72 FIRR Magura Pourashava Market Page 56 of 423

73 FIRR Naogaon Pourashava all combined Page 57 of 423

74 FIRR Naogaon Pourashava WS Page 58 of 423

75 FIRR Naogaon Pourashava Slaughter House Page 59 of 423

76 FIRR Naogaon Pourashava Bus Terminal; Page 60 of 423

77 FIRR Naogaon Pourashava Auditorium and Community Center Page 61 of 423

78 FIRR Naogaon Pourashava Market Page 62 of 423

79 ANNEX 2: Financial Projection Tables Page 63 of 423

80 Page 64 of 423

81 Page 65 of 423

82 5.2 Financial Management Assessment Introduction 167. This Financial Management Assessment (FMA) has been prepared in accordance with Asian Development Bank (ADB) Guidelines for the Financial Management and Analysis of Projects (2005) and Financial Due Diligence, A Methodology Note (2009), and focuses on fund flows, staffing, accounting policies and procedures, internal controls, financial reporting and monitoring, and internal and external audit. The FMA considered the following: (i) Local Government Engineering Department (LGED), in its role as the project executing agency (EA) housing the project management office (PMO), (ii) Department of Public Health Engineering (DPHE) as co-executing agency responsible specifically for water supply and sanitation (WSS) components, and (iii) Three sample Paurashavas (Lalmonirhat, Magura and Naogaon) which will be implementing agencies (IA) housing their respective project implementation units (PIUs) A key aspect of the FMA is evaluating the risks associated with project financial management arrangements. ADB s principal concern is to ensure that project funds are used economically and efficiently for the purpose intended. In support of this, it seeks assurance that the EA and IA financial management systems can report on the source and use of project funds. This assessment is based on the results of a FMA questionnaire, discussions with EA officials, discussions with officials of the three samplepaurashavas and information available through various reports, including LGED Annual Report (2012), DPHE Annual Report (2012) and past ADB project reports This FMA was conducted to (a) assess EA capacity to monitor, manage and support the overall program, (b) assess IA capacity to implement and manage investments and (c) propose ways and means to strengthen the capacity of EA and IAs. Specifically, the objective is to enhance competence levels to achieve the government s goals of improved access to municipal services with required climate resiliency of the towns, especially as beneficiary paurashavas will receive large amounts of investments to support these goals. Therefore, a FMA of the three samplepaurashavas was also carried out with a 20 year projection of operational performance. The assessment together with the forecast outlines the financial environment of IAs and the financial risks that may affect the project impact and sustainability Country Level Issues 170. The identification of country-level issues is based on the Diagnostic Studies of Accounting and Auditing (DSAA), the World Bank Country Financial Accountability Assessments (CFAA), Reports on the Observance of Standards and Codes (ROSC) and others. The country issues that potentially impact project financial management include a weak public financial management (PFM) environment and management and skills capacity issues Public financial management environment. The Country Policy and Institutional Assessment (CPIA) for transparency, accountability and corruption in the public sector rating (1=low to 6=high) in Bangladesh was last reported at 2.9 in 2012 (World Bank 2012) 39. Transparency, accountability, and corruption in the public sector assess the extent to which 39 Available at Page 66 of 423

83 the executive can be held accountable for its use of funds and for the results of its actions by the electorate and by the legislature and judiciary, and the extent to which public employees within the executive are required to account for administrative decisions, use of resources, and results obtained. The three main dimensions assessed here are the accountability of the executive to oversight institutions and of public employees for their performance, access of civil society to information on public affairs and state capture by narrow vested interests Management and skills capacity. In common with many DMCs, Bangladesh has a shortage of skills in financial management, financial analysis and management accounting. In particular, few accounts staff has practical skills beyond basic bookkeeping. The impact of these skills shortages on government operations is amplified by high demand for financial skills from the private sector, which pays higher remuneration and, in most cases, provides better conditions Risk Analysis 173. The risk assessment is based on existing circumstances, staffing and procedures Inherent Risk is the susceptibility of the project financial management system to factors arising from the environment in which it operates, such as country rules and regulations and entity working environment (assuming absence of any counter checks or internal controls). Table 5.5: Risk Inherent Risk Summary Risk Assessment RiskMitigation Measures 1. Country-Specific Substantial Increasing political instability, hampering economic development and possible investments in municipal infrastructure projects. ADB will monitor closely the political situation of the country. 2. Entity-Specific Substantial IA: Revenue generating operations (e.g. water supply) at the paurashavalevel are not currently ring-fenced from general paurashava budget. The project requires ring fencing of water supply accounts and the introduction of volumetric tariff as key entry criteria; and tariff revisions at regular intervals over a period of 20 years. 3. Project-Specific Substantial Financial absorption capacity model of paurashavasrequires them to increase property tax collection (rates and collection efficiency which average around 60%) and increase tariffs of revenue generating services (e.g. water supply, market, terminals etc). If revenues are not increased significantly and sustained then it will be difficult for paurashavas to properly operate and maintain new investments.the competences and experience of EA and IA financial staff in automatic accounting and reporting systems are limited. Intensified continuation of ongoing FM training program is clearly required.same applies for related MIS & Control systems. The project will invest in capacity support to enhance municipal financial systems through a performance based approach in the form of UGIAP to incentivize governance improvements. Overall Inherent Risk Substantial Political unrest and violence may destabilize IA willingness to increase taxes and tariffs in the coming years, and possibly affect their development and financial situation. ADB will Page 67 of 423

84 Risk Risk Assessment RiskMitigation Measures closely monitor and address specific capacity gaps with technical support and incentives for governance improvements through a performance based approach to fund allocation Control Risk is the risk that the project s accounting and internal control framework are inadequate to ensure project funds are used economically and efficiently and for the purpose intended, and that the use of funds is properly reported. Table 5.6: Control Risk Summary LGED and DPHE Risk Type Risk Description Risk Assessment 1. Executing Entity LGED s and DPHE s Finance Sections will be responsible for project FM, accounting and reporting. LGED and DPHE will continue to follow project FM and accounting systems. LGED and DPHE staff hasdonor project management experience including ADB, JICA and World Bank. Recent reports 40 highlight problems with internal controls and transparency. Substantial Proposed Mitigation Measures ADB Review missions Regular FAPAD audits Use of e- procurement Anti-corruption training Business fair for contractors Grievance redresses system to be established for procurement issues. 2. Funds Flow LGED will manageoverall project funds. Project imprest account will be used to cover other payments. LGED will have its own project account 41 ; and DPHE will have a separate subaccount for training and office expenses only. Substantial ADB Review missions Direct payments may be used by ADB for major contracts Capacity building for project financial management Dedicated project financial management staff in PMO supported by GICD, MDS & Individual consultants of the 40 Transparency International Bangladesh Local Government Engineering Department: Problems of Good Governance and Way Forward 41 LGED will have imprest accounts for ADB-ADF& OFID funds Page 68 of 423

85 Risk Type Risk Description Risk Assessment 3. Staffing LGED and DPHE Finance Sections are adequately staffed with competent and experienced personnel. The Sectionsprovide professional quality service. 4. Accounting Policies and Procedures Policies and procedures are well documented. LGED and DPHEuseGOB accounting standards. 5. Internal Audit LGED has an internal audit cell. Most staff are qualified and experienced in the field of auditing and they also receive regular training. DPHE does not have an internal audit cell but will submit financial reports to PMO. 6. External Audit At the project level, Foreign Aided Project Audit Directorate (FAPAD) of C&AG has the constitutional mandate to conductexternal audits of donor funded projects. Annual audit reports are typically produced within 6 months of the end of the financial year. At the entity level, audited financial statements are generally delayed by the CAG 7. Reporting and Monitoring 8. Information Systems Overall Control Risk Comprehensive monthly and quarterly FM reporting systems are in place. Routine reports are produced from the Accounting System others are prepared on spreadsheets with figures extracted from the accounting system. LGED s accounts are computerized under the Unified Financial Management Software (UFMS) system. LGED s financial management practices and procedures are considered to be adequate for management and control of project finances and project funds will be managed and audited separately from LGED funds. DPHE s financial management practices and procedures are considered to be adequate for managing a subaccount. Moderate Moderate Substantial Moderate Substantial Negligible Substantial Proposed Mitigation Measures project. Project will ensure that all FM positions are filled and staff is trained on ADB FM procedures GICD, MDS & Individual consultants will provide oversight and support Internal audits are complemented by external audits (FAPAD) Statement of Audit Needs provided for audit of the PFS GICD, MDS & Individual consultants will build capacity of PMU staff to produce automated reports using existing accounting software Not applicable See measures listed above to provide additional checks and build capacity Table 5.7: Control Risk Summary SamplePaurashavas Risk Type Risk Description Risk Assessment 1. Implementing Paurashavaswill be the IAs for their Substantial Entity respective towns. Proposed Mitigation Measures LGED and DPHE to provide training and Page 69 of 423

86 Risk Type Risk Description Risk Assessment A dedicated PIU will be established to cover technical, procurement and payment approval processes. The PIU Finance Section is responsible for project financial management, accounting and reporting. PIU will adopt project FM and accounting systems and will be assisted by LGED in this regard. Staff in PIU have project management experience but no previous experience with ADB procedures except Lalmonirhat. 2. Funds Flow PIU will receive project funds from Substantial LGED Direct payments by ADB may be used for all major contracts. Proposed Mitigation Measures capacity building with consultant support (Municipal taxation and financial specialist) recruited under the project. ADB reserves the right to randomly audit all project subaccounts GICD, MDS & Individual consultants will provide another layer of support for proper fund flow management 3. Staffing Accounts Officer position is vacant in all sample Paurashavas. Accountant in Naogaon is working on deputation. The Accountant and other staff of accounts sectionare competent, appropriately qualified and experienced. The Section can provide professional quality service to PIU. Moderate Training will be provided on ADB project procedures for all FM staff LGED to ensure placement of Accounts Officer All paurashava accounts staff requires further training in UFMS. Training to be provided by GICD, MDS & Individual consultants. 4. Accounting Policies and Procedures Policies and procedures are well documented. PIUs have adopted GoB accounting standards Substantial Capacity building consultant will strengthen accounting function 5. Internal Audit and controls Paurashavas have no internal audit section. In addition to annual audit, Audit & Accounts Standing Committeemay carry such audit; will require capacity support from project to operationalize the committee and review internal controls. Substantial Capacity building consultant under the project will provide support and build capacity of committee Page 70 of 423

87 Risk Type Risk Description Risk Assessment 6. External Audit PIUs will be audited by C&AG s office. Substantial Annual audit reports are typically produced within 6 months of the 30 th June Year End. Audit is currently delayed in the case of Magura last report was for FY Lalmonirhatand Naogaon last report was for FY Reporting and Monitoring 8. Information Systems Overall Control Risk Routine reports are manually produced from the Accounting System others are prepared with spreadsheets using figures extracted from manual records. An electronic, project specific reporting system will be established as per ADB s requirements. PIUs accounts are already computerized under LGED UFMS. With the support of a dedicated consultant in financial management in the PMO, 42 an accounts officer in the PMO and a dedicated accountant in each PIUthere will be adequate financial management capabilities and support for implementing the project. Moderate Negligible Substantial Proposed Mitigation Measures FAPAD to audit all project pourashavas subaccounts annually and PMU to submit consolidated auditing report to ADB. ADB to liaise with C&AG and request that Magura is audited prior to project commencement LGED to provide relevant assistance and training with support from consultant (Municipal taxation & financial specialist) recruited under the project. LGED to provide assistance for MIS. See measures listed above to provide additional checks and build capacity Project Financial ManagementSystem: Strengths and Weaknesses Executing Agencies 176. Strengths. The main strength of the existing project FM is that both EAs (LGED and DPHE) have had significant experience over the last decade in financial management of international financial institution(ifi) funded projects. However, this experience has not always translated into effective financial management. The main weaknesses are discussed below Weaknesses. Some of the major weaknesses listed below apply to EAs and paurashavas but not necessarily to the projectpaurashavas. These are issues that are pervasive throughout central and local government. (i) Capacity: Paurashava staff are trained and applying the basic functions of the Uniform Financial Management System (UFMS) software. However, they do not have the required skills to use current accounting software to generate automated reports. There is also need to build PMO and PIU capacity for monitoring and evaluation. (ii) Accountability. LGED does not undertake an internal audit of paurashavas at present. IAs are supposed to have an audit& accounts committee (in addition to annual audit of paurashava accounts) that meets on a needs basis and reports to the mayor; but this committee is not functioning like an internal audit section. The project will support the operationalization and build capacity of the audit & accounts committee to perform internal audit of each project of paurashavaand 42 Municipal taxation &financial specialist will provide capacity support to both PMO and all PIUs Page 71 of 423

88 FAPAD will conduct the external audit of all project accounts, including at PIU level. One samplepaurashavas(magura) has not had audited reports since FY2009/2010.A 2009 World Bank study 43 found that LGED internal controls do not always ensure properlyrecorded transactions, or properly accounted for and controlled assets, or a focus on the highest priority projects. The same report found that accounting staff in LGED lack sufficient qualifications to properly manage internal controls. To mitigate these risks, the project will have its own, dedicated financial management staff and will be audited by FAPAD on an annual basis. ADB reserves the right to audit the project and project entities or contractors at anytime during project implementation. ADBs procurement guidelines will be implemented and ADB will carry out periodic review missions. (iii) Transparency in the tender process.a recent Transparency International report (2012) 44 suggests that there is not always transparency in tender process and highlights common practiceslike influencing the tender evaluation committee and nepotism, among others. Loan covenant will include organization of business fairs to inform a wide range of contractors of the business opportunities; and ADB reserves the right to carry out periodic review missions on the tender process. E- procurement will be used to the extent possible. ADB cleared draft e-procurement documents for NCB civil works. (iv) Irregularities in contract management. The recent Transparency International report highlighted recurring issues such as illegal withdrawal of contractor security money, contract variations (with additional amounts split between contractors and office staff) and bribes paid by contractors for release of payment. These issues will be monitored closely by ADB and by FAPAD Bangladesh has implemented key governance and anti-corruption reforms in the recent years. These include constitution of an independent Anti Corruption Commission (ACC) in 2004, enactment of a law on right to information (RTI) and establishment of the Information Commission in 2009, enactment of a law on whistle blower protection in 2011, and anti money laundering act in It has also implemented extensive PFM and procurement reforms including introduction of medium term budgetary framework (MTBF) for budget formulation, uniform procurement laws for all public sector agencies and e- procurement for selected agencies, including the EA of the project, LGED. It has approved recently a comprehensive National Integrity Strategy (NIS) to address corruption holistically and strengthen country s watchdog institutions by formulating phased actions for each of them. Under this, all line ministries have established an Ethics Committee and a focal point to undertake preventive measures to control corruption. At the national level, a National Integrity Advisory Committee has been formed with the Prime Minister as the chair to steer anti-corruption drive in the country. Implementing Entity 179. The structures envisaged to manage and oversee Project implementation have been designed to encourage accountability and minimize corruption risks. An inter-ministerial project steering committee at national level, chaired by the Secretary LGD, will provide overall policy guidance and oversight to the project. The committee will include key government stakeholders, including local government representatives from the project paurashavas. LGED is the executing agency for the project and DPHE will be a co-executing agency. Overall coordination of the project will be provided by a Project Director from LGED who heads the PMO. The participating paurashavas are the implementing agencies and they 43 World Bank Operational Risk Assessment (ORA) for Local Government Engineering Department (LGED) Bangladesh. Final Implementation Plan 44 Transparency International Bangladesh Local Government Engineering Department: Problems of Good Governance and Way Forward Page 72 of 423

89 will each establish a project implementation unit (PIU) within the paurashava structure. Local LGED and DPHE offices will provide technical support to PIUs The PMO will tender and manage all international competitive bidding (IBC) contracts; and PIU will tender and manage all national competitive bidding contracts (NBC). The PMO will also engage all technical assistance (TA) consultants under the project: (i) Governance Improvement & Capacity Development Consultants, (ii) Management Design and Supervision Consultants, and (iii) Individual Consultants LGED will have a project account. DPHE will have its own subaccount for office expenses To foster sustainability, and in keeping with Paris and Kavieng Declaration commitments, Government procedures and documentation will be used in all implementation stages. In addition to direct implementation roles, consultants will build capacity in key technical and management functions by training PMO and PIU staff. Fund Flow Mechanisms 183. The project specific fund flow mechanism is illustrated in Figure 1. The government will be responsible for implementing the project according to the loan agreement and other agreements. ADB will monitor the project and review its progress to ensure that loan proceeds are spent as previously agreed. When a loan becomes effective, a loan account will be opened in ADB s books in the name of the borrower and the loan amount is credited to that account. All disbursements under the loan will be carried out in accordance with ADB s Loan Disbursement Handbook2007, as amended from time to time. The last disbursement under the project will expected to be made by 30 June ADB disburses loan proceeds to the GOB account in the Bangladesh Bank. GOB will make funds available to LGED on a quarterly basis through the Treasury. LGED, as head of the PMO, will manage loan proceeds through direct payment procedures for major contracts i.e. international competitive bidding (ICB) contracts. Other payments will be covered through statement of expenditure procedures and reimbursement procedures from project imprest accounts. PIUs will have subaccounts for day-to-day project administration costs only, and will collect invoices from contractors and forward to PMO for payment. Expenditures are consolidated and reviewed on a monthly basis by the PMO from LGED, DPHE and PIUs and reimbursement claims are submitted to ADB for review and approval. Page 73 of 423

90 Personnel 185. The PMO will have a dedicated accountant and two accounts officers and each PIU will have a dedicated accounts officer. PMO FM staff will be drawn from LGED finance Page 74 of 423

91 department, line agencies and contract employees as required. Paurashava staff will need to be trained on ADB disbursement procedures, along with improving their budgeting, expenditure and financial reporting activities. ADB will provide training to the paurashavasas will the Government through the National Institute of Local Governance (NILG). Project consultants will also build financial and accounting capacity at paurashava level. Accounting Policies and Financial Reporting 186. Project financial statements shall be prepared to achieve maximum alignment with Cash-Basis International Public Sector Accounting Standards (IPSAS). The cash basis of accounting will be adopted, with additional disclosures. Internal Audit 187. LGED s Internal Audit Cell reports to the head of agency, the Chief Engineer. Internal audit tests whether: (i) transactions are executed in accordance with management s authorization, (ii) transactions and other events are promptly recorded in the correct amount, in the appropriate accounts. and in the proper accounting period, (iii) access to assets is permitted only in accordance with management s authorization, and (iv) recorded assets are compared with the existing assets at reasonable intervals and appropriate action is taken regarding any differences 188. LGED Annual Report mentions that there were 147 new, unresolved cases of audit objections on foreign funded projects for FY In total, there are 432 unresolved cases for foreign funded projects and 145 unresolved cases for GOB funded projects. ADB will work closely with PMO to quickly address any issues highlighted in FAPAD reports and not leave any unresolved issues related to the project DPHE does not have an internal audit department. However, one accountant from C&AG s office is posted in DPHE on a part-time basis. The accountant reviews all transactions. This system is adequate to manage a subaccount account. DPHE will be subject to the project procedures for financial management, including regular submission of financial reports to PMO Paurashavas do not have any internal audit department; and LGED does not undertake an internal audit of paurashavas. Each paurashava is however supposed to have an audit and accounts standing committee that may work on a needs basis in addition to the annual audit of accounts of paurashava as required by Local Government (Paurashava) Act, These committees are supposed to report to their respective Mayors. The project will support paurashavas to operationalize these committees to perform internal audit. The PMO will request this committee to undertake internal audit of the PIU s activities and transactions to complement the external audit. External Audit 191. All state entities (including LGED, DPHE and Paurashavas) are subject to external audit of the Office of the Comptroller and Auditor General (C&AG) of Bangladesh. C&AG reviews and comments on state entities financial reporting and records on an annual basis and following GOB accounting rules. The external statutory Audit Report is required be submitted within six months from the end of each financial year although it is often delayed. Page 75 of 423

92 192. The scope of the external audit includes: (i) adequacy of the accounting and internal control systems, (ii) ability to maintain adequate documentation for transactions, (iii) eligibility of incurred expenditures, (iv) basis of estimates, and (v) an opinion concerning the fairness of the accounts 193. For development projects, a project audit is performed by the FAPAD unit of the C&AG. This unit is specifically trained on loan procedures and loan negotiation documents. This unit reviews if the project is being implemented according to the approved loan agreements and also reviews tax payments, deviations from the loan agreements, authorizations, and disbursements. FAPAD will audit PMO and PIUs separately and provide separate audit reports for each subaccount; with a management letter for each subaccount. FAPAD may also prepare a consolidated, summary report for the project highlighting main findings. FAPAD will not be required to issue a management letter for the consolidated project financial statements For the Project, one set of audited project financial statements shall be submitted by the PMO to ADB annually within six months of the financial year end. Procurement 195. LGED, DPHE and project paurashavas need to comply with both government and ADB procurement rules and guidelines applicable for all procurements of goods, works, and services. The PMO and PIU will receive relevant training on ADB requirements Procurement of goods and services under government financing is conducted under the Public Procurement Act 2006 and the guidelines of the Public Procurement Rules (PPR) 2008 following a competitive bidding process. Tenders for works and services follow a twostage process of short-listing by evaluating qualifications and capacity of interested bidders and with review of technical and financial positions of bids LGED is one of 4 pilot agencies engaged in the current government initiative, E- government procurement (E-GP), to transfer all government procurement processes to e- systems. This applies to the acquisition of goods, works and consultancy services. It currently applies only to NCB contracts. The project will build capacity of paurashavas to use e-procurement for acquisition of goods, works and consultancy services funded by the project; and build awareness of e-procurement system among contractors, including through business fairs organized by PMO and PIU IA/PIUaccountantwill review the following financial issues related to procurement: (i) whether the PPR has been followed (ii) suppliers bills (iii) material receiving reports (MMR) from store keeper (iv) whether quality has been certified by concerned experts (v) whether any earlier payments havealready been made (vi) security deposits (vii) whether deductions at sources have been made (VAT-Taxes-IT) 199. GICD, MDS & Individual Consultants Engineering staff will provide support to PIU accountant for engineering related tasks (e.g. verifying quality of materials). Assurance/Covenants Page 76 of 423

93 Right of Audit 200. LGED, DPHE and projectpaurashavaswill ensure that contracts financed by ADB will include provisions specifying the right of ADB to audit and examine the records and accounts of LGED, DPHE and project paurashavas and all contractors, suppliers, consultants, and other service providers as they relate to the Project. Financial Management 201. FAPAD will audit the PMO and PIUs annually with a focus on project funds. Audit reports shall be available within 6 months of the financial year end. The PMO will build PIU capacity to ensure, among other things, timely and rigorous reconciliations, orderly record keeping, and strict adherence to financial management policies and internal controls, and to ensure an orderly and timely year-end process for the preparation and audit of annual project accounts. Governance and Anticorruption 202. The Government will ensure that (a) the project is carried out in compliance with all applicable GoB anticorruption regulations, and ADB s Anticorruption Policy (1998, as amended to date); (b) all PMO and PIU staff actively participate in the training in GoB s anticorruption regulations and ADB s Anticorruption Policy; and (c) a website is developed and maintained to disclose the audited annual project accounts, project progress, and procurement activities. Financial sustainability 203. The Borrower shall cause each of the participatingpaurashavas with water and sanitation subprojects to adopt a volumetric water tariff reform plan as part of an overall O&M and debt service plan. The first volumetric water tariff revision shall be adopted before the completion of works. Performance criteria requirewater bills, revenues including property tax collection to be at least as set out under UGIAP. Fulfilment of this requirement shall be a condition to receive funding under next phases.paurashavas, for introduction of volumetric/metered piped water supply systems in the project towns shall carry out a public awareness campaign throughout the project on the need for metering and tariff changes. Conclusions 204. FMA indicates there are significant FM risks. Consequently, the project has proposed a series of targeted mitigation measures to increase transparency, internal controls and reporting. Given the scale of the planned investments for these towns and expected increase in O&M costs for project paurashavas in the coming years, EA and IA officials should give more and serious attention to financial management risks and make available the required resources to mitigate these risks. A positive finding is that the EAs have a sound record of experience with ADB and donor lending procedures and projects and have implemented several projects and programs. The IAs have a range of experience with donor projects (e.g. ADB, DANIDA, World Bank) Some of the FM weaknesses to be addressed by the project are summarized below: (i) Lack of ADB Experience: The majority of the pilot paurashavas does not have experience with ADB projects and will require adequate training on ADB processes and procedures. (ii) Gaps in audit and reporting: LGED does not undertake an internal audit of paurashavas. Pourashavas have no internal audit section. The audit & accounts standing committee may meet requirement of internal audit on a needs basis and reports to their respective Mayor. There is room for LGED to improve its oversight of paurashavas financial management. LGED does not undertake an internal audit Page 77 of 423

94 of paurashavas. (iii) Insufficient transparency: A recent Transparency International (2012) study finds that there is a lack of transparency in tendering process and contract management. The project will require e-procurement on NCB, and required business opportunity fairs will encourage wide competition; and ADB and PMSC procurement specialist will monitor contract management closely The recent TI report raised issues regarding LGED financial management, for which LGED responded positively and publicly to development partners. This project will have ring fenced account, dedicated financial management and procurement staff with consultant support, and regular audits. PMO and PIU staff will receive training on ADB and GOB corruption rules as well as ADB and GOB financial management and procurement rules. The loan covenants address financial management issues and these have been discussed with the government Page 78 of 423

95 5.3 Financial Management Assessment Questionnaire Sample Pourashavas LALMONIRHAT, MAGURA & NAOGOAN Lalmonirhat Pourashava Sl. No. Topic Response 1. Implementing Agency 1.1 What is the entity s legal status / registration? 1.2 Has the entity implemented an externally-financed project in the past (if so, please provide details)? 1.3 What are the statutory reporting requirements for the entity? 1.4 Is the governing body for the project independent? 1.5 Is the organizational structure appropriate for the needs of the project? 2. Funds Flow Arrangements 2.1 Describe (proposed) project funds flow arrangements, including a chart and explanation of the flow of funds from ADB, government and other financiers. 2.2 Are the (proposed) arrangements to transfer the proceeds of the loan (from the government / Finance Ministry) to the entity satisfactory? 2.3 What have been the major problems in Nothing significant the past in receipt of funds by the entity? 2.4 In which bank will the Imprest Account be opened? 2.5 Does the (proposed) project implementing unit (PIU) have experience in the management of disbursements from ADB? 2.7 Does the entity have/need a capacity to manage foreign exchange risks? Local Government Institution (LGI), A category Pourashava establish in 1972 governed by the Local Government (Pourashava) Act, Yes, project implemented under UGIIP-1- LGED-ADB, Bangladesh Municipal Development Fund (BMDF), 18 District Town Water Supply project Netherland- DPHE. To Local Government Division (LGD), Ministry of LGRD&C. Annual accounts with budgets is submitted to LGD for approval. Yes, the Pourashava has elected Parishad (Council). Yes, may need necessary management arrangement in organizational structure in order to implement the project activities. ADB to Central Bank at Bangladesh to Project Bank Account to Contractors. GoB funds are released quarterly through treasury. Yes, Pourashava thinks it should have access and control over project fund management. Each Purshava shall maintain an imprest account. One shall be maintained at Janata Bank Limited, Lalmonirhat Branch. Yes, has little experience in ADB and Govt of Netherland disbursement procedures. Anyway, required training to be provided to the Pourashava accounts personnel to make them capable and efficient in ADB fund management procedures. No. Pourashava will receive fund in local currency from GoB and it need not to involve in managing foreign currency, it will be managed at GoB level. Page 79 of 423

96 Sl. No. Topic Response 2.8 How are the counterpart funds accessed? 2.9 How are payments made from the counterpart funds? 2.10 If part of the project is implemented by communities or NGOs, does the PIU have the necessary reporting and monitoring features built into its systems to track the use of project proceeds by such agencies? 2.11 Are the beneficiaries required to contribute to project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution? 3. Staffing Through budgetary allocation of the Pourashava. Pourashava will deposit the money to project account and from there payment will be made. It did it in case of BMDF. Yes. It will be managed and reported as per guidelines of the Project. Project will receive periodical reports to track financial transactions that build in control over the financial management of the NGO. If needed the beneficiaries will contribute both in cash and kind and keep record as per guidelines of the project. 3.1 What is the (proposed) organizational 1. Accounts officer 1 structure of the accounting department? 2. Accountant 1 Attach an organization chart. 3. Accounts Assistant 1 4. Cashier 1 5. MLSS 1 Above positions are as per GoB approved organization chart. 3.2 Identify the (proposed) accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the project finance and accounting function staffed adequately? 3.4 Is the finance and accounts staff adequately qualified and experienced? 3.5 Is the project accounts and finance staff trained in ADB procedures? 3.6 What is the duration of the contract with the finance and accounts staff? 3.7 Indicate key positions not contracted yet, and the estimated date of appointment. 1. Accountant 1, M.Com 2. Cashier 1, M. Com. Job title, responsibility, etcare described in the service rules framed by the Government. Yes, with present situation. Position of Accounts Officer need to be filled which in the hand of LGD. Yes. Key position staffs are commerce graduates, experienced and performing well. No. Needs proper training on ADB s disbursement and financial management procedures. Most of them are regular staff and working for a long time. In service rules provision of transfer is there. Recruitment of key position staff is not in the hand of the Pourashava. It is in the hand of the Ministry. Page 80 of 423

97 Sl. No. Topic Response 3.10 Does the project have written position Yes, it is as per service rules and also descriptions that clearly define duties, guided by Pourashava finance manual. responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff? 3.11 At what frequency are personnel transferred? 3.12 What is training policy for the finance and accounting staff? 4. Accounting Policies and Procedures. 4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained? 4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? 4.4 Are cost allocations to the various funding sources made accurately and in accordance with established agreements? 4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? Segregation of Duties 4.7 Are the following functional responsibilities performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction? Normally after three years; it is in the hand of LGD. LGD provides training through NILG, besides training from projects like RMSU is available. Yes. The Pourashava follows GoB cash basis of accounting system that allows the capture of proper recording of financial transactions, including the allocation of expenditure in accordance with respective components, disbursement categories and sources of funds. Yes. All the transactions are made in accordance with appropriate budget allocation with the approval of authorized person following delegation of financial power framed by GoB. Yes. Pourashava has chart of accounts issued by Government to identify the transactions and its recording. Computer code is developed by PMU-LGED. Yes, fund wise accounts are maintained. However, inter-fund transfer in the form of loan is made. Yes, periodical reconciliation is made to ascertain tracking of the transactions and balance. Yes, documents are preserved permanently as per GoB directives and authorized persons have access to records. Yes. Mayor and designated officers are authorized to approve the expenditure as per the delegation of financial power and the transactions are recorded by the accounts personnel. Assets register not maintained; however, custody involve in transaction of assets is maintained. Page 81 of 423

98 Sl. No. Topic Response 4.8 Are the functions of ordering, receiving, Yes, functions are almost well segregated. accounting for, and paying for goods and services appropriately segregated? 4.9 Are bank reconciliations prepared by Yes, done by different person other than someone other than those who make or who makes or approves payments. approve payments? Budgeting System 4.10 Do budgets include physical and financial targets? 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? 4.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? Yes. Inputs are given by the departments with financial targets. Physical targets are not recorded. Yes. Budget is prepared in the prescribed format with sufficient detail and can be used for subsequent financial performance monitoring. Not regularly, if needed sometimes PauraParishad in its monthly meeting reviews progress of the activities with budget and suggests for taking measures Are approvals for variations from the Yes. Approvals are required and if needed budget required in advance or after the taken in advance. fact? 4.14 Who is responsible for preparation and approval of budgets? 4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals? Payments 4.17 Do invoice-processing procedures provide for: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports?(iv) Checking the accuracy of calculations? Accountant with the help of other sections compiles budget and it is approved by the PauraParishad and send to LGD for concurrence. Yes. Preparation of budget is a bottom up approach. Concerned departments provide budgetary information to the Accountant who compiles the preliminary budget. Yes. The budget is prepared based on data, information, assumption, knowledge and in accordance with set procedures. Yes. All the formalities are performed following government standard procedures as well as Pourashava finance rules and manual for processing payments and the documents are preserved accordingly. Page 82 of 423

99 Sl. No. Topic Response 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? 4.19 Do controls exist for the preparation of the payroll and are changes to the payroll properly authorized? Policies and Procedures 4.20 What is the basis of accounting (e.g., cash, accrual)? 4.21 What accounting standards are followed? 4.22 Does the project have an adequate policies and procedures manual to guide activities and ensure staff accountability? Yes. As soon as payment is cleared all invoices and vouchers are marked with pass for payment and numbered serially, recorded in proper heads of account and preserved. Yes. Payroll is made in accordance with the information in attendance registers; changes are duly authorized. Cash basis. Government Accounting Standards issued by MOF. Yes. Pourashava finance manual and rules contains set procedures and responsibility of staff Is the accounting policy and procedure Yes. Standard policies are in place, if manual updated for the project updating is needed it is done by LGD/MoF. activities? 4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy or procedure to be used by the entity? 4.25 Are there written policies and procedures covering all routine financial management and related administrative activities? 4.26 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them? 4.27 Are manuals distributed to appropriate personnel? Cash and Bank 4.28 Indicate names and positions of authorized signatories in the bank accounts Does the organization maintain an Yes adequate, up-to-date cashbook, recording receipts and payments? 4.30 Do controls exist for the collection, timely deposit and recording of receipts at each collection location? Yes. Since the accounting principle is set by the Central Government, the change in policy requires approval of Central Government. In some cases procedures for reporting can be customized / tailored with approval of the appropriate authority. Yes. Pourashava finance manual and rules, service rules and time to time directives issued by LGD covers these. Yes. Pourashava finance manual and rules, service rules and financial instructions issued by LGD/MoF lay down procedures in this regard. Yes. Accounts staff is informed and aware of manuals. Mayor and Secretary or Equivalent Officer is authorised to operate jointly the bank accounts. Yes, holding tax is collected is through bank and recorded accordingly. All other collections are made in cash by the respective collectors and deposited to cashier who deposited the same to bank. Page 83 of 423

100 Sl. No. Topic Response 4.31 Are bank and cash reconciled on a monthly basis? 4.32 Are all unusual items on the bank Yes, unusual items are reviewed and reconciliation reviewed and approved approved by responsible official. by a responsible official? 4.33 Are all receipts deposited on a timely basis? Safeguard over Assets 4.34 Is there a system of adequate safeguards to protect assets from fraud, waste and abuse? Yes Yes, on the day of collection or on the following day. There is no complete register for keeping record of the assets, but section wise register / list is kept for ensuring safeguard Are subsidiary records of fixed assets Maintained; but not in a systematic manner. and stocks kept up to date and reconciled with control accounts? 4.36 Are there periodic physical inventories of fixed assets and stocks? 4.37 Are assets sufficiently covered by insurance policies? Other Offices and Implementing Agencies 4.38 Are there any other regional offices or executing entities participating in implementation? 4.39 Has the project established controls N/A and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? 4.40 Does information among the different N/A offices/implementing agencies flow in an accurate and timely fashion? 4.41 Are periodic reconciliations performed N/A among the different offices/implementing agencies? Other 4.42 Has the project advised employees, beneficiaries and other recipients to whom to report if they suspect fraud, waste or misuse of project resources or property? 5. Internal Audit 5.1 Is there an internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? Not done, however, steps have been taken for conducting physical verification. Insurance are not taken for all assets except third party insurance for motor vehicles. Pourashava has its main office only having departments/sections. For water supply it has a separate office; besides, it has no other office. Yes, Mayor advises verbally everybody in meeting to report to Pourashava if such matter is noticed by them. Pourashava has no internal audit department; but it has audit and inspection committee. N/A. Page 84 of 423

101 Sl. No. Topic Response 5.3 To whom does the internal auditor report? 5.4 Will the internal audit department include the project in its work program? 5.5 Are actions taken on the internal audit findings? 6. External Audit 6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? 6.2 Are there any delays in audit of the entity? When are the audit reports issued? N/A. However, committee reports to Mayor. N/A. However, audit and inspection committee if needed may verify project. N/A. Yes. Revenue Audit Directorate of C &AG which is constitutionally responsible for conducting external audit. Audit is done up to at a time. Audit conducted from to and report issued on Is the audit of the entity conducted As per GoB standards framed by C&AG. according to the International Standards on Auditing? 6.4 Were there any major accountability issues brought out in the audit report of the past three years? 6.5 Will the entity auditor audit the project accounts or will another auditor be appointed to audit the project financial statements? 6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented? Issues are brought to the notice of management for follow up, paragraph wise comments and necessary action is taken in order to settle audit observations. C & AG Revenue Directorate audits the accounts of purshava. However, project audit will be conducted by FAPAD of C&AG Issues and findings of auditors are monitored; comments issued on , complied and settled. 6.7 Is the project subject to any kind of If needed by the project, such external audit audit from an independent may be conducted. governmental entity (e.g., the supreme audit institution) in addition to the external audit? 6.8 Has the project prepared acceptable Yes, Statement of Audit Needs has been terms of reference for an annual project formulated for the Project audit? 7. Reporting and Monitoring 7.1 Are financial statements prepared for the entity? In accordance with which accounting standards? 7.2 Are financial statements prepared for the implementing unit? 7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? Yes. Financial statements (receipts and payments statement) are prepared in accordance with the GoB accounting standards in prescribed format. Yes. Statement of Receipts and Payments is prepared only. Periodical accounts are not prepared in a regular fashion, however, sometimes periodical accounts are prepared for presenting to PauraParishad meeting; annual financial statements are prepared along with budget. Page 85 of 423

102 Sl. No. Topic Response 7.4 Does the reporting system need to be Yes. Report will be prepared and adopted adapted to report on the project as per guidelines of the Project. components? 7.5 Does the reporting system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? 7.7 Are financial management reports used by management? Yes. It is done from time to time by the Engineering Department in association with Accounts Department and the result is discussed in PauraParishad meeting for initiating corrective measures. It will be specified and done under the project and accordingly Pourashava will comply with them. 7.8 Do the financial reports compare actual It is done in the monthly meeting of the expenditures with budgeted and PauraParishad; not in a regular fashion. programmed allocations? 7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means? Yes Accounting software (UFMS) developed by LGED is in place for recording transactions, but automated financial statements and reports could not produce for want of initial capital fund and valuation of assets, reports are prepared in spreadsheet. Accounts staff needs more training on the software for generating automated reports. 8 Information Systems 8.1 Is the financial management system Same as in 7.9; No MIS is prepared. Billing computerized? and collection of holding tax is only computerized, other non-tax revenues billing-collections are not computerized. 8.2 Can the system produce the necessary project financial reports? 8.3 Is the staff adequately trained to maintain the system? 8.4 Does the management organization and processing system safeguard the confidentiality, integrity and availability of the data? Yes. UFMS can produce necessary financial reports. Sometimes the software gives trouble. Received preliminary training in computer including UFMS from RMSU. Needs intensive training to maintain and use the system properly. Yes. Pourashava is committed to appropriate processing of financial and other data and to preserve this important data for future availability and subsequent use. Page 86 of 423

103 Supporting Documents Financial regulations, standards or pronouncement used by the project/entity Information concerning the legal and organizational structure of the entity Extracts or copies of important legal documents, agreements, or minutes Information concerning the sector, economic and legislative environment within which the entity operates Evidence of consideration of the work of the Internal Auditor (if applicable) and conclusions reached Analyses of significant ratios and trends (revenue generating projects) Draft format of the financial statements produced by the project/entity Copies of communications Chart of Accounts Project or entity Financial Management Manual Audit terms of reference Terms of reference and curriculum vitae for key financial and accounting personnel Operational manual Copy of most recent audit report (if applicable) Page 87 of 423

104 Magura Pourashava Sl. No. Topic Response 1. Implementing Agency 1.1 What is the entity s legal status / registration? 1.2 Has the entity implemented an externally-financed project in the past (if so, please provide details)? 1.3 What are the statutory reporting requirements for the entity? 1.4 Is the governing body for the project independent? 1.5 Is the organizational structure appropriate for the needs of the project? 2. Funds Flow Arrangements 2.1 Describe (proposed) project funds flow arrangements, including a chart and explanation of the flow of funds from ADB, government and other financiers. Local Government Institution (LGI), A CatagoryPourashava establish in 1972 governed by the Local Government Institution (Pourashava) Act, Yes, project implemented under MSP-WB- LGED, Bangladesh Municipal Development Fund (BMDF) & 18 District Town Water Supply project Netherland-DPHE. To Local Government Division (LGD), Ministry of LGRD&C. Annual accounts with budgets is submitted to LGD for approval. Yes, the Pourashava has elected Parishad (Council). Yes, may need necessary management arrangement in organizational structure in order to implement the project activities. ADB to Central Bank at Bangladesh to Project Bank Account to Contractors. GoB funds are released quarterly through treasury. 2.2 Are the (proposed) arrangements to Yes, Pourashava should have control over transfer the proceeds of the loan (from project fund management. the government / Finance Ministry) to the entity satisfactory? 2.3 What have been the major problems in Nothing significant the past in receipt of funds by the entity? 2.4 In which bank will the Imprest Account Agrani Bank Limited, Magura Branch. be opened? 2.5 Does the (proposed) project implementing unit (PIU) have experience in the management of disbursements from ADB? 2.7 Does the entity have/need a capacity to manage foreign exchange risks? 2.8 How are the counterpart funds accessed? 2.9 How are payments made from the counterpart funds? No, has little experience in World Bank & Netherland disbursements. Training to be provided to the Pourashava accounts personnel to make them capable in ADB fund management procedures. No. Pourashava will receive fund in local currency and not involve in managing foreign currency, it will be managed at GoB level. Through budgetary allocation of the Pourashava. Pourashava will deposit the money to project account and from there payment will be made. Page 88 of 423

105 Sl. No. Topic Response 2.10 If part of the project is implemented by Yes. It will be managed and reported as per communities or NGOs, does the PIU guidelines of the Project. Project will receive have the necessary reporting and periodical reports to track financial monitoring features built into its transactions that build in control over the systems to track the use of project financial management of the NGO. proceeds by such agencies? 2.11 Are the beneficiaries required to contribute to project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution? 3. Staffing If needed the beneficiaries will contribute both in cash and kind and keep record as per guidelines of the project. 3.1 What is the (proposed) organizational 1. Accounts officer 1 structure of the accounting department? 2. Accountant 1 Attach an organization chart. 3. Accounts Assistant 2 4. Cashier 1 5. MLSS 1 Above positions are as per organization chart. 3.2 Identify the (proposed) accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the project finance and accounting function staffed adequately? 3.4 Is the finance and accounts staff adequately qualified and experienced? 3.5 Is the project accounts and finance staff trained in ADB procedures? 3.6 What is the duration of the contract with the finance and accounts staff? 3.7 Indicate key positions not contracted yet, and the estimated date of appointment. 1. Accountant 1, B.Com 2. Accounts Assistant 1, HSC 3. Cashier 1, B. Com. 4. MLSS -1 Job title, responsibility, etcare described in the service rules framed by the Government. Yes, with present situation. Yes. Key position staffs are commerce graduates, experienced and performing well. No. Needs proper training on ADB s disbursement and financial management procedures. Most of them are regular staff and working for a long time. As per service rules provision of transfer is there. Recruitment of key position staff is not in the hand of the Pourashava. It is in the hand of the Ministry Does the project have written position Yes, it is as per service rules and also guided descriptions that clearly define duties, by Pourashava finance manual. responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff? 3.11 At what frequency are personnel transferred? 3.12 What is training policy for the finance and accounting staff? 4. Accounting Policies and Procedures. Normally after three years. LGD provides training through NILG, besides training from projects like RMSU is available. Page 89 of 423

106 Sl. No. Topic Response 4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained? 4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? Yes. The Pourashava follows GoB accounting system that allows the capture of proper recording of financial transactions, including the allocation of expenditure in accordance with respective components, disbursement categories and sources of funds. Yes. All the transactions are made in accordance with appropriate budget allocation with the approval of authorized person following delegation of financial power framed by GoB. Yes. Pourashava has chart of accounts issued by Government (PMU) to identify the transactions and its records. 4.4 Are cost allocations to the various Yes, fund wise accounts are maintained. funding sources made accurately and in accordance with established agreements? 4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? Segregation of Duties 4.7 Are the following functional responsibilities performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction? Yes. Periodical reconciliation is made to ascertain tracking of the transactions and balance. Yes. Pourashava preserves the documents permanently as per GoB directives and authorized persons have access to records. Yes. Mayor and designated officers are authorized to approve the expenditure as per the delegation of financial power and the transactions are recorded by the accounts personnel. Stock and assets register is maintained with custody of assets. 4.8 Are the functions of ordering, receiving, Yes, functions are well segregated. accounting for, and paying for goods and services appropriately segregated? 4.9 Are bank reconciliations prepared by someone other than those who make or approve payments? Budgeting System 4.10 Do budgets include physical and financial targets? 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? Yes, done by different person other than who makes or approves payments. Yes. Inputs are given by the departments with financial targets. Physical targets are discussed but not recorded. Yes. Budget is prepared with sufficient detail and can be used for subsequent performance monitoring. Page 90 of 423

107 Sl. No. Topic Response 4.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? Yes. PauraParishad in its monthly meeting reviews progress of the activities with budget and suggests for taking measures for timely intervention Are approvals for variations from the Yes. Approvals are required and taken in budget required in advance or after the advance. fact? 4.14 Who is responsible for preparation and approval of budgets? 4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals? Payments 4.17 Do invoice-processing procedures provide for: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports?(iv) Checking the accuracy of calculations? 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? Accountant with the help of other departments compiles budget and it is approved by the PauraParishad and send to LGD for concurrence. Yes. Preparation of budget is a bottom up approach. Concerned departments provide budgetary information to the Accountant who compiles the preliminary budget. Yes. The budget is prepared based on data, information, assumption, knowledge and in accordance with set procedures. Yes. All the formalities are performed following standard procedures as per Pourashava finance rules and manual for processing payments and the documents are preserved accordingly. Yes. As soon as payment is cleared all invoices are stamped as PAID and recorded in proper heads of account Do controls exist for the preparation of Yes. Payroll is made in accordance with the the payroll and are changes to the information in attendance registers. payroll properly authorized? Policies and Procedures 4.20 What is the basis of accounting (e.g., cash, accrual)? 4.21 What accounting standards are followed? 4.22 Does the project have an adequate policies and procedures manual to guide activities and ensure staff accountability? Cash basis. Government Accounting Standards issued by MOF. Yes. Pourashava finance manual and rules contains set procedures and responsibility of staff. Page 91 of 423

108 Sl. No. Topic Response 4.23 Is the accounting policy and procedure Yes. Standard policies are in place, if manual updated for the project updating is needed it is done by LGD/MoF. activities? 4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy or procedure to be used by the entity? 4.25 Are there written policies and procedures covering all routine financial management and related administrative activities? 4.26 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them? 4.27 Are manuals distributed to appropriate personnel? Cash and Bank 4.28 Indicate names and positions of authorized signatories in the bank accounts Does the organization maintain an Yes adequate, up-to-date cashbook, recording receipts and payments? Yes. Since the accounting principle is set by the Central Government, the change in policy requires approval of Central Government. In some cases procedures for reporting can be customized / tailored with approval the appropriate authority. Yes. Pourashava finance manual and rules, service rules and time to time directives issued by LGD covers these. Yes. Pourashava finance manual and rules, service rules and financial instructions issued by LGD/MoF lay down procedures in this regard. Yes. Accounts staff is informed and aware of manuals. Mayor and Secretary or Equivalent Officer is authorised to operate jointly the bank accounts Do controls exist for the collection, Yes, most of the collections are made timely deposit and recording of receipts through bank and recorded accordingly. at each collection location? 4.31 Are bank and cash reconciled on a Yes monthly basis? 4.32 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official? 4.33 Are all receipts deposited on a timely basis? Safeguard over Assets Yes, unusual items are reviewed and approved by responsible official Is there a system of adequate Yes. Paurashsva maintains stock & assets safeguards to protect assets from fraud, register mentioning name of users. waste and abuse? 4.35 Are subsidiary records of fixed assets Yes and stocks kept up to date and reconciled with control accounts? 4.36 Are there periodic physical inventories of fixed assets and stocks? 4.37 Are assets sufficiently covered by insurance policies? Yes Yes, but not regular basis. Insurance are taken where needed, specially for vehicles. All assets are not covered. Page 92 of 423

109 Sl. No. Topic Response Other Offices and Implementing Agencies 4.38 Are there any other regional offices or executing entities participating in implementation? 4.39 Has the project established controls N/A and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? 4.40 Does information among the different offices/implementing agencies flow in an accurate and timely fashion? Pourashava has its main office only having departments/sections. Besides, it has no other office. N/A 4.41 Are periodic reconciliations performed N/A among the different offices/implementing agencies? Other 4.42 Has the project advised employees, Yes, Mayor advises every body to report to beneficiaries and other recipients to Pourashava if such matter is noticed by them. whom to report if they suspect fraud, waste or misuse of project resources or property? 5. Internal Audit 5.1 Is there an internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? 5.3 To whom does the internal auditor report? 5.4 Will the internal audit department include the project in its work program? 5.5 Are actions taken on the internal audit findings? 6. External Audit 6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? Pourashava has no internal audit department; but it has audit and inspection committee. N/A. N/A. However, committee reports to Mayor. N/A. However, audit and inspection committee if needed may verify project. N/A. Yes. Revenue Audit Directorate of C &AG which is constitutionally responsible for conducting external audit. 6.2 Are there any delays in audit of the Audit is done up to Report issued entity? When are the audit reports Since then audit is pending. issued? 6.3 Is the audit of the entity conducted As per GoB standards framed by C&AG. according to the International Standards on Auditing? 6.4 Were there any major accountability issues brought out in the audit report of the past three years? Issues are brought to the notice of management for follow up and necessary action is taken in order to settle audit observations Page 93 of 423

110 Sl. No. Topic Response 6.5 Will the entity auditor audit the project accounts or will another auditor be appointed to audit the project financial statements? C & AG audit will cover the project audit along with pourashava audit. FAPAD of C&AG may also conduct project audit and if needed other external auditor may conduct audit. 6.6 Are there any recommendations made Issues and findings of auditors are monitored, by the auditors in prior audit reports or comments issued, complied and settled. management letters that have not yet been implemented? 6.7 Is the project subject to any kind of If needed by the project, such external audit audit from an independent may be conducted. governmental entity (e.g., the supreme audit institution) in addition to the external audit? 6.8 Has the project prepared acceptable Yes, if needed terms of reference for audit terms of reference for an annual project will be formulated under the project. audit? 7. Reporting and Monitoring 7.1 Are financial statements prepared for the entity? In accordance with which accounting standards? 7.2 Are financial statements prepared for the implementing unit? 7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? 7.4 Does the reporting system need to be adapted to report on the project components? 7.5 Does the reporting system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? 7.7 Are financial management reports used by management? Yes. Financial statements (receipts and payments statement) are prepared in accordance with the GoB accounting standards in prescribed format. Yes. Monthly accounts are prepared for presenting to PauraParishad meeting and final annual financial statements are prepared along with budget. Yes. Report will be prepared and adopted as per guidelines of the Project. Yes. It is done from time to time by the Engineering Department in association with Accounts Department and the result is discussed in PauraParishad meeting for initiating corrective measures. It will be specified and done under the project and accordingly Pourashava will comply with them. Yes Page 94 of 423

111 Sl. No. Topic Response 7.8 Do the financial reports compare actual Yes, it is done in the monthly meeting of the expenditures with budgeted and PauraParishad. programmed allocations? 7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means? 8 Information Systems 8.1 Is the financial management system computerized? 8.2 Can the system produce the necessary project financial reports? 8.3 Is the staff adequately trained to maintain the system? UFMS software developed by LGED is in place for recording transactions, but automated financial statements and reports could not produce, reports are prepared in spreadsheet. Accounts staff needs more training on the software for generating automated reports. Same as in 7.9; No MIS is prepared. Yes. UFMS can produce necessary financial reports. Sometimes the software gives trouble. Received preliminary training in computer including UFMS from RMSU. Needs intensive training to maintain and use the system properly. 8.4 Does the management organization Yes. Pourashava is committed to appropriate and processing system safeguard the processing of financial and other data and to confidentiality, integrity and availability preserve this important data for future of the data? availability and subsequent use. Source: PPTA Consultant Supporting Documents Financial regulations, standards or pronouncement used by the project/entity Information concerning the legal and organizational structure of the entity Extracts or copies of important legal documents, agreements, or minutes Information concerning the sector, economic and legislative environment within which the entity operates Evidence of consideration of the work of the Internal Auditor (if applicable) and conclusions reached Analyses of significant ratios and trends (revenue generating projects) Draft format of the financial statements produced by the project/entity Copies of communications Chart of Accounts Project or entity Financial Management Manual Audit terms of reference Terms of reference and curriculum vitae for key financial and accounting personnel Operational manual Copy of most recent audit report (if applicable) Page 95 of 423

112 Naogoan Pourashava Sl. Topic Response No. 1. Implementing Agency 1.1 What is the entity s legal status / Local Government Institution (LGI), A registration? CatagoryPourashava establish in 1963 governed by the Local Government (Pourashava) Act, Has the entity implemented an externallyfinanced project in the past (if so, please provide details)? 1.3 What are the statutory reporting requirements for the entity? 1.4 Is the governing body for the project independent? 1.5 Is the organizational structure appropriate for the needs of the project? 2. Funds Flow Arrangements 2.1 Describe (proposed) project funds flow arrangements, including a chart and explanation of the flow of funds from ADB, government and other financiers. Yes, project implemented under MSP-WB- LGED, Bangladesh Municipal Development Fund (BMDF), 18 District Town Water Supply project Netherland- DPHE and UPPRP. To Local Government Division (LGD), Ministry of LGRD&C. Annual accounts with budgets is submitted to LGD for approval. Yes, the Pourashava has elected Parishad (Council). Yes, may need necessary management arrangement in organizational structure in order to implement the project activities. ADB to Central Bank at Bangladesh to Project Bank Account to Contractors. GoB funds are released quarterly through treasury. 2.2 Are the (proposed) arrangements to transfer Yes, Pourashava think it should have the proceeds of the loan (from the control over project fund management. government / Finance Ministry) to the entity satisfactory? 2.3 What have been the major problems in the Nothing significant past in receipt of funds by the entity? 2.4 In which bank will the Imprest Account be Jamuna Bank Limited, Naogaon Branch. opened? 2.5 Does the (proposed) project implementing unit (PIU) have experience in the management of disbursements from ADB? 2.7 Does the entity have/need a capacity to manage foreign exchange risks? No, has little experience in World Bank & Netherland disbursements. Training to be provided to the Pourashava accounts personnel to make them capable in ADB fund management procedures. No. Pourashava will receive fund in local currency from GoB and it need not to involve in managing foreign currency, it will be managed at GoB level. 2.8 How are the counterpart funds accessed? Through budgetary allocation of the Pourashava. 2.9 How are payments made from the counterpart funds? Pourashava will deposit the money to project account and from there payment will be made. It did it in case of BMDF. Page 96 of 423

113 Sl. No. Topic 2.10 If part of the project is implemented by communities or NGOs, does the PIU have the necessary reporting and monitoring features built into its systems to track the use of project proceeds by such agencies? 2.11 Are the beneficiaries required to contribute to project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution? 3. Staffing Response Yes. It will be managed and reported as per guidelines of the Project. Project will receive periodical reports to track financial transactions that build in control over the financial management of the NGO. If needed the beneficiaries will contribute both in cash and kind and keep record as per guidelines of the project. 3.1 What is the (proposed) organizational 1. Accounts officer 1 structure of the accounting department? 2. Accountant 1 Attach an organization chart. 3. Accounts Assistant 1 4. Cashier 1 5. MLSS 1 Above positions are as per GoB approved organization chart. 3.2 Identify the (proposed) accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the project finance and accounting function staffed adequately? 3.4 Is the finance and accounts staff adequately qualified and experienced? 3.5 Is the project accounts and finance staff trained in ADB procedures? 3.6 What is the duration of the contract with the finance and accounts staff? 3.7 Indicate key positions not contracted yet, and the estimated date of appointment Does the project have written position descriptions that clearly define duties, responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff? 3.11 At what frequency are personnel transferred? 1. Accountant 1, B.Com 2. Accounts Assistant 1, HSC 3. Cashier 1, M. Com. 4. MLSS -1 Job title, responsibility, etcare described in the service rules framed by the Government. Yes, with present situation. Position of Accounts Officer need to be filled which in the hand of LGD. Yes. Key position staffs are commerce graduates, experienced and performing well. No. Needs proper training on ADB s disbursement and financial management procedures. Most of them are regular staff and working for a long time. In service rules provision of transfer is there. Recruitment of key position staff is not in the hand of the Pourashava. It is in the hand of the Ministry. Yes, it is as per service rules and also guided by Pourashava finance manual. Normally after three years; it is in the hand of LGD. Page 97 of 423

114 Sl. No. Topic 3.12 What is training policy for the finance and accounting staff? 4. Accounting Policies and Procedures. 4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained? 4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? Response LGD provides training through NILG, besides training from projects like RMSU is available. Yes. The Pourashava follows GoB accounting system that allows the capture of proper recording of financial transactions, including the allocation of expenditure in accordance with respective components, disbursement categories and sources of funds. Yes. All the transactions are made in accordance with appropriate budget allocation with the approval of authorized person following delegation of financial power framed by GoB. Yes. Pourashava has chart of accounts issued by Government to identify the transactions and its recording. Computer code is developed by PMU-LGED. 4.4 Are cost allocations to the various funding Yes, fund wise accounts are maintained. sources made accurately and in accordance with established agreements? 4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? Segregation of Duties 4.7 Are the following functional responsibilities performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction? Yes, periodical reconciliation is made to ascertain tracking of the transactions and balance. Yes, documents are preserved permanently as per GoB directives and authorized persons have access to records. Yes. Mayor and designated officers are authorized to approve the expenditure as per the delegation of financial power and the transactions are recorded by the accounts personnel. Custody involve in the transaction of assets is maintained. 4.8 Are the functions of ordering, receiving, Yes, functions are identically well accounting for, and paying for goods and segregated. services appropriately segregated? 4.9 Are bank reconciliations prepared by someone other than those who make or approve payments? Budgeting System 4.10 Do budgets include physical and financial targets? Yes, done by different person other than who makes or approves payments. Yes. Inputs are given by the departments with financial targets. Physical targets are not recorded. Page 98 of 423

115 Sl. No. Topic 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? 4.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? 4.13 Are approvals for variations from the budget required in advance or after the fact? 4.14 Who is responsible for preparation and approval of budgets? 4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals? Payments 4.17 Do invoice-processing procedures provide for: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports?(iv) Checking the accuracy of calculations? 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? 4.19 Do controls exist for the preparation of the payroll and are changes to the payroll properly authorized? Policies and Procedures 4.20 What is the basis of accounting (e.g., cash, accrual)? Response Yes. Budget is prepared in the prescribed format with sufficient detail and can be used for subsequent financial performance monitoring. Yes. PauraParishad in its monthly meeting partially reviews progress of the activities with budget and suggests for taking measures. Yes. Approvals are required and if needed taken in advance. Accountant with the help of other sections compiles budget and it is approved by the PauraParishad and send to LGD for concurrence. Yes. Preparation of budget is a bottom up approach. Concerned departments provide budgetary information to the Accountant who compiles the preliminary budget. Yes. The budget is prepared based on data, information, assumption, knowledge and in accordance with set procedures. Yes. All the formalities are performed following standard procedures as per Pourashava finance rules and manual for processing payments and the documents are preserved accordingly. Yes. As soon as payment is cleared all invoices are numbered chronologically, recorded in proper heads of account and preserved. Yes. Payroll is made in accordance with the information in attendance registers; arrival and departure are recorded. Cash basis What accounting standards are followed? Government Accounting Standards issued by MOF Does the project have an adequate policies and procedures manual to guide activities and ensure staff accountability? Yes. Pourashava finance manual and rules contains set procedures and responsibility of staff. Page 99 of 423

116 Sl. No. Topic 4.23 Is the accounting policy and procedure manual updated for the project activities? 4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy or procedure to be used by the entity? 4.25 Are there written policies and procedures covering all routine financial management and related administrative activities? 4.26 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them? 4.27 Are manuals distributed to appropriate personnel? Cash and Bank 4.28 Indicate names and positions of authorized signatories in the bank accounts Does the organization maintain an adequate, Yes up-to-date cashbook, recording receipts and payments? 4.30 Do controls exist for the collection, timely deposit and recording of receipts at each collection location? 4.31 Are bank and cash reconciled on a monthly basis? 4.32 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official? Response Yes. Standard policies are in place, if updating is needed it is done by LGD/MoF. Yes. Since the accounting principle is set by the Central Government, the change in policy requires approval of Central Government. In some cases procedures for reporting can be customized / tailored with approval the appropriate authority. Yes. Pourashava finance manual and rules, service rules and time to time directives issued by LGD covers these. Yes. Pourashava finance manual and rules, service rules and financial instructions issued by LGD/MoF lay down procedures in this regard. Yes. Accounts staff is informed and aware of manuals. Mayor and Secretary or Equivalent Officer is authorised to operate jointly the bank accounts. Yes, most of the collections are made through bank and recorded accordingly. Few petty miscellaneous collections are made in cash and deposited to bank. Yes 4.33 Are all receipts deposited on a timely basis? Yes Safeguard over Assets 4.34 Is there a system of adequate safeguards to protect assets from fraud, waste and abuse? 4.35 Are subsidiary records of fixed assets and stocks kept up to date and reconciled with control accounts? 4.36 Are there periodic physical inventories of fixed assets and stocks? 4.37 Are assets sufficiently covered by insurance policies? Other Offices and Implementing Agencies Yes, unusual items are reviewed and approved by responsible official. Yes. Paurashsva maintains register properties. Maintained; but not in a systematic manner. Yes, but not in regular basis. Insurance are taken where needed, specially for vehicles. All assets are not covered. Page 100 of 423

117 Sl. No. Topic 4.38 Are there any other regional offices or executing entities participating in implementation? 4.39 Has the project established controls and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? 4.40 Does information among the different offices/implementing agencies flow in an accurate and timely fashion? 4.41 Are periodic reconciliations performed among the different offices/implementing agencies? Other 4.42 Has the project advised employees, beneficiaries and other recipients to whom to report if they suspect fraud, waste or misuse of project resources or property? 5. Internal Audit 5.1 Is there an internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? Response Pourashava has its main office only having departments/sections. For water supply it has a separate office; besides, it has no other office. N/A N/A N/A Yes, Mayor advises everybody in meeting to report to Pourashava if such matter is noticed by them. Pourashava has no internal audit department; but it has audit and inspection committee. 5.3 To whom does the internal auditor report? N/A. However, committee reports to Mayor. 5.4 Will the internal audit department include the project in its work program? 5.5 Are actions taken on the internal audit findings? 6. External Audit 6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? 6.2 Are there any delays in audit of the entity? When are the audit reports issued? 6.3 Is the audit of the entity conducted according to the International Standards on Auditing? 6.4 Were there any major accountability issues brought out in the audit report of the past three years? N/A. N/A. However, audit and inspection committee if needed may verify project. N/A. Yes. Revenue Audit Directorate of C &AG which is constitutionally responsible for conducting external audit. Audit is done up to Audit conducted from to and report issued on As per GoB standards framed by C&AG. Issues are brought to the notice of management for follow up, paragraph wise comments and necessary action is taken in order to settle audit observations. Page 101 of 423

118 Sl. No. Topic 6.5 Will the entity auditor audit the project accounts or will another auditor be appointed to audit the project financial statements? 6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented? Response C & AG audit will cover the project audit along with pourashava audit. FAPAD of C&AG may also conduct project audit and if needed other external auditor may conduct audit. Issues and findings of auditors are monitored; comments issued, complied and settled. 6.7 Is the project subject to any kind of audit If needed by the project, such external from an independent governmental entity audit may be conducted. (e.g., the supreme audit institution) in addition to the external audit? 6.8 Has the project prepared acceptable terms of reference for an annual project audit? 7. Reporting and Monitoring 7.1 Are financial statements prepared for the entity? In accordance with which accounting standards? 7.2 Are financial statements prepared for the implementing unit? 7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? 7.4 Does the reporting system need to be adapted to report on the project components? 7.5 Does the reporting system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? 7.7 Are financial management reports used by management? Yes, if needed terms of reference for audit will be formulated under the project. Yes. Financial statements (receipts and payments statement) are prepared in accordance with the GoB accounting standards in prescribed format. Yes. Statement of Receipts and Payments is prepared only. Periodical accounts, if required are prepared for presenting to PauraParishad meeting and final annual financial statements are prepared along with budget. Yes. Report will be prepared and adopted as per guidelines of the Project. Yes. It is done from time to time by the Engineering Department in association with Accounts Department and the result is discussed in PauraParishad meeting for initiating corrective measures. It will be specified and done under the project and accordingly Pourashava will comply with them. 7.8 Do the financial reports compare actual It is done in the monthly meeting of the expenditures with budgeted and PauraParishad; not in a regular fashion. programmed allocations? Yes Page 102 of 423

119 Sl. No. Topic 7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means? 8 Information Systems 8.1 Is the financial management system computerized? 8.2 Can the system produce the necessary project financial reports? 8.3 Is the staff adequately trained to maintain the system? 8.4 Does the management organization and processing system safeguard the confidentiality, integrity and availability of the data? Response Accounting software (UFMS) developed by LGED is in place for recording transactions, but automated financial statements and reports could not produce for want of initial capital fund and valuation of assets, reports are prepared in spreadsheet. Accounts staff needs more training on the software for generating automated reports. Same as in 7.9; No MIS is prepared. Yes. UFMS can produce necessary financial reports. Sometimes the software gives trouble. Received preliminary training in computer including UFMS from RMSU. Needs intensive training to maintain and use the system properly. Yes. Pourashava is committed to appropriate processing of financial and other data and to preserve this important data for future availability and subsequent use. Supporting Documents Financial regulations, standards or pronouncement used by the project/entity Information concerning the legal and organizational structure of the entity Extracts or copies of important legal documents, agreements, or minutes Information concerning the sector, economic and legislative environment within which the entity operates Evidence of consideration of the work of the Internal Auditor (if applicable) and conclusions reached Analyses of significant ratios and trends (revenue generating projects) Draft format of the financial statements produced by the project/entity Copies of communications Chart of Accounts Project or entity Financial Management Manual Audit terms of reference Terms of reference and curriculum vitae for key financial and accounting personnel Operational manual Copy of most recent audit report (if applicable) Page 103 of 423

120 5.3.2 Financial Management Assessment Questionnaire: Executing Agencies LGED & DPHE Local Government Engineering Department (LGED) Executing Agency Sl. Topic Response No. 1. Implementing Agency 1.1 What is the entity s legal status / registration? LGED is a government agency under the Local Government Division of M/o LGRD&C 1.2 Has the entity implemented an externallyfinanced project in the past (if so, please provide details)? 1.3 What are the statutory reporting requirements for the entity? 1.4 Is the governing body for the project independent? 1.5 Is the organizational structure appropriate for the needs of the project? 2. Fund Flow Arrangements 2.1 Describe (proposed) project funds flow arrangements, including a chart and explanation of the flow of funds from ADB, government and other financiers. Yes. LGED since its inception has been implementing a large number of aided projects funded by WB, ADB, JBIC, IFAD, DANIDA, DFID, IDB, GTA, KfW etc. Agency head is reporting to Ministry. 2.2 Are the (proposed) arrangements to transfer Yes the proceeds of the loan (from the government / Finance Ministry) to the entity satisfactory? 2.3 What have been the major problems in the None significant past in receipt of funds by the entity? 2.4 In which bank will the Imprest Account be Bangladesh Bank. opened? 2.5 Does the (proposed) project implementing Yes. unit (PIU) have experience in the management of disbursements from ADB? 2.7 Does the entity have/need a capacity to Yes. manage foreign exchange risks? Being Government organization; usually there is no independent governing body. However, the project would be administered in a hierarchical order to and from PMO: Project Sterring Committee (PSC): Ministry of LGRD&C, and inter dependent with regard to administrative and financial operations. Yes. During the design of Development Project Proposal (DPP) the EA / IAs provides necessary management arrangement/ organizational structure in order to implement the project activities ADB to Central Bank at Bangladesh to Commercial Bank to Contractors. In the case of GoB annual funds are available in four quarters through the Government Treasury Page 104 of 423

121 2.8 How are the counterpart funds accessed? Through annual development program of GoB. The fund is released in favor of project annually in four installments. 2.9 How are payments made from the counterpart funds? 2.10 If part of the project is implemented by Yes. communities or NGOs, does the PIU have the necessary reporting and monitoring features built into its systems to track the use of project proceeds by such agencies? From CAG Office on the basis of GO Are the beneficiaries required to contribute to Specific guidelines are there. project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution? 3. Staffing 3.1 What is the (proposed) organizational LGED has a published organogram in its structure of the accounting department? annual report Attach an organization chart. 3.2 Identify the (proposed) accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the project finance and accounting function staffed adequately? 3.4 Is the finance and accounts staff adequately qualified and experienced? 3.5 Is the project accounts and finance staff trained in ADB procedures? 3.6 What is the duration of the contract with the finance and accounts staff? 3.7 Indicate key positions not contracted yet, and the estimated date of appointment. Most of the accounting staff is of commerce graduate and they are being trained periodically. Yes Does the project have written position Yes descriptions that clearly define duties, responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff? Yes. Most of them are commerce graduates and are performing well. Yes. LGED s training unit has conducted a number of financial management courses covering ADB s disbursement and financial management procedures. Most of them are regular staff of LGED N/A. Key GoB personnel are already engaged in the existing project 3.11 At what frequency are personnel transferred? Normally after three years What is training policy for the finance and accounting staff? 4. Accounting Policies and Procedures Yearly LGED prepares a calendar of training to conduct a number of training courses for finance and accounting staff. Page 105 of 423

122 4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained? 4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? 4.4 Are cost allocations to the various funding Yes sources made accurately and in accordance with established agreements? 4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? Segregation of Duties 4.7 Are the following functional responsibilities performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction? 4.8 Are the functions of ordering, receiving, Yes accounting for, and paying for goods and services appropriately segregated? 4.9 Are bank reconciliations prepared by Yes someone other than those who make or approve payments? Budgeting System 4.10 Do budgets include physical and financial targets? 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? Yes. The entity follows the Project Accounting Manual issued by MOF. This allows the capture of proper recording of Project financial transactions, including the allocation of expenditure in accordance with respective components, disbursement categories and sources of funds. Yes. All the transactions are made in accordance with appropriate budget allocation with the approval of authorized person of the Project as mentioned in the Delegation of Financial Power issued by MoF. Yes. The Government has issued a chart of accounts of 14 digits to identify the transactions and its records. This ensures the accounts are recorded against project activities and disbursement categories. Yes. Periodical reconciliation is made to ascertain the tracking of the expenditures Yes. The Government has necessary directives to preserve the documents based on types for a period. Yes. Authorized persons can have access to records. Yes. Only the PD, EEs and other designated personnel are authorized to approve the expenditure as per the delegation of financial power and recording is done by the accounting personnel. Yes. The Government has introduced Mid Term Budgeting Framework (MTBF) system of budget and this contains the physical and financial target. Yes. The budget code is exhaustive and contains the classification of allocation in defined activities. Page 106 of 423

123 14.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? 4.13 Are approvals for variations from the budget required in advance or after the fact? 4.14 Who is responsible for preparation and approval of budgets? 4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals? Payments 4.17 Do invoice-processing procedures provide for: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports?(iv) Checking the accuracy of calculations? 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? Yes. LGED centrally monitors project activities with budget variance analysis for timely intervention. Yes. Approvals are required in advance Centrally MOF is responsible for preparation and approval of budget with necessary support from Planning Commission and respective department/ project entities Yes. Preparation of budget is a bottom up approach. PIUs provide the actual data from field / cost centers to PMO. PMO consolidates and compiles and forwards to LGED HQ for further approval from Administrative Ministry and finally sent to MoF and Planning Ministry for approval. Yes. At the entity level, the budget is prepared by Budget Working Group (BWG) in accordance with set procedures. Yes. Standard procedures for invoice processing are in place to check and process payments Yes. As soon as payment is cleared all invoices are stamped as PAID for further accounting actions Do controls exist for the preparation of the Yes. Payroll is made in accordance with the payroll and are changes to the payroll information in attendance registers. properly authorized? Policies and Procedures 4.20 What is the basis of accounting (e.g., cash, accrual)? Cash Basis What accounting standards are followed? Government Accounting Standards issued by MOF as indicated in the Project Accounting Manual 4.22 Does the project have an adequate policies Yes. DPP contains policies to adhere while and procedures manual to guide activities and executing project activities. ensure staff accountability? 4.23 Is the accounting policy and procedure manual updated for the project activities? Yes. Standard policies are in place all the project activities are conducted accordingly Page 107 of 423

124 4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy or procedure to be used by the entity? 4.25 Are there written policies and procedures covering all routine financial management and related administrative activities? Yes. Since the accounting principle is set by the Central Government, the change in policy requires approval of Central Government Yes. Delegation of financial power, PAM issued by MoF and other GOB guidelines to be followed Do policies and procedures clearly define Yes. Financial rules issued by MOF lays conflict of interest and related party down procedures in this regard transactions (real and apparent) and provide safeguards to protect the organization from them? 4.27 Are manuals distributed to appropriate personnel? Cash at Bank 4.28 Indicate names and positions of authorized Project Director at PMO level and Mayor signatories in the bank accounts. and secretary or PIU head at IA level Yes 4.29 Does the organization maintain an adequate, Yes up-to-date cashbook, recording receipts and payments? 4.30 Do controls exist for the collection, timely Yes deposit and recording of receipts at each collection location? 4.31 Are bank and cash reconciled on a monthly basis? 4.32 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official? Yes Yes 4.33 Are all receipts deposited on a timely basis? Yes. Safeguard over Assets 4.34 Is there a system of adequate safeguards to protect assets from fraud, waste and abuse? 4.35 Are subsidiary records of fixed assets and Yes stocks kept up to date and reconciled with control accounts? 4.36 Are there periodic physical inventories of fixed Yes assets and stocks? 4.37 Are assets sufficiently covered by insurance policies? Other Officers and Implementing Agencies 4.38 Are there any other regional offices or Yes. PIUs at PS executing entities participating in implementation? 4.39 Has the project established controls and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? Yes. LGED and respective projects prepare annual stock inventory and annual verifications are done through a committee. Insurance policies are done where applicable Yes. PPMS and PMIS established to generate project and financial information and ensure accountability Page 108 of 423

125 4.40 Does information among the different Yes. offices/implementing agencies flow in an accurate and timely fashion? 4.41 Are periodic reconciliations performed among the different offices/implementing agencies? Other 4.42 Has the project advised employees, Yes beneficiaries and other recipients to whom to report if they suspect fraud, waste or misuse of project resources or property? 5. Internal Audit 5.1 Is there a internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? Yes. Done every month / quarter / annually. Yes. LGED has established an internal audit cell since 1984 Most staff are qualified and experienced in the field of audit and they also receive regular training. 5.3 To whom does the internal auditor report? Chief Engineer, Head of Agency 5.4 Will the internal audit department include the project in its work program? 5.5 Are actions taken on the internal audit findings? 6. External Audit (entity level and project level) 6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? 6.2 Are there any delays in audit of the entity? When are the audit reports issued? 6.3 Is the audit of the entity conducted according to the International Standards on Auditing? 6.4 Were there any major accountability issues brought out in the audit report of the past three years? 6.5 Will the entity auditor audit the project accounts or will another auditor be appointed to audit the project financial statements? 6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented? 6.7 Is the project subject to any kind of audit from an independent governmental entity (e.g., the supreme audit institution) in addition to the external audit? 6.8 Has the project prepared acceptable terms of reference for an annual project audit? 7. Reporting and Monitoring Yes. Periodically LGED conducts internal audit of ongoing projects Yes. Remedial measures are initiated Yes. Foreign Aided Project Audit Directorate (FAPAD) on behalf of C &AG which is constitutionally responsible for conducting external audit. No. FAPAD has been conducting timely audits and submits the reports on time Yes. CAG conducts its audits as per international auditing standards (ISSAIs). Issues are brought to the notice of management for follow up and necessary action is taken in order to settle audit observations The FAPAD directorate of the CAG will audit the project financial statements and relevant records of the project No. The management letter and audit findings are regularly monitored and regular follow up is done Yes. FAPAD sometimes conducts Performance Audit in several donor funded projects of LGED Yes, a Statement of Audit Needs has been provided for agreement with FAPAD Page 109 of 423

126 7.1 Are financial statements prepared for the entity? In accordance with which accounting standards? 7.2 Are financial statements prepared for the implementing unit? 7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? 7.4 Does the reporting system need to be adapted to report on the project components? 7.5 Does the reporting system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? 7.7 Are financial management reports used by management? Yes. Financial statements are prepared in accordance with the Government principles of accounting Yes. Annual Financial Statements are prepared for each project. Yes Yes. Projects implemented by LGED are subject to report in financial matters as suggested in the Loan Agreement Yes. The projects are reporting to different government agencies and donors with a comprehensive summary report on physical and financial targets. Yes. PPMS and PMIS lays down the responsibilities and reports to be prepared and their usage. Yes 7.8 Do the financial reports compare actual Yes expenditures with budgeted and programmed allocations? 7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means? LGED has developed UFMS software and this is being introduced / adopted in different projects. Besides this all other reports are prepared on computer. 8. Information System 8.1 Is the financial management system Same as in 7.9 computerized? 8.2 Can the system produce the necessary project financial reports? 8.3 Is the staff adequately trained to maintain the system? 8.4 Does the management organization and processing system safeguard the confidentiality, integrity and availability of the data? Yes. UFMS LGED has already conducted training in computer software including UFMS. Annually a number of computer courses are being / will be organized for Project Staff on a routine. Yes. LGED is committed to appropriate processing of financial and other data and to preserve this important data for future availability and subsequent use. Supporting Documents Page 110 of 423

127 Financial regulations, standards or pronouncement used by the project/entity Information concerning the legal and organizational structure of the entity Extracts or copies of important legal documents, agreements, or minutes Information concerning the sector, economic and legislative environment within which the entity operates Evidence of consideration of the work of the Internal Auditor (if applicable) and conclusions reached Analyses of significant ratios and trends (revenue generating projects) Draft format of the financial statements produced by the project/entity Copies of communications Chart of Accounts Project or entity Financial Management Manual Audit terms of reference Terms of reference and curriculum vitae for key financial and accounting personnel Operational manual Copy of most recent audit report (if applicable) Page 111 of 423

128 Department of Public Health Engineering (DPHE), Executing Agency Sl. Topic Response No. 1. Implementing Agency 1.1 What is the entity s legal status / registration? 1.2 Has the entity implemented an externallyfinanced project in the past (if so, please provide details)? 1.3 What are the statutory reporting requirements for the entity? 1.4 Is the governing body for the project independent? 1.5 Is the organizational structure appropriate for the needs of the project? 2. Fund Flow Arrangements 2.1 Describe (proposed) project funds flow arrangements, including a chart and explanation of the flow of funds from ADB, government and other financiers. DPHE is a government agency under the Local Government Division of M/o LGRD&C Yes. DPHE since its inception has been implementing a large number of aided projects funded by WB, ADB, DANIDA, JICA, UNICEF, etc. Agency head is reporting to Ministry. Being Government organization; usually there is no independent governing body. However, the project would be administered in a hierarchical order to and from PMO: Project Steering Committee (PSC): Ministry of LGRD&C, and inter dependent with regard to administrative and financial operations. Yes. During the design of Development Project Proposal (DPP) the EA / IAs provides necessary management arrangement/ organizational structure in order to implement the project activities ADB to Central Bank at Bangladesh to Commercial Bank to Contractors. In the case of GoB annual funds are available in four quarters through the Government Treasury 2.2 Are the (proposed) arrangements to Yes transfer the proceeds of the loan (from the government / Finance Ministry) to the entity satisfactory? 2.3 What have been the major problems in the None significant past in receipt of funds by the entity? 2.4 In which bank will the Imprest Account be Bangladesh Bank. opened? 2.5 Does the (proposed) project implementing Yes. unit (PIU) have experience in the management of disbursements from ADB? 2.7 Does the entity have/need a capacity to Yes. manage foreign exchange risks? 2.8 How are the counterpart funds accessed? Through annual development program of GoB. The fund is released in favor of project annually in four installments. Page 112 of 423

129 2.9 How are payments made from the From CAG Office on the basis of GO. counterpart funds? 2.10 If part of the project is implemented by Yes. communities or NGOs, does the PIU have the necessary reporting and monitoring features built into its systems to track the use of project proceeds by such agencies? 2.11 Are the beneficiaries required to contribute Specific guidelines are there. to project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution? 3. Staffing 3.1 What is the (proposed) organizational N/A. A project organogram is already in structure of the accounting department? place Attach an organization chart. 3.2 Identify the (proposed) accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff. 3.3 Is the project finance and accounting function staffed adequately? 3.4 Is the finance and accounts staff adequately qualified and experienced? 3.5 Is the project accounts and finance staff trained in ADB procedures? 3.6 What is the duration of the contract with the finance and accounts staff? 3.7 Indicate key positions not contracted yet, and the estimated date of appointment Does the project have written position descriptions that clearly define duties, responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff? 3.11 At what frequency are personnel transferred? 3.12 What is training policy for the finance and accounting staff? 4. Accounting Policies and Procedures Most of the accounting staff is of commerce graduate and they are being trained periodically. Yes. Yes. Most of them are commerce graduates and are performing well. Yes. DPHE s training unit has conducted a number of financial management courses covering ADB s disbursement and financial management procedures. Most of them are regular staff of DPHE N/A. Key GoB personnel are already engaged in the existing project Yes Normally after three years. DPHE prepares yearly a calendar of training to conduct a number of training courses for finance and accounting staff. Page 113 of 423

130 4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system? 4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained? 4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories? 4.4 Are cost allocations to the various funding Yes sources made accurately and in accordance with established agreements? 4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance? 4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access? Segregation of Duties 4.7 Are the following functional responsibilities performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction? 4.8 Are the functions of ordering, receiving, Yes accounting for, and paying for goods and services appropriately segregated? 4.9 Are bank reconciliations prepared by someone other than those who make or approve payments? Budgeting System 4.10 Do budgets include physical and financial targets? 4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance? Yes. The entity follows the Project Accounting Manual issued by MOF. This allows the capture of proper recording of Project financial transactions, including the allocation of expenditure in accordance with respective components, disbursement categories and sources of funds. Yes. All the transactions are made in accordance with appropriate budget allocation with the approval of authorized person of the Project as mentioned in the Delegation of Financial Power issued by MoF. Yes. The Government has issued a chart of accounts of 13 digits to identify the transactions and its records. This ensures the accounts are recorded against project activities and disbursement categories. Yes. Periodical reconciliation is made to ascertain the tracking of the expenditures Yes. The Government has necessary directives to preserve the documents based on types for a period. Yes. Authorized persons can have access to records. Yes. Only the PD, EEs and other designated personnel are authorized to approve the expenditure as per the delegation of financial power and recording is done by the accounting personnel. Yes Yes. The Government has introduced Mid Term Budgeting Framework (MTBF) system of budget and this contains the physical and financial target. Yes. The budget code is exhaustive and contains the classification of allocation in defined activities. Page 114 of 423

131 14.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget? Yes. DPHE centrally monitors project activities with budget variance analysis for timely intervention Are approvals for variations from the Yes. Approvals are required in advance budget required in advance or after the fact? 4.14 Who is responsible for preparation and approval of budgets? 4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets? 4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals? Payments 4.17 Do invoice-processing procedures provide for: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports? (iv) Checking the accuracy of calculations? 4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment? Centrally MOF is responsible for preparation and approval of budget with necessary support from Planning Commission and respective department/ project entities Yes. Preparation of budget is a bottom up approach. PIUs provide the actual data from field / cost centers to PMO. PMO consolidates and compiles and forwards to DPHE HQ for further approval from Administrative Ministry and finally sent to MoF and Planning Ministry for approval. Yes. At the entity level, the budget is prepared by Budget Working Group (BWG) in accordance with set procedures. Yes. Standard procedures for invoice processing are in place to check and process payments Yes. As soon as payment is cleared all invoices are stamped as PAID for further accounting actions Do controls exist for the preparation of the Yes. Payroll is made in accordance with payroll and are changes to the payroll the information in attendance registers. properly authorized? Policies and Procedures 4.20 What is the basis of accounting (e.g., cash, accrual)? Cash Basis What accounting standards are followed? Government Accounting Standards issued by MOF as indicated in the Project Accounting Manual 4.22 Does the project have an adequate Yes. DPP contains policies to adhere while policies and procedures manual to guide executing project activities. activities and ensure staff accountability? Page 115 of 423

132 4.23 Is the accounting policy and procedure Yes. Standard policies are in place all the manual updated for the project activities? project activities are conducted accordingly 4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy or procedure to be used by the entity? 4.25 Are there written policies and procedures covering all routine financial management and related administrative activities? Yes. Since the accounting principle is set by the Central Government, the change in policy requires approval of Central Government Yes. Delegation of financial power, PAM issued by MoF and other GOB guidelines to be followed Do policies and procedures clearly define Yes. Financial rules issued by MOF lay conflict of interest and related party down procedures in this regard. transactions (real and apparent) and provide safeguards to protect the organization from them? 4.27 Are manuals distributed to appropriate personnel? Cash at Bank 4.28 Indicate names and positions of authorized signatories in the bank accounts Does the organization maintain an adequate, up-to-date cashbook, recording receipts and payments? Yes Project Director at PMO level and Mayor and Chief Executive Office / Secretary or PIU head at IA level. Yes 4.30 Do controls exist for the collection, timely Yes deposit and recording of receipts at each collection location? 4.31 Are bank and cash reconciled on a monthly basis? 4.32 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official? 4.33 Are all receipts deposited on a timely basis? Safeguard over Assets 4.34 Is there a system of adequate safeguards to protect assets from fraud, waste and abuse? Yes Yes Yes Are subsidiary records of fixed assets and Yes stocks kept up to date and reconciled with control accounts? 4.36 Are there periodic physical inventories of fixed assets and stocks? 4.37 Are assets sufficiently covered by insurance policies? Other Officers and Implementing Agencies Yes. DPHE and respective projects prepare annual stock inventory and annual verifications are done through a committee. Yes 4.38 Are there any other regional offices or Yes. PIUs at PS executing entities participating in implementation? Insurance policies are done where applicable. Page 116 of 423

133 4.39 Has the project established controls and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities? 4.40 Does information among the different offices/implementing agencies flow in an accurate and timely fashion? 4.41 Are periodic reconciliations performed among the different offices/implementing agencies? Other 4.42 Has the project advised employees, beneficiaries and other recipients to whom to report if they suspect fraud, waste or misuse of project resources or property? 5. Internal Audit 5.1 Is there a internal audit department in the entity? 5.2 What are the qualifications and experience of audit department staff? Yes. PPMS and PMIS established to generate project and financial information and ensure accountability Yes. Yes. Done every month / quarter / annually. Yes No, there is no internal audit cell but if necessary CE audited any office to make a team. N/A, however, team (stated above) is formed by experience persons. 5.3 To whom does the internal auditor report? Team reported to Chief Engineer, Head of Agency 5.4 Will the internal audit department include the project in its work program? 5.5 Are actions taken on the internal audit findings? 6. External Audit 6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor? 6.2 Are there any delays in audit of the entity? When are the audit reports issued? N/A, however, if needed CE may deploy such team to verify project work. Yes. Remedial measures are initiated on team findings. Yes. Foreign Aided Project Audit Directorate (FAPAD) on behalf of C & AG which is constitutionally responsible for conducting external audit. No. FAPAD has been conducting timely audits and submits the reports on time 6.3 Is the audit of the entity conducted Yes. FAPAD conducts its audits as per according to the International Standards international auditing standards. on Auditing? 6.4 Were there any major accountability issues brought out in the audit report of the past three years? 6.5 Will the entity auditor audit the project accounts or will another auditor be appointed to audit the project financial statements? 6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented? Issues are brought to the notice of management for follow up and necessary action is taken in order to settle audit observations FAPAD regularly audits the financial statements and relevant books of the project. No. The management letter and audit findings are regularly monitored and regular follow up is done Page 117 of 423

134 6.7 Is the project subject to any kind of audit from an independent governmental entity (e.g., the supreme audit institution) in addition to the external audit? 6.8 Has the project prepared acceptable terms of reference for an annual project audit? 7. Reporting and Monitoring 7.1 Are financial statements prepared for the entity? In accordance with which accounting standards? 7.2 Are financial statements prepared for the implementing unit? 7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making? 7.4 Does the reporting system need to be adapted to report on the project components? 7.5 Does the reporting system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data? 7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used? Yes. FAPAD sometimes conducts Performance Audit in several projects of DPHE Yes, if needed Yes. Financial statements are prepared in accordance with the Government principles of accounting Yes. Annual Financial Statements are prepared for each project. Yes 7.7 Are financial management reports used by Yes management? 7.8 Do the financial reports compare actual Yes expenditures with budgeted and programmed allocations? 7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means? Yes. Projects implemented by DPHE are subject to report in financial matters as suggested in the Loan Agreement Yes. The projects are reporting to different government agencies and donors with a comprehensive summary report on physical and financial targets. Yes. PPMS and PMIS lays down the responsibilities and reports to be prepared and their usage. DPHE has developed software and this is being introduced / adopted in different projects. Besides this all other reports are prepared on computer. 8. Information System 8.1 Is the financial management system computerized? 8.2 Can the system produce the necessary project financial reports? Same as in 7.9 Yes. Page 118 of 423

135 8.3 Is the staff adequately trained to maintain the system? 8.4 Does the management organization and processing system safeguard the confidentiality, integrity and availability of the data? DPHE has already conducted training in computer software. Annually a number of computer courses are being / will be organized for Project Staff on a routine. Yes. DPHE is committed to appropriate processing of financial and other data and to preserve this important data for future availability and subsequent use. Supporting Documents Financial regulations, standards or pronouncement used by the project/entity Information concerning the legal and organizational structure of the entity Extracts or copies of important legal documents, agreements, or minutes Information concerning the sector, economic and legislative environment within which the entity operates Evidence of consideration of the work of the Internal Auditor (if applicable) and conclusions reached Analyses of significant ratios and trends (revenue generating projects) Draft format of the financial statements produced by the project/entity Copies of communications Chart of Accounts Project or entity Financial Management Manual Audit terms of reference Terms of reference and curriculum vitae for key financial and accounting personnel Operational manual Copy of most recent audit report (if applicable) Page 119 of 423

136 6 ECONOMIC ANALYSIS 6.1 Economic Rationale 207. Out of the total population of about 150 million, the urban population is growing rapidly from 20% in 1991 to 28% (42 million) in 2011, with the current annual growth rate of 3.1%, more than double the 1.1% annual growth rate of the entire population. 45 At existing growth rates, the country s urban population will reach 63 million, or 36% of the population by Rapid urbanization is widening the deficit in infrastructure and services. Although the urban poverty was reduced to 21.3% in 2010, 47 many of the urban poor live in substandard housing conditions and poor infrastructure often in disaster-prone areas Pourashavas (municipalities) are struggling to provide their citizens with key services including drinking water supply and sanitation, roads, solid waste management, drainage systems, and other municipal services such as kitchen markets, street lights, and bus terminals. Although coverage in drinking water supply reached 85% in urban areas in 2010 (81% for the whole country), access to piped water supply in household premises is provided to only 20% of the urban population, requiring significant improvement in service levels. 48 Only 57% of the urban population have access to improved sanitation facilities in 2010 (56% for the whole country), which is lower than the average in South Asia. The situation is even more serious in slums, as the access to sanitation is highly correlated with wealth. Solid waste management is not systematic, and wastes are often dumped in open areas creating public health risks. Drainage is underdeveloped and poorly maintained, resulting in frequent waterlogging. Although improvements are being made through earlier projects, most pourashavas still need significant investment support to improve municipal service delivery The urban infrastructure improvement will be implemented in three phases under the project. The investment will cover road, drainage, water supply and sanitation, solid waste management, and other municipal service facilities such as kitchen market, bus and truck terminal, slaughter house, community hall, and street lighting. 6.2 Methodology 210. Economic analyses were carried out for subprojects in the three sample pourashavas (Lalmonirhat, Magura, and Naogaon). The analyseswereundertakenin accordance with ADB s Guidelines for the Economic Analysis of Projects 49, Guidelines for the Economic Analysis of Water Supply Projects, 50 and the Framework for the Economic and Financial Appraisal of Urban Development Sector Projects 51. The subprojects analysed involveroad, drainage, water supply andsolid waste management. Except for water supply, the subprojects analysed will be implemented in the first phase of the project Alternative technically viable solutions that comply with environmental rules were 45 Bangladesh Bureau of Statistics Population and Housing Census.Dhaka. 46 United Nations Department of Economic and Social Affairs, Population Division World Urbanization Prospects: The 2011 Revision. New York. 47 Bangladesh Bureau of Statistics Household Income and Expenditure Survey Dhaka. 48 UNICEF and WHO Progress on Drinking Water and Sanitation: 2012 Update. New York. 49 ADB Guidelines for the Economic Analysis of Projects. Manila. 50 ADB Guidelines for the Economic Analysis of Water Supply Projects. Manila. 51 ADB Framework for the Economic and Financial Appraisal of Urban Development Sector Projects. Manila. Page 120 of 423

137 assessed, in consultation with the pourashavas and other stakeholders, to ensure that the cost effective option within the financing capacity of the pourashavas is proposed Benefits and costs were arrived at through comparison of the without project and with project conditions. Benefits and costs were estimated over each subproject s estimated economic life at constant 2013 price. All costs were valued using the domestic price numeraire. Economic costs were derived from the technical team s financial estimates of capital and operation and maintenance (O&M) costs and adjusted for transfer payments and any other market distortions. Taxes and duties were excluded because they represent transfer payments.traded goods, net of taxes and duties, were adjusted by the shadow exchange rate factor of 1.07 while a factor of 1.0 was applied for non-traded goods, except for labor. The shadow wage rate factor of 0.94 was used for labor. These parameters are consistent with those used in recently approved ADB-financed projects in Bangladesh.Economic opportunity cost of capital (EOCC) of 12% was assumed for the analysis. 6.3 Economic Benefits 213. Roads. The road subprojects will involve improvement and/or construction of roads, culverts, roadside protection walls, footpaths, and related road structures. The subprojects will result to better road conditions, smoother road surface and faster travel for all types of vehicles The economic benefits of the road subprojects were quantified in terms of reduction in vehicle operating costs (VOC) and savings in travel time costs (TTC). VOC refers to the costs of operating a vehicle such as fuel, spare parts, depreciation, and crew costs. TTC is the value of time spent on travelling that could be used in other economic activities. The VOC and TTC for each vehicle type were based on the most recent study 52 involving road user cost. The VOC and TTC calculated in the study were adjusted to 2013 prices in the analyses Traffic counts to determine without project situation of selected road 53 were conducted twice, one on a market day and another one on a non-market day from 6 a.m. to 10 p.m.. All types of traffic, motorized and non-motorized, passing through a selected neutral point at the middle of the total length of the selected road, were counted Savings in VOC and TTC would accrue from improvement in the road conditions roughness measured by international rough index. The benefits are assumed to increase at the rate corresponding to the traffic growth rate of 6% annually. The benefits are estimated to be one-third of the total benefits in the first year, two-thirds in the second year and full benefits from the third year onwards. Table 6.1 below summarizes the economic benefits of the selected roads analysed Drainage. The drainage subprojects will improve the drainage system, reduce water logging and flooding, and improve the environmental and living conditions and public health in the subproject areas. The socio-economic surveys and discussions with pourashavas officials and focus groups revealed that large parts of the subproject areas experience regular water logging and flooding during the monsoon season and thus cause damages to properties and disruption of economic activities.the economic benefits of the drainage 52 LGED Road User Cost Study for LGED Roads, Final Report. 53 Out of the 30 road subprojects to be implemented in the first phase from the 3 sample pourashavas, 3 out of 9 roads in Naogaon, 4 out of 7 roads in Lalmonirhat and 4 out 14 roads in Magura, were selected for economic analysis. The selection was based on systematic random sampling which was submitted to ADB and subsequently approved. Page 121 of 423

138 subprojects were quantified in terms of reduction of damages to properties and losses caused by disruption of economic activities due to flooding In each drain subproject 54, the catchment area affected by flooding was identified and estimated. Reduced damagesto properties and losses from disruption of economic activities caused by floodingwere estimated based on the results from the socio-economic surveys andfield discussions conducted.table 6.2 below summarizes the economic benefits of the selected drains analysed. Table 6.1: Economic Benefits in Selected Roads Pourashava / Subproject Naogaon AADT Savings in VOC (Tk/Km/Day) Savings in TTC (Tk/Km/Day) Normal Generated Total Normal Generated Total Road No. 2 Road No. 5 Road No. 17 Lalmonirhat Road No. 1 Road No. 4 Road No. 7 Road No. 9 Magura 602 1, , , , , , , , , , , , , , , , Road No , , Road No , Road No , Road No , , ,108 AADT = annual average daily traffic, VOC = vehicle operating cost, TTC = travel time cost. Source: ADB TA 8339-BAN consultant s estimates. 54 Out of the 13 drain subprojects to be implemented in the first phase from the 3 sample pourashavas, 2 out of 2 drains in Naogaon, 2 out of 3 drains in Lalmonirhat and 3 out of 8 drains in Magura, were selected for economic analysis. The selection was based on systematic random sampling which was submitted to ADB and subsequently approved. Page 122 of 423

139 Table 6.2: Economic Benefits in Selected Drains Pourashava / Subproject Length of Drain (Km) Catchment Area (Ha) Reduction in Losses / Ha (Million Tk) Total Annual Benefits (Million Tk) Naogaon Drain No Drain No Lalmonirhat Drain No Drain No Magura Drain No Drain No Drain No Source: ADB TA 8339-BAN consultant s estimates 219. Water Supply.The proposed water supply subproject in Lalmonirhat involves the improvement of existing production tube wells and replacement of bulk water meters, installation of water level indicator in overhead tank, improvement of distribution network with replacement of distribution pipes, leak detection and repair of distribution system, installation of service connections and water meters 55, establishment of mini water quality testing laboratory, provision of tools and equipment, and other improvement works to provide better quality of water and service to customers The economic benefits from the improved water supply system were quantified in terms of: (i) resource savings in fetching water from non-piped sources estimated at million Taka/year 56 and boiling of water for drinking purpose estimated at million Taka/year 57 ; and (ii) health benefits consisting of productivity gains estimated at million Taka/year 58 and avoided medical costs estimated at million Taka/year 59.The benefits were estimated to be 20% of the total benefits in the second year, 50% in the third 55 Presently, there is no metering in water production and distribution. Water is billed based on the diameter size of distribution connection pipe. Water metering system will be introduced under the project. 56 Basis: 6,550 households (HH) benefitted, time spent of 8 minutes/day/hh and unskilled labor rate of 300 Taka/day. 57 Basis: 6,550 HH benefitted at a conservative boiling cost of 1 Taka/day/HH. Use of firewood was assumed. 58 Basis: 6,550 HH benefitted, 0.6 days lost/month/hh, 15% of lost days due to water borne disease and unskilled labor rate of 300 Taka/day. 59 Basis: 6,550 HH benefitted, medical cost of 615 Taka/month/HH, and 15% of medical cost due to water borne disease. Page 123 of 423

140 year, 80% in the fourth year and 100% from the fifth year onwards Solid Waste Management.The proposed SWM subproject in Magura involves the provision of 2,000 bins, 6 rickshaw vans, 2 trailers with one tractor, one dump truck; and construction of sanitary landfill with site embankment, liner facility, leachate collection and treatment facility, composting and medical waste collection and treatment facility. The subproject will bring about quality improvements in public health and environment. Benefits will accrue to the community as a whole, both poor and the rich, and not only to the direct beneficiaries of the waste collection services as the interventions are public good The economic benefits from the improved SWM system were quantified in terms of productivity gains estimated at milliontaka/year 61 and avoided medical costs estimated at million Taka/year Results of Economic Analysis 223. The results of the economic and sensitivity analysis of the subprojects are summarized in Table 6.3 below. Based on the results, it can be concluded that the proposed subprojects are economically viable. Their base economic internal rates of return (EIRRs)range from 12.24% to 44.78%, well above their assumed EOCCof 12%. The sensitivity analysis indicates that the proposed subprojects are most sensitive to a reduction in benefits. These results are most likely underestimated, since the subprojects have benefits that are not easily quantifiable and not accounted for in the analysis. 6.5 Subprojects Economic Sustainability 224. The economic sustainability of the subprojects depends on the pourashavas condition to sustain financially the subprojects O&M. Unless the pourashavas are financially healthy to sustain the subprojects O&M, the economic benefits assumed in the analysis would not materialize. The results of the projected financial performance of the pourashavas show that the pourashavas are projected to have operating surplus each year over the forecast period when the subprojects facilities become operational. The economic sustainability of the subprojects would require, however, that pourashavas income sources continually grow and improve to keep pace with the rising operating costs due to inflation. Table 6.3: EIRR and Sensitivity Analysis Pourashava / Subproject Naogaon EIRR (%) Base Case Sensitivity of EIRR (%) NPV (Million Tk) BCR 20% Increase in Cost 20% Reduction in Benefits Combined Road No. 2 Road No For conservatism, only the estimated number of direct beneficiaries was used in the analysis. 61 Basis: 11,250 HH benefitted, 0.6 days lost/month/hh, 15% of lost days due to water borne disease and unskilled labor rate of 300 Taka/day 62 Basis: 11,250 HH benefitted, medical cost of 730 Taka/month/HH, and 15% of medical cost due to water borne disease Page 124 of 423

141 Pourashava / Subproject EIRR (%) Base Case Sensitivity of EIRR (%) NPV (Million Tk) BCR 20% Increase in Cost 20% Reduction in Benefits Combined Road No. 17 Drain No. 1 Drain No. 3 Lalmonirhat Road No. 1 Road No. 4 Road No. 7 Road No. 9 Drain No. 3 Drain No. 4 Water Supply Magura Road No. 2 Road No. 4 Road No. 6 Road No. 13 Drain No. 1 Drain No. 3 Drain No. 8 Solid Waste BCR = benefit cost ratio, EIRR = economic internal rate of return, NPV = net present value discounted at EOCC of 12% Source: ADB TA 8339-BAN consultant s estimates Page 125 of 423

142 7 STATUS ON CURRENT LOAN FINANCING TO POURASHAVAS Bangladesh Municipal Development Fund 225. A review of the status of payments under the BMDF shows that borrower municipalities have the capacity to pay their debt obligations to the Fund. Table 7.1 presents the status of loan payments of six sample pourashavas. Table 7.1: Status of Pourashava Loans with BMDF Description Lalmonirhat Magura Naogaon Amtali Pirojpur Mathbaria Principal 4,570,537 4,310,000 6,275,626 2,667,024 3,929,628 2,119,095 amount Loan with 5,856,000 5,522,188 8,040,646 3,417,125 5,034,837 2,945,837 annuity Repayment start Installments due Installments paid Total Repaid 1,067,321 4,377,345 4,955,131 2,953,175 2,970,410 1,486,718 Source: BMDF 226. BMDF loan carries simple interest at 5% per annum, repayable in 36 quarterly installments in 10 years with one-year moratorium. BMDF finances 90% of the project cost while pourashava contributes the remaining 10%. Out of BMDF amount; 85% is grant to pourashava and the rest 15% is treated as loan From Table 12.7, except for Lalmonirhat, all other samples have up-to-date, or nearly so, with their debt servicing requirements. Secondary Towns Water Supply and Sanitation Project As per DPP, GOB shall provide grants to implement the project components except for 50% of the construction cost of the piped water supply systems that shall be onlent to the pourashavas under STWSSP. The loan terms and conditionsfor the onlent amount include (i) interest at 7% p.a., (ii) repayment period of 20 years including 5-year grace, (iii) repayment of principal portion to be in 15 equal annual installments plus interest on the outstanding balance, and (iv) interest during grace period to be paid with 1st repayment installment To effect the above, the concerned pourashavasigned a subsidiary loan agreement (SLA) with the Finance Division, MOF. Although the EA played a major role in the onlending process, there was no provision in the SLA for them to monitoring the loan status. 63 ADB Loan Agreement No: 2265-BAN (SF). Page 126 of 423

143 Urban Governance and Infrastructure Improvement Project II UGIIPll onlends to subproject pourashava 50% of investment cost of direct revenue generating components like markets, water supply, transport terminals, etc. The terms and conditions of onlending are similar to those of STWSSP except for interest rate, which is lower at 4% p.a. There is no available information on loan repayment status for the same reason cited under STWSSP. 64 ADB Loan Agreement No: 2462-BAN (SF). Page 127 of 423

144 8 SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY Country: Bangladesh Project Title: Third Urban Governance and Infrastructure Improvement (Sector) Project Lending/Financing Modality: Sector Department / Division: Urban Development and Water Division South Asia Department (SARD) I. POVERTY AND SOCIAL ANALYSIS AND STRATEGY Targeting classification: General Intervention Poverty is one of the major constraints to the country s economic and social development. Substantial attention has been given to reduce poverty, and Bangladesh has made significant and steady progress in this area. The percentage of population in poverty has decreased from 40% in 2005 to 31.5% in Most of the Millennium Development Goals (MDG) achievements of the country are impressive. Still poverty- extreme to low - is significantly visible and remains scattered throughout the country. Urban poverty continues to be a major agenda for the country s socio-economic development with poverty rates declining by 7.1 percentage points during 2005 to Despite the positive changes, the poverty ratio remains relatively unchanged in large cities like Dhaka (from 32.0% to 30.5%). Major cause of this low achievement is rapid rural-urban migration owing to shortfall in urban services and opportunities in smaller cities and adjacent peri-urban and rural areas. In this light, the project aims to improve governance and infrastructure of the participating municipalities. A. Links to the National Poverty Reduction and Inclusive Growth Strategy and Country Partnership Strategy Bangladesh is on track to achieve MDGs in poverty reduction, inclusive growth and social development. The country has given stress on the above-mentioned issues in its latest strategic document the Sixth Five Year Plan (SFYP) 2011 to a Higher standard of living, better social justice, more equitable and sustained socioeconomic environment for citizens are enshrined in SFYP. To promote equitable, sustainable and inclusive growth and reduce poverty, the SFYP s strategies stress on a more balanced urban growth through proper institutional reform involving the establishment of locally elected and accountable municipalities, property tax reform to strengthen their financial autonomy, proper land use plan, improved infrastructure and road network. Human development is also a crucial strategy of SFYP stressing on good governance. To break low factor endowment trap, the SFYP strategy emphasizes quality and efficient essential public service delivery. To achieve this it is necessary to develop a system of accountability and transparency to ensure availability and appropriate and adequate services for the poor and among them women and girls. The SFYP strategy puts emphasis on establishing equal opportunities for women and on gender equality and social inclusion. The SFYP also focuses on inclusive and holistic aspects in the design of strategies, policies and programs. Given ADB s commitment to the already present mandate of improving urban, ADB will continue to assist the government in expanding access to municipal infrastructure and services, including municipal transport, drainage, water supply, sanitation, solid waste management, and other urban services with significant impact on urban public and environmental health. B. Results from the Poverty and Social Analysis during PPTA or Due Diligence 1. Key poverty and social issues: Bangladesh is a country with accelerated and rapid urbanization. Rural-urban migration particularly towards big cities like Dhaka and Chittagong is still high and increasingly making the cities unlivable. Majority of migrants grapple to find places in the already cramped slums. Access to economic opportunities and social services are limited in the rapidly growing urban areas with poor urban facilities. Municipal governance parameters are explicitly weak and poorly addressed as has been highlighted by the poor and women in community and municipality meetings. They have identified the lack of accountability, transparency, responsiveness and financial management as key problems of weak municipal governance. 2. Beneficiaries: Men and women including the poor of the project Pourashavas will benefit from the project. They will benefit from better municipal services, taking part in municipal decision-making from planning stage, raising voice in different forums to address their needs, building leadership quality, better water supply, improved infrastructure and better health, hygiene and environment through project awareness raising program. The hardcore poor of selected slums will benefit from improved environmental sanitation. 3. Impact channels: Through the participation of the poor and women in Municipal decision-making forums, such as the town-level coordination committee (TLCC), ward-level coordination committee (WLCC), Poverty Reduction & Slum Improvement Standing Committee (PR&SI), Women & Children (W&C) Affairs Standing Committee, the Page 128 of 423

145 project will open a window to raise their (poor and vulnerable) voices. Through a provision of project fund to Slum Improvement (SI) activities including providing footpaths, streetlights, toilets, tube wells, and dustbins for the poor and vulnerable group, will directly benefit the poor and the women. Women friendly infrastructure will promote mobility for women. Project generated infrastructure work including construction will benefit poor and vulnerable through short-term employment. Improved municipal services, e.g., health service, immunization activities, and water supply, will benefit poor and women. Series of awareness programs and constructing public toilets in public places and SI activities will promote Human Resource Development (HRD) especially among poor and vulnerable. Besides, Poverty Reduction Action Plan (PRAP) and Gender Action Plan (GAP) and allocating workable budget from Pourashava revenue setting on a perennial basis will stand to address specific needs of poor and vulnerable and will also work for ushering gender equality, empowering women and gender mainstreaming. 4. Other social and poverty issues: Project intervention will not be sufficient to address all the needs of poor and women such as: (i) safety, (ii) security, (iii) unemployment, (iv) education, and (v) health. Linking various departments like: Social Welfare, Department of Youth Development, other related government organizations and non-government organizations (NGOs) and stakeholders may be effective to address the needs. Pourashava can take the initiatives to link the related organizations and pursue especially through effective TLCC. This will lead the Pourashavas to a balanced growth and contribute to reduce the trend of mobility towards major cities. 5. Design features: Key poverty and social issues are enshrined in project outcome and output. The outcome of the project is: Improved municipal service delivery and urban governance in project towns. Project s outcome for strengthening governance is to be ensured through a fully functional TLCC which has at least one-third women and 7 representatives of the poor and WLCC which has 40% women and 2 representatives of the poor and municipal budget allocation to implement GAP and PRAP. C. Poverty Impact Analysis for Policy-Based Lending Not applicable II. PARTICIPATION AND EMPOWERING THE POOR 1. Participatory approaches and the proposed project activities that strengthen inclusiveness: The project will ensure participation of citizens; men women and poor in local governance, which will strengthen inclusiveness. The project will strengthen such participation and inclusiveness through mandatory inclusion of poor and women as members in TLCC, WLCC and poor representatives in PR & SI standing committee; preparing demand driven PRAP in consultation with poor representatives; giving room to the poor representatives in raising their voice in municipal decision-making including infrastructure planning/ urban planning, budgeting; formation of women-led SICs (comprising only slum people and at least one-third women). The committee will manage overall SI activities, targeting promotion of leadership quality and enhancing their assets, particularly infrastructure. 2. If civil society has a specific role in the project, summarize the actions taken to ensure their participation: Forming TLCC, WLCC, and standing committees with representation of civil society is a prerequisite for all project Pourashavas to receive budget for infrastructure improvement. Keeping these committees functional will be monitored throughout the project. 3. Explain how the project ensures adequate participation of civil society organizations in project implementation: Pourashavas are the implementing units of the project and TLCC is a consultative forum of Pourashava decisionmaking. TLCC members comprise civil society including at least 7 poor representatives, 17 women members and representatives from different line departments, NGOs, journalists, teachers, entrepreneurs. Adequate participation of civil society in project implementation will be ensured through effective TLCCs, WLCCs and other committees that include members from civil society organization. Besides, series of Focus Group Discussions (FGDs) and courtyard meetings will be conducted as part of awareness-raising. 4. What forms of civil society organization participation is envisaged during project implementation? (L) information gathering and sharing, (H) consultation, (M) collaboration, (N) partnership 5. Will a project level participation plan be prepared to strengthen participation of civil society as interest holders for affected persons particularly the poor and vulnerable? No. Community mobilizers will promote participation during implementation. Participatory and inclusive planning process is incorporated into the governance criteria that all project Pourashavas need to fulfill. III. GENDER AND DEVELOPMENT Gender mainstreaming category: Gender Equity Theme A. Key issues. Mainstreaming gender; Active participation of women in municipal governance is very important in making decisions and make service delivery gender-friendly. Women ward councilors elected from reserved seats are mostly with limited capacity to take part in decision-making. Pourashavas also largely do not pay attention to make an enabling environment for raising women s voice. Pourashava citizen particularly women and poor mostly are not fully aware of the entire gamut of services provided by Pourashavas. They have limited awareness regarding health, hygiene, solid waste management and also service-billing like tax and water bills. Infrastructure without addressing women need is a constraint of women mobility and living. Poor living condition in slums increase the miseries/hardship of women spanning such as fetching water from a distance, nursing weak family members, poor health, and insecurity in night-time movements. Page 129 of 423

146 B. Key actions. Gender action plan Other actions or measures No action or measure Project provision of forming TLCC, WLCC, and standing committees for W&C and PR&SI, SIC with a particular percentage of women will provide women a platform to take part in municipal governance. To make women participation active the provision of recording women voice in TLCC and WLCC and counting it in decision is enshrined in performance criteria. Performance criteria also mention about the preparation of Pourashava-tailored GAP in light of project GAP and allocation of PS revenue fund for its implementation. Infrastructure will be women- friendly. Core labor standards will be maintained. At least 20% women will be engaged in project generated construction work. Equal wage for work of equal value for men and women will be promoted. Women will get equal opportunity to participate in project-supported training. Awareness meetings/ campaigns will target women to increase their knowledge regarding health-hygiene, tax, water billing, maintenance of toilets, solid waste management and other social services. Women in slums will get opportunity of better toilets, walk way, and water supply, and their burden of fetching drinking water also will be reduced. Women also will get Income Generating Activities (IGA) training and be supported through town-level GAP implementation. IV. ADDRESSING SOCIAL SAFEGUARD ISSUES A. Involuntary Resettlement Safeguard Category: A B C FI 1. Key impacts. Limited impacts are identified in three sample subproject towns. No private land acquisition required for the proposed components as all of them are located in the existing government lands or road/drainage right-of-way. Three permanent structures and 70 semi-permanent structures will be affected. Most of them are in forms of shops/or business stalls. Livelihoods of a total 71 shop owners will be affected. One of them will have to move out permanently from the current location and 70 owners will only experience temporary relocation. 2. Strategy to address the impacts. Three draft resettlement plans in each of the sample towns are prepared. Resettlement framework is prepared to provide guidance for the preparation of resettlement plans for future subprojects and towns. 3. Plan or other Actions. Resettlement plan Resettlement framework B. Indigenous Peoples Safeguard Category: A B C FI 1. Key impacts. No impacts on indigenous people community identified in three sample towns of Magura, Naogaon, and Lalmornihat. Is broad community support triggered? Yes No 2. Strategy to address the impacts. Indigenous People Planning Framework is prepared to provide guidance on procedures and documentation requirements in the event of indigenous people/ ethnic minority issues are identified during project implementation and in the future subproject activities 3. Plan or other actions. Indigenous peoples planning framework V. ADDRESSING OTHER SOCIAL RISKS A. Risks in the Labor Market 1. Relevance of the project for the country s or region s or sector s labor market. (L) unemployment (L) underemployment (L) retrenchment (M) core labor standards 2. Labor market impact. The project will generate employment opportunities in construction works including community participation in slum improvement works. Core labor standards will be adhered to. B. Affordability The socio-economic survey undertaken in the PPTA shows that monthly water bills and other service charges are within the affordable limit of citizens. The average monthly household income in 3 sample towns is about Tk16,350. Their monthly water bill is Tk125. This means that it is less than 1% of monthly household income. Even after switching to volumetric tariff system, the average monthly water bill will remain at a similar level. Thus it is affordable to town dwellers. C. Communicable Diseases and Other Social Risks 1. Indicate the respective risks, if any, and rate the impact as high (H), medium (M), low (L), or not applicable (NA): Communicable diseases Human trafficking Others (please specify) Not applicable 2. Describe the related risks of the project on people in project area. The size of civil works is rather small, and works will be undertaken by local contractors. The risk is minimal. VI. MONITORING AND EVALUATION 1. Targets and indicators: The overall impact of the project will be improved living environment in project towns. The expected outcome will be improved municipal service delivery and urban governance in project towns. Improved municipal infrastructure and enhanced capacity of selected Pourashavas to address the needs of the poor and women will be supported. The project includes some unique gender-related design features and the commitment to developing pourashava-specific gender action plans (GAPs), with at least 1% of municipal revenue budget earmarked for GAP implementation. A range of gender-relevant outcome and output indicators and targets have been set in the DMF and GAP. 2. Required human resources: The project will engage social safeguards specialists, environmental safeguards specialists, and gender development and poverty alleviation specialists. Safeguard officers and a gender and social development specialist will be in the Project Management Office (PMO). Page 130 of 423

147 3. Information in PAM: The PAM includes details of the monitoring mechanism. To measure progress and results, there will be annual surveys and quarterly monitoring of output and outcome indicators presented through quarterly progress reports with a GAP update implementation matrices attached. Review missions will monitor the timely and effective implementation of the project-specific GAP and pourashava-specific GAPs. 4. Monitoring tools: The PMO will develop a sex disaggregated qualitative and quantitative monitoring reporting format and distribute it among relevant officers in the Pourashavas. a Government of Bangladesh Sixth Five Year Plan: FY2011 FY2015. Dhaka. Source: Asian Development Bank. Page 131 of 423

148 9 GENDER ACTION PLAN Activities Indicators and Targets Responsibilities Output 1. Municipal infrastructure improved and made gender and climate responsive 1. Ensure women s participation in identification of location of infrastructure and type/kind of infrastructure to be built 2. Ensure women-friendly infrastructure and facilities in target Municipalities 3. Ensure women s engagement in the construction, operation and maintenance (O&M) of community infrastructure 4. Ensure compliance with core labor standards in construction, especially gender-relevant CLSs (incl. equal wage for work of equal value, promotion of women s safety, protection from sexual harassment, prohibition against discrimination, and prohibition of child labor) 5. Involve women in planning, identification and management of community infrastructure in targeted slum areas All community consultation meetings related to identification of location for local infrastructure with women participation [Target: 30% women] 1,000 households (HHs) with new connections and improved water supply 1,000 HHs with new and improved sanitation services 25 Municipal buildings with separate office space and toilets for Women Ward Councilors (WWCs) 80% Municipalities with bus terminals (if possible launch ghats (boat landind area) and railway station) equipped with separate toilets for women and as feasible, women- and child-friendly waiting rooms and booking counters 80% Municipalities with public parks with well-lit and safe sitting areas and separate toilets for women Women engaged in construction work as laborer and this provision included in bidding document [Target: 20%] 600 women including members from SICs (who signed a contract with the Municipality) trained in O&M 600 women including members from SICs engaged for O&M of community infrastructure Clauses on gender-relevant national core labor standards (CLS) included in all bidding documents. All contractors oriented on all CLSs with focus on gender-related CLS clauses Workers' attendance sheet with name, sex, age, and wage of workers available for inspection by IIS All construction workers, including all women workers oriented on work safety measures All construction sites will arrange separate toilets for women and provided with safe drinking water At least 30% women from targeted slum communities participate in consultation, planning and preparation of Community Action Plan (CAP) for slum improvement under PRAP Municipalities (PIUs) Municipal council Women and Children Affairs (WCA) Standing Committee (STC) PIU, Communication and Infrastructure (C&I), WCA STCs and Infrastructure Improvement Section (IIS) of Municipality PIU WCA STCs Department of Public Health and Engineering (DPHE) PIU WCA STC, IIS and Contractors Municipal Council WCA and Poverty Reduction & Slum Improvement (PRSI) STCs Time frame Year 1-6 Year 1-6 Year 1-6 From 3 rd Qtr Year 1 Year 6 Year 2-6 Page 132 of 423

149 Activities Indicators and Targets Responsibilities Output 2. Improved capacity of pourashavas in urban service delivery, planning, and financial management 6. Ensure equitable representation of women and poor in Pourashava structures 7. Conduct gender related capacity building activities for effective implementation of GAP 8. Ensure W&CA and PR & SI standing committees information is incorporated in all Citizen Charter 9. Institutionalize gender responsive planning and budgeting in every PS 10. Ensure women s leadership in slum improvement committees and activities 11. Support LGED Gender Forum to strengthen gender mainstreaming in LGED Output 3. Project management and administration system in place At least 40% women and 2 representatives from poor communities in Ward Level Coordination Committees (WLCCs) At least 33% women and 7 representatives from poor community in Town Level Coordination Committees (TLCCs) Women and Children Affairs (WCA) Standing Committee formed, effectively operational with allocated funds from Municipal revenue budget and with women holding 40% (two of the five seats) Poverty Reduction and Slum Improvement (PRSI) Standing Committees effectively operational with women holding 40% (two of the five seats) and 2 representatives from poor community Women s Ward Councils (WWCs) are assigned with gender-responsive responsibilities Gender related training modules and materials improved 25 trainers on gender issues developed from 60 trainers trained on ToT Training and orientation workshops conducted for relevant persons of all Municipalities on GAP implementation 25 Municipal Mayors, 60 Councilors, all WWCs from PIUs and 90% of PMO staff oriented/ trained on GAP implementation All citizen charters include information on WCA and PRSI Standing Committees and available services of Pourashavas Pourashava-specific GAPs with specific target/ indicator and appropriate budget prepared in all Municipalities and endorsed by TLCC [Target: by 1-2 year] Budgetary provision: at least 1% of Municipal revenue fund allocated for GAP implementation and earmarked [Target: at least 20 Municipalities] At least 50% of the allocated budgetary provision for the GAP fund of Municipality is spent from Municipal revenue budget in every fiscal year [Target: 20 Municipalities] At least 60% SICs are chaired by women(consistent with UGIIP II SIC Guidelines- 2/3 of all SIC members are women) Provide support to organize gender related events and produce IEC material at LGED [Target: at least 2 events/ Year] PIU WCA and PRSI STCs PMO PIU PIU PS Council WCA and PRSI STCs PIU PS Council WCA STCs Time frame Year 1-6 Year 1-6 Year 1 Year 1-6 PIU, WCA and PRSI STCs Year 1-5 PMO Year 1-6 Page 133 of 423

150 Activities Indicators and Targets Responsibilities 12. Ensure representation of women as staff, consultants, and facilitators for PMO 13. Strengthen collection, monitoring and reporting of sex disaggregated, qualitative and quantitative data Increase number of women employees in PMO Recruit women in technical, supervisory and managerial positions (Target: 10%) Women-friendly facilities (e.g., separate toilets, appropriate sitting arrangement) are available in PMO Sex disaggregated quantitative and qualitative monitoring format developed and distributed to Municipalities Quarterly Progress reports on GAP implementation prepared by PMO and shared with development partners All relevant staff oriented on gender and trained on the collection and monitoring of sex disaggregated data Time frame PMO Year 1-6 PMO Year 1-6 Page 134 of 423

151 10 PROCUREMENT CAPACITY ASSESSMENTS & MARKET ANALYSIS 1) Procurement Capacity Assessment Report and Recommendations Proposed Project Name: Third Urban Governance and Infrastructure Improvement (Sector) Project Proposed Amount: Executing/Implementing Agency: Local Government Engineering Department (LGED), Government of Bangladesh Source of Funding: Asian Development Bank (ADB) Expected Procurement The procurement under the Project will be carried out in 3 phases; out of which only Phase 1 interventions have been identified which consists of 6 works contract packages. Implementation of the project will be supported by the consultants; namely, Consulting Services for Management, Design and Supervision (MDS), and Consulting Services for Governance Improvement and Capacity Development (GICD). All these selection process will follow QCBS method with the quality: cost ratio of 90:10. In order to facilitate project management, there would be 4 goods contracts following Shopping 65 method for procurement of computers and, vehicles, quality control and monitoring tools, equipment for waste management and drainage maintenance etc. General Procurement Environment Assessment Risk Assessment Average Summary of Findings: The proposed project will be implemented by pourashavas (municipalities); which follow the guidelines of the local government ministry for procurement from their local budget or from national funds. These procurements have historically been of low threshold and consist of goods and civil works using the National Tendering Documents. The government s national procurement rules and regulations govern the implementation. These procurements are conducted by the Engineering Section of the Pourashava headed by the Executive Engineer (XEN) or when the XEN is absent by the Assistant Engineer (AE) who conducts the procurement process with the ultimate responsibility of the HOPE (Head of Procurement Entity). Each Pourashava according to the PPA 2006 and the PPR 2008 is required to have a Tender Opening Committee (TOC) and Tender Evaluation Committee (TEC) for opening and evaluation of all tenders submitted under Government of Bangladesh (GOB) procedures. All Pourashavas have experience with low value procurement and evaluations from their local budget or from national funds for goods and civil works. None of the Pourashavas (municipalities) have had formal procurement training in the requirements of the ADB s Procurement Guidelines or Government of Bangladesh s (GOB) Public Procurement Act and Rules. Likewise with the Pourashavas Tender Evaluation Committees (TEC) and familiarization with GoB procedures for evaluations. The government has developed its own standard documents for procurement of goods and works, and requirements for evaluation. These are mainly used for the government funded projects. Hence, these could be adjusted subject to modifications in conformity with ADB s requirements. Such adjustments would create the immediate need for Pourashavas orientation / training for the bidding documents and requirements for evaluation. For recruitment of consultants, the project will use Guidelines on the use of Consultants by Asian Development Bank, edition March 2013 For the proposed project, the following is suggested: (i) follow the national standard bidding documents after modifications to be suggested by ADB for procurement of goods and works following NCB method under national act subject to the modifications above; (ii) use ADB s standard bid documents and procedures for procurement of goods and works following ICB method; and (iii) recruit consultants using ADB s consultant selection documents and guidelines (iv) use bid evaluation requirements as set forth in the national act with any needed ADB modification s. 65 ADB Procurement Guidelines, Section III. Par. 3.5 Page 135 of 423

152 General Agency Resource Assessment: Organizational and Staff Capacity Risk Assessment Average Summary of Findings: The implementing Pourashavas, through the Engineering Section, act as the procurement function headed by the Executive Engineer under overall responsibility of the HOPE (Head of Procurement Entity). Each Pourashava has a Tender Opening Committee (TOC) and Tender Evaluation Committee (TEC) for opening and evaluation of all tenders submitted under GoB procedure. They have only dealt with low value procurement and evaluations from on their local budget or from national funds for goods and civil works. Neither of these groups has had any formal procurement training in either ADB s Procurement Procedures or Government of Bangladesh s Procurement Guidelines. Procurement Practices: Procurement of Goods and Works Risk Assessment: Average Summary of Findings: Procurement Practices: Consulting Services Process Control and Oversight : General Risk Assessment: Average The implementing Pourashavas, through the Engineering Section and Tender Evaluation Committees (TEC), have only dealt with low value procurement and evaluations from on their local budget or from national funds for goods and civil works using national procurement documents. Summary of Findings: The Public Procurement Act of 2006 and the Public Procurement Rules of 2008 provide a clear framework that describes procurement process control and oversight mechanism for all public procurement with clear reference to when to use donor procurement guidelines. The Pourashavas are working within this framework for the procurement and contracting of low value procurement and evaluations from their local budget or from national funds for goods and civil works using national procurement documents. Process Control and Oversight : Accountability Measures Risk Assessment: Average Summary of Findings: The Pourashavas are generally aware of the government s accountability procedures. To function as an effective accountability measure, procurement records must not just be kept according to good record keeping practice, but also be easily and equally accessed by interested parties, including the public. The Pourashavas are deficient in a number of areas due do to the lack of training. To mention a few examples; procurement plans are not published as required by PPR 2008, or unsuccessful bidders are usually not notified in writing that the contract has been awarded to a competitor, which makes it difficult for unsuccessful bidders to take action before it is too late. Page 136 of 423

153 Process Control and Oversight : Records Keeping and Audit Risk Assessment Average Summary of Findings: The Pourashavas are aware of the requirements set forth in the national Procurement Act. The sample records reviewed did not make use of the record keeping checklist provided in the PPR 2008, which illustrates the need for procurement management training of all concerned with this function. Summary of Assessment The Office of the Comptroller and Auditor General (OCAG), Foreign-aided projects audit division (FAPAD) is responsible for donor funded projects. However, these have been only financial audits which do not address weaknesses in the procurement process in depth. The framework for auditing or review constitutes the single most important accountability mechanism for procurement, through which procurement practices are systematically controlled, and audit recommendations are enforced and followed up. The overall procurement risk for the proposed project is regarded as Average based on the considerations summed up below: The capacity of the participating Pourashavas (municipalities), particularly the Engineering Sections, Technical Evaluation Committees and the HOPE (Head of Procurement Entity), need support in the following areas: The Engineering Sections should have a minimum of twice a year procurement training consisting of classroom and structured on the job training session of five days in ADB Procurement Guidelines and Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures for the life of the project. The Technical Evaluation Committees should have a minimum of twice a year procurement training consisting of classroom and structured on the job training session of five days in ADB Procurement and Evaluation Guidelines and Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures for the life of the project. All Pourashavas HOPE (Head of Procurement Entity), Councilors and project related staff should have a minimum of twice a year procurement training consisting of classroom and structured on the job training session of five days in ADB Procurement Guidelines and Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures for the life of the project. As all three Pourashava Implementing Agency ( IAs) have limited to no experience and there is number of infrastructure works will be constructed, the PPTA has recommended engagement of Consulting Services for Management, Design and Supervision (MDS) team of international and domestic consultants to be responsible for review the detail design, specifications, O&M requirements, bid document contractual conditions, and the TEC bid evaluation reports, including addressing ADB s comments on relevant documents. This will supplement the recommended Pourashava procurement training and provide a structured on the job training environment for building project management capacity, including procurement capability during the project implementation stages. Specific Recommendations for Project Implementation Risks Recommended Action Responsibility and comment Considering the long experience of Executing Agencies there is no major risk identified. However, the Pourashavas HOPE (Head of Procurement Entity), councilors, and project related staffs will require systematic tracking of procurement performance during project implementation. PMO/PIU will establish the monitoring tools (example Technical Monitoring Checklist, Monthly Procurement Status Report) and techniques to provide the Project Director with current up to date information for monitoring and follow-up. LGED Page 137 of 423

154 Pourashava Leadership buy in is the critical factor to a successful procurement function that adds value to the supply chain and strengthens procurement capacities. In the assessed Pourashavas, procurement is largely perceived as an administrative function. Effective procurement auditing. The Office of the Comptroller and Auditor General (OCAG), Foreign-aided projects audit division (FAPAD) is responsible for donor funded projects However, these have been only financial audits which do not address weaknesses in the procurement process in depth. PMO will organize procurement specific workshops / seminars/ cross-learning and exchange of experience at least biannually to review the progress identifying problems / issues (if any) followed by detail discussion and guidance on implementation. PMO to make specific arrangements for with The Office of the Comptroller and Auditor General (OCAG), Foreign-aided projects audit division (FAPAD) for procurement audits of Pourashavas at regular intervals during life of the project. LGED LGED General Recommendations, IA Capacity Capacity Constraint Recommended Action Responsibility and comment Training All Pourashavas HOPE (Head of Procurement Entity), Councilors and project related staff need regular sensitisation sessions in ADB Procurement Guidelines and Government of Bangladesh Public Procurement of 2006 as well as and the Public Procurement Rules of 2008 procedures. The Pourashavas Technical Evaluation Committees need procurement training in ADB Procurement and Evaluation Guidelines, and Government of Bangladesh Public Procurement of 2006 as well as the Public Procurement Rules of 2008 procedures. PMO to arrange Pourashava capacity development plan and schedule with a minimum of twice a year procurement training consisting of classroom and structured on the job training session of three days for procurement training in ADB Procurement Guidelines and Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures for the life of the project. PMO to arrange Pourashava capacity development plan and schedule with a minimum of twice a year procurement training consisting of classroom and structured on the job training session of five days for procurement training in ADB Procurement Evaluation Guidelines and Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures for the life of the project. LGED LGED Page 138 of 423

155 The Pourashavas Engineering Sections are unfamiliar with ADB Procurement Guidelines and lack procurement training in Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures. PMO to arrange Pourashava capacity development plan and schedule should have a minimum of twice a year procurement training consisting of classroom and structured on the job training session of five days in ADB Procurement Guidelines and Government of Bangladesh Public Procurement of 2006 and the Public Procurement Rules of 2008 procedures for the life of project. Loan implementation consultant to provide Pourashava structured on thejob training during bid document preparation (technical and financial aspects) and bid evaluation, and in addressing ADB s comments ADB to require: Works: >=$ 2m ICB - Prior review $ 1-2m NCB- Prior Review <$ 1m Post review 1 st contract of any value prior review 1 st contract of any nature prior review Goods >=$ 1m ICB prior review $ 0.1-1m NCB- Prior review $ 0.5 m post review Services (Firms) >= $0.5 m QCBS & prior review Service (individual) all prior review LGED General Recommendations, Procurement Environment Capacity Constraint Recommended Action Responsibility and comment Pourashavas websites are the first PMO to provide funding for creation LGED step towards e-procurement that can of similar PS web sites be developed with a dedicated procurement section to provide easy access by interested parties, including the public, to all procurement information. Posted information could include as invitation for bids, Annual Procurement Plan, Summary of Bid Evaluation Report, and Notice of Procurement Awards Development of a Pourashavas PMO to provide funding for creation of LGED Android Procurement App for similar open Pourashava smartphone of suppliers, contractorsprocurement App based on either and consultants enabling access toandroid or IPhone OS procurement information features such as current and future bidding opportunities and even download bidding documents, and also view evaluation reports and awards, would provide a valuable tool for procurement participation. Page 139 of 423

156 LGED has implemented the GOB e- Tendering system in all districts in FY The next step initially can be the e-procurement pilot at Pourashavas level through UGllP lll PMO to coordinate with LGED to transfer capacity to Pourashava. Arrange Pourashava Registration Process e-gp e-tendering training for officials. LGED 2) Procurement Capacity Assessment Pourashava Questionnaire a) Name of Pourashava: Lalmonirhat Risk Ratings Extremely High High Average Low I. Specific Assessment and Ratings Question Answer/Finding Risk A. ORGANIZATIONAL AND STAFF CAPACITY A.1. How many years of experience does the head of the procurement department/unit have in a direct procurement role? The Pourashava Engineering Section (ES) undertakes all procurement activities; although, it is not identified as a Procurement Department/Unit. The Engineering Section (ES) is headed by the Executive Engineer (Municipal Engineer) which is assigned by the Local Government Division (LGD) and is chosen from a pool of government engineers. High A.2. How many staff in the procurement department/unit are: i. Full Time? ii. Part Time? iii Seconded? A.3. Does the procurement staff have English language proficiency? The Pourashava Engineering Section (ES) is knowledgeable of the procurement process at low threshold values with small civil works and goods. None of the ES staff has attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. Currently, the assigned Executive Engineer, XEN) Mr. Fazlul Haque has been at the duty station for a one (1) year and previously was in Joypurhat Pourashava for three (3) years. He holds a Diploma in Civil Engineering. The Pourashava Engineering Section (ES) staff includes one (1) Assistant Engineer (AE) Md. Ayub Ali, Asst. Engineer (BSc in Civil), with eighteen (18) year experience of which eight (8) years in Lalmonirhat Pourashava, two (2) Sub Assistant Engineer (SAE) with Md. Mostaker Rahman, Sub Asst. Engineer (Civil), with 12 years experience and Md. Amzad Hossain, Sub Asst. Engineer (Electrical/Water Sanitation), with 12 years experience, and one (1) Surveyor Md. Mozammel Haque, Surveyor, fourteen (14) years. (i) Total five(5) full time staff in the Engineering Section: XEN 1, AE 1, SAE 2, Surveyor - 1 (ii) Part Time zero (0) (iii) Seconded zero (0) The PS Engineering Section (ES) day to day working language is Bengali with English language limited to bidding Documents. All concerned staff (Class 1, 2,3,4) during procurement training to be tested for procurement technical vocabulary. Average Average Page 140 of 423

157 Question Answer/Finding Risk A.4. Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project? A.5. Does the unit have adequate facilities, such as PCs, internet connections, photocopy facilities, printers, etc., to undertake the planned procurement? A.6. Does the Pourashava have a procurement training program? The pourashava will need support from LGED with additional technical expertise during the procurement and implementation cycle. Staff Positions are sufficient for the current level of Pourashava procurement. If additional technical expertise are required positions must be filled with appropriate staffs, the number and qualifications of the staffs would be capable of undertaking additional procurement activities. Generally, short term expertise to support will be essential as the ES expands. Not Adequate. New facilities would be required; because existing PCs and printers are old, although working. Existing facilities within the Pourashava: - 6 PCs (2 in Engineering Section, 1 in Accounts Section & 3 in other sections 2 years old; - 2 Laptop 2 years old; - 2 Printers - 2 years old - 1 Photocopy machine in poor condition ; and - the old Fax machine is not working. Additional facilities tentatively required: - 3 PCs (2 in Engineering Section, 1 in Accounts Section) - 2 internet connectivity (GSM modems); - 2 Laptop in Engineering Section; - 2 Laser Printers (1 in Engineering Section & 1 in Accounts Section); - 1 Photocopy machine; and - 1 Fax machine. The pourashava does not have a training program of its own. The PS Engineering Section (ES) are knowledgeable of the procurement process for low threshold values national procurement with civil works and goods. None of the ES staff or support staff has any training in either ADB Procurement Procedures for Goods and Works, ADB Financial Management Government of Bangladesh Public Procurement guidelines. Staff would attend trainings organized by other agencies /departments, such as: LGED, CPTU etc. Average Average Average Page 141 of 423

158 Question Answer/Finding Risk A.7. Does the Pourashava have a Procurement Committee that is independent from the head of the Pourashava? Yes, 2 Procurement Committees constituted following the circular by LGD: Tender Opening Committee (TOC): 5 persons: AE-1, SAE-1 & Secretary-1; and Tender Evaluation Committee (TEC): 8 persons: AE-1, SAE-1, Secretary-1, counsellors-2 (including 1 nominated female), Representative of Deputy Commissioner of the district (Upazila Assistant Secondary Education Officer)-1, Representative of DPHE (Upazila SAE)- 1 & Representative of LGED (Upazila SAE)-1. Average A.8. Does the Pourashava have a procurement department/unit, including a permanent office that performs the function of a Secretariat for the Procurement Unit, and which serves as the main support unit of the Procurement Committee? A.9. If yes, what type of procurement does it undertake? A.10. At what level does the department/unit report (to the head of Pourashava, deputy etc.)? Tender Evaluation Committee (TEC) has no experience with ADB Procurement Procedures for Goods and Works. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and should include the Public Procurement Act of 2006 and the Public Procurement Rules of This specialized training should be provided to each members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Yes. The Engineering Section (ES) functions as procurement department/unit. It has permanent office, staffs and facilities. This support will need to be expanded with the additional workload of the project. Under the procurement laws, this section Mandatorily provides secretarial support to the procurement committees. Only national and local budget civil works and goods contracts for the Pourashava (goods, road, bridge, culvert, drains, water supply system, lighting facilities, and sanitation etc.) To the Head of Pourashava, HOPE (Head of Procurement Entity). It must be noted that HOPE (Head of Procurement Entity) lacks training and the background which could lead to irregularities and pose a serious threat to sound and efficient public procurement. Average Average Page 142 of 423

159 Question Answer/Finding Risk A.11. Do the procurement positions in the Pourashava have job descriptions, which outline specific roles, minimum technical requirements and career routes? A.12. Is there a procurement process manual for goods and works? A.13. If there is a manual, is it up to date and does it cover foreign-assisted projects? A.14. Is there a procurement process manual for consulting services? A.15. If there is a manual, is it up to date and does it cover foreign-assisted projects? A.16. Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects? A.17. Does the Terms of Reference follow a standard format such as background, tasks, inputs, objectives and outputs? A.18. Who drafts the procurement specifications? No, there is no procurement positions describe in the government guidelines. The Pourashava Engineering Section (ES) undertakes all procurement activities. This does not follow international best practice for separation of job functions. A dedicated procurement function is required to ensure that procurements are carried out systematically according to principles of sound and efficient procurement, and in line with the established rules. The positions of pourashava are run by the circulars issued by the Local Government Division (LGD). All staff (Class 1,2,3,4) positions have job descriptions, which outline specific roles, minimum technical requirements and career routes. In order to avoid and question of conflict of interest or worse, the project should setup a procurement unit within each Pourashava for the life of project. They would be responsible for all project procurement and transfer of knowledge to Pourashava staff. Yes, the Public Procurement Rules (PPR) 2008 are used as guidelines or manual which supplements and details all the provisions of Public Procurement Act (PPA) LGD arranged adequate publication of PPA and PPR, and distributed to each pourashava. Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. Yes, PPR covers consulting services; however, pourashavas are not required to procure services under the proposed project Yes, PPR is updated from time to time. It stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. Yes, there are standard procurement documents/forms issued by CPTU. For ADB projects, these documents are modified incorporating ADB s requirements. Yes, the standard documents issued by CPTU follow ADB format; however, pourashavas are not required to procure services under the proposed project. Pourashava Executive Engineer (XEN) and Assistant Engineer (AE) use LGED Rate Schedule and Specifications. It should be noted that neither Engineer has no training in the requirements for preparation of specifications under ADB guidelines. Average Average Average Page 143 of 423

160 Question Answer/Finding Risk Works specifications are drafted by the Executive Engineer, who submits to the HOPE (Head of Procurement Entity) for final approval for national or A.19. Who approves the procurementlocal budget. It should be noted that neither the specifications? HOPE (Head of Procurement Entity) or Executive Engineer had training in the requirements for preparation of goods specifications under ADB or GOB guidelines. A.20 Who drafts the bidding documents? A.21 Who manages the sale of the bidding documents? A.22 Who identifies the need for consulting services requirements? Executive Engineer and Assistant Engineer. It should be noted that neither the Engineer had training in the requirements for preparation of bidding documents under ADB or GOB guidelines. The Accounts Section of the Pourashava, the documents are sold in multi locations. At the point of sale the purchaser is provided with the official sales receipt and provided with the bidding document. The pourashava does not generally procure services. If needs are initially Identified the Engineering Section would be responsible.. For procurement of services under a project, the relevant experts at the project office should identify the requirements. High A.23 Who drafts the terms of reference (ToR)? A.24 Who prepares the request for proposals (RFPs)? B. INFORMATION MANAGEMENT B.1 Is there a referencing system for procurement files? Generally, the pourashava does not procure any services. If required, Pourashava Engineering Section would prepare the ToR. For procurement of services under a project, the relevant experts at the project office would prepare the ToR. If required, Engineering Section would prepare the RFPs. For procurement of services under a project, the relevant experts at the project office would prepare the RFPs. Yes. The Pourashava follows the PPR Part A [rule Rule 43(4)], Schedule-Vlll requirements.. As stated in Section A.1 the Pourashava has not had any formal procurement training which includes requirements for record management. Average B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the Pourashava? B.3 For what period are records kept? Yes The Pourashava is aware of requirements for records management functions under the PPR PPR [rule 43(1), Schedule-2], but during the field visit the consultant was not shown the full record keeping infrastructure. Yes. The Pourashava is aware of keeping records for 5 years under PPR [rule 43(1), Schedule-2] stipulates minimum time as 5 years. During the field visit the consultant was shown a records which appeared to be within the guidelines. Average Average Page 144 of 423

161 Question Answer/Finding Risk B.4 Are copies of bids or proposals retained with the evaluation? B.5 Are copies of the original advertisements retained with the precontract papers? B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence? Yes. The Pourashava is aware of the requirements for records management under under PPR Schedule VIII Part-A : [See Rule 43(4)]. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B : [See Rule 43(4) file check list. Yes. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B : [See Rule 43(4) file check list. Yes. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B : [See Rule 43(4) file check list. Average Average Average B.7 Are copies of invoices included with the contract papers? C. PROCUREMENT PRACTICES Goods and Works C.1 Has the Pourashava undertaken foreign-assisted procurement of goods or works recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) C.2 If the above answer is yes, what were the major challenges? C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more) C.4 Is there a minimum period for preparation of bids and if yes how long? Yes. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B : [See Rule 43(4) file check list.. No. Any future foreign-assisted project procurement of goods or works, the Pourashava staff will need procurement training under donor guidelines, supplemented with procurement training in GOB guidelines Yes. A potential list of requirements is prepared in the months of June-July each year based on citizen s demands and twice per year field surveys by the Engineering Section. FY Total Budget: BDT 104,041,651 Engineering: Budget: BDT 74,518,300 Yes. When the decision about a procurement Scheme is final from the local budget; the Engineering Section takes about 7 days to prepare the national standard bidding documents. After the Invitation for Bids (IFB) bids has been published in the newspapers, the minimum preparation time for the bidders according to PPR [rule 61(4), Schedule- 2] is as follows: 14 days for estimated value up to BDT 3 million (approx. US$ 37,500); 21 days for estimated value above BDT 3 million and up to BDT 50 million (approx. US$ 625,000); and 28 days for estimated value above BDT 50 million. They have no experience with donor funded projects will require from PMO. Average High Average Average Page 145 of 423

162 Question Answer/Finding Risk C.5 Are all queries from bidders replied to in writing? Yes. During the field visit the consultant was shown a few records which appeared to be within the guidelines. C.6 Does the bidding document state the date and time of bid opening? C.7 Is the opening of bids done in public? C.8 Can late bids be accepted? C.9 Can bids be rejected at bid opening? C.10 Are minutes of the bid opening taken? Yes. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. The procedure is detailed in PPR [rule 97]. During the field visit the consultant was shown a few records which appeared to be within the guidelines. No. Late bids are returned unopened according to PPR [rule 97(6)]. During the field visit the consultant was shown a few records which appeared to be within the guidelines. No During the field visit the consultant was shown a few records which appeared to be within the guidelines. Bids cannot be rejected at the time of opening according to PPR [rule 97(6)]. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Tender Opening Sheet (TOS) is prepared which includes signature of officials and bidders present in the meeting. Apart from opening sheet, minutes are not prepared. Average Average Average C.11 Who may have a copy of the minutes? C.12 Are the minutes free of charge? During the field visit the consultant was shown a few records which appeared to be within the guidelines. TOS is distributed to all present at the meetings and concerned offices including the project office. The Pourashava follows PPR [rule 97(7)], which requires the TOS to be signed by the opening officials and attending bidders, and has to be distributed to all who attended the opening session, and to the head of procuring entity and relevant consultant / project offices. There is no provision of price or cost for distribution of TOS or opening minutes C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)? It is a permanent committee. TEC (as detailed in A.7 above) undertakes evaluation of bids following the provisions of PPR [rule 98]. Average Page 146 of 423

163 Question Answer/Finding Risk C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation? Current TEC consisted of 8 persons, 6 of whom are responsible government officials having experience in public procurement, and 2 are elected or selected public representatives, 4 of them have engineering educational background; either graduation or at least diploma. 3 members come from external agency outside the controlling authority of the pourashava. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and specialized training should be provided to members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. High C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals? Recommendation of TEC is subject to concurrence of the HOPE (Head of Procurement Entity) for national tendering. The HOPE (Head of Procurement Entity) has not attended procurement training either in ADB Procurement Procedures for Goods and Works or Government of Bangladesh Public Procurement guidelines. High C.16 Using at least three real examples, how long does it normally take from the issuance of the invitation for bids up to contact effectiveness? The Pourashava usually takes 60 days for national open tendering required from the issuance of the invitation for bids up to contact signing /effectiveness for estimated cost of contract more than BDT 3 million (approx. US$ 37,500) for which bid preparation time is minimum 21 days. PPR allows maximum 14 days for bid evaluation process, maximum 7 days for Approval at the level of HOPE (Head of Procurement Entity), 28 days from issuance of Notification of Award and Contract signing [rule 8(14), schedule -3, Part-A & rule 102(11), Schedule-2]. The Pourashava has no experience with donor funded projects. High C.17 Are there processes in place for the collection and clearance of cargo through ports of entry? Not Applicable. Pourashava has not yet done any procurement from abroad. However processes will be established if required under the project. C.18 Are there established goods receiving procedures? Yes. Generally, the user unit /official(s) and the store-in-charge receive the goods examining for the proper quality and quantity. Average C.19 Are all goods that are received recorded as assets or inventory in a register? C.20 Is the Pourashava/ procurement department familiar with letters of credit? Yes. Store-in-charge is responsible for recording the items in the stock / inventory register. No, Pourashava has never used letters of credit. Average Average Page 147 of 423

164 Question Answer/Finding Risk C.21 Does the procurement department register and track warranty and latent defects liability periods? Yes, warranty and latent defects liability periods are recorded in the concerned contract file, which is kept open until the specified period is over, and all pending issues are resolved. Average Consulting Services C.22 Has the Pourashava undertaken No, foreign-assisted procurement of consulting The Pourashava has not yet done any services recently (last 12 months, or last procurement of consulting services 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) C.23 If the above answer is yes, what Not Applicable. were the major challenges? C.24 Are assignments and requests for Not Applicable. expressions of interest (EOIs) advertised? C.25 Is a consultants selection Not Applicable. committee formed with appropriate individuals, and what is its composition (if C.26 What criteria is used to evaluate Not Applicable. EOIs? C.27 Historically, what is the most Not Applicable. common method used (QCBS, QBS, etc.) to select consultants? C.28 Do firms have to pay for the Request Not Applicable. for Proposals (RFP) document? C.29 Does the proposal evaluation Not Applicable. criteria follow a pre-determined structure and is it detailed in the Request for Proposals (RFP)? C.30 Are pre-proposal visits and meetings arranged? Not Applicable. C.31 Are minutes prepared and Not Applicable. circulated after pre-proposal meetings? Not Applicable. C.32 To whom are the minutes distributed? C.33 Are all queries from consultants answered/addressed in writing? C.34 Are the technical and financial proposals required to be in separate C.35 Are proposal securities required? Not Applicable. Not Applicable. Not Applicable. C.36 Are technical proposals Not Applicable. opened in public? C.37 Are minutes of the technical Not Applicable. opening distributed? C.38 Do the financial proposals remain Not Applicable. sealed until technical evaluation is C.39 Who determines the final Not Applicable. technical ranking and how? C.40 Are the technical scores sent to all Not Applicable. firms? C.41 Are the financial proposal Not Applicable. opened in public? C.42 Are minutes of the financial Not Applicable. opening distributed? C.43 How is the financial Not Applicable. evaluation completed? Page 148 of 423

165 Question Answer/Finding Risk C.44 Are face to face contract negotiations Not Applicable. held? C.45 How long after financial evaluation is negotiation held with C.46 What is the usual basis for negotiation? Not Applicable. Not Applicable. C.47 Are minutes of negotiation Not Applicable. taken and signed? C.48 How long after negotiation is the Not Applicable. contract signed? C.49 Is there an evaluation Not Applicable. system for measuring the outputs Payments C.50 Are advance payments made? No advance payment is made. C.51 What is the standard period for payment included in contracts? During the field visit the consultant was shown a few records which appeared to be within the guidelines. This period is included in the standard contract conditions. According to PPR [rule 39(22), Schedule-2], payment has to be made within 28 days from the date of issuance of acceptance certificate to the contractor / supplier. Average C.52 On average, how long is it between receiving a firm s invoice and making payment? C.53 When late payment is made, are the beneficiaries paid interest? D. EFFECTIVENESS D.1 Is contractual performance systematically monitored and reported? The Pourashava states they usually makes payment within days. The Pourashava usually makes payments promptly when funds are available. Standard contract conditions include the provision of interest for delayed payment. However, no case of interest claim for payment delay has yet been reported. Yes. The Engineering Section makes field visits and checks, quality control tests etc. During the field visit the consultant was shown a few records which appeared to be within the guidelines. As noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements Average D.2 Does the Pourashava monitor and track its contractual payment obligations? D.3 Is a complaints resolution mechanism described in national procurement documents? Yes. Accounts section monitors the payment obligations through tracking the contract-wise lists. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. Bidding and Contract documents clearly reflect PPR s specific provisions for complaint resolution mechanisms Average Average Page 149 of 423

166 Question Answer/Finding Risk D.4 Is there a formal non-judicial mechanism for dealing with complaints? D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment? E. ACCOUNTABILITY MEASURES E.1. Is there a standard statement of ethics and are those involved in procurement required to formally commit to it? Yes. This process is described in the SDB and briefly outlined as below During Bidding Process: At the 1st stage, any complaint is to be submitted to the procuring entity who is obliged to address the issue within 5 working days [PPR rule 57(4), Schedule-2]. If not satisfied, the complainant may go to next higher authority gradually up to the highest administrative tier (Secretary of the concerned ministry) with time bound obligation at every stage [PPR rule 57, Schedule-2]. At the last stage, the complainant may submit the matter to the Review Panel consisting 3 to 5 persons who are eminent experts in the laws, contract implementation and technical aspects of the procurement. This panel is independent of the government control, and has the obligation to decide on the issue within 12 working days [PPR rule 60(2), Schedule-2]. During Contract Implementation: According to standard bidding documents for works and goods, there are three options: (i) Amicable Settlement between the procuring entity and the contractor or supplier; (ii) Adjudication by an independent person mutually agreed and named in the contract agreement; and (iii) Arbitration conducted in accordance with the Arbitration Act (Act No 1 of 2001) of Bangladesh which facilitates settlement outside the judicial court. Yes. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. PPR stipulates strict compliance with ethical standards called code of ethics [PPR rule 127(1)(b), Schedule-XII] by those involved in procurement. Any case of professional misconduct or offence shall be dealt with provisions of PPR [rule 127] and other applicable laws; such as: Anticorruption Commission Act 2004 of the country Average High Average Page 150 of 423

167 Question Answer/Finding Risk E.2. Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process? Yes. During bid evaluation process, each member of the committee has to declare and sign written individual statement of no business or other links to any of the competing Tenderers or Applicant [PPR rule 8(13)(a)]. PPR [rule 55] has specific provision detailing the conflict of interest situations for the tenderers (for works and goods) or applicants (for services). According to rule 55(7), procuring entity officials, who have an interest, directly or indirectly, with a firm or individual that is Tendering or has Tendered for a Procurement proceedings of that entity shall declare its relationship with that firm or individual and consequently not participate in any proceedings concerned with that specific Procurement at any stage including from when the specifications are written and qualification criteria are established up to the Supply of Goods or performance of the Works are completed and, until all contractual obligations have been fulfilled. High E.3. Is the commencement of procurement dependent on external approvals (formal or de-facto) that are outside of the budgeting process? E.4. Who approves procurement transactions, and do they have procurement experience and qualifications? No. The Pourashava Engineer Section has responsible for all procurement transactions, which are finally approved by the HOPE (Head of Procurement Entity). The HOPE (Head of Procurement Entity) or the ES (XEN) have had no formal procurement training in the requirements under GOB guidelines. Average Average E.5. Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval? a) Bidding document, invitation to pre-qualify or Request for Proposals (RFP) b) Advertisement of an invitation for bids, pre-qualification or call for EOIs c) Evaluation reports d) Notice of award e) Invitation to consultants to negotiate - f) Contracts Formally all of these actions require approvals from the HOPE (Head of Procurement Entity). The HOPE (Head of Procurement Entity) has not attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. High E.6. Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets? No, the same person is not responsible for all the stated actions. HOPE (Head of Procurement Entity) is responsible for items (i) and (ii); and XEN is responsible for items (iii) and (iv) Average Page 151 of 423

168 Question Answer/Finding Risk E.7. Is there a written auditable trail of procurement decisions attributable to individuals and committees? Yes. All procurement decisions including communication /exchange of views /comments between relevant / responsible persons are recorded in the concerned file. During the field visit the consultant was shown a few records which appeared to be within the guidelines. High II. General Ratings Criterion A. Organizational and Staff Capacity Average B. Information Management Average C. Procurement Practices Average D. Effectiveness Average E. Accountability Measures Average OVERALL RISK RATING Average Risk Page 152 of 423

169 b) Name of Pourashava: Magura Risk Ratings Extremely High High Average Low I. Specific Assessment and Ratings Question Answer/Finding Risk A. ORGANIZATIONAL AND STAFF CAPACITY A.1. How many years of experience does the head of the procurement department/unit have in a direct procurement role? The Pourashava Engineering Section (ES) undertakes all procurement activities; although, it is not identified as a Procurement Department/Unit. The Engineering Section (ES) is headed by the Executive Engineer (Municipal Engineer) which is assigned by the Local Government Division (LGD) and is chosen from a pool of government engineers. The Pourashava Engineering Section (ES) is knowledgeable of the procurement process at low threshold values with small civil works and goods. None of the ES staff has attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. Currently, the assigned Executive Engineer, XEN) Md. Nazmul Haque has has Bsc Engineerin(Civil Engineering) 22 years experience The Pourashava Engineering Section (ES) staff includes one (1) Assistant Engineer (AE) Diploma in Civil Engineering (Civil), 22 year s experience, four (4) Sub Assistant Engineer (SAE) positions with three (3) vacant, Abu Md. Al - Aram, Diploma in Electrical Engineering, 10 years implementation experience one (1) Surveyor, Md. Abdul Aziz, 08 years experience, three (3) Work Assistant s, Md. Shahjahan,18 years experience, Md. Misbah Uddin, 14 years experience, Md. Kashed Ali, 14 years experience,one (1) Drafts Man, Md. Mahfuzur Rahman Khan, 07 years experience Average A.2. How many staff in the procurement department/unit are: iv. Full Time? v. Part Time? vi. Seconded? (iv) Total (08) (v) Part Time zero (0) (vi) Seconded zero (0) Average Page 153 of 423

170 Question Answer/Finding Risk A.3. Does the procurement staff have English language proficiency? A.4. Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project? A.5. Does the unit have adequate facilities, such as PCs, internet connections, photocopy facilities, printers, etc., to undertake the planned procurement? A.6. Does the Pourashava have a procurement training program? The Pourashava Engineering Section (ES) day to day working language is Bengali with English language limited to bidding Documents. All concerned staff (Class 1, 2,3,4) during procurement training to be tested for procurement technical vocabulary. No, the pourashava will need support from LGED with additional technical expertise during the procurement and implementation cycle. Staff Positions are sufficient for the current level of Pourashava procurement. If additional technical expertise are required positions must be filled with appropriate staffs, the number and qualifications of the staffs would be capable of undertaking additional procurement activities. Generally, short term expertise to support will be essential as the ES expands. Not Adequate. New facilities would be required; because existing PCs and printers are old, although working. Existing facilities within the Pourashava: 3 desktop (2 old, 1 new) 2 laptop (Windows 7) 1 fax (old) 2 printers ( 1 out of order) Additional facilities tentatively required: 3 printers 2 desktop 1 photocopier 2 GSM modem 3 File cabinets No, the pourashava does not have a training program of its own. The Pourashava Engineering Section (ES) are knowledgeable of the procurement process for low threshold values national procurement with civil works and goods. None of the ES staff or support staff has any training in either ADB Procurement Procedures for Goods and Works, ADB Financial Management Government of Bangladesh Public Procurement guidelines. Staff would attend trainings organized by other agencies /departments, such as: LGED, CPTU etc. Average Average High High Page 154 of 423

171 Question Answer/Finding Risk A.7. Does the Pourashava have a Procurement Committee that is independent from the head of the Pourashava? Yes, 2 Procurement Committees constituted following the circular by LGD: Tender Opening Committee (TOC): 5 persons: AE-1, SAE-1 & Secretary-1; and Tender Evaluation Committee (TEC): 8 persons: AE-1, SAE-1, Secretary-1, counsellors-2 (including 1 nominated female), Representative of Deputy Commissioner of the district (Upazila Assistant Secondary Education Officer)-1, Representative of DPHE (Upazila SAE)-1 & Representative of LGED (Upazila SAE)-1. Average A.8. Does the Pourashava have a procurement department/unit, including a permanent office that performs the function of a Secretariat for the Procurement Unit, and which serves as the main support unit of the Procurement Committee? A.9. If yes, what type of procurement does it undertake? Tender Opening Committee (TOC) have no experience with ADB Procurement Procedures for Goods and Works. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and specialized training should be provided to members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Yes. The Engineering Section (ES) functions as procurement department/unit. It has permanent office, staffs and facilities. This support will need to be expanded with the additional workload of the project. Under the procurement laws, this section Mandatorily provides secretarial support to the procurement committees. National and local budget civil works and goods contracts for the Pourashava (goods, road, bridge, culvert, drains, water supply system, lighting facilities, and sanitation etc.) Average A.10. At what level does the department/unit report (to the head of Pourashava, deputy etc.)? To the Head of Pourashava, HOPE (Head of Procurement Entity). It must be noted that HOPE (Head of Procurement Entity) lacks training and the background which could lead to irregularities and pose a serious threat to sound and efficient public procurement. Average Page 155 of 423

172 Question Answer/Finding Risk A.11. Do the procurement positions in the Pourashava have job descriptions, which outline specific roles, minimum technical requirements and career routes? No, there is no procurement positions describe in the government guidelines. The Pourashava Engineering Section (ES) undertakes all procurement activities. This does not follow international best practice for separation of job functions. A dedicated procurement function is required to ensure that procurements are carried out systematically according to principles of sound and efficient procurement, and in line with the established rules. The positions of pourashava are run by the circulars issued by the Local Government Division (LGD). All staff (Class 1,2,3,4) positions have job descriptions, which outline specific roles, minimum technical requirements and career routes. In order to avoid and question of conflict of interest or worse, the project should setup a procurement unit within each Pourashava for the life of project. They would be responsible for all project procurement and transfer of knowledge to Pourashava staff. High A.12. Is there a procurement process manual for goods and works? A.13. If there is a manual, is it up to date and does it cover foreign-assisted projects? Yes, the Public Procurement Rules (PPR) 2008 are used as guidelines or manual which supplements and details all the provisions of Public Procurement Act (PPA) LGD arranged adequate publication of PPA and PPR, and distributed to each pourashava. Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. Average A.14. Is there a procurement process manual for consulting services? Yes, PPR covers consulting services; however, pourashavas are not required to procure services under the proposed project A.15. If there is a manual, is it up to date and does it cover foreign-assisted projects? Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. A.16. Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects? A.17. Does the Terms of Reference follow a standard format such as background, tasks, inputs, objectives and outputs? Yes, there are standard procurement documents/forms issued by CPTU. For ADB projects, these documents are modified incorporating ADB s requirements. Yes, the standard documents issued by CPTU follow ADB format; however, pourashavas are not required to procure services under the proposed project. Page 156 of 423

173 Question Answer/Finding Risk A.18. Who drafts the procurement specifications? Pourashava Executive Engineer (XEN) and Assistant Engineer (AE) use LGED Rate Schedule and Specifications. It should be noted that neither Engineer has no training in the requirements for preparation of specifications under ADB guidelines. High Works specifications are drafted by the Assistant Engineer, who submits to A.19. Who approves the Executive Engineer for final approval for national or local budget. It should be noted procurement that neither the Assistant Engineer or specifications? Executive Engineer have had training in the requirements for preparation of goods specifications under ADB or GOB guidelines. A.25 Who drafts the bidding documents? A.26 Who manages the sale of the bidding documents? A.27 Who identifies the need for consulting services requirements? A.28 Who drafts the terms of reference (ToR)? Assistant Engineer. It should be noted that neither the Engineer had training in the requirements for preparation of bidding documents under ADB or GOB guidelines. Technically HOPE (Head of Procurement Entity), with support of the Accounts Section of the Pourashava. At the point of sale the purchaser is provided with the official sales receipt and provided with the bidding document. The pourashava does not procure services. If needs are initially Identified the Engineering Section (XE) would be responsible.. For procurement of services under a project, the relevant experts at the project office should identify the requirements. Generally, the pourashava does not procure any services. If required, Pourashava Engineering Section would prepare the ToR. For procurement of services under a project, the relevant experts at the project office would prepare the ToR. High A.29 Who prepares the request for proposals (RFPs)? If required, Engineering Section would prepare the RFPs. For procurement of services under a project, the relevant experts at the project office would prepare the RFPs. B. INFORMATION MANAGEMENT Yes. The Pourashava follows the PPR Part A [rule Rule 43(4)], Schedule-Vlll B.1 Is there a referencing system for procurement requirements.. As stated in Section A.1 files? the Pourashava has not had any formal procurement training which includes requirements for record management. Average Page 157 of 423

174 Question Answer/Finding Risk B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the Pourashava? B.3 For what period are records kept? B.4 Are copies of bids or proposals retained with the evaluation? B.5 Are copies of the original advertisements retained with the pre-contract papers? Yes The Pourashava is aware of requirements for records management functions under the PPR [rule 43(1), Schedule-2]. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent by to Executive Engineer which answered each question. Yes. The Pourashava is aware of keeping records for 5 years under PPR [rule 43(1), Schedule-2] stipulates minimum time as 5 years. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent by to Executive Engineer which answered each question. Yes. The Pourashava is aware of the requirements for records management under under PPR Schedule VIII Part-A : [See Rule 43(4 The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Yes. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Average Average Average Average B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence? B.7 Are copies of invoices included with the contract papers? C. PROCUREMENT PRACTICES Goods and Works C.1 Has the Pourashava undertaken foreignassisted procurement of goods or works recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) Yes. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Yes. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Yes. According to the Executive Engineer answer the Pourashava has undertaken one project funded by ADB Emergency Disaster Damage Rehabilitation Project ( EDDRP ). With development partners JICA, OFID, JBIC Average Average Average C.2 If the above answer is yes, what were the major challenges? This question was not answered by the Executive Engineer. Page 158 of 423

175 Question Answer/Finding Risk C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more) Yes. This answer was not explained by the Executive Engineer.. High C.4 Is there a minimum period for preparation of bids and if yes how long? C.5 Are all queries from bidders replied to in writing? 45 days. Average Yes. C.6 Does the bidding document state the date and time of bid opening? C.7 Is the opening of bids done in public? C.8 Can late bids be accepted? Yes. Yes. This answer was not explained by the Executive Engineer. No. High High No. This answer is from the Executive Engineer. Bids cannot be rejected at the C.9 Can bids be rejected at bid opening? time of opening according to PPR [rule 97(6)]. HOPE (Head of Procurement Entity), TEC member & other concerned persons. This C.10 Are minutes of the bid opening taken? answer was not explained by the Executive Engineer. C.11 Who may have a copy of the minutes? TOS is distributed to all present at the meetings and concerned offices including the project office. High C.12 Are the minutes free of charge? C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)? The Pourashava follows PPR [rule 97(7)], which requires the TOS to be signed by the opening officials and attending bidders, and has to be distributed to all who attended the opening session, and to the head of procuring entity and relevant consultant / project offices. There is no provision of price or cost for distribution of TOS or opening minutes It is a permanent committee. TEC (as detailed in A.7 above) undertakes evaluation of bids following the provisions of PPR [rule 98]. Average Page 159 of 423

176 Question Answer/Finding Risk C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation? C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals? Current TEC consisted of 8 persons, 6 of whom are responsible government officials having experience in public procurement, and 2 are elected or selected public representatives, 4 of them have engineering educational background; either graduation or at least diploma. 3 members come from external agency outside the controlling authority of the pourashava. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and specialized training should be provided to members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Recommendation of TEC is subject to concurrence of the HOPE (Head of Procurement Entity) for national tendering. The HOPE (Head of Procurement Entity) has not attended procurement training either in ADB Procurement Procedures for Goods and Works or Government of Bangladesh Public Procurement guidelines. Average High C.16 Using at least three real examples, how long does it normally take from the issuance of the invitation for bids up to contact effectiveness? This question was not answered by the Executive Engineer. High C.17 Are there processes in place for the collection and clearance of cargo through ports of entry? C.18 Are there established goods receiving procedures? Not Applicable. Pourashava has not yet done any procurement from abroad. However processes will be established if required under the project. Yes. Generally, the user unit /official(s) and the store-in-charge receive the goods examining for the proper quality and quantity. Average Average C.19 Are all goods that are received recorded as assets or inventory in a register? Yes. Store-in-charge is responsible for recording the items in the stock / inventory register. Average Page 160 of 423

177 Question Answer/Finding Risk C.20 Is the Pourashava/ procurement department familiar with letters of credit? No, Pourashava has never used letters of credit. Average C.21 Does the procurement department register and track warranty and latent defects liability periods? Yes, warranty and latent defects liability periods are recorded in the concerned contract file, which is kept open until the specified period is over, and all pending issues are resolved. Average Consulting Services C.22 Has the Pourashava undertaken foreign-noassisted procurement of consulting services recentlythe Pourashava has not yet done any (last 12 months, or last 36 months)? (If yes, pleaseprocurement of consulting services indicate the names of the development partner/s and the Project/s.) C.23 If the above answer is yes, what were the Not Applicable. major challenges? C.24 Are assignments and requests fornot Applicable. expressions of interest (EOIs) advertised? C.25 Is a consultants selection committee formed with appropriate individuals, and what is its composition (if any)? C.26 What criteria is used to evaluate EOIs? Not Applicable. Not Applicable. C.27 Historically, what is the most common Not Applicable. method used (QCBS, QBS, etc.) to select consultants? C.28 Do firms have to pay for the Request fornot Applicable. Proposals (RFP) document? C.29 Does the proposal evaluation criteria Not Applicable. follow a pre-determined structure and is it detailed in the Request for Proposals (RFP)? C.30 Are pre-proposal visits and meetings arranged? C.31 Are minutes prepared and circulated after pre-proposal meetings? C.32 To whom are the minutes distributed? Not Applicable. Not Applicable. Not Applicable. C.33 Are all queries from consultants Not Applicable. answered/addressed in writing? C.34 Are the technical and financial proposals Not Applicable. required to be in separate envelopes? Not Applicable. C.35 Are proposal securities required? C.36 Are technical proposals opened in public? C.37 Are minutes of the technical opening distributed? C.38 Do the financial proposals remain sealed until technical evaluation is completed? C.39 Who determines the final technical ranking and how? C.40 Are the technical scores sent to all firms? Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Page 161 of 423

178 Question Answer/Finding Risk C.41 Are the financial proposal opened in public? C.42 Are minutes of the financial opening distributed? C.43 How is the financial evaluation completed? C.44 Are face to face contract negotiations held? C.45 How long after financial evaluation is negotiation held with the selected firm? C.46 What is the usual basis for negotiation? Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. C.47 Are minutes of negotiation taken and Not Applicable. signed? C.48 How long after negotiation is the contract Not Applicable. signed? C.49 Is there an evaluation system for Not Applicable. measuring the outputs of consultants? Payments C.50 Are advance payments made? No advance payment is made. Low C.51 What is the standard period for payment included in contracts? Contracts do not state period for payment. According to PPR [rule 39(22), Schedule- 2], payment has to be made within 28 days from the date of issuance of acceptance certificate to the contractor / supplier. C.52 On average, how long is it between receiving athe Pourashava states that payments are firm s invoice and making payment? made within 10 days. C.53 When late payment is made, are theno beneficiaries paid interest? High D. EFFECTIVENESS D.1 Is contractual performance systematically monitored and reported? D.2 Does the Pourashava monitor and track its contractual payment obligations? D.3 Is a complaints resolution mechanism described in national procurement documents? Yes. As noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements Yes. As noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements. Yes. Bidding and Contract documents clearly reflect PPR s specific provisions for complaint resolution mechanisms Average Average Average Page 162 of 423

179 Question Answer/Finding Risk D.4 Is there a formal non-judicial mechanism for dealing with complaints? D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment? Yes. This process is described in the SDB and briefly outlined as below During Bidding Process: At the 1st stage, any complaint is to be submitted to the procuring entity who is obliged to address the issue within 5 working days [PPR rule 57(4), Schedule- 2]. If not satisfied, the complainant may go to next higher authority gradually up to the highest administrative tier (Secretary of the concerned ministry) with time bound obligation at every stage [PPR rule 57, Schedule-2]. At the last stage, the complainant may submit the matter to the Review Panel consisting 3 to 5 persons who are eminent experts in the laws, contract implementation and technical aspects of the procurement. This panel is independent of the government control, and has the obligation to decide on the issue within 12 working days [PPR rule 60(2), Schedule-2]. During Contract Implementation: According to standard bidding documents for works and goods, there are three options: (i) Amicable Settlement between the procuring entity and the contractor or supplier; (ii) Adjudication by an independent person mutually agreed and named in the contract agreement; and (iii) Arbitration conducted in accordance with the Arbitration Act (Act No 1 of 2001) of Bangladesh which facilitates settlement outside the judicial court. Yes. However, as noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements Average Average E. ACCOUNTABILITY MEASURES E.1. Is there a standard statement of ethics and are those involved in procurement required to formally commit to it? Yes. PPR stipulates strict compliance with ethical standards called code of ethics [PPR rule 127(1)(b), Schedule-XII] by those involved in procurement. Any case of professional misconduct or offence shall be dealt with provisions of PPR [rule 127] and other applicable laws; such as: Anti-corruption Commission Act 2004 of the country Average Page 163 of 423

180 Question Answer/Finding Risk E.2. Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process? E.3. Is the commencement of procurement dependent on external approvals (formal or defacto) that are outside of the budgeting process? E.4. Who approves procurement transactions, and do they have procurement experience and qualifications? Yes. During bid evaluation process, each member of the committee has to declare and sign written individual statement of no business or other links to any of the competing Tenderers or Applicant [PPR rule 8(13)(a)]. PPR [rule 55] has specific provision detailing the conflict of interest situations for the tenderers (for works and goods) or applicants (for services). According to rule 55(7), procuring entity officials, who have an interest, directly or indirectly, with a firm or individual that is Tendering or has Tendered for a Procurement proceedings of that entity shall declare its relationship with that firm or individual and consequently not participate in any proceedings concerned with that specific Procurement at any stage including from when the specifications are written and qualification criteria are established up to the Supply of Goods or performance of the Works are completed and, until all contractual obligations have been fulfilled. No. The Pourashava Engineer Section has responsible for all procurement transactions, which are finally approved by the HOPE (Head of Procurement Entity). The HOPE (Head of Procurement Entity) or the ES (XEN) have had no formal procurement training in the requirements under GOB guidelines. High Average Average E.5. Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval? g) Bidding document, invitation to prequalify or Request for Proposals (RFP) h) Advertisement of an invitation for bids, pre-qualification or call for EOIs i) Evaluation reports j) Notice of award k) Invitation to consultants to negotiate - l) Contracts Formally all of these actions require approvals from the HOPE (Head of Procurement Entity). The XE has answered the question that no approvals are required outside of the procurement unit (ES) The Pourashava has not attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. High E.6. Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets? E.7. Is there a written auditable trail of procurement decisions attributable to individuals and committees? Several officials are responsible for this job. Yes. Average High Page 164 of 423

181 II. General Ratings Criterion A. Organizational and Staff Capacity Average B. Information Management Average C. Procurement Practices Average D. Effectiveness Average E. Accountability Measures Average OVERALL RISK RATING Average Risk Page 165 of 423

182 c) Name of Pourashava: Magura Risk Ratings Extremely High High Average Low I. Specific Assessment and Ratings Question Answer/Finding Risk A. ORGANIZATIONAL AND STAFF CAPACITY A.1. How many years of experience does the head of the procurement department/unit have in a direct procurement role? The Pourashava Engineering Section (ES) undertakes all procurement activities; although, it is not identified as a Procurement Department/Unit. The Engineering Section (ES) is headed by the Executive Engineer (Municipal Engineer) which is assigned by the Local Government Division (LGD) and is chosen from a pool of government engineers. The Pourashava Engineering Section (ES) is knowledgeable of the procurement process at low threshold values with small civil works and goods. None of the ES staff has attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. Currently, the assigned Executive Engineer, XEN) Md. Nazmul Haque has has Bsc Engineerin(Civil Engineering) 22 years experience The Pourashava Engineering Section (ES) staff includes one (1) Assistant Engineer (AE) Diploma in Civil Engineering (Civil), 22 year s experience, four (4) Sub Assistant Engineer (SAE) positions with three (3) vacant, Abu Md. Al - Aram, Diploma in Electrical Engineering, 10 years implementation experience one (1) Surveyor, Md. Abdul Aziz, 08 years experience, three (3) Work Assistant s, Md. Shahjahan,18 years experience, Md. Misbah Uddin, 14 years experience, Md. Kashed Ali, 14 years experience,one (1) Drafts Man, Md. Mahfuzur Rahman Khan, 07 years experience Average A.2. How many staff in the procurement department/unit are: vii. Full Time? viii. Part Time? ix. Seconded? (vii) Total (08) (viii) Part Time zero (0) (ix) Seconded zero (0) Average Page 166 of 423

183 Question Answer/Finding Risk A.3. Does the procurement staff have English language proficiency? A.4. Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project? A.5. Does the unit have adequate facilities, such as PCs, internet connections, photocopy facilities, printers, etc., to undertake the planned procurement? A.6. Does the Pourashava have a procurement training program? The Pourashava Engineering Section (ES) day to day working language is Bengali with English language limited to bidding Documents. All concerned staff (Class 1, 2,3,4) during procurement training to be tested for procurement technical vocabulary. No, the pourashava will need support from LGED with additional technical expertise during the procurement and implementation cycle. Staff Positions are sufficient for the current level of Pourashava procurement. If additional technical expertise are required positions must be filled with appropriate staffs, the number and qualifications of the staffs would be capable of undertaking additional procurement activities. Generally, short term expertise to support will be essential as the ES expands. Not Adequate. New facilities would be required; because existing PCs and printers are old, although working. Existing facilities within the Pourashava: 3 desktop (2 old, 1 new) 2 laptop (Windows 7) 1 fax (old) 2 printers ( 1 out of order) Additional facilities tentatively required: 3 printers 2 desktop 1 photocopier 2 GSM modem 3 File cabinets No, the pourashava does not have a training program of its own. The Pourashava Engineering Section (ES) are knowledgeable of the procurement process for low threshold values national procurement with civil works and goods. None of the ES staff or support staff has any training in either ADB Procurement Procedures for Goods and Works, ADB Financial Management Government of Bangladesh Public Procurement guidelines. Staff would attend trainings organized by other agencies /departments, such as: LGED, CPTU etc. Average Average High High Page 167 of 423

184 Question Answer/Finding Risk A.7. Does the Pourashava have a Procurement Committee that is independent from the head of the Pourashava? Yes, 2 Procurement Committees constituted following the circular by LGD: Tender Opening Committee (TOC): 5 persons: AE-1, SAE-1 & Secretary-1; and Tender Evaluation Committee (TEC): 8 persons: AE-1, SAE-1, Secretary-1, counsellors-2 (including 1 nominated female), Representative of Deputy Commissioner of the district (Upazila Assistant Secondary Education Officer)-1, Representative of DPHE (Upazila SAE)-1 & Representative of LGED (Upazila SAE)-1. Average A.8. Does the Pourashava have a procurement department/unit, including a permanent office that performs the function of a Secretariat for the Procurement Unit, and which serves as the main support unit of the Procurement Committee? A.9. If yes, what type of procurement does it undertake? Tender Opening Committee (TOC) have no experience with ADB Procurement Procedures for Goods and Works. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and specialized training should be provided to members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Yes. The Engineering Section (ES) functions as procurement department/unit. It has permanent office, staffs and facilities. This support will need to be expanded with the additional workload of the project. Under the procurement laws, this section Mandatorily provides secretarial support to the procurement committees. National and local budget civil works and goods contracts for the Pourashava (goods, road, bridge, culvert, drains, water supply system, lighting facilities, and sanitation etc.) Average A.10. At what level does the department/unit report (to the head of Pourashava, deputy etc.)? To the Head of Pourashava, HOPE (Head of Procurement Entity). It must be noted that HOPE (Head of Procurement Entity) lacks training and the background which could lead to irregularities and pose a serious threat to sound and efficient public procurement. Average Page 168 of 423

185 Question Answer/Finding Risk A.11. Do the procurement positions in the Pourashava have job descriptions, which outline specific roles, minimum technical requirements and career routes? No, there is no procurement positions describe in the government guidelines. The Pourashava Engineering Section (ES) undertakes all procurement activities. This does not follow international best practice for separation of job functions. A dedicated procurement function is required to ensure that procurements are carried out systematically according to principles of sound and efficient procurement, and in line with the established rules. The positions of pourashava are run by the circulars issued by the Local Government Division (LGD). All staff (Class 1,2,3,4) positions have job descriptions, which outline specific roles, minimum technical requirements and career routes. In order to avoid and question of conflict of interest or worse, the project should setup a procurement unit within each Pourashava for the life of project. They would be responsible for all project procurement and transfer of knowledge to Pourashava staff. High A.12. Is there a procurement process manual for goods and works? A.13. If there is a manual, is it up to date and does it cover foreign-assisted projects? Yes, the Public Procurement Rules (PPR) 2008 are used as guidelines or manual which supplements and details all the provisions of Public Procurement Act (PPA) LGD arranged adequate publication of PPA and PPR, and distributed to each pourashava. Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. Average A.14. Is there a procurement process manual for consulting services? Yes, PPR covers consulting services; however, pourashavas are not required to procure services under the proposed project A.15. If there is a manual, is it up to date and does it cover foreign-assisted projects? Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. A.16. Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects? A.17. Does the Terms of Reference follow a standard format such as background, tasks, inputs, objectives and outputs? Yes, there are standard procurement documents/forms issued by CPTU. For ADB projects, these documents are modified incorporating ADB s requirements. Yes, the standard documents issued by CPTU follow ADB format; however, pourashavas are not required to procure services under the proposed project. Page 169 of 423

186 Question Answer/Finding Risk A.18. Who drafts the procurement specifications? Pourashava Executive Engineer (XEN) and Assistant Engineer (AE) use LGED Rate Schedule and Specifications. It should be noted that neither Engineer has no training in the requirements for preparation of specifications under ADB guidelines. High Works specifications are drafted by the Assistant Engineer, who submits to A.19. Who approves the Executive Engineer for final approval for national or local budget. It should be noted procurement that neither the Assistant Engineer or specifications? Executive Engineer have had training in the requirements for preparation of goods specifications under ADB or GOB guidelines. A.30 Who drafts the bidding documents? A.31 Who manages the sale of the bidding documents? A.32 Who identifies the need for consulting services requirements? A.33 Who drafts the terms of reference (ToR)? Assistant Engineer. It should be noted that neither the Engineer had training in the requirements for preparation of bidding documents under ADB or GOB guidelines. Technically HOPE (Head of Procurement Entity), with support of the Accounts Section of the Pourashava. At the point of sale the purchaser is provided with the official sales receipt and provided with the bidding document. The pourashava does not procure services. If needs are initially Identified the Engineering Section (XE) would be responsible.. For procurement of services under a project, the relevant experts at the project office should identify the requirements. Generally, the pourashava does not procure any services. If required, Pourashava Engineering Section would prepare the ToR. For procurement of services under a project, the relevant experts at the project office would prepare the ToR. High A.34 Who prepares the request for proposals (RFPs)? If required, Engineering Section would prepare the RFPs. For procurement of services under a project, the relevant experts at the project office would prepare the RFPs. B. INFORMATION MANAGEMENT Yes. The Pourashava follows the PPR Part A [rule Rule 43(4)], Schedule-Vlll B.1 Is there a referencing system for procurement requirements.. As stated in Section A.1 files? the Pourashava has not had any formal procurement training which includes requirements for record management. Average Page 170 of 423

187 Question Answer/Finding Risk B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the Pourashava? B.3 For what period are records kept? B.4 Are copies of bids or proposals retained with the evaluation? B.5 Are copies of the original advertisements retained with the pre-contract papers? Yes The Pourashava is aware of requirements for records management functions under the PPR [rule 43(1), Schedule-2]. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent by to Executive Engineer which answered each question. Yes. The Pourashava is aware of keeping records for 5 years under PPR [rule 43(1), Schedule-2] stipulates minimum time as 5 years. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent by to Executive Engineer which answered each question. Yes. The Pourashava is aware of the requirements for records management under under PPR Schedule VIII Part-A : [See Rule 43(4 The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Yes. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Average Average Average Average B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence? B.7 Are copies of invoices included with the contract papers? C. PROCUREMENT PRACTICES Goods and Works C.1 Has the Pourashava undertaken foreignassisted procurement of goods or works recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) Yes. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Yes. The consultant was not able to make a physical visit because of the national strike to verify condition. The questionnaire was sent be to Executive Engineer which answered each question. Yes. According to the Executive Engineer answer the Pourashava has undertaken one project funded by ADB Emergency Disaster Damage Rehabilitation Project ( EDDRP ). With development partners JICA, OFID, JBIC Average Average Average C.2 If the above answer is yes, what were the major challenges? This question was not answered by the Executive Engineer. Page 171 of 423

188 Question Answer/Finding Risk C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more) Yes. This answer was not explained by the Executive Engineer.. High C.4 Is there a minimum period for preparation of bids and if yes how long? C.5 Are all queries from bidders replied to in writing? 45 days. Average Yes. C.6 Does the bidding document state the date and time of bid opening? C.7 Is the opening of bids done in public? C.8 Can late bids be accepted? Yes. Yes. This answer was not explained by the Executive Engineer. No. High High No. This answer is from the Executive Engineer. Bids cannot be rejected at the C.9 Can bids be rejected at bid opening? time of opening according to PPR [rule 97(6)]. HOPE (Head of Procurement Entity), TEC member & other concerned persons. This C.10 Are minutes of the bid opening taken? answer was not explained by the Executive Engineer. C.11 Who may have a copy of the minutes? TOS is distributed to all present at the meetings and concerned offices including the project office. High C.12 Are the minutes free of charge? C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)? The Pourashava follows PPR [rule 97(7)], which requires the TOS to be signed by the opening officials and attending bidders, and has to be distributed to all who attended the opening session, and to the head of procuring entity and relevant consultant / project offices. There is no provision of price or cost for distribution of TOS or opening minutes It is a permanent committee. TEC (as detailed in A.7 above) undertakes evaluation of bids following the provisions of PPR [rule 98]. Average Page 172 of 423

189 Question Answer/Finding Risk C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation? C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals? Current TEC consisted of 8 persons, 6 of whom are responsible government officials having experience in public procurement, and 2 are elected or selected public representatives, 4 of them have engineering educational background; either graduation or at least diploma. 3 members come from external agency outside the controlling authority of the pourashava. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and specialized training should be provided to members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Recommendation of TEC is subject to concurrence of the HOPE (Head of Procurement Entity) for national tendering. The HOPE (Head of Procurement Entity) has not attended procurement training either in ADB Procurement Procedures for Goods and Works or Government of Bangladesh Public Procurement guidelines. Average High C.16 Using at least three real examples, how long does it normally take from the issuance of the invitation for bids up to contact effectiveness? This question was not answered by the Executive Engineer. High C.17 Are there processes in place for the collection and clearance of cargo through ports of entry? C.18 Are there established goods receiving procedures? Not Applicable. Pourashava has not yet done any procurement from abroad. However processes will be established if required under the project. Yes. Generally, the user unit /official(s) and the store-in-charge receive the goods examining for the proper quality and quantity. Average Average C.19 Are all goods that are received recorded as assets or inventory in a register? Yes. Store-in-charge is responsible for recording the items in the stock / inventory register. Average Page 173 of 423

190 Question Answer/Finding Risk C.20 Is the Pourashava/ procurement department familiar with letters of credit? No, Pourashava has never used letters of credit. Average C.21 Does the procurement department register and track warranty and latent defects liability periods? Yes, warranty and latent defects liability periods are recorded in the concerned contract file, which is kept open until the specified period is over, and all pending issues are resolved. Average Consulting Services C.22 Has the Pourashava undertaken foreign-noassisted procurement of consulting services recentlythe Pourashava has not yet done any (last 12 months, or last 36 months)? (If yes, pleaseprocurement of consulting services indicate the names of the development partner/s and the Project/s.) C.23 If the above answer is yes, what were the Not Applicable. major challenges? C.24 Are assignments and requests fornot Applicable. expressions of interest (EOIs) advertised? C.25 Is a consultants selection committee formed with appropriate individuals, and what is its composition (if any)? C.26 What criteria is used to evaluate EOIs? Not Applicable. Not Applicable. C.27 Historically, what is the most common Not Applicable. method used (QCBS, QBS, etc.) to select consultants? C.28 Do firms have to pay for the Request fornot Applicable. Proposals (RFP) document? C.29 Does the proposal evaluation criteria Not Applicable. follow a pre-determined structure and is it detailed in the Request for Proposals (RFP)? C.30 Are pre-proposal visits and meetings arranged? C.31 Are minutes prepared and circulated after pre-proposal meetings? C.32 To whom are the minutes distributed? Not Applicable. Not Applicable. Not Applicable. C.33 Are all queries from consultants Not Applicable. answered/addressed in writing? C.34 Are the technical and financial proposals Not Applicable. required to be in separate envelopes? Not Applicable. C.35 Are proposal securities required? C.36 Are technical proposals opened in public? C.37 Are minutes of the technical opening distributed? C.38 Do the financial proposals remain sealed until technical evaluation is completed? C.39 Who determines the final technical ranking and how? C.40 Are the technical scores sent to all firms? Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Page 174 of 423

191 Question Answer/Finding Risk C.41 Are the financial proposal opened in public? C.42 Are minutes of the financial opening distributed? C.43 How is the financial evaluation completed? C.44 Are face to face contract negotiations held? C.45 How long after financial evaluation is negotiation held with the selected firm? C.46 What is the usual basis for negotiation? Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. C.47 Are minutes of negotiation taken and Not Applicable. signed? C.48 How long after negotiation is the contract Not Applicable. signed? C.49 Is there an evaluation system for Not Applicable. measuring the outputs of consultants? Payments C.50 Are advance payments made? No advance payment is made. Low C.51 What is the standard period for payment included in contracts? Contracts do not state period for payment. According to PPR [rule 39(22), Schedule- 2], payment has to be made within 28 days from the date of issuance of acceptance certificate to the contractor / supplier. C.52 On average, how long is it between receiving athe Pourashava states that payments are firm s invoice and making payment? made within 10 days. C.53 When late payment is made, are theno beneficiaries paid interest? High D. EFFECTIVENESS D.1 Is contractual performance systematically monitored and reported? D.2 Does the Pourashava monitor and track its contractual payment obligations? D.3 Is a complaints resolution mechanism described in national procurement documents? Yes. As noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements Yes. As noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements. Yes. Bidding and Contract documents clearly reflect PPR s specific provisions for complaint resolution mechanisms Average Average Average Page 175 of 423

192 Question Answer/Finding Risk D.4 Is there a formal non-judicial mechanism for dealing with complaints? D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment? Yes. This process is described in the SDB and briefly outlined as below During Bidding Process: At the 1st stage, any complaint is to be submitted to the procuring entity who is obliged to address the issue within 5 working days [PPR rule 57(4), Schedule- 2]. If not satisfied, the complainant may go to next higher authority gradually up to the highest administrative tier (Secretary of the concerned ministry) with time bound obligation at every stage [PPR rule 57, Schedule-2]. At the last stage, the complainant may submit the matter to the Review Panel consisting 3 to 5 persons who are eminent experts in the laws, contract implementation and technical aspects of the procurement. This panel is independent of the government control, and has the obligation to decide on the issue within 12 working days [PPR rule 60(2), Schedule-2]. During Contract Implementation: According to standard bidding documents for works and goods, there are three options: (i) Amicable Settlement between the procuring entity and the contractor or supplier; (ii) Adjudication by an independent person mutually agreed and named in the contract agreement; and (iii) Arbitration conducted in accordance with the Arbitration Act (Act No 1 of 2001) of Bangladesh which facilitates settlement outside the judicial court. Yes. However, as noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements Average Average E. ACCOUNTABILITY MEASURES E.1. Is there a standard statement of ethics and are those involved in procurement required to formally commit to it? Yes. PPR stipulates strict compliance with ethical standards called code of ethics [PPR rule 127(1)(b), Schedule-XII] by those involved in procurement. Any case of professional misconduct or offence shall be dealt with provisions of PPR [rule 127] and other applicable laws; such as: Anti-corruption Commission Act 2004 of the country Average Page 176 of 423

193 Question Answer/Finding Risk E.2. Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process? E.3. Is the commencement of procurement dependent on external approvals (formal or defacto) that are outside of the budgeting process? E.4. Who approves procurement transactions, and do they have procurement experience and qualifications? Yes. During bid evaluation process, each member of the committee has to declare and sign written individual statement of no business or other links to any of the competing Tenderers or Applicant [PPR rule 8(13)(a)]. PPR [rule 55] has specific provision detailing the conflict of interest situations for the tenderers (for works and goods) or applicants (for services). According to rule 55(7), procuring entity officials, who have an interest, directly or indirectly, with a firm or individual that is Tendering or has Tendered for a Procurement proceedings of that entity shall declare its relationship with that firm or individual and consequently not participate in any proceedings concerned with that specific Procurement at any stage including from when the specifications are written and qualification criteria are established up to the Supply of Goods or performance of the Works are completed and, until all contractual obligations have been fulfilled. No. The Pourashava Engineer Section has responsible for all procurement transactions, which are finally approved by the HOPE (Head of Procurement Entity). The HOPE (Head of Procurement Entity) or the ES (XEN) have had no formal procurement training in the requirements under GOB guidelines. High Average Average E.5. Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval? m) Bidding document, invitation to prequalify or Request for Proposals (RFP) n) Advertisement of an invitation for bids, pre-qualification or call for EOIs o) Evaluation reports p) Notice of award q) Invitation to consultants to negotiate - r) Contracts Formally all of these actions require approvals from the HOPE (Head of Procurement Entity). The XE has answered the question that no approvals are required outside of the procurement unit (ES) The Pourashava has not attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. High E.6. Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets? E.7. Is there a written auditable trail of procurement decisions attributable to individuals and committees? Several officials are responsible for this job. Yes. Average High Page 177 of 423

194 d) Name of Pourashava: Naogaon Risk Ratings Extremely High High Average Low I. Specific Assessment and Ratings Question Answer/Finding Risk A. ORGANIZATIONAL AND STAFF CAPACITY A.1. How many years of experience does the head of the procurement department/unit have in a direct procurement role? A.2. How many staff in the procurement department/unit are: x. Full Time? xi. Part Time? xii. Seconded? The Pourashava Engineering Section (ES) undertakes all procurement activities; although, it is not identified as a Procurement Department/Unit. The Engineering Section (ES) is headed by the Executive Engineer (Municipal Engineer) which is assigned by the Local Government Division (LGD) and is chosen from a pool of government engineers. The Pourashava Engineering Section (ES) is knowledgeable of the procurement process at low threshold values with small civil works and goods. None of the ES staff has attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. Currently, the assigned Executive Engineer, XEN) Mr. Goudas Data has been at the duty station for six (6) years. The Pourashava Engineering Section (ES) staff includes two (2) Assistant Engineer (AE) Ms. Arvin Sultana Asst. Engineer (Civil), 8 years experience Pourashava, and Md. Nizamul Hoque Asst. Engineer (Water Sanitation) 13 years as Sub-Assistant Engineer, 1 year as AE, four (4) Sub Assistant Engineer (SAE) Mr. Abdul Moneyed, SAE (Elec.), 10 years experience, Mr. Jwel, SAE (Mech), 12 years experience, Mr. Kamrul Islam, SAE (Civil), 1 year experience, Mr. Abu Raihan Mondal, SAE (Civil), 6 months experience, one (1) Surveyor, Ms. Aysha Siddiqa. (x) Total eight (8) full time staff in the Engineering Section: XEN 1, AE 2, SAE 4, Surveyor - 1 (xi) Part Time zero (0) (xii) Seconded zero (0) Average Average Page 178 of 423

195 Question Answer/Finding Risk A.3. Does the procurement staff have English language proficiency? A.4. Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project? A.5. Does the unit have adequate facilities, such as PCs, internet connections, photocopy facilities, printers, etc., to undertake the planned procurement? The Pourashava Engineering Section (ES) day to day working language is Bengali with English language limited to bidding Documents. All concerned staff (Class 1, 2,3,4) during procurement training to be tested for procurement technical vocabulary No, the pourashava will need support from LGED with additional technical expertise during the procurement and implementation cycle. Staff Positions are sufficient for the current level of Pourashava procurement. If additional technical expertise are required positions must be filled with appropriate staffs, the number and qualifications of the staffs would be capable of undertaking additional procurement activities. Generally, short term expertise to support will be essential as the ES expands. Not Adequate. New facilities would be required; because existing PCs and printers are old, although working. Existing facilities within the Pourashava: - 3 PCs (3 in Engineering Section 2 years old), - 3 Printers - 2 years old - 1 Photocopy machine in poor condition; 1 - Fax machine general use. Additional facilities tentatively required: - 4 PCs (3 in Engineering Section - 2 internet connectivity (GSM modems); - 2 Laptop in Engineering Section; - 2 Laser Printers - 1 Photocopy machine; and - 1 Fax machine. Average Average High A.6. Does the Pourashava have a procurement training program? No, the pourashava does not have a training program of its own. The Pourashava Engineering Section (ES) are knowledgeable of the procurement process for low threshold values national procurement with civil works and goods. None of the ES staff or support staff has any training in either ADB Procurement Procedures for Goods and Works, ADB Financial Management Government of Bangladesh Public Procurement guidelines. Staff would attend trainings organized by other agencies /departments, such as: LGED, CPTU etc. High Page 179 of 423

196 Question Answer/Finding Risk A.7. Does the Pourashava have a Procurement Committee that is independent from the head of the Pourashava? Yes, 2 Procurement Committees constituted following the circular by LGD: Tender Opening Committee (TOC): 5 persons: AE-1, SAE-1 & Secretary-1; and Tender Evaluation Committee (TEC): 8 persons: AE-1, SAE-1, Secretary-1, counsellors-2 (including 1 nominated female), Representative of Deputy Commissioner of the district (Upazila Assistant Secondary Education Officer)-1, Representative of DPHE (Upazila SAE)-1 & Representative of LGED (Upazila SAE)-1. Average A.8. Does the Pourashava have a procurement department/unit, including a permanent office that performs the function of a Secretariat for the Procurement Unit, and which serves as the main support unit of the Procurement Committee? A.9. If yes, what type of procurement does it undertake? A.10. At what level does the department/unit report (to the head of Pourashava, deputy etc.)? Tender Evaluation Committee (TEC) has no experience with ADB Procurement Procedures for Goods and Works. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and should include the Public Procurement Act of 2006 and the Public Procurement Rules of This specialized training should be provided to each members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Yes. The Engineering Section (ES) functions as procurement department/unit. It has permanent office, staffs and facilities. This support will need to be expanded with the additional workload of the project. Under the procurement laws, this section Mandatorily provides secretarial support to the procurement committees. Only national and local budget civil works and goods contracts for the Pourashava (goods, road, bridge, culvert, drains, water supply system, lighting facilities, and To HOPE (Head of Procurement Entity). It must be noted that HOPE (Head of Procurement Entity) lacks training and the background which could lead to irregularities and pose a serious threat to sound and efficient public procurement. Average Average Page 180 of 423

197 Question Answer/Finding Risk A.11. Do the procurement positions in the Pourashava have job descriptions, which outline specific roles, minimum technical requirements and career routes? A.12. Is there a procurement process manual for goods and works? A.13. If there is a manual, is it up to date and does it cover foreign-assisted projects? A.14. Is there a procurement process manual for consulting services? No, there is no procurement positions describe in the government guidelines. The Pourashava Engineering Section (ES) undertakes all procurement activities. This does not follow international best practice for separation of job functions. A dedicated procurement function is required to ensure that procurements are carried out systematically according to principles of sound and efficient procurement, and in line with the established rules. The positions of pourashava are run by the circulars issued by the Local Government Division (LGD). All staff (Class 1, 2, 3) positions have job descriptions, which outline specific roles, minimum technical requirements and career routes. In order to avoid and question of conflict of interest or worse, the project should setup a procurement unit within each Pourashava for the life of project. They would be responsible for all project procurement and transfer of knowledge to Pourashava staff. Yes, the Public Procurement Rules (PPR) 2008 is used as guidelines or manual which supplements and details all the provisions of Public Procurement Act (PPA) LGD arranged adequate publication of PPA and PPR, and distributed to each pourashava. Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. Yes, PPR covers consulting services; however, pourashavas are not required to procure services under the proposed project High Average A.15. If there is a manual, is it up to date and does it cover foreign-assisted projects? A.16. Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects? A.17. Does the Terms of Reference follow a standard format such as background, tasks, inputs, objectives and outputs? Yes, PPR is updated from time to time. It does not cover foreign assisted projects but stipulates that conditions of financing agreement shall prevail for procurement under foreign-assisted projects. Yes, there are standard procurement documents/forms issued by CPTU. For ADB projects, these documents are modified incorporating ADB s requirements. Yes, the standard documents issued by CPTU follow ADB format; however, pourashavas are not required to procure services under the proposed project. Page 181 of 423

198 Question Answer/Finding Risk A.18. Who drafts the procurement specifications? Pourashava Executive Engineer (XEN) and Assistant Engineer (AE) use LGED Rate Schedule and Specifications. It should be noted that neither Engineer has training in the requirements for preparation of specifications under ADB guidelines. High A.19. Who approves the Works specifications are drafted by the Executive Engineer, who submits to the HOPE (Head of Procurement Entity) for final approval for national or local budget. procurement It should be noted that neither the HOPE specifications? (Head of Procurement Entity) or Executive Engineer had training in the requirements for preparation of goods specifications under ADB or GOB guidelines. A.20 Who drafts the bidding documents? A.21 Who manages the sale of the bidding documents? A.22 Who identifies the need for consulting services requirements? A.23 Who drafts the terms of reference (ToR)? A.24 Who prepares the request for proposals (RFPs)? Executive Engineer and Assistant Engineer. It should be noted that neither the Engineer had training in the requirements for preparation of bidding documents under ADB or GOB guidelines. The Accounts Section of the Pourashava, the documents are sold in multi locations. At the point of sale the purchaser is provided with the official sales receipt and provided with the bidding document. The pourashava does not generally procure services. If needs are initially Identified the Engineering Section would be responsible.. For procurement of services under a project, the relevant experts at the project office should identify the requirements. Generally, the pourashava does not procure any services. If required, Pourashava Engineering Section would prepare the ToR. For procurement of services under a project, the relevant experts at the project office would prepare the ToR. If required, Engineering Section would prepare the RFPs. For procurement of services under a project, the relevant experts at the project office would prepare the RFPs. Average B. INFORMATION MANAGEMENT Yes. The Pourashava follows the PPR Part A [Rule 43(4)], Schedule-Vlll B.1 Is there a referencing system for procurement requirements... As stated in Section A.1 files? the Pourashava has not had any formal procurement training which includes requirements for record management. Average B.2 Are there adequate resources allocated to record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the Pourashava? Yes The Pourashava is aware of requirements for records management functions under the PPR PPR [rule 43(1), Schedule-2], but during the field visit the consultant was not shown the full record keeping infrastructure. Average Page 182 of 423

199 Question Answer/Finding Risk B.3 For what period are records kept? B.4 Are copies of bids or proposals retained with the evaluation? B.5 Are copies of the original advertisements retained with the pre-contract papers? Yes. The Pourashava is aware of keeping records for 5 years under PPR [rule 43(1), Schedule-2] stipulates minimum time as 5 years. During the field visit the consultant was shown a records which appeared to be within the guidelines. Yes. The Pourashava is aware of the requirements for records management under under PPR Schedule VIII Part-A: [See Rule 43(4)]. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B: [See Rule 43(4) file check list. Yes. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B: [See Rule 43(4) file check list. Average Average Average B.6 Is there a single contract file with a copy of the contract and all subsequent contractual correspondence? Yes. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B: [See Rule 43(4) file check list. Average B.7 Are copies of invoices included with the contract papers? Yes. During the field the records appeared to be within the guidelines but did not include PPR Schedule VIII Part-B: [See Rule 43(4) file check list. Average C. PROCUREMENT PRACTICES Goods and Works C.1 Has the Pourashava undertaken foreignassisted procurement of goods or works recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) No. Any future foreign-assisted project procurement of goods or works, the Pourashava staff will need procurement training under donor guidelines, supplemented with procurement training in GOB guidelines Average C.2 If the above answer is yes, what were the major challenges? C.3 Is there a systematic process to identify procurement requirements (for a period of one year or more) Yes. A potential list of requirements is prepared in the months of June-July each year based on citizen s demands and twice per year field surveys by the Engineering Section. FY Total Budget: BDT 249,492,066 Engineering: Budget: BDT 142,104,000 Average Page 183 of 423

200 Question Answer/Finding Risk C.4 Is there a minimum period for preparation of bids and if yes how long? C.5 Are all queries from bidders replied to in writing? C.6 Does the bidding document state the date and time of bid opening? C.7 Is the opening of bids done in public? C.8 Can late bids be accepted? C.9 Can bids be rejected at bid opening? C.10 Are minutes of the bid opening taken? Yes. When the decision about a procurement Scheme is final from the local budget; the Engineering Section takes about 7 days to prepare the national standard bidding documents. After the Invitation for Bids (IFB) bids has been published in the newspapers, the minimum preparation time for the bidders according to PPR [rule 61(4), Schedule-2] is as follows: 14 days for estimated value up to BDT 3 million (approx. US$ 37,500); 21 days for estimated value above BDT 3 million and up to BDT 50 million (approx. US$ 625,000); and 28 days for estimated value above BDT 50 million. They have no experience with donor funded projects will require from PMO. Yes. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. The procedure is detailed in PPR [rule 97]. During the field visit the consultant was shown a few records which appeared to be within the guidelines. No. Late bids are returned unopened according to PPR [rule 97(6)]. During the field visit the consultant was shown a few records which appeared to be within the guidelines. No During the field visit the consultant was shown a few records which appeared to be within the guidelines. Bids cannot be rejected at the time of opening according to PPR [rule 97(6)]. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Tender Opening Sheet (TOS) is prepared which includes signature of officials and bidders present in the meeting. Apart from opening sheet, minutes are not prepared. Average Average Average Average C.11 Who may have a copy of the minutes? During the field visit the consultant was shown a few records which appeared to be within the guidelines. TOS is distributed to all present at the meetings and concerned offices including the project office. Page 184 of 423

201 Question Answer/Finding Risk C.12 Are the minutes free of charge? C.13 Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)? C.14 What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation? C.15 Is the decision of the evaluators final or is the evaluation subject to additional approvals? The Pourashava follows PPR [rule 97(7)], which requires the TOS to be signed by the opening officials and attending bidders, and has to be distributed to all who attended the opening session, and to the head of procuring entity and relevant consultant / project offices. There is no provision of price or cost for distribution of TOS or opening minutes It is a permanent committee. TEC (as detailed in A.7 above) undertakes evaluation of bids following the provisions of PPR [rule 98]. Current TEC consisted of 8 persons, 6 of whom are responsible government officials having experience in public procurement, and 2 are elected or selected public representatives, 4 of them have engineering educational background; either graduation or at least diploma. 3 members come from external agency outside the controlling authority of the pourashava. In order to contribute to the building of the Pourashava procurement capacity a Bid Evaluation Handbook should be developed, based on the ADB Guide for Bid Evaluation and specialized training should be provided to members of the Tender Evaluation Committee (TEC) once a year. Further new members should provide with this handbook. Recommendation of TEC is subject to concurrence of the HOPE (Head of Procurement Entity) for national tendering. The HOPE (Head of Procurement Entity) has not attended procurement training either in ADB Procurement Procedures for Goods and Works or Government of Bangladesh Public Procurement guidelines. Average Average Average Page 185 of 423

202 Question Answer/Finding Risk C.16 Using at least three real examples, how long does it normally take from the issuance of the invitation for bids up to contact effectiveness? C.17 Are there processes in place for the collection and clearance of cargo through ports of entry? C.18 Are there established goods receiving procedures? C.19 Are all goods that are received recorded as assets or inventory in a register? C.20 Is the Pourashava/ procurement department familiar with letters of credit? The Pourashava usually takes 60 days for national open tendering required from the issuance of the invitation for bids up to contact signing /effectiveness for estimated cost of contract more than BDT 3 million (approx. US$ 37,500) for which bid preparation time is minimum 21 days. PPR allows maximum 14 days for bid evaluation process, maximum 7 days for Approval at the level of HOPE (Head of Procurement Entity), 28 days from issuance of Notification of Award and Contract signing [rule 8(14), schedule -3, Part-A & rule 102(11), Schedule-2]. The Pourashava has no experience with donor funded projects. Not Applicable. Pourashava has not yet done any procurement from abroad. However processes will be established if required under the project. Yes. Generally, the user unit /official(s) and the store-in-charge receive the goods examining for the proper quality and quantity. Yes. Store-in-charge is responsible for recording the items in the stock / inventory register. No, Pourashava has never used letters of credit. High Average Average Average C.21 Does the procurement department register and track warranty and latent defects liability periods? Yes, warranty and latent defects liability periods are recorded in the concerned contract file, which is kept open until the specified period is over, and all pending issues are resolved. Average Consulting Services C.22 Has the Pourashava undertaken foreign-noassisted procurement of consulting services recentlythe Pourashava has not yet done any (last 12 months, or last 36 months)? (If yes, pleaseprocurement of consulting services indicate the names of the development partner/s and the Project/s.) C.23 If the above answer is yes, what were the Not Applicable. major challenges? C.24 Are assignments and requests for expressionsnot Applicable. of interest (EOIs) advertised? C.25 Is a consultants selection committee formed with appropriate individuals, and what is its composition (if any)? C.26 What criteria are used to evaluate EOIs? C.27 Historically, what is the most common method used (QCBS, QBS, etc.) to select consultants? Not Applicable. Not Applicable. Not Applicable. Page 186 of 423

203 Question Answer/Finding Risk C.28 Do firms have to pay for the Request fornot Applicable. Proposals (RFP) document? C.29 Do the proposal evaluation criteria Not Applicable. follow a pre-determined structure and is it detailed in the Request for Proposals (RFP)? C.30 Are pre-proposal visits and meetings arranged? C.31 Are minutes prepared and circulated after pre-proposal meetings? C.32 To whom are the minutes distributed? Not Applicable. Not Applicable. Not Applicable. C.33 Are all queries from consultantsnot Applicable. answered/addressed in writing? C.34 Are the technical and financial proposals Not Applicable. required to be in separate envelopes? Not Applicable. C.35 Are proposal securities required? C.36 Are technical proposals opened in public? C.37 Are minutes of the technical opening distributed? C.38 Do the financial proposals remain sealed until technical evaluation is completed? C.39 Who determines the final technical ranking and how? C.40 Are the technical scores sent to all firms? C.41 Are the financial proposal opened in public? C.42 Are minutes of the financial opening distributed? C.43 How is the financial evaluation completed? C.44 Are face to face contract negotiations held? C.45 How long after financial evaluation is negotiation held with the selected firm? C.46 What is the usual basis for negotiation? Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. Not Applicable. C.47 Are minutes of negotiation taken and Not Applicable. signed? C.48 How long after negotiation is the contract Not Applicable. signed? C.49 Is there an evaluation system for Not Applicable. measuring the outputs of consultants? Payments C.50 Are advance payments made? No advance payment is made. Low C.51 What is the standard period for payment included in contracts? During the field visit the consultant was shown a few records which appeared to be within the guidelines. This period is High included in the standard contract conditions. According to PPR [rule 39(22), Schedule-2], payment has to be made within 28 days from the date of issuance of acceptance certificate to the contractor / supplier. Page 187 of 423

204 Question Answer/Finding Risk C.52 On average, how long is it between receiving athe Pourashava states they usually make firm s invoice and making payment? payment within days. C.53 When late payment is made, are thethe Pourashava usually makes payments beneficiaries paid interest? promptly when funds are available. Standard contract conditions include the provision of interest for delayed payment. However, no case of interest claim for payment delay has yet been reported. D. EFFECTIVENESS D.1 Is contractual performance systematically monitored and reported? D.2 Does the Pourashava monitor and track its contractual payment obligations? D.3 Is a complaints resolution mechanism described in national procurement documents? D.4 Is there a formal non-judicial mechanism for dealing with complaints? Yes. The Engineering Section makes field visits and checks, quality control tests etc. During the field visit the consultant was shown a few records which appeared to be within the guidelines. As noted earlier the Pourashava has had no formal training in contract administration through the procurement training requirements Yes. Accounts section monitors the payment obligations through tracking the contract-wise lists. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. Bidding and Contract documents clearly reflect PPR s specific provisions for complaint resolution mechanisms Yes. This process is described in the SDB and briefly outlined as below During Bidding Process: At the 1st stage, any complaint is to be submitted to the procuring entity who is obliged to address the issue within 5 working days [PPR rule 57(4), Schedule- 2]. If not satisfied, the complainant may go to next higher authority gradually up to the highest administrative tier (Secretary of the concerned ministry) with time bound obligation at every stage [PPR rule 57, Schedule-2]. At the last stage, the complainant may submit the matter to the Review Panel consisting 3 to 5 persons who are eminent experts in the laws, contract implementation and technical aspects of the procurement. This panel is independent of the government control, and has the obligation to decide on the issue within 12 working days [PPR rule 60(2), Schedule-2]. During Contract Implementation: According to standard bidding documents for works and goods, there are three options: (i) Amicable Settlement between the procuring entity and the contractor or supplier; (ii) Adjudication by an independent person mutually agreed and named in the contract agreement; and (iii) Arbitration conducted in accordance with the Arbitration Act (Act No 1 of 2001) of Bangladesh which facilitates settlement outside the judicial court. Average Average Average Average Page 188 of 423

205 Question Answer/Finding Risk D.5 Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment? E. ACCOUNTABILITY MEASURES E.1. Is there a standard statement of ethics and are those involved in procurement required to formally commit to it? Yes. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Yes. PPR stipulates strict compliance with ethical standards called code of ethics [PPR rule 127(1) (b), Schedule-XII] by those involved in procurement. Any case of professional misconduct or offence shall be dealt with provisions of PPR [rule 127] and other applicable laws; such as: Anti-corruption Commission Act 2004 of the country Average Average E.2. Are those involved with procurement required to declare any potential conflict of interest and remove themselves from the procurement process? E.3. Is the commencement of procurement dependent on external approvals (formal or defacto) that are outside of the budgeting process? E.4. Who approves procurement transactions, and do they have procurement experience and qualifications? Yes. During bid evaluation process, each member of the committee has to declare and sign written individual statement of no business or other links to any of the competing Tenderers or Applicant [PPR rule 8(13) (a)]. PPR [rule 55] has specific provision detailing the conflict of interest situations for the tenderers (for works and goods) or applicants (for services). According to rule 55(7), procuring entity officials, who have an interest, directly or indirectly, with a firm or individual that is Tendering or has Tendered for a Procurement proceedings of that entity shall declare its relationship with that firm or individual and consequently not participate in any proceedings concerned with that specific Procurement at any stage including from when the specifications are written and qualification criteria are established up to the Supply of Goods or performance of the Works are completed and, until all contractual obligations have been fulfilled. No. The Pourashava Engineer Section has responsible for all procurement transactions, which are finally approved by the HOPE (Head of Procurement Entity). The HOPE (Head of Procurement Entity) or the ES (XEN) have had no formal procurement training in the requirements under GOB guidelines. High Average Average Page 189 of 423

206 Question Answer/Finding Risk E.5. Which of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval? s) Bidding document, invitation to prequalify or Request for Proposals (RFP) t) Advertisement of an invitation for bids, pre-qualification or call for EOIs u) Evaluation reports v) Notice of award w) Invitation to consultants to negotiate - x) Contracts Formally all of these actions require approvals from the HOPE (Head of Procurement Entity). The HOPE (Head of Procurement Entity) has not attended procurement training either in ADB Procurement Procedures for Goods and Works, Government of Bangladesh Public Procurement guidelines. High E.6. Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets? E.7. Is there a written auditable trail of procurement decisions attributable to individuals and committees? No, the same person is not responsible for all the stated actions. HOPE (Head of Procurement Entity) is responsible for items (i) and (ii); and XEN is responsible for items (iii) and (iv) Yes. All procurement decisions including communication /exchange of views /comments between relevant / responsible persons are recorded in the concerned file. During the field visit the consultant was shown a few records which appeared to be within the guidelines. Average Average II. General Ratings Criterion A. Organizational and Staff Capacity Average B. Information Management Average C. Procurement Practices Average D. Effectiveness Average E. Accountability Measures Average OVERALL RISK RATING Average Risk Page 190 of 423

207 2) Executing Agency Capacity Assessment Questionnaire 66 Agency: Local Government Engineering Department (LGED) Part A. General Agency Resource Assessment A.1.Is there a procurement department? A.2.What procurement does it undertake? A.3.Are the staff provided with written job descriptions? A.4.How many years experience does the head of the procurement unit have in a direct procurement role? Response Because of the nature of the job decentralized in the whole country, procurement is being conducted by several procuring entities of LGED working in different levels as such LGED does not have a separate procurement department exclusively responsible for the procurement. However, LGED has a procurement unit in the Headquarter. The procurement unit provides policy issues and directives related to procurement to all procuring entities of the department. There is National Procurement Act. LGED follows the National procurement Act. LGED under takes all kinds of public procurement related to goods, works and services mainly for developing urban and rural infrastructures as well as small scale water resources projects. Yes. 30 years. A.5.How many staff in theprocurement department are: i. Full Time? 10 (ten) nos. ii. Part Time? -- iii. Seconded? -- A.6.At what level does the department report (to the head of agency, deputy etc.)? A.7.Do the staff that will be involved with the procurement have English language skills sufficient to undertake international procurement? Head of agency, Chief Engineer Yes, the procuring entities those who will be involved in the procurement have sufficient proficiency in English. It may be mentioned here that the whole language skills sufficient procurement document in terms of bidding document, specification, public procurement law and rules are being practiced in English. The LGED procuring entities are being continuously trained up with the procurement law, rules and bidding documents and contract management. Hence, English language will not be at all any problem for LGED procuring entities. 66 TA-8128BAN:PreparingCoastalTownsInfrastructureImprovementProject FR Vol.2:Appendices Page 191 of 423

208 Response A.8.Is the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project? A.9.Does the unit have adequate Facilities such as PCs, internet connections, photocopy facilities, printers etc. to under take the expected procurement? A.10. Is there a procurement training program? Part B. Agency Procurement Processes, Goods and Works B.1. Has the agency undertaken foreign assisted procurement of goods or works recently (last 12months, or last 36 months)? (If yes funded by whom and name of the Project) B.2. If the above is yes, what where the major challenges? B.3. Is there a procurement process manual for goods and works? B.4. If there is a manual is it up to date and does it cover foreign assisted procurement? With national and international training and huge procurement practice in different national and foreign aided projects, the capacity of LGED officials and staff has developed sufficiently at a level to under take additional procurement proposed under the project. The Ministry of Planning has been conducting3 - weeklong residential training course for developing the knowledge and skill of the procuring entities for major procuring departments of Bangladesh. LGED is one of those departments receiving that kind of extensive training on procurement. Most of the Procuring entities of LGED have been trained on that course. Some of the LGED officers have completed post-graduation degree on procurement from the abroad. In addition, some engineers of the department were trained on procurement under FIDIC condition. Besides, LGED has been conducting different kinds training courses on procurement for all levels of staff involved with the procurement. As mentioned earlier that the LGED procurement unit provides procurement directives and policy guidelines for procurement but that unit does not involve with the procurement. However, the unit Is equipped with facilities of PCs, internet connections, photocopy facilities, printers etc. The procurement under the proposed Project will be undertaken by PMU & PIUs; which will be equipped with adequate facilities such as: PCs, Internet Connections, photocopy facilities, printers etc. for smooth implementation of procurement. As mentioned earlier, there are various training programs on procurement arranged by the Ministry of Planning and LGED for the officials and staffs responsible for procurement. This kind of training programs continues round the year. Yes. Some major challenges are as follows: Procurement of consultants usually causes delay, which leads to start-up delay in procurement of civil works and goods; Designing realistic procurement plan after considering all uncertainties. Yes. All public procurements are being under taken in accordance with the Public Procurement Rules-2008 supported by Public ProcurementAct Comprehensive procurement process for goods, works and services are described in that document. All those documents are available in the Central Procurement Technical Unit (CPTU) website: Yes. The public procurement rules are amended from time to time and those amendments are notified to all procuring entities through notification in the Government Gazette. All amendments are also available in the CPTU website. Such document is used For foreign assisted procurement if that document is acceptable to the concerned donor. Otherwise, customized procurement documents are prepared with concurrence of the donor and that document is used for foreign assisted procurement. Page 192 of 423

209 B.5. Is there a systematic process to identify procurement requirements (1yearormore) B.6. Who drafts the specifications? B.7. Who approves the specification? B.8. Are there standard bidding documents in use and have they been approved for use on ADB funded projects? B.9.Who drafts the bidding documents? B.10. Who manages the sale of the document? B.11. Are all queries from bidders replied to in writing? B.12. Is there a minimum period for preparation of bids and if yes how long? B.13. Does the bidding document state the date and time of opening and how close is it to the deadline for submission? Response Yes. Considering the available resources against prioritized requirement, all procuring entities of LGED have to submit the annual procurement plans to the head of procuring entity for approval at the dead end of the year for the following year. Procurement requirements are determined from the procurement plan. However, such plans are modified time to time depending on the availability of resources or other reasons. The Maintenance Unit and Quality Control Unit jointly publish standard general specifications of civil works with rates at the dead end of the financial year for the following year. The specifications and rates are updated in each year with the assistance of experts working in those units. The Head of Procuring Entity i.e. the Chief Engineer approves the specifications. Yes. Under the purview of the Public Procurement Rule, the standard bidding documents have been prepared by the Central Procurement Technical Unit (CPTU) for all kind of procurements. These documents are available in the CPTU website: Those standard bidding documents are used for foreign aided procurements if those are acceptable to the donor. Otherwise, customized bidding documents are prepared in concurrence with the donor for the foreign aided procurement. Most of the donors including ADB accepted the bidding Documents of CPTU for National Competitive Bidding(NCB). Central Procurement Technical Unit (CPTU) is responsible for preparation and modification of Standard Bidding Documents. The project management office is responsible for making customized bidding documents acceptable to the respective donors. In case of works procurement, the District Executive Engineer (Procuring Entity) manages the sale of all bidding documents. The biding documents are sold at least by the following offices: 1.The Executive Engineer of the district (procuring Entity); 2.The Upazila Engineer of the Upazila where the site is located; 3.SuperintendingEngineeroftheconcernedLGEDregion;and 4.The Project Director, of the concerned project. However, records of all sales are available at the office of the Procuring Entity. The Project Director becomes the procuring entity for the case of goods and services and he/she manages the sales of bidding document of those procurement. Yes. B.14. Is the opening public? Yes. B.15. Can late bids be accepted? No. B.16. Can bids be rejected at bid opening? Yes. The minimum period for preparation of tender for NCB procurement is 28 days since the publication of the invitation notice in the newspaper but the same is 42 days for ICB procurement. Yes. Bids are opened within 3 (three) hours after closing. No. B.17. Are minutes taken? Yes. B.18. Who may have a copy of the minutes? The bidders or their authorized representatives those who attend the opening of the tenders. Page 193 of 423

210 B.19. Are the minutes free of charge? Yes. B.20. Who undertakes the evaluation (individual(s), permanent committee, ad-hoc committee)? B.21. What are the qualifications of the evaluators in respect to procurement and the goods and works under evaluation? B.22. Is the decision of the evaluators final or is the evaluation subject to additional approvals? B.23. Using at least three real example show long between the issue of the invitation for bids and contact effectiveness? B.24. Are there processes in place for the collection and clearance of Cargo through ports of entry? B.25. Are there established goods receiving procedures? B.26. Are all goods received recorded as assets or inventory in a register Or similar? B.27. Is the agency/procurement department familiar with letters of Credit? B.28. Does the procurement department register and track warranty and latent defects liability periods? Part C. Agency Procurement Processes, Consulting Services C.1. Has the agency under taken foreign assisted procurement of consulting services recently(last 12 months, orlast36months)? C.2. If the above is yes what where the major challenges? C.3. Is there a procurement process manual for consulting services procurement? C.4. Is the manual up to date and does it cover foreign assisted projects? C.5. Who identifies the need for consulting services requirements? C.6. Who drafts the ToR? C.7. Do the ToR followed a standard format such as background, tasks, inputs, objectives and outputs? C.8. Who prepares there quest for proposals? Response The evaluations are undertaken by permanent Tender Evaluation Committees formed as per the Public Procurement Rules and sub sequent directives by the procurement unit. For LGED officials, minimum Graduate in Engineering. The evaluators can only recommend to the appropriate approving authority determined in accordance with the Government s Delegation of Financial Power for approval. Maximum 4 (four) months. Yes. Yes. Yes. Yes. Yes. Yes. Delay in getting concurrence from the development partners in various layers of procurement process such as: EOI, RFP, Technical Evaluation, Financial Evaluation, Combined Evaluation, Contract Negotiation, Agreement etc. Yes. Yes. LGED and the development partners. LGED and the development partners. Yes. The designated Project Director of LGED. Page 194 of 423

211 Response C.9. Are assignments advertised and expressions of interest called for? C.10. Is a consultants selection committee for med with appropriate individuals in terms of Procurement and technical expertise? C.11. What criteria are used to evaluate EOIs? C.12. Historically what is the most common method used (QCBS, QBS etc.) C.13. Do firms have to pay for the proposal document? C.14. Does the evaluative criteria follow a pre-determined structure and is it detailed in the RFP? C.15. Are pre-proposal visits and meetings arranged? C.16. Are minutes prepared and circulated after pre-proposal meetings? C.17.Towhoareminutesdistributed? C.18. Are all queries from consultants answered to in writing? C.19. Are the financial and technical proposals in separate envelopes? C.20. Are proposal securities required? C.21. Are technical proposals opened in public? C.22. Do the financial proposals remain sealed until technical evaluation is completed? C.23. Are minutes of technical opening distributed? C.24. Who determines the final technical ranking and how? C.25. Are the technical scores published and sent to all firms? C.26. Is the financial proposal opening public? C.27. Are there minutes taken and distributed of financial proposal opening? Yes. The Proposal Evaluation Committee (PEC) is a permanent committee formed by the Head of Procuring Entity. The major criteria are as follows: Consultancy firm's facilities and area of expertise; Experience in similar assignment; Experience in similar operating environments and conditions; Professional qualifications and adequate resources; Managerial strength and financial capacity. QCBS No. Yes. Yes. Yes. The consulting firms or their authorized representatives those who have obtained the bidding document and those consulting firms who received RFP documents. Yes. Yes. No. Yes. Yes. Yes. The Proposal Evaluation Committee determines the final technical ranking according to predetermined evaluation criteria. Technical scores are disclosed/published prior to opening financial proposal. Yes. Yes. Page 195 of 423

212 Response C.28. How is the financial evaluation completed? C.29. Are face to face contract negotiations held? C.30. How long after financial evaluation is the selected firm to negotiate? C.31.Whatis the usual basis for negotiation? C.32. Are minutes of negotiation taken and signed? C.33. How long after negotiations until the contract is signed? C.34. Are advance payments made? C.35. Is there an evaluation system for measuring the outputs of consultants? Part D. Process Over sight and Control D.1. Is there a standard statement of ethics and are those involved in procurement required to formally commit to it? D.2. Are those involved with procurement required to declare any potential conflict of interest And remove themselves from the procurement process? D.3. Is the commencement of procurement dependent on external approvals (formal or defacto) outside of the budgeting process? D.4. Who approves procurement transactions and do they have procurement experience and qualifications? D.5. Which of the following actions require approval outside of the procurement unit or a permanent evaluation committee and who grants the approval? a) Bidding document, invitation to pre-qualify or request for proposal Financial Evaluation is carried out in accordance with the procurement guidelines. In general, arithmetical calculations are checked and bid price adjusted for any arithmetical errors. If any work was proposed in the technical proposal but not' priced in the financial proposal must be loaded by the highest price of the participating firms. All taxes and provisional sum must be taken out from the financial proposal for cost comparison. Yes 3 (three) weeks. Methodology of Works; Work plan: Organization and staffing: Deliverable; Proposed contract price etc. Yes. 2 (two) months Yes. No. However, the LGED officials are aware of this evaluation system and capable of managing a balance between the expenditure against the consultant input compared to delivered output. Yes. Yes. Yes. According to delegation of financial power of the Government, different layers of approving authority ranging from district level Executive Engineer, Project Director, HOPE, Line Ministry and Cabinet Committee approves procurement transactions within their financial power. HOPE and Development Partner Page 196 of 423

213 b) Advertisement of an invitation for bids, prequalification or call for expressions of interest HOPE Response c) Evaluation reports As per delegation of financial power, HOPE or Line Ministry or Cabinet Committee (CCGP) and Development Partner. d) Notice of award HOPE and Development Partner. e) Invitation to consultants to negotiate HOPE and Development Partner. f) Contracts HOPE and Development Partner. D.6. Is contractual performance systematically monitored and reported upon? D.7. Does the agency monitor and track its contractual payment obligations? D.8. On average how long is it between receiving a firm s invoice and making payment? D.9. What is the standard period for payment included in contracts? D.10. When payment is made late are the beneficiaries paid interest? D.11. Are payments authorized by the same individuals empowered to approve invitation documents, evaluations and contracts? D.12. Is there a written auditable trail of procurement decisions attributable to individuals and committees? D.13. Are procurement decisions and disputes supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment? D.14. Is there a formal non-judicial mechanism for dealing with complaints? D.15. Is a complaints resolution mechanism described in national procurement documents? Part E. Records Keeping E.1. Is there a referencing system for procurement files? E.2. Are original contracts secured in a fire and theft proof location? E.3. Are copies of bids or proposals retained with the evaluation? E.4. Are copies of the original advertisements retained with the pre-contract papers? Yes. Yes. 2 (two) weeks. 2 (two) weeks. Yes, if the reasonable claims are delayed. No. No. Yes. Yes. Yes. Yes. Yes. Yes. Yes. Page 197 of 423

214 Response E.5. Is there a single contract file with a copy of the contract and all sub sequent contractual correspondence? E.6. Are copies of invoices included with contract papers? E.7. For what period are records kept? Yes. Invoices are not included in the contract but are kept in separate files containing the copy of the contract and related correspondences. 5 (five) years. Co-Executing/Implementing Agency Department of Public Health Engineering (DPHE) 67 Risk Ratings Extremely High High Average > Low I. Specific Assessment and Ratings Question Answer/Finding Risk A. ORGANIZATIONAL AND STAFF CAPACITY A.1. How many years of experience does the head of the procurement department/ unit have in a direct procurement role? A.2. How many staff in the procurement department/unit are: no. of staffs. xiii. Full Time? All staffs are full time. xiv. Part Time? None. xv. Seconded? None. A.3. Does the procurement staff have English language proficiency? A.4. Are the number and qualifications of the staff sufficient to undertake the additional procurement that will be required under the proposed project? A.5. Does the unit have adequate facilities, such as PCs, internet connections, photocopy facilities, printers, etc., to undertake the planned procurement? A.6. Does the agency have a procurement training program? A.7. Does the agency have a Procurement Committee that is independent from the head of the agency? A.8. Does the agency have a procurement department/unit, including a permanent office that performs the function of a Secretariat for the Procurement Unit, and which serves as the main support unit of the Procurement Committee?? A.9. If yes, what type of procurement does it undertake? DPHE has 72 procuring Entities (1 in each district and others in H/Q) because of its decentralized job nature. Each procuring entity is led by an officer having at least 12 years of procuring experience. Each of the procuring entity have at least 12 Yes. Adequate working knowledge. Yes. Under the project, DPHE will not be directly involved in procurement activities. Yes. The core establishment of DPHE has at least minimum facilities. DPHE has regular training program including procurement. Under a WB supported project of CPTU, most of the staffs have been trained and under process of getting training (3 week duration). Yes. PEC/TEC and TOC are formed following PPR. All the committees are supported by the department s permanent setups (District offices for field level and divisions for H/Q) as well as its administrative channels. There is no separate procurement department in the HQ to perform as Secretariat for procurement Unit that serves as the support unit of Procurement committees. -- Low Low Low Low Low Low Low Low 67 TA-8128 BAN: Preparing Coastal Towns Infrastructure Improvement Project DFR Vol. 2: Appendices Page 198 of 423

215 A.10. At what level does the department/unit report (to the head of agency, deputy etc.)? A.11. Do the procurement positions in the agency have job descriptions, which outline specific roles, minimum technical requirements and career routes? A.12. Is there a procurement process manual for goods and works? A.13. If there is a manual, is it up to date and All the Procuring Entities (72 nos.) directly submit their monthly expenditure statement to the Chief Accounts General office of the Government of Bangladesh. Other financial and procurement related reports are submitted to the administrative authority of the departments. All the positions responsible for the government procurement have their specific job description and career routs as per the approved government recruitment and promotion regulations. All procurement is done as per PPR 2008 and PPA Yes. As per PPR, all the foreign assisted Low Low Low Question Answer/Finding Risk does it cover foreign-assisted projects? A.14. Is there a procurement process manual for consulting services? A.15. If there is a manual, is it up to date and does it cover foreign-assisted projects? A.16. Are there standard documents in use, such as Standard Procurement Documents/Forms, and have they been approved for use on ADB funded projects? A.17. Does the ToR follow a standard format such as background, tasks, inputs, objectives and outputs? A.18. Who drafts the procurement specifications? A.19. Who approves the procurement specifications? A.20. Who drafts the bidding documents? A.21. Who manages the sale of the bidding documents? project will also follow PPR 2008 and PPA 2006 if not otherwise specified by the donors and agreed by the Government of Bangladesh. Yes Yes Yes Yes. Respective Procurement Entity Head of Procuring Entity Respective Procurement Entity Respective Procurement Entity & other places as per PPR. Low A.22. Who identifies the need for consulting services requirements? A.23. Who drafts the terms of reference (ToR)? As per donor s requirement and respective project offices. Respective Project Office. Low A.24. Who prepares the request for proposals Respective Project Office. (RFPs)? B. INFORMATION MANAGEMENT B.1. Is there a referencing system for Yes. Low procurement files? B.2. Are there adequate resources allocated to Yes. Low record keeping infrastructure, which includes the record keeping system, space, equipment and personnel to administer the procurement records management functions within the agency? B.3. For what period are records kept? As per PPR. Low B.4. Are copies of bids or proposals retained Yes. Low with the evaluation? B.5. Are copies of the original advertisements Yes Low retained with the pre-contract papers? B.6. Is there a single contract file with a copy of Yes Low the contract and all subsequent contractual correspondence? B.7. Are copies of invoices included with the No. Kept separately. Low contract papers? C. PROCUREMENT PRACTICES Goods and Works Page 199 of 423

216 C.1. Has the agency undertaken foreignassisted procurement of goods or works recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) C.2. If the above answer is yes, what were the major challenges? C.3. Is there a systematic process to identify procurement requirements (for a period of one year or more) C.4. Is there a minimum period for preparation of bids and if yes how long? C.5. Are all queries from bidders replied to in writing? Yes. ADB, IDB, UNICEF, JICA, W orld Bank. In few cases Delay in getting concurrence from the development partners. Yes the yearly procurement plan is to be approved in advance as per PPR Yes. For NCB-28 days and ICB 42 days and other cases as per PPR. Yes. Low Low Question Answer/Finding Risk C.6. Does the bidding document state the date Yes. Low and time of bid opening? C.7. Is the opening of bids done in public? Yes. Low C.8. Can late bids be accepted? No. C.9. Can bids be rejected at bid opening? No. C.10. Are minutes of the bid opening taken? Yes. Low C.11. Who may have a copy of the minutes? Bidders or Authorized representatives of the Bidders who attended the opening of the Tender. C.12. Are the minutes free of charge? Yes. C.13. Who undertakes the evaluation of bids (individual(s), permanent committee, ad-hoc committee)? Permanent Tender evaluation committee has been formed following PPR. Low C.14. What are the qualifications of the evaluators with respect to procurement and the goods and/or works under evaluation? C.15. Is the decision of the evaluators final or is the evaluation subject to additional approvals? C.16. Using at least three real examples, how long does it normally take from the issuance of the invitation for bids up to contact effectiveness? C.17. Are there processes in place for the collection and clearance of cargo through ports of entry? C.18. Are there established goods receiving procedures? C.19. Are all goods that are received recorded as assets or inventory in a register? C.20. Is the agency/procurement department familiar with letters of credit? C.21. Does the procurement department register and track warranty and latent defects liability periods? Minimum at the rank of 1 st Class officer of government. The committee can only recommend for approval. At least three months and Maximum four months. Yes. Yes Yes No. DPHE will not be required to open L/C. Yes. Low Low Low Low Low Low Low Low Consulting Services C.22. Has the agency undertaken foreignassisted procurement of consulting services recently (last 12 months, or last 36 months)? (If yes, please indicate the names of the development partner/s and the Project/s.) C.23. If the above answer is yes, what were the major challenges? C.24. Are assignments and requests for expressions of interest (EOIs) advertised? C.25. Is a consultants selection committee formed with appropriate individuals, and what is its composition (if any)? Yes. IDB, W orld Bank None. Yes Yes C.26. What criteria is used to evaluate EOIs? As per REOI notice. Low Low Low Low Page 200 of 423

217 C.27. Historically, what is the most common QCBS Low method used (QCBS, QBS, etc.) to select consultants? C.28. Do firms have to pay for the RFP Yes Low document? C.29. Does the proposal evaluation criteria Yes Low follow a pre-determined structure and is it detailed in the RFP? C.30. Are pre-proposal visits and meetings Yes Low arranged? C.31. Are minutes prepared and circulated after Yes pre-proposal meetings? C.32. To whom are the minutes distributed? To the attended firms C.33. Are all queries from consultants Yes Low Question Answer/Finding Risk answered/addressed in writing? C.34. Are the technical and financial proposals Yes Low required to be in separate envelopes? C.35. Are proposal securities required? No Low C.36. Are technical proposals opened in Yes Low public? C.37. Are minutes of the technical opening distributed? Yes, to the PEC members and concerned approving authority. C.38. Do the financial proposals remain sealed Yes Low until technical evaluation is completed? C.39. Who determines the final technical Proposal Evaluation Committee (PEC) ranking and how? C.40. Are the technical scores sent to all firms? No. C.41. Are the financial proposal opened in Yes Low public? C.42. Are minutes of the financial opening Yes distributed? C.43. How is the financial evaluation As per PPR Low completed? C.44. Are face to face contract negotiations Yes held? C.45. How long after financial evaluation is Within proposal validity period, 90 days. negotiation held with the selected firm? C.46. What is the usual basis for negotiation? Reimbursable items. C.47. Are minutes of negotiation taken and Yes. signed? C.48. How long after negotiation is the contract 4 weeks Low signed? C.49. Is there an evaluation system for As mentioned in ToR. Low measuring the outputs of consultants? Payments C.50. Are advance payments made? As per contract. Low C.51. What is the standard period for payment As per nature of job and Agreement. Low included in contracts? C.52. On average, how long is it between 2 weeks receiving a firm s invoice and making payment? C.53. When late payment is made, are the As per PPR. beneficiaries paid interest? D. EFFECTIVENESS D.1. Is contractual performance systematically Yes Low monitored and reported? D.2. Does the agency monitor and track its Yes Low contractual payment obligations? D.3. Is a complaints resolution mechanism Yes Low described in national procurement documents? D.4. Is there a formal non-judicial mechanism Yes Low for dealing with complaints? D.5. Are procurement decisions and disputes Yes. Low supported by written narratives such as minutes of evaluation, minutes of negotiation, notices of default/withheld payment? E. ACCOUNTABILITY MEASURES Page 201 of 423

218 E.1. Is there a standard statement of ethics and Yes Low are those involved in procurement required to formally commit to it? E.2. Are those involved with procurement Yes Low required to declare any potential conflict of interest and remove themselves from the procurement process? E.3. Is the commencement of procurement Yes Low dependent on external approvals (formal or defacto) that are outside of the budgeting process? E.4. W ho approves procurement transactions, As per delegation of Financial power of the Low Question Answer/Finding Risk and do they have procurement experience and qualifications? E.5. W hich of the following actions require approvals outside the procurement unit or the evaluation committee, as the case may be, and who grants the approval? y) Bidding document, invitation to prequalify or RFP z) Advertisement of an invitation for bids, pre-qualification or call for EOIs aa) Evaluation reports bb) Notice of award cc) Invitation to consultants to negotiate dd) Contracts E.6. Is the same official responsible for: (i) authorizing procurement transactions, procurement invitations, documents, evaluations and contracts; (ii) authorizing payments; (iii) recording procurement transactions and events; and (iv) the custody of assets? E.7. Is there a written auditable trail of procurement decisions attributable to individuals and committees? Government. Hope and Development Partner (DP) HOPE As per delegation of Financial Power (HOPE/ Line Ministry/ CCGP) and by DP (if preferred by donors) HOPE/DP HOPE/DP HOPE/DP No. Yes Low Low Low II. General Ratings Criterion Risk A. Organizational and Staff Capacity Low B. Information Management Low C. Procurement Practices Low D. Effectiveness Low E. Accountability Measures Low OVERALL RISK RATING Low Page 202 of 423

219 3) Market Assessment - Assessment of Contract Implementation capacity of district-level civil contractors and public procurement perspectives Preamble and Setting Public procurement is increasingly being recognized as a vehicle to help governments to achieve social goals and sustainable economic development. Appropriate public procurement policy has been used in quite a few adjoining countries of Bangladesh to empower previously disenfranchised populations and thus pursue the goal of equitable and sustainable development. In the context of Bangladesh, public procurement issues areprogressively finding a strong root in the overall development milieu of the country. which primarily includes 30 pourashavas (predominantly district level) is eyed to make investment into the urban infrastructure umbrella of these ULBs.Specifically, the spectrum of related activities stands to include roads, drains, water supply, sanitation, SWM, improvement of slums and impoverished areas and a range of municipal facilities like markets, bus/lorry terminals, auditorium/community centers, street-lighting and certain other civic amenities. These call for engagement of contractorsvis-à-vis procurement of civil contracts to have the stated components delivered in time, in right quantity and with desired quality control. Now, as a precursor job, it was justifiably felt essential to make an assessment of the related prevailing service situation in the urban levels of the sample PSs and beyond. Down the road, it was also felt necessary to get a measure vis-à-visassessment of the capacity of thelocal contractors, both technical, as well as, financial (a defacto construction market analysis) and simultaneously to learn about the track records of such contractors. With these in view, interactions were made with some district Executive Engineers (EE) of LGED to get some kind of picture of the prevailing situation. LGED EEs were particularly considered because of their relevant involvement both in urban, as well as rural scenario. Hence they are relatively in a better situation to give a pragmatic reflection related to the desired market analysis. Narrated below are some key interaction-points, which attempt to throw some light on the construction market and the types of contractors active in the civil construction areas. The Interactions Experience was shared withmrshahrear Ahmed, current EE, LGED, Jessore. Prior to his current posting, he was EE, Naogaon and earlier, Laksmipur. So however brief, MrShahrear was able to reflect on three different towns, located across the country. Incidentally all these three district towns happen to be towns as well. His experience on the practice, standing and capacity of the civil contractors in these three districts are briefly bulleted below. Jessore: Normal contracts under GoB-funded projects are of the size of BDT 5-15 million. Contracts of this range are almost entirely implemented by local-level contractors without any serious constraints. Notably, the finances and working capital needed to implement these contracts are conveniently generated by the local contractors. Other donor-funded projects entail contracts up to BDT million. These too are largely handled by local level contractors. Albeit, fund generation and working capital required are higher than those of smaller contracts, yet the local contractors can Page 203 of 423

220 mobilize required resources. However, for such larger contracts, competition gets somewhat reduced. Recently, USAID has started channeling funds directly to LGED for implementation of civil works (roads, bridges, etc.). As a pilot case, they have selected Jessore. Should it be found effective, USAID contemplates expanding the modality to other districts. The first contract is over BDT 32 million and local contractors submitted their bids without any observed difficulty. Under LGED, Jessore, all bidding/tendering are electronically done and mostly on line, whichsomewhat reduces hooliganism experienced with previous contracting system. Normal size of contracts for other projects are of the range of BDT million. However, larger contracts certainly bring in bigger contractors from outside, say Dhaka or other divisional towns. For example, one bridge has been tendered out for BDT 800 million. It is being implemented by a joint-venture (JV) arrangement (BD- China). This is beyond the capacity of local contractors. Lastly, beyond BDT 100 million, local contractors largely resort to JV arrangements, which at times, leads to slow implementation Naogaon: The EE (MrShahrear) stated that Naogaon (his immediate past district) has a number of capable and financially strong contractors. He named a few (namely, Russel Enterprise, Sohel Builders and Shamsul Islam & Co) who are reputed to be good contractors and possess good track records. Generally speaking, he felt that Naogaon has more capable civil contractors than many other district towns. During his (Shahrear s) tenure, individual contracts tendered out valued up to around BDT million. He felt that on a number of instances, JV arrangement worked well, albeit there had been a few hiccups as well. MrShahrear felt that Naogaon contractors can safely be relied upon with contracts up BDT 100 million approx. Laksmipur: MrShahrear expressed that Lakhsmipur(he was EE, LGED for some period) as well has a limited number of capable contractors(around 3) who can implement contracts of value up to BDT million. It was also stated that almost all contracts floated from the LGED office are vulnerable to political interference. Nevertheless, the works get completed as the stated contractors are largely efficient. At times, the stated contractors face hardship to mobilize fund. But eventually, they were found to have completed the works contracted out to them, more or less, on time. Largest contracts so far floated/are or being implemented in the said 3 districts are: Jessore BDT 800 million through JV (normal contracts safely handled by local contractors are within BDT million). Naogaon BDT 95 million Implemented by local level contractor (bridge). Laksmipur BDT 50 million implemented by local contractor. Page 204 of 423

221 General Observation: In general, Mr. Shahrear feels from his experience that: The local contractors have already gained substantial experience, especially in implementing civil works like bridges, drains, roads, laying water mains and other system requisites. However, specialized works like Over Head Tank (OHT), Surface Water Treatment Plant/Iron Removal Plant (SWTP/IRP), major transmission systems, tall structures, etc will require contractors coming from outside or through some kind of JV arrangement. It is felt that, with some pre-bid familiarization, reflecting on the technicalities of an undertaking, and of course, with proper monitoring and supervision, the local level contractors with proven track record can be entrusted with the implementation of civil contracts up to a value of BDT million. E-procurement needs to be practiced to protect the genuine contractors from the unholy political influence/musclemen. If the genuine contractors could be given support from the Pourashava or LGED, especially through the district administration, implementing the project schemes through local-level contractors may not be difficult. Training of the local level contractors is a strongly felt necessity. Interactions (continued) Narail and Madaripur Interaction with EngrM. A. Motaleb, EE, LGED, Narail (his immediate previous posting was at Madaripur) revealed the following. Madaripur Normal GoB project contracts are of around BDT 10 million value which the local contractors convenient execute. For other types of project contracts, the ceiling goes up to BDT 50 million and more. However, number of local contractors with proven track record are very few. In his experience, only around 5 local contractors are of known efficiency although total number of contractors substantially exceed this number, but not all with desired efficiency. Besides in most cases, mobilization of fund for bidding and working capital often becomes difficult for these contracts. Largest contract, in recent times, executed was for a bridge that valued around BDT 700 million. This has been implemented by Mr. Akhtar Hossain, an international contractor of Bangladeshi origin. Narail GoB project contracts, reportedly, are of value up to around BDT 10 million. Very few good contractors are available in Narail. Reportedly, the district has only 2 contractors of some repute and with proven track record. Page 205 of 423

222 These 2 contractors are capable of executing contracts of BDT million. But at times, they too face problems with mobilization of fund for work execution. Larger contracts bring in bigger contractors from Dhaka and other divisional towns. General Observation The EE (Engr Motaleb) notes that: Both Madaripur and Narail have very few good contractors known for efficiency, albeit the situation in Madaripur is relatively better than in Narail. Training of the existing contractors to do the job better is an imperative and LGED needs to focus on this aspect. Local political influence/thugs at times creates disturbance in contract bidding and award process. However, with proper monitoring and guidance ensured, the local contractors can be entrusted with works valuing around BDT million. Mymensingh Interactions were held with Mr ABM Rwzaul Bari, EE, LGED, Mymensingh. He stated that: Mymensing is a comparatively larger town, hence has more activities and justifiably, number of contractors is larger than many other districts. Normal contracts are within a range of BDT 20 million for small contracts (which the local contractors can manage well) and around BDT 80 million for medium sized contracts. Political influence/hooligans/thugs often create problems in contact award and execution. Localcontractors of Mymensingh are relatively better off than those of most other districts. Hence, for the stated size of contract, will not be exposed to fund mobilization constraint. Future contracts ought to be around BDT 80 million or around. This will enable more competition through participation of a good number of local contractors. Biggest contract awarded was BDT 720 million (just finished bridge at Gafargaon and done by outside contractor through joint-venture). He emphasized provision of training to contractors. PPTA Consultants Observations and Recommendations In the face of the generic picture that emerged through the stated interactions (3 project districts (towns) and 3 non-project districts (towns)), observation and recommendations in respect of market-analysis regarding contractor-situation, their capacity, financial mobility, etc., in respect of -implementation are: Observations a) Local contractors are by and large available in the stated districts but mostly not in adequate numbers b) Except in a lesser number of cases, financial vis-à-vis working capital availability is a problem. Page 206 of 423

223 c) Generally they are not capable of executing large contracts. In such cases, they go for JV which at times slows the process of execution (JV contractors are mostly from outside the locality). d) Political interference/influence are present in many a case which is mostly counterproductive and retards progress of work. e) Size of contract valuing BDT 80 million and around is considered feasible for the local contractors to be productively involved. f) Most contractors lack required technical knowledge which warrants provision of relevant training/capacity building. g) At times, joint-ventures leads to unwritten subcontracting which is extremely counterproductive and leads to delay in work completion. h) E-procurement has started finding a root in the procurement-horizon of LGED. i) Specialized works will essentially need contractors to come from outside the locality. Recommendations 1) It is advisable that the each contract package may need to be around BDT million (it is eyed to engage and make use of the services and expertise of local contractors as extensively as possible). 2) Care will need to be taken and actions initiated against any illegal sub-contracting so as to ensure quality and timeliness in contract-completion. 3) E-procurement will need to be practiced and ensured so as to ensure promptitude in bidding process and as well, to prevent unholy influence from political overlords and hooligans. 4) Training/capacity-building of the prospective contractors will need to precede bidding and award of contract. 5) If, for the work s interest, contractors are needed to come from outside, full cooperationand support are to be extended to such contractor(s) by the incumbent pourashavas. 6) Close scrutiny of a contractor s equipment/devices will need to precede award of work in order to make sure that he/she has the right devices/equipment for the job. Page 207 of 423

224 11 PROCUREMENT PLAN Basic Data PROCUREMENT PLAN (as of 9 April 2014) Project Name: Third Urban Governance and Infrastructure Improvement (Sector) Project Project Number: Approval Number: Country: BANGLADESH Executing Agency: LGED/DPHE Project Financing Amount: $ million Implementing Agency: project pourashavas ADB Financing: $125 million Non-ADB Financing: $40 million Date of First Procurement Plan: 10 April 2014 Date of this Procurement Plan: A. Methods, Thresholds, Review and 18-Month Procurement Plan 1. Procurement and Consulting Methods and Thresholds 231. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works. Procurement of Goods and Works Method Threshold Comments International Competitive Bidding (ICB) for $2,000,000 Works International Competitive Bidding for $500,000 Goods National Competitive Bidding (NCB) for Works 1 Beneath that stated for ICB, Works National Competitive Bidding for Goods 1 Beneath that stated for ICB, Goods Shopping for Works Below $100,000 Shopping for Goods Below $100,000 Community Participation in Procurement Below $30,000 ($100,000 for communities with successful experience) 1 Refer to Para. 3 of PAI 3.04 for National Competitive Bidding Consulting Services Method Quality and Cost Based Selection (QCBS) Individual Consultants Comments 2. Goods and Works Contracts Estimated to Cost $1 Million or More 232. The following table lists goods and works contracts for which the procurement activity is either ongoing or expected to commence within the next 18 months. Package Number 5 General Description Estimated Value Procurement Method Review (Prior / Post) Bidding Procedure 6 Advertisement Date (quarter/year) Comments 7 Page 208 of 423

225 Magura package 1 (roads and RC drains) $1.01 million NCB Prior 1S1E Q3/2014 Small works 5 If the package contains multiple lots, please provide the following information for each lot lot number, lot description and lot estimated value. 6 Type of Bidding Procedures: 1S1E / 1S2E / 2S / 2S2E. 7 Indicate whether prequalification of bidders and domestic preference is applicable. Specify the type of bidding documents to be used: Small Works / Large Works / Plant / Goods. 3. Consulting Services Contracts Estimated to Cost $100,000 or More 233. The following table lists consulting services contracts for which the recruitment activity is either ongoing or expected to commence within the next 18 months. Package Number General Description Management, design, and supervision Governance improvement and capacity building Benefit monitoring and evaluation Performance monitoring and evaluation Gender development and poverty alleviation Estimated Value Recruitment Method Review (Prior / Post) Advertisement Date (quarter/year) Type of Proposal $7.21 million QCBS Prior Q4/2013 Full $4.96 million QCBS Prior Q4/2013 Full $0.29 million Individual Prior Q2/2014 N.A. $0.17 million Individual Prior Q2/2014 N.A. $0.18 million Individual Prior Q2/2014 N.A. 9 Indicate the type of assignment: International or National. Specify the Quality-Cost Ratio for QCBS method. Indicate the type of expertise for Individual Consultant Selection. Comments 9 International; 90:10 International; 90:10 National; team leader National; team leader National; team leader 4. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000 (Smaller Value Contracts) 234. The following table groups smaller-value goods, works and consulting services contracts for which the activity is either ongoing or expected to commence within the next 18 months. Package Number 5 General Description PMO vehicles Estimated Value $0.69 million PIU vehicles $0.67 million PIU vehicles $0.025 million Number of Contracts 3 Goods and Works Procurement Method NCB/Shop ping Review (Prior / Post) Prior for first NCB; post for other Bidding Procedure 6 1S1E 1 ICB Prior 1S1E 1 Shopping Post 1S1E Advertisement Date (quarter/ year) Comments 7 Q3/2014 Goods; Q3/2014 Goods Q3/2014 Page 209 of 423

226 PMO office equipment PIU office equipment PIU equipment (dump truck) PIU equipment Phase 1 subprojects in remaining 27pourasha vas $0.063 million $0.35 million $0.64 million 3 Shopping Post 1S1E 3 $6.3 million 9 $0.77 million $0.89 million $0.83 million $0.98 million $0.86 million NCB/Shop ping Post 1S1E 1 ICB Prior 1S1E ICB(5)/NC B(4) $25 million About 35 NCB Prior(ICB )/Post(N CB) 1S1E 1 NCB prior 1S1E 1 NCB Prior 1S1E 1 NCB Post 1S1E 1 NCB Prior 1S1E 1 NCB Post 1S1E Prior for first package of each pourasha va; post thereafter 1S1E Q3/2014 Q3/2014 Q3/2014 Q1/2015 Q3/2014 Goods Goods Small works Q3/2014 Small works Q3/2014 Small works Q3/2014 Small works Q3/2014 Small works Lalmonirhat Lot 1 of 2 (RC Drains) Lalmonirhat Lot 2 of 2 (Road Improvemen t) Magura Package 2 (RC Drains) Naogaon Package 1( Roads) Naogaon Package 2 (Drains & River Bank improvement) Q4/2014- Q2/2015 Small works Package Number General Description Benefit monitoring and evaluation Performance monitoring and evaluation Gender development and poverty alleviation Estimated Value $0.41 million $0.49 million $0.21 million Number of Contracts Consulting Services Recruitment Method Review (Prior / Post) Advertisement Date (quarter/ year) Type of Proposal Comments 3 Individual Prior Q2/2014 N.A. National; 3 individuals 5 Individual Prior Q2/2014 N.A. National; 5 individuals 2 Individual Prior Q2/2014 N.A. National; 2 individuals B. Indicative List of Packages Required Under the Project Page 210 of 423

227 235. The following table provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e., those expected beyond the current period). Package Number 5 General Description Civil works packages for pourashavas (Window A) Civil works packages for pourashavas (Window B) Slum improvement works Estimated Value (cumulative) Estimated Number of Contracts Goods and Works Procurement Method $45 million 60 NCB $20 million 40 NCB Small Multiple Community participation in procurement Review (Prior / Post) Prior for first package of each PS Prior for first package of each PS Prior for first only; post thereafter Bidding Procedure 6 1S1E 1S1E - Comments7 No prequalification. Post review for the second and subsequent packages for each PS Two packages envisaged for each PS; only the first package will go through prior review. Small works Package Number General Description Estimated Value (cumulative) Consulting Services Estimated Number of Contracts Recruitment Method Review (Prior / Post) Type of Proposal 8 Comments9 C. List of Awarded and On-going, and Completed Contracts 236. The following tables list the awarded and on-going contracts, and completed contracts. 1. Awarded and Ongoing Contracts Package Number General Description Estimated Value Contract Value Procurement Method Advertisement Date (quarter/ year) Date of ADB Approval of Contract Award Comments Indicate the Contractor s name and the contract signing date. Package Number General Description Estimated Value Contract Value Recruitment Method Advertisement Date (quarter/year) Date of ADB Approval of Contract Award Comments Indicate the Consulting Firm s name and the contract signing date. 2. Completed Contracts Page 211 of 423

228 Package Number General Description Estimated Value Contract Value Goods and Works Procurement Method Advertise ment Date (quarter/ year) Date of ADB Approval of Contract Award Date of Completion Comments Package Number General Description Estimated Value Contract Value Consulting Services Recruitment Method Advertisement Date (quarter/year) Date of ADB Approval of Contract Award Date of Completion Comments D. Non-ADB Financing 237. The following table lists goods, works and consulting services contracts over the life of the project, financed by Non-ADB sources. General Description Civil work packages for pourashavas (Window A) Goods and Works Estimated Estimated Value Number of (cumulative) Contracts Procurement Method Comments $46 million 55 NCB Prior for first package of each PS; packages in several towns will be financed by OFID General Description Consulting Services Estimated Estimated Value Number of (cumulative) Contracts Recruitment Method Comments E. National Competitive Bidding 1. General 238. The procedures to be followed for national competitive bidding shall be those set forth for the National Open Tendering Method in the Government s Public Procurement Rules, 2008 (as updated and issued pursuant to the Bangladesh Public Procurement Act, 2006) with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the Procurement Guidelines. 2. Advertising 239. Bidding of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB s website via the posting of the Procurement Plan. 3. Anti-Corruption 240. Definitions of corrupt, fraudulent, collusive and coercive practices shall reflect the Page 212 of 423

229 latest ADB Board-approved Anti-Corruption Policy definitions of these terms and related additional provisions (such as conflict of interest, etc.). 4. Location of Bid Submission 241. Submission of bids to primary and secondary locations, or multiple droppings of bids, shall not be required or allowed. Advertisements and bidding documents shall specify only one location for delivery of bids. 5. Rejection of All Bids and Rebidding 242. Bids shall not be rejected and new bids solicited without ADB s prior concurrence. 6. Member Country Restrictions 243. Bidders must be nationals of member countries of ADB, and offered goods must be produced in member countries of ADB. 7. Lottery 244. A lottery system shall not be used to determine a successful bidder, including for the purpose of resolving deadlocks. 8. Qualification Requirements 245. A successful bidder must be determined by an assessment process that shall include the application of qualification requirements to all bids. 9. Rejection of Bids 246. A bid shall not be rejected on the grounds that its bid price is not within a percentage range above or below the contract estimate. Page 213 of 423

230 12 SOCIOECONOMIC BENCHMARK REPORTS The three reports are provided separately under separate cover. Page 214 of 423

231 13 TOR FOR CONSULTANTS ADVANCE CONTRACTING MDS 13.1 Management, Design, and Supervision (MDS) consultants I. BACKGROUND INFORMATION Introduction 247. The Government of Bangladesh (GoB) has applied for a loan from the Asian Development Bank (ADB) to help finance the proposed Third Urban Governance and Infrastructure Improvement (Sector) Project for implementation in 30 target Pourashavas. The Local Government Engineering Department (LGED) and the Department of Public Health Engineering under the Local Government Division (LGD), both with extensive experience in managing urban development projects financed by the Asian Development Bank (ADB) will be the executing agencies of the project while the participating Pourashavas will implement project components. The project is expected to be implemented over a period of 6 (six) years starting from July, A portion of the project fund will be utilized for procurement of consulting services for Governance Improvement and Capacity Development (GICD) of the project Pourashavas. For this purpose, consulting firm for Management, Design and Supervision (MDS) will be engaged under the PMO for a total period of 64 (sixtyfour) months (Sep 2014-Dec 2019) using ADB guidelines on the use of consultants. Urbanization Trend and Challenge in Bangladesh 248. It is widely acknowledged that Bangladesh is a rapidly urbanizing country where urban base has expanded rapidly from 7.6% to nearly 25% between 1970 and A combination of socio-economic, political and demographic factors is responsible for this. It reflects for instance the redistribution of the rural and urban population. Also, the growth in the magnitude of urban economy, change in the scale and nature of economic activity and distribution of income between regions and among classes, demographic transition and change in the scale and nature of governance are likely to be influenced by rapid urbanization and urban settlement patterns in Bangladesh The urbanization challenge unless managed well could pose a serious problem to the future growth prospects for Bangladesh. But urbanization is also an opportunity and an integral part of the development process. As income grows and the economy relies more and more on manufacturing and organized services, urbanization will grow. The challenge for public policy is to manage this natural transition of Bangladesh from an agrarian economy to a modern economy well through appropriate institutions, programs and policies. The Government is cognizant of this challenge. It also understands that this is a long-term challenge. The back-log of unmet demand and new demand for basic urban services like housing, sanitation, water supply and urban transport requires huge resources, sound planning and strong implementation capacity. Driving Force behind Rapid Urbanization 250. A major cause of urbanization in Bangladesh is that the agriculture sector is no 68 6 th Five Year Plan, Fy 2011-Fy 2015: Chapter 5: Managing the Urban Transition Page 215 of 423

232 longer able to absorb the surplus labour force entering the economy every year. Inability of the agriculture sector to provide sufficient employment or sufficiently high household incomes to cope with a growing number of dependent can encourage people to seek employment outside agriculture. In the case of Bangladesh the rural to urban migration has contributed to more than 40 percent of the change in urban population. The lure of employment opportunities existing in these cities is another reason for urban migration Despite the fact that majority of the country s population live in rural areas, the importance of the traditional rural sector has been declining over the years. The share of the agricultural sector in GDP has come down from about 60 percent in to only 17 percent in The urban sector led by non-agricultural activities (commerce, trade, industry service etc.) accounts for a relatively large share of GDP compared to its rural counterpart. Its contribution to GDP has increased from a low of 25 percent in 1972/73 to over 50 percent in Although rising levels of urbanization and rapid population growth in urban areas have often been considered problematic, it is a fact that these areas generally have a significantly higher concentration of nation s economic output than their population. Urban areas also account for a disproportionate higher share of national economic production and are the main sources of economic growth in most countries. This is also no exception for a developing country like Bangladesh where urban dwellers constitute about 25 percent of the total population of the country, but their contribution to GDP is more than 50 percent 70. National economic growth is thus closely correlated with urbanization. Urban Poverty in Bangladesh 253. Poverty in Bangladesh, as in most other developing countries, has long been associated with rural areas. But with rapid urbanization during the last few decades, poverty has increasingly been urbanized by way of transfer of the rural poor to urban areas. But manifestation of urban poverty is often more appalling than that of rural poverty. Urban poverty is invariably associated with poor quality housing Most of the urban poor live in slums and squatter settlements characterized by substandard living conditions. Majority of those living in slums are very poor and nearly 80 percent of the households have income below the upper poverty line. More than 50 percent of the slum dwellers earn less than half of the poverty line income while about 25 percent of them are in extreme poverty and destitution. More than 90 percent of the income earners are engaged in informal sector activities. They work mainly as rickshaw-pullers, transport workers, hawkers, day labourers, small factory workers, construction workers, etc. Many of the female members of slum households in Dhaka and Chittagong are employed in the formal sector garment factories and in very large numbers in domestic work as maids. What is interesting, however, is that few among the male slum dwellers remain unemployed because of their easy access to informal sector activities. This is perhaps the most important factor stimulating rural to urban migration. Future Urban Development Strategy 255. A review of past policies, institutions and programs suggest that the urbanization strategy needs to change substantially to meet the challenges of future urbanization in Bangladesh. In the past much of the focus has been on implementing piecemeal programs. Multitudes of local government agencies, weak planning, poor governance, inadequate resources and weak project implementation capacity have limited the progress with meeting 69 6 th Five Year Plan, Fy 2011-Fy 2015: Chapter 5: Managing the Urban Transition th Five Year Plan, Fy 2011-Fy 2015: Chapter 5: Managing the Urban Transition. Page 216 of 423

233 the urban challenge. The Sixth Plan will internalize these lessons of experience and shift the emphasis to the development of sound urban institutions, improve city governance, emphasize urban resource mobilization and reducing urban poverty. Improving City Governance 256. The key constraints to the effective functioning of the municipalities and city corporations are unclear mandate and service responsibilities; weak finances and financial autonomy; poor coordination and control among service agencies and weak management. These problems call for a major rethinking and wholesale change in the management of these entities and their enabling environment The ability of city managers to coordinate fiscal, regulatory and administrative systems which influence the efficiency of cities is crucial to improving the welfare of urban citizens. In this context, cities need to be managed as standalone economics where project investments are planned in the context of a coherent city strategy and better understanding of how urban markets perform overall. The Government s role in this regard will be to support initiatives to combine local level skills, resources and ideas to stimulate the local economy towards the goals of job creation, poverty alleviation and redistribution; and take proactive measures to deal effectively with changes in the national and global economics Thus, a key institutional reform during the Sixth Five Year Plan ( ) is that the municipalities and city corporations will be organized to manage their functions on the basis of elected representatives. For the urban centers of Bangladesh to be dynamic growth centers it is essential that they have elected and accountable municipalities and city corporations with clearly defined responsibilities. They must be able to attract private investment and mobilize public resources based on service delivery and the quality of the city environment. In order to implement the strategy the Government will take steps for: (i) (ii) (iii) (iv) Institutional reforms and decentralization of responsibilities and resources to local authorities Participation of civil society including women in the design, implementation and monitoring of local priorities Building capacity of all actors (institutions, groups and individuals) to contribute fully to decision making and urban development processes; and Facilitating networking at all levels. Promoting Balanced Development of Urban Centers 259. In view of the severe problem of concentrated migration and economic growth, efforts must be made to select new centers away form the main centers (i.e. Dhaka and Chittagong Metropolitan areas) for location of economic activities. If urban population growth is arranged and distributed over space in cities and towns of different population sizes in balanced manner, the process of urbanization can be managed in a better way. Special emphasis, therefore, will be given to the development of urban centers of various sizes and policies will be directed towards strengthening of economic base and allied infrastructure and services in these centers. Special attention will be paid to supporting services housing, education, health etc. again with a view to channeling those investments which are made at these centers in the most productive manner. Creating employment opportunities in these urban areas would require integration of local economic development and poverty alleviation initiatives. In order to achieve this, the government will pursue growth paths that encourage labor intensive sectors of the economy, support small, medium and micro enterprises (SMMEs) and enforce a regulatory framework that creates an environment conducive to investment. In addition, steps Page 217 of 423

234 will be taken to attract private investment through investments in infrastructure and utilities that reduce production and distribution costs within their economies. Better Environmental Management 260. Strategic options in this area will seek to promote cleaner environment, control pollution and protect public health from environmental hazards. Emphasis will be given on preventive actions, that is, to develop preventive polices that can forestall future environmental degradation; and on holistic and integrated approach, with particular attention to participatory planning and management, public private partnerships, capacity building and cost- recovery. Developing Sustainable Urban Transportation 261. Transport interventions in urban areas should aim at improving transport and traffic infrastructure so as to meet existing and potential demands, and developing and integrated and balance system in which all modes (motorized and non motorized) can perform efficiently and each mode can fulfill its appropriate role in the system. The main objective of urban transport strategy will be to support sustainable urban development. Urban transportation strategies will focus on developing an integrated and balanced transportation system taking into consideration the needs of the road system, non motorized transport and public passenger transport. Making Provision of Infrastructure and Services 262. Basic infrastructure and services at the community level include the delivery of safe water, sanitation, waste management, social welfare, transport and communications facilities, energy, health and emergency services, schools, public safety, and the management of open spaces strategies will be formulated to provide adequate and affordable basic infrastructure and services focusing on demand, equity and accessibility, economic efficiency and cost recovery, public private partnerships and capacity building of local governments. Reducing Urban Poverty 263. Poverty is understood to encompass many different aspects including inadequate consumption, inadequate income and asset base, and inadequate access to basic infrastructure and services. Economic growth and consequent increase in income does not necessarily lead to reduction in urban poverty. poverty reducing measures outside of economic growth is important which, however, depends on local institutions that can address on or more of the inadequacies as mentioned above. The plan strategy to deal with urban poverty will promote equal access to and fair and equitable provision of services in urban areas; and emphasize on urban policies that ensure equal access to and maintenance of basic services, including those related to education, employment and livelihood. Previous Similar Projects Implemented by LGED 264. The following major projects have been/are being implemented by LGED with financial support from ADB: (i) (ii) (iii) (iv) Secondary Towns Infrastructure Development Project (STIDP-I) Secondary Towns Infrastructure Development Project (STIDP-II) Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-I) Second Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-II) Page 218 of 423

235 265. As a departure from UGIIP-I, UGIIP-II consists of 3 phases for its implementation (the project is half-way through). Initially nr of PSs addressed stands at 35. The 1 st phase (18 months) is essentially preparatory works that includes evolving Pourashava Development Plan (PDP) and formation of different committees (TLCC, WLCCs, gender committee and CBOs) to involve the citizens into the municipal processes and their contribution to pertinent decisionmaking. Specifics also included interim holding tax reassessment and establishment of Pourashava Planning Unit (PPU). The 2 nd phase (24 months) involves allocating 50% of assigned amount for infrastructure development to each of the PSs which graduated to 2 nd phase. Simultaneously, UGIAP activities, that specifically includes governance improvement elements, will mandatorily be implemented. The 3 rd phase (30 months) will entail UGIAP and infrastructure implementation works by the PSs who will successfully graduate to the 3 rd phase. Infrastructure improvement and service-delivery will mainly include: Improvement of transportation infrastructure, Drainage system, Solid waste disposal mgt., Water supply, Sanitation, Municipal service improvement, Basic services to the slum dwellers etc. Special features of UGIIP-II include: Performance based allocation, Participatory urban planning, Propoor urban development and Private sector participation Pourashavas were characterized by inadequate governance and lack of community participation in the planning, implementation and management of projects and programs. There were limited incentives to improve the performance in such areas as accountability and transparency, promotion of gender equity, poverty reduction and financial sustainability. However, with the introduction of a performance based fund allocation strategy through the urban governance improvement action program (UGIAP) in the Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP) funded by ADB, Pourashavas significantly improved their performance. Major achievements under the UGIIP made by all project Pourashavas include (i) establishment of Town Level Coordination Committees (TLCCs) and Ward Level Coordination Committees (WLCCs), key vehicle for ensuring citizens participation (ii) development and implementation of Pourashava level Gender Action Plan (GAP) and (iii) computerization of tax and accounting records and increase of own resource mobilization. Poverty reduction programs were implemented and the average collection of holding tax was improved. It is reported that the UGIIP motivated even nonproject Pourashavas to embark on a reform agenda, requesting participation in a program such as UGIIP Lessons from similar projects suggest that (i) governance-led infrastructure improvement is indeed possible and desirable (ii) the use of sector-lending modality proved highly appropriate for performance based fund allocation adopted in the project (iii) good quality and front loading capacity building support is required for Pourashavas. Thus, the project adopts sector lending modality and capacity building support will be provided both during project preparation and implementation. The project is consistent with ADB s Bangladesh country partnership strategy (CPS). Urban sector is one of the six priority sectors in the CPS and the project will also address key thematic drivers of the CPS including good governance and capacity development, environmental sustainability and gender equity. Although earlier phases of the project were instrumental in creating a paradigm shift in local governments administration, they are not without weaknesses and challenges. Among 316 Pourashavas in the country, only about 70 have benefited from the two phases of UGIIP. While other development partners have started to emulate the approach adopted in UGIIP, there are still large financing needs to improve infrastructure and services in Pourashavas. Even taking account of the own revenue enhancement achieved through the implementation of UGIAP, the allocation of less than $3 million from the government to each Pourashava under previous phases was grossly inadequate to meet the demand for improved services, including that for water supply and sanitation. Governance reform needs to be further advanced in areas such as urban planning and financial sustainability. Master Plans comprising a structural plan, a detailed area plan and Page 219 of 423

236 an urban area plan, are being prepared in most Pourashavas with support from the LGED and these plans need to be implemented to facilitate more controlled and organized urban development. The proposed project will be a refined and innovative version of UGIIP model where performance based infrastructure allocation will be strongly linked with governance improvement and capacity development of selected project towns. Over the period of time, the success of governance led infrastructure development through UGIIP model has been spread among other development partners. The World Bank has introduced governance improvement approach to its upcoming Municipal Governance and Services Project (MGSP) in 26 City Corporations and Pourashavas and JICA has already accepted and introduced to its recently approved Northern Rural and Urban Infrastructure Project in 18 smaller towns. It is expected that the upcoming UGIIP-III investment project will set another example of sustainable governance led infrastructure development within selected municipalities. II. THE PROJECT Project Objectives 268. The primary objectives of the project is to promote sustainable human development economic growth and poverty reduction by improving urban governance, developing urban infrastructure and services, enhancing municipal management and strengthening capacity to deliver municipal services (especially to the poor) in 30 target Pourashavas of Bangladesh. To achieve this objective, the project will assist the selected Pourashavas to: (i) (ii) (iii) (iv) (v) (vi) Improve urban governance by implementing a set of programs Increase transparency and accountability of Pourashavas towards their citizens Provide improved physical infrastructure and urban services Enhance capacity of Pourashava to implement, operate, manage and maintain basic urban services. Provide capacity building support to the elected representatives, citizens representatives and officials regarding governance improvement and infrastructures developments. Make contribution towards future sustainability of governance improvement and infrastructure development activities. Project Outcomes 269. I outcome is the improved access to municipal services and strengthened pro-poor and gender-responsive urban governance in target Pourashavas. Project Outputs/Components 270. The project consists of three components: (i) Component-A: Municipal Infrastructure Improvement and Service Delivery (ii) Component-B: Urban Governance Improvement and Capacity Development (iii) Component-C: Project Management and Implementation support Component-A: Municipal Infrastructure Improvement and Service Delivery 271. Component-A will include the following major activities: (i) (ii) Road and related infrastructure Drainage Page 220 of 423

237 (iii) (iv) (v) Water Supply and Sanitation Solid Waste Management (SWM) Other infrastructures, such as, kitchen market, slaughter house, whole sale market, bus terminal, truck terminal, community hall and improvement of physical facilities in slum areas The project will adopt a three-phase approach as practices in UGIIP-2. Two sets of pourashavas will be supported under Component A: The first set is 30 pre-selected target pourashavas listed below for which full set of support will be provided under the project (called Window A). The project will aim at developing these towns in an integrated and holistic way both in terms of governance and infrastructure and services to make them model towns of the country, rather than incremental improvements on a piecemeal basis. 71 The second set is pourashavas that will be selected by performance evaluation of governance improvement, about 10 pourashavas each as a result of the evaluation to be undertaken twice during project implementation (Window B). Component-B: Urban Governance Improvement and Capacity Development 273. Component-B will include the following areas of activity: (i) (ii) (iii) (iv) (v) (vi) (vii) Citizen awareness and participation Urban Planning Equity and inclusiveness of women and urban poor Enhancement of Local Resource Mobilization (LRM) Financial management, accountability and sustainability Administrative transparency Keeping essential Pourashava services functional Component-C: Project Management and Implementation Support 274. A Project Management Office (PMO) in LGED and a Project Implementation Unit (PIU) in each Pourashava will be established under Component C of the Project. The PMO will manage the overall project implementation, while PIUs will implement activities for improvement of governance and physical infrastructures at the Pourashava level. There will be the following 3 consultancy packages to provide support to PMO and PIUs for implementation of the project activities: Package-1 : Governance Improvement & Capacity Development (GICD) Consultants Package-2 : Management, Design and Supervision (MDS) Consultants Package-3 : i. Individual Consultants for Benefit Monitoring and Evaluation (BME) ii. Individual Consultants for Performance Monitoring and Evaluation iii. Individual Consultants for Gender Development & Poverty Alleviation (GDPA) 71 Features of a model town will include: (i) improved municipal service delivery 100% water supply and sanitation coverage including 24/7 piped water supply systems in core urban areas (towards 100% metered connections with volumetric tariff structure), solid waste regularly collected in core urban areas and safely disposed of at a designated site, and core urban areas free from waterlogging; (ii) financial sustainability adequate O&M costs and debt-servicing fully recovered by own source revenue; (iii) citizen participation, accountability, inclusiveness, and transparency pourashava development plan, master plan, gender action plan (GAP), poverty reduction action plan (PRAP), annual budget, and audit reports developed through consultation and disclosed to the public; and (iv) urban development control buildings constructed in accordance with approved plan Page 221 of 423

238 275. The ToR given below is for Package-2: MDS Consultants Project Area 72 Sl. No. Name of Pourashava Category of Pourashava Sample Pourashava (3) 1 Lalmonirhat A 2 Magura A 3 Naogaon A Priority Pourashava (7) 4 Bera A 5 Charghat B 6 Kishoreganj A 7 Muktagacha A 8 Netrokona A 9 Rajbari A 10 Sherpur A Target Pourashava (20) 11 Bandarban A 12 Benapole A 13 Chapai Nawabganj A 14 Chhatak A 15 Chouadanga A 16 Habiganj A 17 Ishwardi A 18 Jessore A 19 Joypurhat A 20 Khagrachari A 21 Kotalipara B 22 Laksham A 23 Laxmipur A 24 Meherpur A 25 Moulvibazar A 26 Nabinagar A 27 Nilphamari A 28 Panchagarh A 29 Rangamati A 30 Shahjadpur A 276. Window A. The budget for physical investments will be made available to target Pourashavas under Window A in phases upon fulfillment of three phases of UGIAP. The maximum amount that target Pourashavas will receive will mainly depend upon the population of respective Pourashavas. Once the entry criteria are fulfilled, the first set of priority investments amounting to about 20-25% of the ceiling will be supported (phase 1). Upon substantial progress of such investments and fulfillment of intermediate criteria, more priority investment projects amounting to about 60% of the ceiling will be implemented (phase 2). Meeting the advanced criteria and progress of investment projects will make these Pourashavas eligible for additional investment support within 15-20% of the ceiling 72 Design of subprojects under phase 1 for Sample and Priority Pourashavas will be prepared by another team of consultants. These 30 Pourashava are collectively called Target Pourashavas under Window A. Page 222 of 423

239 (phase 3). This phased approach will ensure continued motivation for governance reform in the project Pourashavas Window B. The project will support rolling-out the application of governance performance criteria (called Urban Governance Improvement Action Program - UGIAP) to all Class-A Pourashavas in the country (Window B). Class B and C Pourashavas may participate on a voluntary basis. 10%-20% of the ADB loan amount will be allocated for this purpose, and used for (i) establishing a performance assessment mechanism and undertaking annual (or every two years) performance assessment, and (ii) allocating performance-based investment budget to top performing Pourashavas (about 10 for each evaluation). Simple, objective and focused criteria with up to 10 indicators, which can be scored to enable ranking among Pourashavas, will be prepared with the consultants inputs. The Urban Management Support Unit (UMSU) under the LGED will take the lead in performance assessment, while the project management office will support sub project preparation and implementation of top-performing Pourashavas Design and supervision of subprojects for both Windows A and B will be the tasks under this assignment. Implementation Arrangements Arrangements at the Central Level 279. The Local Government Engineering Department (LGED) and the Department of Public Health Engineering (DPHE), both under the Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C) and having extensive experience in managing urban and water supply projects financed by the Asian Development Bank (ADB), will be the executing agencies of the project A Project Management Office (PMO) will be established for the overall management of the Project. The PMO will be headed by Project Director (PD) who will be a senior engineer specialized in urban development, at least in the rank of executive engineer, supported by officials including three Project Managers in charge of (i) municipal infrastructure (excluding water supply and sanitation), (ii) water supply and sanitation, and (iii) governance improvement and capacity development respectively. The PMO will be responsible for (i) Preparing annual work plan by consolidating PIU work plans, (ii) Monitoring and supervising overall project implementation; (iii) Assisting Pourashavas in implementing the UGIAP; (iv) Assisting Pourashavas in implementing physical works and ensuring quality of works, including training; (v) Managing and supervising consultants under the Project; (vi) Ensuring the compliance of assurances, including safeguards; and (vii) Preparing progress reports and project completion report UMSU will also keep functioning as secretariat of Municipal Performance Review Committee (MPRC) in assessing performance of Pourashava based on UGIAP. The Superintending Engineer, Urban Management Wing of LGED, will act as Director of UMSU and the Additional Chief Engineer in charge of urban management will coordinate activities between UMSU and PMO The transparent and fair assessment of performance is critical for a successful performance-based fund allocation. The MPRC will be responsible for rating of the participating Pourashavas. The MPRC will be chaired by the Secretary of LGD, and consist of Chief Engineer of LGED, Director General of LGD, representatives of the Planning Commission (PC), Economic Relations Division (ERD), Finance Division (FD) and Implementation Monitoring and Evaluation Division (IMED) and Pourashavas, an urban Page 223 of 423

240 governance professional nominated by LGD, Deputy Project Director from DPHE and the Director of the national UMSU (as the member secretary). Arrangements at the Pourashava Level 283. A project implementation unit (PIU) will be established in each participating Pourashavas to implement the UGIAP and physical works. The PIU will be headed by the Pourashava Mayor assisted by the Chief Executive Officer and other officials. Each PIU includes three sections: (i) the infrastructure improvement section (IIS) headed by the Executive Engineer/Assistant Engineer; (ii) the urban governance improvement section (UGIS) headed by the Secretary; and (iii) the environmental, sanitation and slum improvement section (ESSIS) headed by the Health Officer. The PIU shall be located within the Pourashava office and be responsible for Ii) preparing the detailed annual work plan for the respective Pourashava; (ii) implementing the governance improvement activities specified in the UGIAP, including the preparation and implementation of the Pourashava Development Plan (PDP), Gender Action Plan (GAP), and Poverty Reduction Action Plan (PRAP), (iii) implementing physical works, including the preparation of bid documents as well as procurement and supervision of contractors, and (iv) (iv) preparing progress reports for submission to the PMO Each PIU will be staffed with accounting officers/accountants, to manage financial transaction including recording, preparation of liquidation statements, and replenishment requests to the PMO. III. MANAGEMENT, DESIGN AND SUPERVISION (MDS) CONSULTANCY SERVICE Objectives of the Consulting Services 285. The PMO and participating Pourashavas will require consultants support on a range of activities related to project management, engineering design and supervision of physical works. For this purpose, consulting firm for Management Design and Supervision (MDS) will be engaged under the PMO for a total period of 64 months. The MDS Consultants will also be responsible for bid management, safeguard measures for environmental management, rehabilitation and resettlement. The consulting team will consist of 3532 person-months of international and domestic consultants. The team will be headed by an international Team Leader supported by a national Dy. Team Leader and other experts and national staff. Scope of Works of the Consultancy Service 286. The scope of works under MDS consultants services will include, but not limited to, the following: Activities Related to Management Support (i) (ii) (iii) (iv) Assisting PMO and the PIUs on overall project management by setting up procedure for management and monitoring of the project activities; Assisting PMO and PIU in the preparation of annual work plan, O&M Plan, implementation and monitoring of the same; Assisting PMO in the preparation of Sub-project Agreement and Subsidiary Loan Agreement; Maintain close liaison with other consultancy services and develop team work spirit Page 224 of 423

241 (v) Undertaking any other assignment by the Project Director. Activities Related to Design and Supervision (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) Conducting physical survey as well as development and preparation of initial baseline infrastructure database; Identifying and prioritization of Sub-projects; Conducting technical, economic, financial, environmental, and social assessment of Sub-projects as per sub project selection criteria; Ensuring environmental and social safeguards according to requirements of Government and ADB; Preparing detailed drawings, design and bid documents, assisting PIUs for tendering and evaluation of works; Supervising and managing contractors, with adherence to specifications with strict quality control; Preparing and introducing O&M plans and providing training for implementation O&M Sub-project; Preparing contract document for procurement of goods for the use of PMO and PIU s and assisting PMO/PIUs in the process of tendering and evaluation; Preparing environmental sub-projects following the selection guidelines prepared under the project; Conducting survey for water supply leak detection (sub-contracting) and preparing rehabilitation sub-project; Introducing classification of Pourashava road system for efficient maintenance and operation planning. Providing training to PIU staff regarding bid management, quality control and timely completion of works, safe guard and environmental issues; Exploring the possibility of introducing e-procurement at the Pourashava level, as appropriate; Providing training to contractors to comply with all requirement of the bid documents. Inputs of Professional Staff The consultancy team will be responsible to the Project Director for efficient and effective delivery of services. The consultants team will have members based at PMO and PIUs. Those based at Pourashava level will be responsible for full time supervision of works at the local level. They will assist PIUs in solving specific technical and other project related issues and problems. Position and duration of the services for the international and the national consultants and national staff are shown below: Preparing Topographic Map and Drainage Master Plan by engaging subcontractors; Sl. Man- Position Qnty. No. Month A. PMO LEVEL (a) International Consultant 1 International Team Leader (Infrastructure Specialist) (1) 1 60 Page 225 of 423

242 Sub-Total (a): 1 60 (b) National Consultants 2 Deputy Team Leader (Senior Municipal Engineer) (1) Sr. Water and Sanitation Engineer (1) Solid Waste Management Specialist (1) Architect (1) Sr. Structural and Design Engineer (1) Hydrologist Quality Control Engineer (2) Drainage Engineer (1) Training Engineer (2) Procurement and Contract Management Specialist (1) National Resettlement Specialist (1) Regional Resettlement Specialist (3) National Environmental Specialist (1) Regional Environmental Specialist (3) Municipal Engineer (for PIU) (30) Economist (1) 1 54 Sub-Total (b): (c) National Staff 18 Jr. Structural and Design Engineer (1) Jr. Water and Sanitation Engineer (1) Auto CAD Operator (2) Cost Estimator (4) Quantity Surveyor (2) Sub-Total (c): Total (a+b+c): Support Staff The total support staff inputs for the MDS Consultancy Service at the PMO level will be 462 person months as indicated below: Post Number Person-months Office Manager 1 66 Computer Operator Office Assistant Photocopy Operator 1 66 Total: Terms of Reference (ToR) of MDS Consultants 1. International Team Leader/Infrastructure Specialist (1x60 months) Qualification and Experience The Team Leader will have degree in Civil Engineering/Municipal Engineering with over 25 years of experience, of which at least 15 years involved in planning, design and supervision of urban development projects and will have a minimum of 10 years proven work experience and skill in similar position in similar developing countries specially in South and South-East Asia. The Team Leader will be familiar with all aspects of the tasks listed in the Page 226 of 423

243 scope of works and will have overall responsibility for managing the team. Duties and Responsibilities 290. The duties and responsibilities will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) Review all relevant project documents, ADB Guidelines, GOB Rules & Procedures and assist PMO, PIUs, and MDS team members for smooth efficient, effective and successful implementation of infrastructure and services; Ensure close co-operation and assistance to the Project Director in all respects for effective and successful implementation of the Project; Assist Project Director in the preparation and implementation of annual work plan; Ensure implementation of activities as defined in the scope of works pertaining to this TOR. Prepare and submit Inception Report (40 copies) defining the role and pinpointing the methods and approaches following which the team will carry out its assignment and submit within 2-months from the date of commencement of contract; Organize and distribute assignments among the members and ensure team spirit among the members of the consultants team to perform assignments; Work maintaining close liaison with other consultancy services/packages and building team work Assist PMO in undertaking technical survey for each identified sub-project and help prepare full/short resettlement plans (RPs) based on their the impacts; Assist PMO in the preparation of Sub-project Agreement and Subsidiary Loan Agreement for approval and signing between Pourashava and LGED and between Pourashava and the Ministry of Finance (MOF) respectively; Select eligible sub-projects in accordance with the agreed sub-project selection criteria supported by economic, environmental and social safeguards according to rules/policies/guidelines of GOB and ADB; Assist PIUs in preparing and introducing O&M plans and provide training on implementation O&M sub-project; Conduct periodic supervision and ensure duties of other members of consultants' team to ensure better performance, strict adherence to specification and quality of work at field level; Assist PIUs to prepare the Pourashava Development Plan (PDP) as per programmes chalked out by GICD consultants (will support to prioritize infrastructure schemes); Engage the team to prepare and appraise the sub-project of all components and sub-components of basic urban infrastructure and services of UGIIP-3; Maintain close liaison with other consultants in UGIIP-3, specially with Governance Improvement and Capacity Development (GICD) consultants to get assistance for smooth running of the project; Page 227 of 423

244 (xvi) (xvii) Carry out survey, study and assist PMO and PIUs in preparing plan, design, cost estimates of individual schemes of subprojects; Prepare contract documents for procurement of goods and works and help PMO and PIUs to evaluate tenders, award contracts and recommend contracts for approval by ADB, GoB; (xviii) Advise on issues related to implementation and supervision of civil works and to review and confirm quantity and quality of work followed by certification of bills for the works implemented under the project; (xix) (xx) (xxi) (xxii) Co-ordinate project activities and maintain liaison with other urban development projects under implementation in LGED; Collect and maintain relevant data, analyze level of performance of project, pin-point and highlight the outcome and issues of the project in the monthly, quarterly, annual and mid-term reports to use these as tools and guidance for future course of action for the project; Submit time based monthly, quarterly, annual and Project Completion Report (PCR); Assist the Project Director in liquidating/reimbursing bills/making payments, when required; (xxiii) Conduct survey on roads and assist Pourashavas in the preparation of road classification for efficient maintenance and operation planning; (xxiv) Prepare Terms of Reference (TOR) for sub-contracting services to prepare Topographic Map and Drainage Master Plan, Water Supply Leak Detection and Preparation of Rehabilitation Sub-Project. Also get all the above works done by engaging sub-contractors to the satisfaction of PMO and PIUs; (xxv) Work as a Training Coordinator and perform as Trainer (xxvi) Perform any other task assigned by the Project Director, LGED and ADB (xxvii) Ensure project compliance with loan covenants and assurance, including safeguards 2. Deputy Team Leader/Senior Municipal Engineer (1 x 66 months) Qualification and Experience The Deputy Team Leader will have degree in Civil Engineering/Municipal Engineering and having over 20 years experience of which at least 10 years proven work experience and skill involved in the planning, design and supervision of similar urban development projects in Bangladesh or elsewhere in the developing countries. The Deputy Team Leader will be responsible to the Team Leader for his/her assignments. Duties and Responsibilities 292. The duties and responsibilities will include, but not limited to the following: (i) (ii) Assist the Team Leader in all respects for implementation of activities as defined in the scope of works pertaining to this TOR of the project and maintain liaison between the PMO and PIUs; Assist the Team Leader in the preparation of standard bidding documents, tender/ contract evaluation and supervision of civil works, review and ensure Page 228 of 423

245 quantity and quality of work as per specifications and certify bills for the works implemented under the project; (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) Assist the Team Leader in preparing contract document, tendering and evaluation for procurement of goods by PMO; Assist Team Leader in preparation of Inception Reports and other Reports, such as, Monthly, Quarterly, Annual and Mid Term Progress Reports, etc. ; Co-ordinate and supervise activity of other consultants of the team to ensure smooth implementation of the project activity Work as Training Coordinator and perform as Trainer Assist PIUs to establish mobile maintenance units Assist Pourashavas to prepare plan for cleanliness of drains, canal etc. Perform the responsibility of the Team Leader in his absence; Perform any other activity assigned by the Team Leader and the Project Director. 3. Sr. Water Supply and Sanitation Engineer (1 x 48 months) Qualification and Experience The Sr. Water Supply & Sanitation Engineer will have degree in Civil Engineering with over 15 years of experience in planning, design, operation, management and supervision water supply and sanitation activities and having 7 years of practical experience in urban water supply and sanitation in Bangladesh and elsewhere in the developing countries. He will assist the PMO and the PIUs under the overall supervision of the Team Leader and the Deputy Team Leader. Design experience of water supply sub projects will be considered as added advantage. Duties and Responsibilities 294. The duties and responsibilities of the Sr. Water Supply & Sanitation will include but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) Assist the Team Leader and the Deputy Team Leader about water supply and sanitation activities; Assist in selection of water supply/sanitation sub-projects following subproject selection criteria of UGIIP-3; Assist PMO and PIUs in planning, design and construction of production well, treatment plants, overhead tanks, iron and arsenic removal plants, prepare specifications, bid documents, drawings, etc; Help conducting survey for identification of community toilets and location for hand tube wells and public stand pipes; Prepare guidelines for organizing community, establish operation and management mechanism for long time sustainability of the services; Include introduction of metering system in piped water supply (domestic and bulk meters) subprojects and help PIUs in preparation of sub-project and its implementation; Develop mechanism for identification of water supply system leak detection and leak management to prevent water losses; Page 229 of 423

246 (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) Assist the Team Leader in engagement of sub-contractor for water supply leak detection survey, supervise their works and report to the Team Leader; Help improved design of pit latrines, public toilet and wash station; Assist PIU in identification of proper places for public toilet, wash station, transfer station and sludge disposal; Assess appropriate O&M arrangements (e.g. management contract) to ensure sustainable operation of the facilities to be built and incorporate them in the bid documents; Assist PMO and PIUs in developing leaflets, brochures, posters, etc. for public awareness campaign for better hygiene; Impart training to related PIU staffs for successful O&M of water supply network Assist PIUs in organizing dissemination of awareness campaign through rally, local newspapers and cable broadcast, etc.; Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 4. Solid Waste Management Specialist (1 x 48 months) Qualification and Experience 295. The Solid Waste Management Specialist will have degree in Civil/Environmental Engineering with over 15 years of experience and having 10 years practical experience in planning, design and implementation supervision of works concerned to environmental issues with 5 years of practical experience in dealing with urban solid waste management in Bangladesh and elsewhere in the developing countries. Duties and Responsibilities 296. The duties and responsibilities of the Solid Waste Management Specialist will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) Assist the Team Leader and the Deputy Team Leader regarding solid waste management activities in selection of solid waste management sub-project following environmental sub-project selection criteria of UGIIP-3; Develop improved mechanism and introduce the same to collect, segregate and disposal of solid waste for clean environment and public health; Assist in identification of location, design, construction and management of transfer station; Conduct survey to identify existing equipment and machineries of target Pourashavas for handling solid waste, determine need for such equipment, prepare procurement plan and assist PMO for timely procurement and distribution among Pourashavas; Help design sanitary landfill and solid waste disposal schemes with full environmental issues taking into consideration and analyze and assess impact for all such schemes ; Assist PIU in construction of sanitary landfill storage, improvement of existing dumping ground/sanitary landfill sites; Develop mechanism for safe disposal of hospital wastes; Page 230 of 423

247 (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) Help design installation and operation of solid waste recycle plants; Prepare guidelines to organize community and to support the community based organizations for house to house collection of solid wastes; Assess the appropriateness of involving the private sector in collection, transportation, recycling, and/or disposal of municipal solid waste and assist implementation in accordance with the assessment results; Identify potential Pourashava for solid waste privatization contract and help implementation on a pilot basis; Prepare guidelines and plan of action for Pourashava staff for effective collection and disposal of solid waste from public places; Design training program and help to organize training for Pourashava staff and community based organization; Work as Training Coordinator and perform as Trainer Conduct regular social awareness campaign for school-teachers, imams, social organizations, businessmen, NGO, etc. on environmental protection and management and help to implement Clean Development Mechanism (CDM), if applicable; Assist Pourashavas to plan and execute regular garbage removal and guide them to ensure cleanliness of towns Maintain close liaison with the Department of Environment to follow their latest policies; (xviii) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 5. Architect (1 x 30 months) Qualification and Experience The Architect will have degree in Architecture and 15 years of work experience with 10 years practical experience in preparation of architectural plan and design of infrastructure in urban areas of Bangladesh or any other developing countries: Duties and Responsibilities 298. The duties and responsibilities of the Architect will include, but not limited to the following: (i) (ii) Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader Support consultant s team in preparing layout plans, architectural plans and design for municipal facilities with particular attention to: a. Bus and Truck Terminal and Boat Landing (jetty) b. Parking Area and water bodies c. Kitchen Market and Slaughter Houses d. Municipal Parks / Playground e. Street light/decoration f. Urban Landscaping and beautifications g. Construction of Community Centers/commercial markets Page 231 of 423

248 (iii) h. Any other building/structure Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 6. Sr. Structural and Design Engineer (1 x 48 months) Qualification and Experience 299. The Sr. Structural Engineer will have first class degree in civil engineering with over 15 years experience in the field of design of civil works in Bangladesh or any other developing country. 7 years practical experience in designing urban and related civil works will be essential. Duties and Responsibilities 300. The duties and responsibilities of the Sr. Structural and Design Engineer will include, but not limited to the following: Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader (i) (ii) (iii) (iv) (v) (vi) (vii) Help PMO and PIUs in the structural design of civil construction works that includes road/road structure/drain/bus-truck terminals/boat landing/kitchen market/commercial markets and other structures Collect relevant data, information related to structural design of schemes included in the sub-project report Undertake detailed design, prepare design reports for the sub-project Assist in the preparation of detailed estimate and bill of quantities Device computer based design module using standard updated software and help to train PIU and PMO staff in using Auto CAD/other design soft wares Check/inspect sites that need special attention Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 7. Quality Control Engineer (2 x 48 months for each) Qualification and Experience 301. The Quality Control Engineer will have degree in civil engineering and have 15 years experience in quality control activities of civil work with 7 years experience of quality control activities in urban civil work in Bangladesh and developing countries. Experience to work in quality control laboratories will get preference. Duties and Responsibilities 302. The duties and responsibilities of the Quality Control Engineer will include, but not limited to the following: (i) (ii) Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader Ensure quality control/assurance of civil work falling within his/her jurisdiction Page 232 of 423

249 (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) Prepare annual work plan for supervision and monitoring of civil work Arrange laboratory testing of materials used for construction work in LGED laboratories/ elsewhere, as required Arrange field testing of construction materials/activities Design monitoring procedures/formats for quality control/assurance of civil work Collect, compile and analyze test results of civil work and submit reports to the PMO Identify deviations from the standard specifications/quality of civil work and arrange rectification of the same, as required Frequently supervise all civil works and will certify final bills regarding quality compliance Train PIU staff/contractors to ensure quality Assist PIUs to establish mobile maintenance team Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 8. Drainage Engineer (1 x 54 months) Qualification and Experience 303. The Drainage Engineer will have degree in civil engineering. He/she should have at least 15 years overall experience and 7 years practical experience in planning, design construction and management of flood control and urban drainage system projects in Bangladesh or any other developing country. Design experience of drainage structures will be essential. Duties and Responsibilities 304. The duties and responsibilities of the Drainage Engineer will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader Assist PMO and PIUs in designing drains and appropriate drainage network Prepare feasibility studies and designs of flood control and urban drainage system improvement subprojects prioritized under the project, including those in slum areas, in collaboration with other relevant specialists Discuss the technical viability of various proposed options for each subproject and demonstrate that they are most cost efficient Coordinate with relevant government departments, such as, Bangladesh Water Development Board (BWDB) to ensure consistency in the approach for reducing water logging and flood impacts Review O&M options and prepare an O&M strategy including technical procedures to ensure efficiency and sustainability of the selected subprojects Assist to develop drainage subproject according to selection criteria for the project Page 233 of 423

250 (viii) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 9. Hydro-Geologist (1 x 6 months) Qualification and Experience 305. The Hydro-Geologist will have master degree in hydro-geology and 12 years overall experience and 7 years practical experience in hydro-geological investigations and assessment. The candidate should have working knowledge of hydro-geologic and geologic concepts and knowledge of ground water models. Duties and Responsibilities 306. The duties and responsibilities of the Hydro-Geologist will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) Work under the overall supervision and guidance of the Team Leader and the Deputy Team Leader Carry out mapping and assessments of groundwater for the project area Interact with other MDS Consultancy Service Specialists on groundwater related issues in watershed management planning Assist water supply expert in designing wells Construct potentiometer surface maps, cross-section and ISO contour maps Deal with underground water and related surface water Carryout water resource development and use, and water resource monitoring etc. Conduct project work involving support for site investigation, remediation and remediation design, field work/sampling interpretation of laboratory and ground water data Prepare O&M plan for all existing wells and development plan for future expansion Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 10. Training Engineer (2 x 48 months for each) Qualification and Experience 307. The Training Engineer will have degree in civil engineering. Candidates having master degree in civil engineering and diploma/training in Human Resource Development (HRD) will be given preference. He/she will be required to have at least 15 years of work experience with minimum 10 years practical experience in the field of technical training in Bangladesh or elsewhere. Experience of imparting training to the Pourashava elected representatives, officials and citizen representatives will be preferred. Duties and Responsibilities 308. The duties and responsibilities of the Training Engineer will include, but not limited to the following: Page 234 of 423

251 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) Work under the supervision of the TL and the DTL in respect of technical training activities Prepare and implement annual training calendar and budget for technical training under the project Make review and prepare training material and module for feasibility study of urban infrastructure improvement projects Make review and prepare training material and module for design and estimate of urban infrastructure improvement projects Make review and prepare training material and module for construction and quality control/assurance of civil work of urban infrastructure improvement project Make review and prepare training material and module for operation and maintenance (O&M) of urban infrastructure improvement project Make review and prepare training material and module for training of trainers (ToT) course Work as Training Coordinator and perform as Trainer Cooperate and coordinate with the Training Specialist, GICD consultancy team regarding training activities Coordinate with the Regional Coordinators with regard to implementation of technical training activities Ensure frequent visit to Pourashavas to assist the PIUs and the Municipal Engineer (for PIU) in timely implementation of technical training activities Prepare procedure and format for submission of monthly, quarterly and annual progress reports from project Pourashavas regarding technical training activities Guide the Municipal Engineer (for PIU) in preparing monthly, quarterly and annual progress reports stating activities and tasks of technical training Compile monthly, quarterly and annual progress reports on technical training activities from project Pourashavas Provide assistance to other PMO level Specialists regarding implementation of technical training activities Prepare plan and implement training programmes for PIU staff regarding contract management/quality adherence Prepare plan and implement training for contractors on contract management and quality adherence (xviii) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 11. Procurement and Contract Management Specialist (1 x 48 months) Qualification and Experience 309. Procurement Contract Management Specialist will have at least Bachelor degree in Engineering or Masters in Economics/Business Administration/Commerce or equivalent from any recognized university. He/She will be required to have about 15 years of work experience of which 7 years should be directly related to the relevant tasks of preparation of Page 235 of 423

252 bidding documents/procurement plans/ bid evaluation etc. related to procurement of goods, works and services and must have good understanding of procurement guidelines of the Asian Development Bank (ADB) and the Public Procurement rules, 2008 of the Government of Bangladesh. Duties and Responsibilities 310. The duties and responsibilities of the Procurement & Contract Management Specialist will include, but not limited to the following: (i) Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader (ii) Review procurement plan of the project agreed upon between ADB and GoB, procurement threshold, procurement methods (ICB/NCB/LIB/Shopping) and approval requirement (prior or post) in connection with procurement of goods and works under the project and advise PMO and PIU accordingly; (iii) Support PMO in the procurement of equipment, goods and vehicles including preparation of specification and bid documents; (iv) Prepare bid documents for procurement of goods and works for use of PMO and PIUs following ADB guidelines for Procurement, 2007 and Public Procurement Rules, 2008 of GoB, as applicable; (v) Assist PMO/PIUs in preparing procurement plans including annual procurement plans for goods and works and suggest methods to be used by PMO/PIU; (vi) Assist PMO and PIUs in bid evaluation and contract award process; (vii) Assist Municipal Engineer to helping PIUs in bidding and evaluation process at Pourashava level; (viii) Arrange training to PIU staff regarding procurement management (ix) Assist Pourashavas in adopting innovative modes of procurement including e- procurement, as required and appropriate (x) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 12. National Resettlement/Social Safeguards Specialist (1 x 60 months) Qualification and Experience The Specialist will be a qualified social scientist with master degree in related field from recognized university preferably in public administration / sociology / political science/economics. He/She should have at least 15 years of work experience and proven track record in the relevant field that shall include minimum of 5 years of direct involvement in preparing and implementing involuntary land acquisition and resettlement plans as well as on indigenous people issues in Bangladesh for development projects funded by international organizations. He/she is also required to have a close familiarity with the GoB s land acquisition rules and regulations and ADB s SPS (2009) on involuntary resettlement and indigenous peoples. Duties and Responsibilities 312. The duties and responsibilities of the National Resettlement Specialist will include, but not limited to the following: (i) Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader Page 236 of 423

253 (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) Provide technical support to PMO and PIU including implementation of the ADB approved Resettlement Framework (RF), Indigenous People Planning Framework (IPPF) and other social safeguards related guidelines for specific types of the subprojects Co-ordinate all resettlement and indigenous people issues and ensure that all subprojects comply with involuntary resettlement (IR) and indigenous people (IP) safeguards requirements of GOB and ADB Assist PMO in getting approvals from ADB, when required, for any updating of IR and IP policy frameworks prepared and approved during project processing. Assist PMO in updating draft RP(s) and preparing new Resettlement Plan (RP) as required in accordance with the RF and submit to ADB for approval prior to implementation Assist PMO in preparing indigenous people planning (IPP) in the event IP issues are identified in any project towns in accordance with the approved IPPF and submit to ADB for approval prior to implementation. Prepare terms of reference for engagement of NGOs to assist implementation of RPs and assist in the process of recruitment of such NGOs Train PIU officials and engineers regarding resettlement and indigenous people issues and ADB SPS principles on IR and IP policies. With supports from the regional specialist, ensure the project compliance in getting consent from affected indigenous people community in the event of IP issues are identified in the subproject areas. Assist PMO in all activities related to preparation, screening and finalization of resettlement plan (RP) and indigenous people plan (IPP) including budget allocation, approval and internal monitoring, etc. Assist PMO in monitor, coordinate and provide technical guidance to regional resettlement/ social safeguards specialists. Consolidate monthly progress reports submitted by regional specialists, prepare semiannual social safeguards monitoring report for the PMO to ensure timely submission to ADB Support and facilitate the implementation of project grievance redress mechanism and safeguards related corrective action for policy compliance. Ensure timely disclosure of final safeguards reports in the EA s website. Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 13. Regional Resettlement/Social Safeguards Specialists (3 x 60 months for each) Qualification and Experience 313. The Specialists will be a social scientist with master degree in related field from any recognized university preferably in administration / sociology / political science/economics. He/She should have at least 10 years of work experience and proven track record in the relevant field that shall include a minimum of 5 years in direct involvement in preparing and implementing involuntary land acquisition and resettlement plans as well as on indigenous people issues in Bangladesh. He/she is also required to have a close familiarity with the GoB s land acquisition rules and regulations and ADB s SPS (2009) on involuntary resettlement and indigenous peoples. Page 237 of 423

254 Duties and Responsibilities 314. The duties and responsibilities of the Regional Resettlement Specialist will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) Work with the PIU to up-date the prepared resettlement plans (RPs) following the completion of detailed design and prepare new RP for new sub-projects, where required, to comply with Government s and ADB s policies; Work with the PMO national specialist and PIU to prepare indigenous people plan(s) (IPPs) in the event of IP issues are identified in the subproject to comply with ADB s SPS on IP; Assist and support PIU engineers in screening on IR and IP impacts and categorization of sub-projects for submission to PMO; Prepare and translate the Project Information Documents (PIDs) for disclosure to stakeholders and Project Affected Persons (PAPs); Conduct census of 100% PAPs and socio-economic survey; Identify vulnerable PAPs and calculate compensation and entitlement; Support and assist the national specialist in up-date or write new sub-project RPs. IPPs, hold meaningful consultation on RPs, IPPs and entitlement with PAPs, incorporate comments and suggestions to RPs and IPPs for submission to ADB ; With guidance and support from national specialist conduct meaningful consultation with the identified IPs to get consent from the affected indigenous people community or broad community supports as required by ADB SPS (2009) Conduct final RP consultations with the affected peoples and relevant stakeholders for endorsements and disclosure Assist and guide the PIU official and engineers regarding involuntary resettlement and indigenous people issues Support and facilitate the implementation of project grievance redress mechanism and safeguards related corrective action for policy compliance. Prepare and submit to national specialist a monthly progress and monitoring report on RPs/IPPs implementation and IR and IP policy compliance. Perform any other task assigned by NRS, Team Leader, Deputy Team Leader and the Project Director. 14. National Environmental Specialist (1 x 60 months) Qualification and Experience 315. The National Environmental Specialist will have bachelor degree in civil/environmental engineering with at least 15 years of working experience and have 5 years practical experience in environmental management functions. Experience in similar Page 238 of 423

255 projects will be added advantage. Duties and Responsibilities 316. The duties and responsibilities of the National Environmental Specialist will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Work under the general supervision of the Team Leader and the Deputy Team Leader Review the environmental guidelines and requirement of the Government of Bangladesh and ADB s Safeguard Policy Statement (SPS 2009), Environmental Sub-project selection guidelines and Environmental Assessment and Review Framework (EARF) and guide the implementation of future sub-projects Provide technical support to the PMO and PIUs including review and update of EARF and guidelines for specific type of sub-projects and assist in preparing terms of reference for environmental assessment Assist and guide the Regional Environmental Specialists (RESs) to provide support to Environmental Management functions including updating subproject IEEs in respect to Environmental Management Plan; assisting in preparing IEEs and assist in monitoring impact and mitigation measures associated with sub-projects Assist PIUs and RESs working in the steps for preparing the IEE and EIA, capacity building and training, preparation of guidelines and procedure and subproject specific guidance Provide support and guidance in undertaking environmental monitoring by PIUs, and support PMU in submitting semi-annual environmental monitoring reports to ADB Facilitate in grievance redress and corrective actions; Training PIU officials regarding environmental requirement and issues Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 15. Regional Environmental Specialist (3 x 60 months for each) Qualification and Experience 317. The Regional Environmental Specialist will have bachelor degree in Civil / Environmental Engineering with 10 years of working experience and having minimum 5 years of experience in Environmental Management functions. Experience in similar projects will be added advantage. Duties and Responsibilities 318. The duties and responsibilities of the Regional Environmental Specialist will include, but not limited to the following: (i) (ii) Work under the supervision and guidance of the Team Leader, Deputy Team Leader and the National Environmental Specialist Assist PIUs in preparing and updating IEEs including Environmental Management Plans (EMPs) in accordance with the EARF and assist in Page 239 of 423

256 (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) monitoring impact and mitigation measures associated with sub-projects including implementation of EMPs by contractors; Assist in preparation of IEE and in the environmental review of sub-project consisting of screening at Pourashava level by PIU through a committee formed with Municipal Mayor as Chairman and representatives from DOE, LGED and other relevant district office as members; Assist PIU in the steps for preparing the IEE and EIA, capacity building and training, preparation of guidelines and procedure and sub-project specific guidance; Support environmental monitoring undertaken by PIU and submit monitoring reports to PMU as inputs into the semi-annual monitoring report submitted to ADB; Undertake mitigation measures associated with opportunity and specific other measures in construction contract; Facilitate in grievance redress and corrective actions; Follow sub-project selection guidelines and EARF to ensure compliance with the environmental guidelines and requirement of the Government of Bangladesh and ADB s SPS; Support IES/NES by providing data, information and all other requested assistance to them at PMO; Train PIU officials regarding environmental issues Perform any other task assigned by NES, Team Leader, Deputy Team Leader and the Project Director. 16. Economist (1 x 54 months) Qualification and Experience 319. The Economist will have at least a master s degree in economics. He/she will need to have at least 10 years of practical experience analyzing economic aspects of development projects, including economic analysis of subprojects. Duties and Responsibilities 320. The duties and responsibilities of the Economist will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Work under the overall supervision and guidance of the Team Leader and the Deputy Team Leader Review of associated economic policies, including tariff policy Identify how to achieve the goals at least cost, including specifying simple and economically sound criteria for selecting subprojects Estimate investment requirement Identify economic risks Develop economic criteria for subproject selection Estimate financial internal rate of return for subprojects with sensitivity analysis Estimate economic internal rate of return for subprojects with sensitivity analysis Page 240 of 423

257 (ix) (x) Prepare the design for a willingness-to-pay (WTP) survey to be adopted by the Pourashavas assessing the demand for various urban services; and undertake the WTP survey for relevant subprojects prepared under the project Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 17. Municipal Engineer for PIU (30 x 60 months for each) Qualification and Experience 321. The Municipal Engineer will have degree in civil engineering and over 8 years experience in planning and implementation of urban related infrastructure improvement activities. Specific experience of infrastructure improvement activities at the Pourashava level will be given preference. He/she will be based at Pourashava level. Duties and Responsibilities 322. The duties and responsibilities of the Municipal Engineer will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) Reporting Requirements Work under the general supervision and guidance of the Team Leader and the Deputy Team Leader Assist the Pourashavas in the selection of eligible sub-projects using subproject selection criteria supported by economic, social and environmental safeguards according to rules/ policies/guidelines of GoB and ADB Assist the Pourashava in implementing the infrastructure improvement subprojects Assist Pourashava in preparation of O&M plans and implementation of O&M subprojects Assist the Pourashava in the preparation of bid document, detailed design and estimate etc. Assist PIUs in tender evaluation and contract award process Help contract administration and supervision to ensure quality control of subprojects Ensure regular checking and supervision of works at field level and conform quality and quantity of work as per specification and certify bills for construction work Assist Pourashavas in preparation of Pourashava Development Plan (PDP) meeting all necessary requirements including environmental and social safeguard with liaison and coordination with GICD consultants Assist to conduct necessary training at Pourashava level Perform any other tasks assigned by the Team Leader, Deputy Team Leader, Project Director and the PIU The MDS Consultants will prepare and submit the following reports: i) Inception Report The Consultant will prepare and submit an Inception Report to PMO, LGED and ADB Page 241 of 423

258 within 2 months after commencing the service. The report shall outline the consultant s initial findings and confirm the methodology and detailed work program proposed for adoption in the light of the initial findings, while also identifying constraints and proposed solutions, together with any action required by LGED to facilitate the successful implementation of the service. ii) Monthly Progress Report Monthly Progress Report will be prepared using standard report format or suitable format developed in consultation with LGED to show detailed progress against target, in respect of all project elements and hard out puts. All monthly project correspondences shall be submitted in soft copy together with monthly progress reports. The report will cover the activities performed during the reporting period. A suitable number of color photographs with date imprint should be included which will illustrate progress and any difficulties encountered on the work place. These will allow a permanent record of progress. iii) Quarterly Progress Report The Quarterly Progress Report will be similar to the monthly report but will be more detailed and informative. The quarterly progress report will also include important information of the quarter and an update of project cost estimate, expenditure, variation and reasons for the same. The QPR will also include relevant details of activities performed and plan of activities to be performed during the next quarter. A suitable number of color photographs with date imprint should be included which will illustrate progress and any difficulties encountered on the site. These will allow a permanent record of progress. Moreover, semiannual safeguards monitoring reports focusing on the implementation and monitoring of environmental and social safeguards will be submitted. iv) Annual Progress Report The Annual Progress Reports will summarize the activities performed within a year. The format of this report is similar to that of the quarterly progress reports. The annual progress report will include, inter-alia, the following: Annual work programme and budget for infrastructure improvement Achievement made against work programme and budget Problems encountered, how those were overcome or ways to overcome those in future List of outputs prepared during the year Any other relevant and important issue. v) Mid Term Progress Report The MDS consultants will prepare and submit Mid-term progress report. The timing of the mid-term review of the project will be fixed in consultation with ADB which will be during the middle of the project implementation. The Mid-term progress report will summarize the progress made as included in the Annual Progress Report and the Quarterly Progress Reports (for incomplete portion of the year). The Mid-term progress report will contain, inter-alia, the following: Physical progress achieved against targets Financial progress achieved against targets Progress achieved about social and environmental safeguards of the project Progress made about land acquisition matters, if required Problems faced/encountered and the ways to resolve those Page 242 of 423

259 Any other strategic/important issues which may require revision of project design/ implementation methodology during the remaining period vi) Consultancy Completion Report The Consultancy Completion Report will be prepared upon completion of the consultancy service. It will be a comprehensive report on the consultancy service throughout the contract. It will describe the achievements of governance improvement and capacity development of the Pourashavas. A format for consultancy completion report will be prepared by the consultant team and approval of PMO obtained. All relevant and important issues of the consultancy service will be included in the report including experience gained and lessons learnt. Necessary courses of action to be taken in similar projects in future will be included in the report. The Consultancy Completion Report will be prepared and submitted by the consultant and it will be finalized based on comments from PMO, LGED and ADB. vii) Any Other Special Report In addition to the above reports, the consultant will prepare and submit any other special report to be required by PMO, LGED and ADB. Consultant s Performance Evaluation Any sort of non compliance and deviation from the ToR will be recorded and the project authority may withheld invoice until compliance is ensured. In order to ensure smooth support to implementation of infrastructure improvement activities and technical training programmes, the selected firm(s) will ensure additional short term input, like preparation of electro mechanical and plumbing design and trading etc., if required from their own expenses and they should quote rate considering the above provision. Counterpart Staff and Facilities to be Provided by LGED 325. LGED will make available adequate counterpart staff for MDS Consultancy service available. LGED will also make available to the consultants all relevant reports, documents, data and information at cost basis The consultants will clearly indicate in their financial proposal the number and manmonth requirement of additional counterpart personnel needed as well as the detailed requirement of office space, machinery, equipment and supplies. The consultant will be attached to the PMO, regional level and PIU level according to a schedule. Arrangements for all these will be decided at the time of consultancy contract negotiations Governance, Improvement and Capacity Development (GICD) consultants I. BACKGROUND Introduction 327. The Government of Bangladesh (GoB) has applied for a loan from the Asian Development Bank (ADB) to help finance the proposed Third Urban Governance and Infrastructure Improvement (Sector) Project for implementation in 30 target Pourashavas. The Local Government Engineering Department (LGED) and the Department of Public Page 243 of 423

260 Health Engineering under the Local Government Division (LGD), both with extensive experience in managing urban development projects financed by the Asian Development Bank (ADB) will be the executing agencies of the project while the participating Pourashavas will implement project components. The project is expected to be implemented over a period of 6 (six) years starting from July, A portion of the project fund will be utilized for procurement of consulting services for Governance Improvement and Capacity Development (GICD) of the project Pourashavas. For this purpose, consulting firm for Governance Improvement and Capacity Development (GICD) will be engaged under the PMO for a total period of 64 (sixty four) months, (Sept-2014 to Dec-2019) using ADB guidelines on the use of consultants. Urbanization Trend and Challenge in Bangladesh It is widely acknowledged that Bangladesh is a rapidly urbanizing country where urban base has expanded rapidly from 7.6% to nearly 25% between 1970 and A combination of socio-economic, political and demographic factors is responsible for this. It reflects for instance the redistribution of the rural and urban population. Also, the growth in the magnitude of urban economy, change in the scale and nature of economic activity and distribution of income between regions and among classes, demographic transition and change in the scale and nature of governance are likely to be influenced by rapid urbanization and urban settlement patterns in Bangladesh The urbanization challenge unless managed well could pose a serious problem to the future growth prospects for Bangladesh. But urbanization is also an opportunity and an integral part of the development process. As income grows and the economy relies more and more on manufacturing and organized services, urbanization will grow. The challenge for public policy is to manage this natural transition of Bangladesh from an agrarian economy to a modern economy well through appropriate institutions, programs and policies. The Government is cognizant of this challenge. It also understands that this is a long-term challenge. The back-log of unmet demand and new demand for basic urban services like housing, sanitation, water supply and urban transport requires huge resources, sound planning and strong implementation capacity. Driving Force behind Rapid Urbanization 330. A major cause of urbanization in Bangladesh is that the agriculture sector is no longer able to absorb the surplus labour force entering the economy every year. Inability of the agriculture sector to provide sufficient employment or sufficiently high household incomes to cope with a growing number of dependent can encourage people to seek employment outside agriculture. In the case of Bangladesh the rural to urban migration has contributed to more than 40 percent of the change in urban population. The lure of employment opportunities existing in these cities is another reason for urban migration Despite the fact that majority of the country s population live in rural areas, the importance of the traditional rural sector has been declining over the years. The share of the agricultural sector in GDP has come down from about 60 percent in to only 17 percent in The urban sector led by non-agricultural activities (commerce, trade, industry service etc.) accounts for a relatively large share of GDP compared to its rural counterpart. Its contribution to GDP has increased from a low of 25 percent in 1972/73 to over 50 percent in Although rising levels of urbanization and rapid population growth in urban areas 73 6 th Five Year Plan, Fy 2011-Ft 2015: Chapter 5: Managing the Urban Transition 74 Ibid. Page 244 of 423

261 have often been considered problematic, it is a fact that these areas generally have a significantly higher concentration of nation s economic output than their population. Urban areas also account for a disproportionate higher share of national economic production and are the main sources of economic growth in most countries. This is also no exception for a developing country like Bangladesh where urban dwellers constitute about 25 percent of the total population of the country, but their contribution to GDP is more than 50 percent. National economic growth is thus closely correlated with urbanization. Urban Poverty in Bangladesh 333. Poverty in Bangladesh, as in most other developing countries, has long been associated with rural areas. But with rapid urbanization during the last few decades, poverty has increasingly been urbanized by way of transfer of the rural poor to urban areas. But manifestation of urban poverty is often more appalling than that of rural poverty. Urban poverty is invariably associated with poor quality housing Most of the urban poor live in slums and squatter settlements characterized by substandard living conditions. Majority of those living in slums are very poor and nearly 80 percent of the households have income below the upper poverty line. More than 50 percent of the slum dwellers earn less than half of the poverty line income while about 25 percent of them are in extreme poverty and destitution. More than 90 percent of the income earners are engaged in informal sector activities. They work mainly as rickshaw-pullers, transport workers, hawkers, day labourers, small factory workers, construction workers, etc. Many of the female members of slum households in Dhaka and Chittagong are employed in the formal sector garment factories and in very large numbers in domestic work as maids. What is interesting, however, is that few among the male slum dwellers remain unemployed because of their easy access to informal sector activities. This is perhaps the most important factor stimulating rural to urban migration. Future Urban Development Strategy 335. A review of past policies, institutions and programs suggest that the urbanization strategy needs to change substantially to meet the challenges of future urbanization in Bangladesh. In the past much of the focus has been on implementing piecemeal programs. Multitudes of local government agencies, weak planning, poor governance, inadequate resources and weak project implementation capacity have limited the progress with meeting the urban challenge. The Sixth Plan will internalize these lessons of experience and shift the emphasis to the development of sound urban institutions, improve city governance, emphasize urban resource mobilization and reducing urban poverty. Improving City Governance 336. The key constraints to the effective functioning of the municipalities and city corporations are unclear mandate and service responsibilities; weak finances and financial autonomy; poor coordination and control among service agencies and weak management. These problems call for a major rethinking and wholesale change in the management of these entities and their enabling environment The ability of city managers to coordinate fiscal, regulatory and administrative systems which influence the efficiency of cities is crucial to improving the welfare of urban citizens. In this context, cities need to be managed as standalone economics where project investments are planned in the context of a coherent city strategy and better understanding of how urban markets perform overall. The Government s role in this regard will be to support initiatives to combine local level skills, resources and ideas to stimulate the local Page 245 of 423

262 economy towards the goals of job creation, poverty alleviation and redistribution; and take proactive measures to deal effectively with changes in the national and global economics Thus, a key institutional reform during the Sixth Five Year Plan ( ) is that the municipalities and city corporations will be organized to manage their functions on the basis of elected representatives. For the urban centers of Bangladesh to be dynamic growth centers it is essential that they have elected and accountable municipalities and city corporations with clearly defined responsibilities. They must be able to attract private investment and mobilize public resources based on service delivery and the quality of the city environment. In order to implement the strategy the Government will take steps for: (i) (ii) (iii) (iv) Institutional reforms and decentralization of responsibilities and resources to local authorities Participation of civil society including women in the design, implementation and monitoring of local priorities Building capacity of all actors (institutions, groups and individuals) to contribute fully to decision making and urban development processes; and Facilitating networking at all levels. Urban Resource Mobilization 339. A major constraint on urban services is the lack of adequate funding. Even with best city governance unless new sources of funding are found it will be difficult to meet the demand and development need of the urban sector. Presently, mush of the financing comes from the Government s own budget; property taxes and user charges for urban services are very limited. The Sixth Plan will emphasize resource mobilization through much better implementation of the property tax and stronger cost recovery of key urban services. The policies include steps to improve land and property valuation, better tax collection through improvements in property tax administration, and setting prices for urban services with due regards to cost. Additionally efforts will be made to reduce efficiency and eliminate corruption in the collection of property taxes. Reducing Urban Poverty 340. Poverty is understood to encompass many different aspects including inadequate consumption, inadequate income and asset base, and inadequate access to basic infrastructure and services. Economic growth and consequent increase in income does not necessarily lead to reduction in urban poverty. poverty reducing measures outside of economic growth is important which, however, depends on local institutions that can address on or more of the inadequacies as mentioned above. The plan strategy to deal with urban poverty will promote equal access to and fair and equitable provision of services in urban areas; and emphasize on urban policies that ensure equal access to and maintenance of basic services, including those related to education, employment and livelihood. Previous Similar Projects Implemented by LGED 341. The following major projects have been/are being implemented by LGED with financial support from ADB: (i) Secondary Towns Infrastructure Development Project (STIDP-I) Page 246 of 423

263 (ii) (iii) (iv) Secondary Towns Infrastructure Development Project (STIDP-II) Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-I) Second Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-II) 342. As a departure from UGIIP-I, UGIIP-II consists of 3 phases for its implementation (the project is at nearing completion). Initially nr of PSs addressed stands at 35. The 1 st phase (18 months) is essentially preparatory works that includes evolving PDP and formation of different committees (TLCC, WLCCs, gender committee and CBOs) to involve the citizens into the municipal processes and their contribution to pertinent decision-making. Specifics also included interim holding tax reassessment and establishment of PPU. The 2 nd phase (24 months) involves allocating 50% of assigned amount for infrastructure development to each of the PSs which graduated to 2 nd phase. Simultaneously, UGIAP activities, that specifically includes governance improvement elements, will mandatorily be implemented. The 3 rd phase (30 months) will entailed UGIAP and infrastructure implementation works by the PSs who will successfully graduate to the 3 rd phase. Infrastructure improvement and service-delivery will mainly include: Improvement of transportation infrastructure, Drainage system, Solid waste disposal mgt., Water supply, Sanitation, Municipal service improvement, Basic services to the slum dwellers etc. Special features of UGIIP-II include: Performance based allocation, Participatory urban planning, Pro-poor urban development and Private sector participation Pourashavas were characterized by inadequate governance and lack of community participation in the planning, implementation and management of projects and programs. There were limited incentives to improve the performance in such areas as accountability and transparency, promotion of gender equity, poverty reduction and financial sustainability. However, with the introduction of a performance based fund allocation strategy through the urban governance improvement action program (UGIAP) in the Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP) funded by ADB, KfW and GIZ. Pourashavas significantly improved their performance. Major achievements under the UGIIP made by all project Pourashavas include (i) establishment of Town Level Coordination Committees (TLCCs) and Ward Level Coordination Committees (WLCCs), key vehicle for ensuring citizens participation (ii) development and implementation of Pourashava level Gender Action Plan (GAP) and (iii) computerization of tax and accounting records and increase of own resource mobilization. Poverty reduction programs were implemented and the average collection of holding tax was improved. It is reported that the UGIIP motivated even non-project Pourashavas to embark on a reform agenda, requesting participation in a program such as UGIIP Lessons from similar projects suggest that (i) governance-led infrastructure improvement is indeed possible and desirable (ii) the use of sector-lending modality proved highly appropriate for performance based fund allocation adopted in the project (iii) good quality and front loading capacity building support is required for Pourashavas. Thus, the project adopts sector lending modality and capacity building support will be provided both during project preparation and implementation. The project is consistent with ADB s Bangladesh country partnership strategy (CPS). Urban sector is one of the six priority sectors in the CPS and the project will also address key thematic drivers of the CPS including good governance and capacity development, environmental sustainability and gender equity. Although earlier phases of the project were instrumental in creating a paradigm shift in local Government administration, they are not without weaknesses and challenges. Among 319 Pourashavas in the country, only about 70 have benefited from the two phases of UGIIP. While other development partners have started to emulate the approach adopted in UGIIP, there are still large financing needs to improve infrastructure and services in Pourashavas. Even taking account of the own revenue enhancement Page 247 of 423

264 achieved through the implementation of UGIAP, the allocation of less than $3 million from the government to each Pourashava under previous phases was grossly inadequate to meet the demand for improved services, including that for water supply and sanitation. Governance reform needs to be further advanced in areas such as urban planning and financial sustainability. Master Plans comprising a structural plan, a detailed area plan and an urban area plan, are being prepared in most Pourashavas with support from the LGED and these plans need to be implemented to facilitate more controlled and organized urban development. The proposed project will be a refined and innovative version of UGIIP model where performance based infrastructure allocation will be strongly linked with governance improvement and capacity development of selected project towns. Over the period of time, the success of governance led infrastructure development through UGIIP model has been spread among other development partners. The World Bank has introduced governance improvement approach to its upcoming Municipal Governance and Services Project (MGSP) in 26 City Corporations and Pourashavas and JICA has already accepted and introduced to its recently approved Northern Rural and Urban Infrastructure Project in 18 smaller towns. It is expected that the upcoming UGIIP-III investment project will set another example of sustainable governance led infrastructure development within selected municipalities. III. THE PROJECT Project Objectives 345. The primary objectives of the project is to promote sustainable human development. Economic growth and poverty reduction by improving urban governance, developing urban infrastructure and services, enhancing municipal management and strengthening capacity to deliver municipal services (especially to the poor) in 30 target Pourashavas of Bangladesh. To achieve this objectives, the project will assist the selected Pourashavas to: (i) Improve urban governance by implementing a set of programs (ii) Increase transparency and accountability of Pourashavas towards their citizens (iii) Provide improved physical infrastructure and urban services (iv) Enhance capacity of Pourashava to implement, operate, manage and maintain basic urban services. (v) Provide capacity building support to the elected representatives, citizens representatives and officials regarding governance improvement and infrastructures developments. (vi) Make contribution towards future sustainability of governance improvement and infrastructure development activities. Project Outcomes 346. I outcome is the improved access to municipal services and strengthened pro-poor and gender-responsive urban governance in target Pourashavas. Project Outputs/Components 347. The project consists of three components (i) Component-A: Municipal Infrastructure Improvement and Service Delivery (ii) Component-B: Urban Governance Improvement and Capacity Development (iii) Component-C: Project Management and Implementation support Component-A: Municipal Infrastructure Improvement and Service Delivery Component-A will include the following major activities: (i) Road and related infrastructure Page 248 of 423

265 (ii) (iii) (iv) (v) Drainage Water Supply and Sanitation Solid Waste Management (SWM) Other infrastructures, such as, kitchen market, slaughter house, whole sale market, bus terminal, truck terminal, community hall and improvement of physical facilities in slum areas. Component-B: Urban Governance Improvement and Capacity Development 349. Component-B will include the following areas of activity: (i) Citizen awareness and participation (ii) Urban Planning (iii) Equity and inclusiveness of women and urban poor (iv) Enhancement of Local Resource Mobilization (LRM) (v) Financial management, accountability and sustainability (vi) Administrative transparency (vii) Keeping essential Pourashava services functional Component-C: Project Management and Implementation Support 350. A Project Management Office (PMO) in LGED and a Project Implementation Unit (PIU) in each Pourashava will be established under Component C of the Project. The PMO will manage the overall project implementation, while PIUs will implement activities for improvement of governance and physical infrastructures at the Pourashava level. There will be the following 3 consultancy packages to provide support to PMO and PIUs for implementation of the project activities: Package-1 : Governance Improvement & Capacity Development (GICD) Consultants Package-2 : Management, Design and Supervision (MDS) Consultants Package-3 : i. Individual Consultants for Benefit Monitoring and Evaluation (BME) ii. Individual Consultants for Performance Monitoring and Evaluation (PME) iii. Individual Consultants for Gender Development & Poverty Alleviation (GDPA) Project Area Sl. No. Name of Pourashava Category of Pourashava Sample Pourashava (3) 1 Lalmonirhat A 2 Magura A 3 Naogaon A Priority Pourashava (7) 4 Bera A 5 Charghat B 6 Kishoreganj A 7 Muktagacha A 8 Netrokona A 9 Rajbari A 10 Sherpur A Page 249 of 423

266 Sl. Name of Pourashava No. Other Target Pourashava (20) Category of Pourashava 11 Bandarban A 12 Benapole A 13 Chapai Nawabganj A 14 Chhatak A 15 Chouadanga A 16 Habiganj A 17 Ishwardi A 18 Jessore A 19 Joypurhat A 20 Khagrachari A 21 Kotalipara B 22 Laksham A 23 Laxmipur A 24 Meherpur A 25 Moulvibazar A 26 Nabinagar A 27 Nilphamari A 28 Panchagarh A 29 Rangamati A 30 Shahjadpur A 351. Budget Allocation under Window A. The budget for physical investments will be made available to target Pourashavas under Window A in phases upon fulfillment of three phases of UGIAP. The maximum amount that target Pourashavas will receive will mainly depend upon the population of respective Pourashavas. Once the entry criteria are fulfilled, the first set of priority investments amounting to about 20-25% of the ceiling will be supported (phase 1). Upon substantial progress of such investments and fulfillment of intermediate criteria, more priority investment projects amounting to about 60% of the ceiling will be implemented (phase 2). Meeting the advanced criteria and progress of investment projects will make these Pourashavas eligible for additional investment support within 15-20% of the ceiling (phase 3). This phased approach will ensure continued motivation for governance reform in the project Pourashavas Rolling-out Performance Evaluation of Pourashavas. The project will support rolling-out the application of governance performance criteria (called Urban Governance Improvement Action Program (UGIAP)) to all Class-A Pourashavas in the country (Window B). Class B and C Pourashavas may participate on a voluntary basis. 10%-20% of the ADB loan amount will be allocated for this purpose, and used for (i) establishing a performance assessment mechanism and undertaking annual (or every two years) performance assessment, and (ii) allocating performance-based investment budget to top performing Pourashavas (about 10 for each evaluation). Simple, objective and focused criteria with up to 10 indicators, which can be scored to enable ranking among Pourashavas, will be prepared with the consultants inputs. The Urban Management Support Unit (UMSU) under the LGED will take the lead in performance assessment, while the project management office will support sub project preparation and implementation of top-performing Page 250 of 423

267 Pourashavas. Implementation Arrangements Arrangements at the Central Level 353. The Local Government Engineering Department (LGED) and the Department of Public Health Engineering (DPHE), both under the Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives (MLGRD&C) and having extensive experience in managing urban and water supply projects financed by the Asian Development Bank (ADB), will be the executing agencies of the project A Project Management Office (PMO) will be established for the overall management of the Project. The PMO will be headed by Project Director (PD) who will be a senior engineer specialized in urban development, at least in the rank of executive engineer, supported by officials including two Deputy Project Directors in charge of (i) Infrastructure and service delivery improvement and (ii) Governance improvement and capacity development respectively. The PMO will be responsible for (i) Preparing annual work plan by consolidating PIU work plans, (ii) Monitoring and supervising overall project implementation; (iii) Assisting Pourashavas in implementing the UGIAP; (iv) Assisting Pourashavas in implementing physical works and ensuring quality of works, including training; (v) Managing and supervising consultants under the Project; (vi) Ensuring the compliance of assurances, including safeguards; and (vii) Preparing progress reports and project completion report UMSU will also keep functioning as secretariat of MPRC in assessing performance of Pourashava based on UGIAP. The Superintending Engineer, Urban Management Wing of LGED, will act as Director of UMSU and the Additional Chief Engineer in charge of urban management will coordinate activities between UMSU and PMO The transparent and fair assessment of performance is critical for a successful performance-based fund allocation. The Municipal Performance Review Committee (MPRC) will be responsible for rating of the participating Pourashavas. The MPRC will be chaired by the Secretary of LGD, and consist of Chief Engineer of LGED, Director General of LGD, representatives of the PC, ERD, FD and IMED and Pourashavas, an urban governance professional nominated by LGD, Deputy Project Director from DPHE and the Director of the national UMSU (as the member secretary). Arrangements at the Pourashava Level 357. A project implementation unit (PIU) will be established in each participating Pourashavas to implement the UGIAP and physical works. The PIU will be headed by the Pourashava Mayor assisted by the Chief Executive Officer and other officials. Each PIU includes three sections: (i) the infrastructure improvement section (IIS) headed by the Executive Engineer/Assistant Engineer; (ii) the urban governance improvement section (UGIS) headed by the Secretary; and (iii) the environmental, sanitation and slum improvement section (ESSIS) headed by the Health Officer. The PIU shall be located within the Pourashava office and be responsible for Ii) preparing the detailed annual work plan for the respective Pourashava; (ii) implementing the governance improvement activities specified in the UGIAP, including the preparation and implementation of the PDP, GAP, and PRAP, (iii) implementing physical works, including the preparation of bid documents as well as procurement and supervision of contractors, and (iv) (iv) preparing progress reports for submission to the PMO. Page 251 of 423

268 358. Each PIU will be staffed with accounting officers/accountants to manage financial transaction including recording, preparation of liquidation statements, and replenishment requests to the PMO. III. GOVERNANCE IMPROVEMENT AND CAPACITY DEVELOPMENT (GICD) CONSULTANCY SERVICE B. Objectives of Consulting Services 359. The PMO and PIUs will require consultants support on a range of activities related to governance improvement and capacity development of 30 target Pourashavas. The consultant will support PMO and PIUs in implementing UGIAP by providing capacity development, community mobilization and other facilitation services C. Composition of GICD Team 360. Consulting firm will be engaged by PMO for a total period of 5 (five) years. GICD package of consultants will involve 1278 person-months of consultants. The GICD team will be headed by a Team Leader supported by one Deputy Team Leader and 4 specialists at the PMO level. There will be 4 regional offices of GICD consultancy service consisting of 4 Regional Coordinators at each regional office and 2 Local Capacity Development Associates in each project Pourashava (1 for Community Mobilization another for Municipal Finance) and 1 Town Planning Expert in each of the two B Category Pourashavas under the project. D. Objectives and Scope of Consultancy Service 361. The objectives of the Consultancy Service will include facilitating support to the project Pourashavas in the following areas: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Facilitate the process of Citizen awareness and participation in Pourashava activities and services Support the process of effective urban planning activities Facilitate the process of ensuring equity and inclusiveness of women and urban poor in Pourashava activities and services Support the process of enhancing local resource mobilization to create stronger financial base for Pourashavas Facilitate the process of ensuring financial management, accountability and sustainability of Pourashava activities and services Support the process of ensuring transparency of Pourashava activities and services Facilitate the process of keeping essential Pourashava services smooth and functional Support the process of capacity development of the Pourashavas The scope of work of the Consultancy Service is to provide governance improvement, capacity development and other supports to the PIUs in implementing UGIAP. Draft UGIAP is attached. GICD consultants supports will include: (i) (ii) (iii) Collecting relevant training/capacity building related guides, IEC materials, manuals, handbooks, reviewing all these materials, recommending modification, if required, developing appropriate training modules, imparting training at PMO, Regional and Pourashava levels for Pourashava officials Organize and arrange initial, intermittent and final socio-economic surveys of the Pourashava level, scrutinize present report to PMO Formation and working of Town Level Coordination Committee (TLCC), Ward Page 252 of 423

269 Level Coordination Committee (WLCC) and (Grievance Redress Cell (GRC) (iv) Preparation, display and implementation of Citizen Charter. (v) Establishment and operation of Urban Planning Unit and controlling development activities. (vi) Preparation and implementation of PDP and preparation of annual O&M plan including budget provision and implementation of the O&M plan. (vii) Forming and activating Standing Committee on Women and Children for GAP activities, (viii) Forming and activating Standing Committee on Poverty Reduction & Slum improvement for PRAP activities (ix) Forming and activating SIC for implementation of slum improvement activities (x) Preparing annual O&M plan including budget provision. (xi) Revenue mobilization through holding tax, collection of indirect taxes and fees from other sources (xii) Fixing a water tariff enhancement plan and implementing it in coordination with MDS consultants. (xiii) Computerizing tax record system and generate computerized tax bill and fixation and collection of water tariff (xiv) Preparation of annual Pourashava budget with involvement of standing committee on establishment and finance (xv) Payment of electric and telephone bills (xvi) Establishing computerized accounting system & generating computerized accounting reports (xvii) Carrying out audit of accounts with involvement of Standing Committee on Accounts & Audit (xviii) Carrying out inventory of fixed assets, opening/designing fixed asset register/database and creation of fixed asset depreciation fund account (xix) Making necessary arrangement of repayment of all GOB loans (xx) Formation and working of other Standing Committees, as required (xxi) Participating/rendering assistance for training/capacity development programmes, preparing/ sending progress report on UGIAP implementation to PMO and using improved information technology (IIT) for good governance (xxii) Assisting Pourashavas in the areas of Collection, disposal & management of solid waste, clearing & maintenance of drains, cleaning & maintenance of drains, arrangement for making street lighting functional, establishment & operation of Mobile Maintenance Team (MMT) and keeping public toilet clean & operational. (xxiii) Rendering assistance to PMO and UMSU for transparent and fair assessment of Pourashava performance by MPRC established in LGD. Inputs of Key Experts and Non-Key Experts 363. The consultancy team will be responsible to the Project Director for efficient and effective delivery of services. The consultant s team will have members based at PMO level, Regional level and Pourashava Level. Position and duration of the key experts and non-key experts are shown below: Sl. Man Position Qnty No Month A. Key Experts 1 Team leader (senior Governance Specialist) Dy. Team Leader ( Capacity Development Specialist) Community Participation & Inclusive Development specialist Municipal Taxation & Financial Specialist Training Specialist Sr. IT Specialist 1 48 Page 253 of 423

270 Sl. Man Position Qnty No Month 7 Regional Coordinator (16)* Sub-Total : A B. Non Key Experts 1 Local Capacity Development Associates** Sub-Total: B Note: * For UGIAP implementation support, participating Pourashava will be divided into 4 regions. Each region will cover 7 to 8 Pourashavas and 1 Finance, 1 Urban Planning, 1 Community Mobilization and 1 IT Coordinator will be engaged in each region. Each regional office will be housed in a suitability located 4 project Pourashavas and UGIAP implementation support for those 4 project Pourashavas will be provided by the regional team itself. No additional Local Capacity Development Associates (Community/Finance) will be engaged from the project. ** For UGIAP implementation, each participating A-Category Pourashava except 4 regional Pourashava will be provided 1 Local Capacity Development Associates (Community Mobilization) and 1 Local Capacity Development Associates (Municipal Finance) and in addition, for 2 B-Category Pourashavas 1 Town Planner will be provided each as the B-Category Pourashavas organogram has no provision for Town Planner. Support Staff The total local professional/support staff inputs for the Consultancy Services will be 4020 person-months as indicated below: Post Number Person-months A. PMO Level Office Manager 1 60 Computer Operator Office Assistant Sub-Total (A): B. Regional Level Computer Operator Office Assistant Sub-Total (B): Total (A+B): Page 254 of 423

271 14 TOR FOR CONSULTANTS ADVANCE CONTRACTING GICD A. Key Experts at PMO Level 1. Team Leader/Senior Governance specialist (1x60 months) Qualification and Experience 365. The Team Leader will have master degree in public administration/mba/management/urban & regional planning/ economics/sociology/ political science/or similar and equivalent educational qualification. He/ She have 20 years of work experience, of which 12 years in the field of urban development, specially related to municipal governance improvement and capacity development in Bangladesh or else where in developing countries with 5 years practical experience of working in similar position. Previous experience as Team Leader or Deputy Team Leader will be given preference. The Team Leader will be familiar with all aspects of the tasks listed in the scope of work and will have overall responsibility for managing the team. Duties and Responsibilities 366. The major duties and responsibilities will include, but not limited to the following: (i) Review all UGIIP III related documents including urban management policy statement (1999), Local Government (Pourashava) Act, 2009, 6 th Five year Plan (SFYP), ADB policy documents relevant to urban governance improvement and capacity develop and assist the PMO, regional level and PIUs in effective, efficient and successful implementation of Urban Governance and Improvement Action Plan (UGIAP) (ii) Prepare a list of Pourashavas to be assigned to the 4 regional coordinators under each of 4 disciplines (community participation & inclusive development, urban planning, municipal taxation & finance and information technology) in consultation with the Project Director and distribute the assignment accordingly (iii) Assist PMO, PIU in preparing UGIAP implementation methodology including preparation of operational guidelines for TLCC, WLCC and GRC (iv) Suggest national level reform on urban sector including processing and approval of urban sector policy developed in UGIIP-III and its implementation process (v) Assist PMO and UMSU for assessment of Pourashava Performance by MPRC (vi) Assist the Project Director in planning and implementation of activities and tasks delineated in the UGIAP at Pourashava level (vii) Ensure preparation of materials and modules for various training/capacity development programmes/courses including training of trainers (ToT) (viii) Ensure preparation of annual plan, budget, schedule, select trainers and trainees for various training/capacity development courses including ToT (ix) Coordinate the activities of all Regional Coordinators and Local Capacity Development Associates and ensure team spirit among the team members to perform the assignment (x) Conduct periodic supervision and ensure performance of duties of other Page 255 of 423

272 members of the team at regional and PIU levels (xi) Maintain close liaison with all specialists and consultants of UGIIP-III (including MDS) and consultants of other urban sector projects of LGED, especially with the consultants of Northern Bangladesh Integrated Development project (NOBIDEP) financed by Japan International Cooperation Agency (JICA), the World Bank funded Municipal Governance and Services Project (MGSP) and ADB funded Coastal Towns Infrastructure Improvement Project (xii) Collect and maintain relevant data related to UGIAP implementation, analyze the level of performance, pin-point and highlight the outcome and issues in monthly, quarterly, annual and mid term reports to be used as tools and guidance for further course of action by PMO (xiii) Develop monitoring format for progress monitoring for UGIAP implementation, establish mechanism for progress monitoring of target Pourashavas on a quarterly basis and prepare quarterly progress report for submission to the Project Director (xiv) Prepare and submit Inception Report describing the role and responsibilities of the team members & pin pointing the methods and approaches following which the team will carryout its assignment within 2 months from the date of commencement of contract (xv) Collect good practices of Pourashavas in various sectors, prepare documented report and use these for horizontal learning (xvi) Assist PMO in conducting initial, intermittent and final socio-economic survey, scrutinize at submit report to PMO (xvii) Assist Pourashavas to prepare Pourashava Development Plan (PDP) (xviii) Perform as a Training Coordinator/Trainer (xix) Submit monthly, quarterly, annual and project completion report to the Project Director as per prescribed time schedule (xx) Ensure implementation of all other activities as defined in the scope of work pertaining to this TOR (xxi) Perform any other task assigned by the Project Director, LGED and ADB. 2. Deputy Team Leader/ Capacity Development Specialist (1 x 54 person months) Qualification and Experience 367. The Deputy Team Leader will have master degree in public administration/mba/ management/urban & regional planning/economics/sociology/political science or similar and equivalent educational qualification. Candidates having degree/diploma/training in human resource development (HRD) will be given preference. He/She will have over 15 years of work experience with 10 years practical experience in the field of municipal governance improvement and capacity development activities in Bangladesh or elsewhere. Previous experience as Deputy Team Leader or Team Leader will be preferred. The Deputy Team Leader will be responsible to the Team Leader for his/her assignment. Experience in planning and implementing related training programmes and performance as a trainer will be preferred Duties and Responsibilities 368. The major duties and responsibilities will include, but not limited to the following: (i) Assist the Team Leader and other team members in respect of planning and implementation of activities/tasks delineated in the UGIAP, capacity development and other tasks as defined in the scope of works pertaining to this ToR Page 256 of 423

273 (ii) (iii) (iv) (v) (vi) (vii) Assist the Team Leader in coordination of the activities of the specialists of PMO, Regional Coordinators and Local Capacity Development Associates at the Pourashava level Provide required assistance to the GICD Specialists and Regional Coordinators Prepare materials and modules for various training/capacity development programmes and ensure selection of trainees and trainers for various training/capacity development courses including ToT Supervise training/capacity development courses implemented in the project Pourashavas including ToT Assist the Team Leader to prepare monitoring format for progress monitoring of UGIAP implementation and capacity development programmes and collection of reports from the regional level and Pourashavas for compiling those at PMO Review Local Government (Pourashava) Act, 2009 and other relevant documents and support the Team Leader in the relevant area of intervention ensuring conformity with rules and procedures (viii) Assist the Team Leader and the Project Director for preparing procedures/documents in respect of assessment of Pourashava performance by MPRC (ix) (x) (xi) (xii) (xiii) Perform as a Training Coordinator/Trainer Assist Pourashavas in preparing Pourashava Development Plan (PDP) Assist PMO in conducting initial, intermittent and final socio-economic survey, scrutinize at submit report to PMO Collect good practices of Pourashavas in various sectors, prepare documented report and use these for horizontal learning Prepare and submit training/capacity development reports with regard to implementation of UGIAP and governance improvement (xiv) (xv) (xvi) Assist the Team Leader in the preparation of inception reports and other reports, such as, monthly, quarterly, annual and project completion reports; Conduct periodic supervision to monitor regional level coordinators and PIU level Local Capacity Development Associates and submit to the Team Leader performance report of the team members and progress of UGIAP implementation and capacity development programme at each Pourashava. Perform any other task assigned by the Team Leader and the Project Director. 3. Community Participation & Inclusive Development Specialist (1 x 54 person months) Qualification and Experience 369. The Community Participation & Inclusive Development Specialist will have master degree in sociology/social welfare/ economics/political science/public administration or similar and equivalent educational qualification. He/She will be required to have 12 years of work experience with 5/6 years practical experience in the field of community mobilization and inclusive development in Bangladesh or elsewhere. Direct working experience with urban community, particularly with poor and women will be given preference. Experience in planning and implementing related training programmes and performance as a trainer will be preferred. Duties and Responsibilities 370. The major duties and responsibilities will include, but not limited to the following: Page 257 of 423

274 (i) Work under supervision of the TL and the DTL in respect of community participation and inclusive development. (ii) Make review and prepare procedures for formation and working of TLCC, WLCC and GRC. (iii) Make review and prepare procedures for preparation of Citizen Charter (iv) Make review and prepare procedures for formation and activating Standing Committee on Women & Children and implementation of GAP. (v) Make review and prepare procedures for formation and activating Standing Committee on Poverty Reduction & Slum Improvement and implementation of PRAP. (vi) Make review and prepare procedures for formation of SIC and implementation of slum improvement activities. (vii) Make review and prepare procedures for formation and working of other Standing Committees, as required. (viii) Make review of the Local Government (Pourashava) Act, 2009 in respect of strengthening of community participation and inclusive development for Pourashava development activities and service delivery (ix) Coordinate with the Regional Community Mobilization Coordinator with regard to implementation of activities related to public awareness, integration of the urban poor and women participation as detailed in the UGIAP ; (x) Ensure frequent visit to the Pourashavas to assist the PIUs and the Local Capacity Development Associates in timely implementation of community participation and inclusive development activities as included in UGIAP. (xi) Guide the Local Capacity Development Associates in preparing monthly progress report stating activities and tasks of UGIAP implementation, status related to community participation and inclusive development in Pourashava activities and services (xii) Assist Pourashavas in preparing of PDP (xiii) Perform as a Training Coordinator/Trainer in the relevant field (xiv) Prepare procedure and format for submission of monthly, quarterly and annual progress report from project Pourashavas regarding community participation and inclusive development activities (xv) Compile monthly, quarterly and annual progress reports on community participation and inclusive development activities (xvi) Provide assistance to other PMO level specialists regarding implementation of UGIAP and GICD activities (xvii) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 4. Municipal Taxation & Financial Specialist (1 x 48 person months) Qualification and Experience 371. The Municipal Taxation & Financial Specialist will have master degree in finance/accounting/ business administration/chartered accounts or equivalent qualification in relevant subject. He/She will be required to have 12 years of work experience with 6 years practical experience in the field of municipal taxation, finance and accounting in Bangladesh or elsewhere. Experience in planning and implementing related training programmes and performance as a trainer will be preferred Duties and Responsibilities 372. The major duties and responsibilities will include, but not limited to the following: Page 258 of 423

275 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) Work under supervision of the TL and the DTL in respect of municipal taxation, finance and accounts related activities Make review and prepare procedures for revenue mobilization through holding tax Make review and prepare procedures for revenue mobilization through collection of indirect taxes and fees from other sources Make review and prepare procedures for fixation and collection of water tariff Make review and prepare procedures for preparation of annual Pourashava budget with involvement of the Standing Committee on Establishment and Finance Make review and prepare procedures for carrying out inventory of fixed assets, opening/designing fixed asset register/database and creation of Fixed Asset Depreciation Fund Account Make review and prepare procedures for carrying out audit of accounts with involvement of the Standing Committee on Accounts & Audit Make review of the Local Government (Pourashava) Act, 2009 in respect of assessment & collection of taxes, rates and fees, preparation of annual budget and accounts and carrying out of audit of accounts Make liaison and coordination with Information Technology (IT) Specialist regarding computerization of tax record, water tariff and accounting reports Coordinate with the Regional Information Technology (IT) Coordinator with regard to implementation of activities related to enhancement of Local Resource Mobilization and financial management, accountability and sustainability as detailed in the UGIAP Ensure frequent visit to Pourashavas to assist the PIUs and the Local Capacity Development Associates in timely implementation of assessment and collection of taxes and financial management activities as included in the UGIAP Perform as a Training Coordinator/Trainer in the relevant field Prepare procedure and format for submission of monthly, quarterly and annual progress reports from the project Pourashavas regarding taxation and financial management activities Guide Local Capacity Development Associates in preparing monthly, quarterly and annual progress reports stating activities and tasks of UGIAP implementation related to taxation and financial management Compile monthly, quarterly and annual progress reports on taxation and financial management activities from project Pourashavas Provide assistance to other PMO level Specialists regarding implementation of UGIAP and Capacity Development activities Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 5. Training Specialist (1 x 54 person months) Qualification and Experience 373. The Training Specialist will have master degree in sociology/social welfare/economics/ political science/public administration or similar and equivalent educational qualification. Candidates having degree/diploma/training in Human Resource Development (HRD) will be given preference. He/She will be required to have 15 years of work experience with 10 years practical experience in the field of training/capacity development in Bangladesh or elsewhere. Experience having participatory training courses implemented for Pourashava elected representatives, officials and citizen representatives will be given preference. Duties and Responsibilities Page 259 of 423

276 374. The major duties and responsibilities will include, but not limited to the following: (i) Collect relevant training/capacity building related guides, IEC materials, manuals, handbooks, review all these materials, recommend modification if required, develop appropriate training modules, impart training at PMO, Regional and Pourashava levels for Poura officials (ii) Work under the supervision of the TL and the DTL in respect of capacity development on implementation of UGIAP under UGIIP-III (iii) Make review and prepare training material and module for TLCC, WLCC and GRC (iv) Make review and prepare training material and module for PDP preparation and implementation (v) Make review and prepare training material and module for tax assessment and collection (vi) Make review and prepare training material and module for preparation of budget, maintenance of accounts and carrying out of audit (vii) Make review and prepare training material and module for computerization of tax, water tariff and accounts in consultation with IT Specialist (viii) Make review and prepare training material and module for the Standing Committee on Women & Children (ix) Make review and prepare training material and module for Standing Committee on Poverty Reduction & Slum Improvement (x) Make review and prepare training material and module for slum improvement activities (xi) Make review and prepare training material for other Standing Committees, as required (xii) Coordinate with the Regional Coordinators with regard to training capacity development activities (xiii) Ensure frequent visit to Pourashavas to assist the PIUs and the Local Capacity Development Associates in timely implementation of training/capacity development activities (xiv) Perform as a Training Coordinator/Trainer (xv) Plan and implement Training of Trainers (ToT) Course (xvi) Prepare procedure and format for submission of monthly, quarterly and annual progress reports from project Pourashavas regarding training/capacity development activities (xvii) Guide Local Capacity Development Associates in preparing monthly, quarterly and annual progress reports stating activities and tasks of capacity development (xviii) Compile monthly, quarterly and annual progress reports on training/capacity development activities from project Pourashavas (xix) Provide assistance to other PMO level Specialists regarding implementation of UGIAP and Capacity Development activities (xx) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 6. Sr. IT Specialist (1 x 48 person months) Qualification and Experience 375. The IT Specialist will have master degree in computer science/computer engineering from any recognized university and will have 12 years of experience of which 7 years experience of working in the field of IT and computer technology including system management (PC and Server), networking, trouble shooting, etc. He/She will also have 5 Page 260 of 423

277 years of working experience in GIS and MIS of any reputed organizations. Experience for software development/maintenance will get preference. Experience of web hosting/designing and running as administrator will be added advantage. Duties and Responsibilities 376. The major duties and responsibilities will include, but not limited to the following: (i) Work under the supervision of the TL and the DTL in respect of IT activities of the project Pourashavas and PMO (ii) Study and understand the ToR of the GICD team basically engaged to assist PIUs in implementing UGIAP and Capacity Development with particular attention to introduction of computerized modern accounting system, holding tax assessment, billing and collection computerization of water tariff and introducing e-governance, such as, web based information management and disclosure at the Pourashava level (iii) Study overall operation and management of IT system of LGED and project Pourashavas and help PMO in implementation of IT related activities of UGIAP (iv) Visit Pourashava from time to time and assist solving the problems related to computerized activities of UGIAP and Capacity Development (v) Assist Pourashava and PMO in connection with adoption of IT and GIS specially linking GIS with preparation of PDP (vi) Conduct training programmes for the relevant PMO, regional and PIU staff working with IT and MIS (vii) Maintain liaison with Pourashavas and Regional IT Coordinator on related problem and provide suggestion for solution including trouble shooting of all problems encountered by the users (viii) Obtain and compile progress reports from project Pourashava on IT application (ix) Visit IT related markets and keep the PMO and Pourashavas updated on the advancement in PC related system, the advantages and cost for appropriate decision making (x) Perform as a Training Coordinator/trainer in the relevant field (xi) Provide assistance to other PMO level specialists regarding IT activities (xii) Assist PMO in designing, introducing and updating websites for UGIIP-III and Pourashavas (xiii) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. B. Key Experts at Regional Level 7. Regional Community Mobilization & Inclusive Development Coordinator (4 x 60 = 240 person months) Qualification and Experience 377. The Regional Coordinator will have master degree in sociology/social welfare/economic/ political science/public administration or similar and equivalent educational qualification. He/She will be required to have 12 years of work experience with 5/6 years practical experience in the field of community mobilization in Bangladesh or elsewhere. Computer literacy and direct working experience with urban community particularly with poor and women will be given preference. Experience in planning/implementing related training and imparting training as a trainer will be added advantage. Page 261 of 423

278 Duties and Responsibilities 378. The major duties and responsibilities will include, but not limited to the following: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) Work under the supervision of the TL and the DTL Act as the overall Coordinator of the Regional Coordinators Provide assistance and guidance to the Pourashava capacity development facilitators in performing their assignment in a coordinated and efficient manner with concerned Pourashava staff Assist and guide Capacity Development facilitators to help Pourashava enable to implement the activities and tasks with focus on formation and working of TLCC, WLCC, GRC and slum improvement committee and prepare GAP and PRAP Coordinate with Community Participation & Inclusive Development Specialist of PMO with regard to implementation of activities related to public awareness, integration of urban poor, women s participation and administrative transparency as detailed in the UGIAP implementation plan Make frequent visit to Pourashavas to assist the PIUs and the Local Capacity Development Associates in timely implementation of UGIAP Perform as a Training Coordinator/Trainer in the relevant field Assist Pourashava and the Local Capacity Development Associates in the activities related to community participation & inclusive development in Pourashava s Guide capacity development facilitators in preparing monthly, quarterly and annual progress reports stating activities and tasks of UGIAP Develop monthly, quarterly and annual progress report formats for monitoring progress of UGIAP activities Review monthly, quarterly and annual progress reports, identify issues and problems/ success and failure, assist PIUs to overcome the problems and report to PMO Assist Pourashava in preparing PDP Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 7.2 Regional Urban Planning Coordinator (4 x 60 = 240 person months) Qualification and Experience 379. The Regional Coordinator will have bachelor degree in urban and regional planning or master degree in geography/civil engineering graduate with masters in urban and regional planning or similar and equivalent educational qualifications. He/She will be required to have 12 years of working experience with 5/6 years practical experience in urban planning and development in Bangladesh or elsewhere. Direct working experience with Pourashava and knowledge of computer based planning/design package will be given preference. Experience in planning and implementing related training programmes and performance as Trainer will be preferred. Duties and Responsibilities 380. The major duties and responsibilities will include, but not limited to the following: (i) Review Local Government (Pourashava) Ordinance, 2008 and other relevant documents including those of UGIIP-III and assist Pourashava in undertaking planning activities ensuring conformity with rules and regulations in order to avoid conflict and legal complication Page 262 of 423

279 (ii) Work under direct supervision and guidance of the Team Leader and the DTL (iii) Provide support and guidance to the Pourashava Local Capacity Development Associates and Town Planning Experts (if available) in performing their assignment in a coordinated and efficient way with Pourashava staff. (iv) Assist all participating Pourashava to establish urban planning unit (v) Assist Pourashavas to prepare base map/verify existing base map and update the same (vi) Assist PIU, in preparing PDP through participatory process (vii) Make frequent visit to Pourashavas for providing assistance to the PIUs and Local Capacity Development Associates and Town Planning Experts (if available) in the process of UGIAP implementation on urban planning in a timely manner (viii) Help participating Pourashavas in preparing annual O&M plan including budget requirement (ix) Identify training needs of the town planner and relevant urban planning staff, prepare tentative training program and coordinate with Training Specialist at PMO level in preparing of training material/module and implement training program (x) Perform as a Training Coordinator/trainer in the relevant field (xi) Develop monitoring format for progress monitoring of activities and tasks of UGIAP relevant to the area of urban planning on monthly and quarterly basis. (xii) Review monthly and quarterly reports, identify issues and problems/success and failure and assist PIUs to overcome problems and report to PMO (xiii) In coordination with 3 other Regional Specialists, review the monthly and quarterly reports and prepare progress reports and submit to the Team Leader along with comments and recommendations (xiv) Assist Pourashava in preparing PDP (xv) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director 7.3 Regional Municipal Taxation & Finance Coordinator (4 x 60 = 240 person months) Qualification and Experience 381. The Regional Coordinator will have master degree in accounting/finance/business administration/chartered accounts or equivalent qualification in relevant subject. He/She will be required to have 12 years of experience with 5/6 years practical experience in the field of municipal finance and accounting in Bangladesh or elsewhere. Knowledge of computer based tax records and budgeting/accounting packages and direct working experience with Pourashava will be given preference. Experience in planning and implementing related training programmes and performance as Trainer will be preferred. Duties and Responsibilities 382. The major duties and responsibilities will include, but not limited to the following: (i) Work under supervision of Team Leader, DTL and Municipal Taxation and Finance Specialist at the PMO level (ii) Provide assistance and guidance to the Pourashava capacity development facilitators in performing their assignment in a coordinated and efficient manner with concerned Pourashava staff (iii) Arrange preparation of plan of action for interim assessment and assist Pourashavas in undertaking specific and sustainable program for the purpose (iv) Arrange preparation of action plan for preparation of annual budget and carrying out of audit of Pourashava accounts (v) Review Local Government (Pourashava) Act, 2009 and relevant other Page 263 of 423

280 (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) procedures related to re-assessment of property tax, identify other relevant source of revenue generation and assist Pourashavas in maximizing Pourashavas own source income and financial management, preparation of accounts and audit of accounts Coordinate activities related to computerization of tax records and accounting system, as detailed in the UGIAP and assist Pourashava to introduce the system and make these operational Identify training needs of the relevant municipal staff prepare tentative training program and coordinate with Training Specialist in preparing training module and implement the training program Assist Pourashavas in rationalizing water tariff setting and collection Assist PIU in implementation of all activities and tasks as delineated to the UGIAP related to internal resource mobilization and financial management Ensure frequent visit to Pourashava for providing assistance to the facilitators and the PIUs in the process of UGIAP implementation plan on a timely manner Develop monitoring format for progress monitoring of activities and tasks of UGIAP relevant to the municipal taxation and finance on monthly and quarterly basis Develop mechanism for preparation of such progress reports by the capacity development facilitators and submission to the region and the PMO Review monthly and quarterly progress reports, identify issues and problems/success and failure, assist PIUs to overcome problems and report to PMO In coordination with other 3 other Regional Specialists, review the monthly and quarterly reports of the region and prepare quarterly progress report of UGIAP implementation by Pourashavas and submit to the Team Leader along with comments and recommendations Assist Pourashavas in preparing PDP Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 7.4 Regional Information Technology (IT) Coordinator (4 x 60 = 240 person months) Qualification and Experience 383. The Regional IT Coordinator will have bachelor degree in computer science/computer engineering from any recognized university and will have 10 years of work experience, of which 7 years experience of working in the field of IT and computer technology including system management (PC and Server), networking, trouble shooting, etc. He will also have 5 years of working experience in GIS and MIS of any reputed organizations. Experience in planning and implementing related training programmes and performance as Trainer will be preferred. Duties and Responsibilities 384. The major duties and responsibilities will include, but not limited to the following: (i) (ii) (iii) Work under the supervision and guidance of TL, DTL and the IT Specialist at the PMO level Study and understand the ToR and CICD team basically engaged to assist PIUs in implementing UGIAP with particular attention to introduction of computerized modern accounting system, holding tax collection, billing and collection water tariff and introducing e-governance such as web based information management and disclosure Study overall operation and management of IT system of LGED and project Pourashavas and help PMO in establishment and implementation of IT related Page 264 of 423

281 (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) issues under UGIAP Visit Pourashavas from time to time and assist solving the problems related to computerization activities of UGIAP and also develop IT for UGIAP implementation at Pourashava level matched with MIS at PMO Assist Pourashavas and PMO in connection with adoption of IT and GIS Conduct training program for the PIU staff working with IT and website Maintain liaison with Pourashava on related problem and provide suggestion for solution including trouble shooting of all common place problems encountered by the users Visit IT related markets and keep the Pourashavas updated on the advancement in PC related system, the advantages and cost for appropriate decision making Assist PMO in designing, introducing and updating websites for Project Pourashavas Assist Pourashavas in preparing PDP Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. C. Non-Key Experts at Pourashava Level 9.1 Local Capacity Development Associates (Community Mobilization) (26 x 60 = 1560 person months) Qualification and Experience The Local Capacity Development Associates will have master degree in sociology/social welfare/public administration/management/political science or similar and equivalent educational qualification. He/She will be required to have 5 years experience in any government or non-government agency. Relevant field of work in any urban development project or Pourashava will be preferred. He/She will have computer literacy and proven oral and written communication skills in Bengali and English. Computer literacy will be preferred. Experience in planning and implementing related training programmes and performance as Trainer will be preferred. Duties and Responsibilities 386. The major duties and responsibilities will include, but not limited to the following: (i) He/She will have to be posted at Pourashava level and will have to work maintaining close liaison with Mayor, Councilors, Pourashava Staffs and Communities (ii) Work under supervision and guidance of the TL, DTL, Specialists at the PMO level and concerned Specialists of 4 regions (iii) Provide assistance and support to PIU regarding planning and implementation of citizen awareness and participation activities (iv) Provide assistance and support to PIU regarding planning and implementation of urban planning activities (v) Provide assistance and support to PIU regarding planning and implementation of activities relating to equity and inclusiveness of women and urban poor (vi) Provide assistance and support PIU for enhancement of local resource mobilization activities (vii) Provide assistance and support PIU for activities relating to financial management, accountability and sustainability Page 265 of 423

282 (viii) (ix) (x) (xi) (xii) (xiii) (xiv) Provide assistance and support to PIU in respect of activities on administrative transparency Provide assistance and support to PIU for activities relating to keeping essential Pourashava services functional Render assistance regarding planning and implementation of training/capacity development activities at the Pourashava level Maintain liaison and coordination with the concerned Regional Specialists for various UGIAP and capacity development activities Prepare monthly, quarterly and annual progress reports on implementation of UGIAP and capacity development activities and send those to the PMO with copy to the concerned regional office Assist Pourashavas in preparing PDP Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 9.2 Local Capacity Development Associates (Municipal Finance) (26 x 60 = 1560 person months) Qualification and Experience 387. The Local Capacity Development Associates will have master degree in Masters in Accounting/ Finance or similar and equivalent educational qualification. He/She will be required to have 5 years experience in any government or non-government agency. Relevant field of work in any urban development project or Pourashava will be preferred. He/She will have computer literacy and proven oral and written communication skills in Bengali and English. Computer literacy will be preferred. Experience in planning and implementing related training programmes and performance as Trainer will be preferred. Duties and Responsibilities 388. The major duties and responsibilities will include, but not limited to the following: (i) He/She will have to be posted at Pourashava level and will have to work maintaining close liaison with Mayor, Councilors, Pourashava Staffs and Communities (ii) Work under supervision and guidance of the TL, DTL, Specialists at the PMO level and concerned Specialists of 4 regions (iii) Provide assistance and support to PIU regarding planning and implementation of citizen awareness and participation activities (iv) Provide assistance and support to PIU regarding planning and implementation of urban planning activities (v) Provide assistance and support to PIU regarding planning and implementation of activities relating to equity and inclusiveness of women and urban poor (vi) Provide assistance and support PIU for enhancement of local resource mobilization activities (vii) Provide assistance and support PIU for activities relating to financial management, accountability and sustainability (viii) Provide assistance and support to PIU in respect of activities on administrative transparency (ix) Provide assistance and support to PIU for activities relating to keeping essential Pourashava services functional (x) Render assistance regarding planning and implementation of training/capacity development activities at the Pourashava level (xi) Maintain liaison and coordination with the concerned Regional Specialists for Page 266 of 423

283 (xii) (xiii) (xiv) various UGIAP and capacity development activities Prepare monthly, quarterly and annual progress reports on implementation of UGIAP and capacity development activities and send those to the PMO with copy to the concerned regional office Assist Pourashavas in preparing PDP Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director. 9.3 Town Planning Associates (2 x 60 = 120 person months) Qualification and Experience 389. The Town Planning Associates will have bachelor degree in urban and regional planning or similar and equivalent educational qualifications. He/She will be required to have 5 years of working experience with 3 years practical experience in urban planning and development. Direct working experience with Pourashava and knowledge of computer based planning/design package will be given preference. Duties and Responsibilities 390. The major duties and responsibilities will include, but not limited to the following: (i) He/She will have to be posted at Pourashava level and will have to work maintaining close liaison with Mayor, Councilors, Pourashava Officials and Communities (ii) Work under direct supervision and guidance of the Regional Urban Planning Coordinator (iii) Maintain liaison and coordination with the Local Capacity Development Associates (iv) Work with and assist the urban planning unit of the Pourashava (v) Assist Pourashavas to prepare base map/verify existing base map and update the same (vi) Assist PIUs in preparing PDP through participatory process (vii) Assist Pourashavas in preparing annual O&M plan including budget requirement (viii) Identify training needs of the urban planning staff and render assistance in the implementation of training programmes (ix) Perform as a Training Coordinator/trainer in the relevant field (x) Assist the Pourashava Urban Planning Unit in preparing progress reports (xi) Perform any other task assigned by the Team Leader, Deputy Team Leader and the Project Director Reporting Requirements 391. The GICD Consultants will prepare and submit the following reports: i) Inception Report 392. The Consultant will prepare and submit an Inception Report to PMO, LGED and ADB within 2 months after commencing the service. The report shall outline the consultant s initial findings and confirm the methodology and detailed work program proposed for adoption in the light of the initial findings, while also identifying constraints and proposed solutions, together with any action required by LGED to facilitate the successful implementation of the service. Page 267 of 423

284 ii) Monthly Progress Report 393. Monthly Progress Report will be prepared using standard report format or suitable format developed in consultation with LGED to show detailed progress against target, in respect of all project elements and hard out puts. All monthly project correspondences shall be submitted in soft copy together with monthly progress reports. The report will cover the activities performed during the reporting period. A suitable number of color photographs with date imprint will be included which will illustrate progress and any difficulties encountered on the work place. These will allow a permanent record of progress. iii) Quarterly Progress Reports 394. The Quarterly Progress Report will be similar to the monthly report but will be more detailed and informative. The quarterly progress report will also include important information of the quarter and an update of project cost estimate, expenditure, variation and reasons for the same. The QPR will also include relevant details of activities performed and plan of activities to be performed during the next quarter. A suitable number of color photographs with date imprint should be included which will illustrate progress and any difficulties encountered on the site. These will allow a permanent record of progress. iv) Annual Progress Reports 395. The Annual Progress Reports will summarize the activities performed within a year. The format of this report is similar to that of the quarterly progress reports. The annual progress report will include, inter-alia, the following: (i) Annual work programme and budget for governance improvement and capacity development (ii) Achievement made against work programme and budget (iii) Problems encountered, how those were overcome or ways to overcome those in future (iv) List of outputs prepared during the year (v) Any other relevant and important issue. v) Consultancy Completion Report 396. The Consultancy Completion Report will be prepared upon completion of the consultancy service. It will be a comprehensive report on the consultancy service throughout the contract. It will describe the achievements of governance improvement and capacity development of the Pourashavas A format for consultancy completion report will be prepared by the consultant team and approval of PMO obtained. All relevant and important issues of the consultancy service will be included in the report including experience gained and lessons learnt. Necessary courses of action to be taken in similar projects in future will be included in the report. The Consultancy Completion Report will be prepared and submitted by the consultant and it will be finalized based on comments from PMO, LGED and ADB. vi) Any Other Special Report 398. In addition to the above reports, the consultant will prepare and submit any other special report to be required by PMO, LGED and ADB. Consultant s Performance Evaluation 399. The consultant s performance will be evaluated on the basis of performance in implementation of Urban Governance Improvement Action Program (UGIAP) since Pourashavas will receive investment allocation following performance based allocation Page 268 of 423

285 approach. This will be implemented in three phases. At the end of each phase, performance of Pourashava and the consultant team will be evaluated by the Municipal Performance Review Committee (MPRC) and by the Executing Agency. During execution of project activities, if the percentages of completion of tasks are not within acceptable range, ascertained by the executing agency. PD will retain 10 percent money from the consultant s invoices submitted for the last month. If the consultant fails to achieve targeted performance they will have to prepare an action plan to catch up with the agreed performance target. Money will be released when actions have been taken and performance achieved. Otherwise, the money will be forfeited. It is understood that the consultants may not have full control of the project performance. Some exogenous factors may impede physical progress, only in that case retained money will be released. However, sanction would apply only if there is a lack of pro-activity and willingness to undertake or recommend actions to address poor performance Any sort of non-compliance deviation from the ToR will be rendered and project authority may withheld invoice until compliance is ensured. In order to ensure smooth UGIAP implementation and related training programmes, selected fund(s) will ensure additional short term input from their own expenses and they should quote rate considering the above provision. Counterpart Staff and Facilities to be Provided by LGED 401. LGED will make available adequate counterpart staff for GICD Consultancy service LGED will also make available to the consultants all relevant reports, documents, data and information at no cost or minimal costs of printing The consultants will clearly indicate in their financial proposal the number and manmonth requirement of additional personnel needed as well as the detailed requirement of office space, machinery, equipment and supplies. The consultant will be attached to the PMO, regional level and PIU level according to a schedule. Arrangements for all these will be decided at the time of consultancy contract negotiations. Page 269 of 423

286 15 NOTE ON PPP Public Private Partnership in Municipal Services Introduction 403. One of the policies of the government is to encourage private sector participation through public private partnership (PPP) in provisioning and managing municipal infrastructure and service delivery system. In line with the policy, UGIIP II is being implemented to provide support for creating an environment for PPP and extend technical support to pilot PPP projects in Pourashavas 75. Butso far PPP initiativeforugiip II towns infrastructure development and management is not visible Socioeconomic Survey conducted for 3 sample Pourashavas shows that desired maintenance activities for infrastructure facilities are not undertaken in time and in required volume due to shortage of resources and management skills. Therefore roads, drains, markets, solid waste management system, etc are in precarious condition. would provide support in improvementof infrastructure and governancein some selected Pourashavas. This will include construction/ rehabilitation/repair of roads, drains, markets, bus/truck terminals, rehabilitation of water supply system and solid waste management, etc.the objective of this section is to explore the possibility of implementing some of the schemes under PPP. Need and rationale for PPP 405. Rapid urbanization in Bangladesh and growing demand for infrastructure and services has increased the need for greater investments and effective management of assets. Limited availability of funds for Pourashavas for the provision of infrastructure has widened the gap between the need and the availability of quality municipal services. At present, the investment requirement far exceeds the availability of budgetary allocation. Recognizing this situation, Committee on Urban Local Government (CULG) recommended for greater involvement of private sector for attracting market investments and for effective management of assets Urban infrastructure projects are somewhat complex, involving different stakeholders, and require significant preparatory work. When properly structured or made bankable, PPP projects should meet the requirements of the Pourashavas for service provision, with respect to standards, levels and quality of service etc, reduce their exposure to risks and attract private investments. To achieve this, however, it is necessary to lay down service requirements or targets of performance to be achieved. Pourashavas have to be clear in terms of objectives, on what is expected from the private sector and what price the public/pourashava would be willing to pay for the quality of services envisaged PPPs provide a good alternative for attracting private investment as well as efficiency in the provision of services that met the current social needs. 3. Public Private Partnership Options 408. There are different PPP options for urban infrastructure development. These are: service contract; management contract;build, design and operate (DBO); build, operate and 75 UGIIP2. Appendix 8 Page 270 of 423

287 transfer (BOT); concession; lease, etc. The options can be presented in Table 1. However the possibility of using an option depends on the extent of funds required from private sources, service levels targeted, size of market, willingness to pay and affordability of consumers/pourashavas, rehabilitation of existing system, etc. Table 1: Range of PPP options Form of PPP Characteristic Rights of private partner Service Management Leasing BOT and Concession Complex Low Low Moderate Complex Supervision and Simple Construct and or control with or services without O&M O&M and transfer Ownership Assets Duration contract Examples of of With Govt and Pourashava Short term Billing and collection of water and holding tax, meter reading, maintenance, replacement etc 4. Potential sub-projects for PPP With Govt and its agencies Short term Improvements in existing system, operations Streamlining administrative and operational practices Govt: Government; PS: Pourashava Lease rights with private partner for the period Medium to long term Distribution system improvement Design, rehabilitate/ construct, O&M and transfer With private partner from the O&M period Long term Efficiency enhancement and creating new assets 409. Various types of options and activities that could be implemented following PPP arrangements under UGIIP-3 are given in Table 2 below. The model could be used under the following limitations. Economy of scale: Size of operation of a specific service is limited in the Pourshava under consideration. It is difficult for a private service provider to conduct the activity (or provide the service)earning reasonable net income/profit, Existing setup in the Pourashava:For providing specific services, Pourashavas have specific manpower resources along with their organizational set up. If private service providers are hired, many of the existing manpower resources will get unemployed. Absence of enabling environment:according to the Pourashava Water Supply Bye Law 1999 Pourashavas can fix or raise water tariffs with the approval of the government. Certain aspects continue to remain under the domain of the central government; Page 271 of 423

288 Against this backdrop, although there is a potential for PPP, but in the present context its use is limited. Sectors Water Supply Sanitation Solid Waste Management Lighting Storm water drainage Bus terminals/jetty Potential sub-projects for PPP Management Service contract contract Maintenance of pumping stations and other equipments. Meter reading. Billing and collection. Maintenance of tube wells. Community and institutional toilets. Septage disposal facility. House-to-house collection. Medical waste collection, disposal & treatment Street sweeping. Transportation. Operation and maintenance. Non-revenue water (NRW) management Operation and maintenance. Leasing Composting operations. Yes BOT Public toilets. Septage disposal facility. Landfills. Markets Yes Yes Slaughter houses Yes Yes Parks Yes Yes Yes Page 272 of 423

289 16 COMMENTS-ANSWERS Answers to Comments by Mr. Norio on Main Volume (Volume 1) (16 February 2014) Comment 1. Model town requirements It s fine to have minimum and advanced requirements. Please make sure that enough budget is allocated under the project to 3 sample towns (and eventually to all towns) so that they can meet minimum requirements by the end of the project. Why are you recommending 12/7 water supply, not 24/7, even under advanced targets? This would increase the risk of contamination and system failure. 2. Recommendations for advancement of policy and governance reform This section is still very weak despite our earlier comments to strengthen your assessment. Please identify remaining problems/constraints that cannot be addressed through UGIAP, analyze the problems, and suggest ways to rectify them with clear justification. Answer Only minimum requirements have been kept and tailored to match DMF indicators and achievable targets. 24/7 water supply is now targetted. The section has been thoroughly revised and made more straightforward, including Section on urban planning see Comment below. Issues to be discussed with GoB (para 424) it is not clear what issues you are suggesting to discuss. Issues to be used as policy conditions (para 434) what are those issues? Chapter 9 CDTA I don t see any suggestion about CDTA. 3. UGIAP Window B will not have phases, but the description is confusing (e.g., para 142, 856). UGIAP for Window B needs to allow scoring, as the intention is to rank pourashavas and reward top-ranked pourashavas. The draft is rather easy to achieve and will not lead to much competition. Simple criteria are good, but should be at the level equivalent of advanced criteria. You are proposing scoring system for UGIAP for Window A. This will complicate the evaluation, though it is not impossible. The current proposal is not well thought of either. How do you judge above 80%, 60-80% etc when the task is qualitative (e.g., TLCC is established and meets regularly.)? It has been agreed that CDTA does not need to be adressed. These aspects have been thoroughly revised in line with ADB and GoB advices. Page 273 of 423

290 Comment 4. Project cost estimates This needs to be redone based on ADB standard method of calculation. Are you comfortable with 5% physical contingency for civil works and equipment? (We face cost overrun very often.) Do the costs of subprojects in 3 sample towns include base costs only? 5. DMF DMF s page limit is 3 pages in ADB. Please strengthen focus and streamline the DMF. Baseline data are missing in some parts. Please provide a basis of calculation (e.g., 1,130 km of roads improved for 30 pourashavas) so that we can assess whether your estimates are appropriate/achievable. 6. Procurement assessment The number of packages is way too many, without clear justification. Did you observe serious problems in similar towns (such as UGIIP-2 towns) because the contract size was too large? I don t understand the logic why 10 packages of $0.1 million each are easier to administer than 1 package of $1 million. (I think it s the opposite.) The current threshold for ICB/NCB is $2 million for civil works and $0.5 million for goods, and there is still much room to increase the package size even within this threshold (and discussion is ongoing to increase the threshold for civil works.) 7. Lessons learned from other projects There is hardly any discussion/detailed assessment in the section. It just describes the scope of a number of similar projects. Please deepen your analysis (already commented in the inception/interim stage). 8. Urban planning This is an important area that requires strengthening under the project. Please clarify your approach on PDPs, Master Plans, use of building permits, capacity building requirements, etc. Answer This has been addressed. This has been addressed. This has been addressed; the umber of packages has been reduced; a market analysis has been added and additional justifications and answers to additional questions on procurements have been provided. The section has been thoroughly revised and lessons made more straightforward. Same as answer to comment # 2 above. The section has been thoroughly revised and made more straightforward, including Section on urban planning see Comment below. Page 274 of 423

291 Comment 9. Repayment under previous loans Despite our comments reiterated more than once, I still don t see whether and how repayments from pourashavas to MOF are being made under previous projects such as UGIIP-1. Are such data not available even in MOF? 10. The report has a lot of repetitions but lacks crossreferences to other volumes. Answer As acknowledged in the final Aide Mémoire of the Fact-Finding ADB Mission (dated 26 February 2014, #11), The PPTA Consultants updated that Finance Division of the Ministry of Finance is strengthening monitoring of subloan repayment from pourashavas with creation of database. With additional monitoring by LGD/LGED through evaluation of governance performance even after the project, the financing arrangements practiced under UGIIP-2 can be continued. As many of the target towns have been or are being supported for infrastructure improvement by other projects, subproject formation under the project will ensure complementarity to the earlier interventions. Many useless repetitions have been deleted and cross-references to other volumes have been added when necessary. Page 275 of 423

292 Response to Mr Norio s comments on Volume 7 (03 March 2014) Sl No. ADB Comment Action 1 The data collected from 10 priority pourashavas (e.g., holding tax collection efficiency) can be used as baselines in DMF, if collecting data from all 30 is difficult. 2 Master plans being prepared in 6 out of 10 towns (according to PPTA data) is not well documented. The PDP should build upon the master plan, to avoid duplication and ensure consistency. Para 19 discussing preparation of PDP is silent about master plan. It's only mentioned very briefly in Muktagacha and Naogaon. 3 How to monitor the implementation of PDP should be well discussed and documented in the plan. Otherwise, this will be another document that will be put on shelf soon after finalization (like what happened in MIDP in many instances). The data on holding tax collection efficiency of 10 priority PSs has been collected: Name of Pourashava Demand including Arrear (Tk) Collection (Tk) Efficiency (%) Charghat Magura Muktagacha Rajbari Sherpur Bera Kishoreganj Lalmonirhat Naogaon Netrakona Master Plans are being prepared for 6 six Pourashavas namely Muktagachha, Kishoreganj, Bera, Charghat, Naogaon & Magura under UpazilaTowns Infrastructure Development Project (UTIDP) and District Towns Infrastructure Development Project (DTIDP). Among these 6 PSs Master Plan of Kishoreganj is in the Interim phase and the other 5 PSs are in Draft Final Stage. The remaining 4 PSs are not The implementation of PDP should be monitored by the Local Government Division of the Ministry of LGRD & C. The implementation procedure will be addressed in the PDP before its finalization. The following steps should be taken in this regard: The ministry should issue an office order for The Pourashavas and the Executing Agency in order to implement any development project/scheme following the PDP priority scheme list and complying the policy, guidelines and recommendations of the PDP. The Pourashava Authority should strictly follow the Land Use Management Plan of the PDP/Master Plan (if any) whenever issuance or approval of any Layout Plan. The ministry should monitor periodically whether the PSs are following the PDP or not. If they deviate from the implementation of PDP, the ministry should take action (e.g. curtail or stop ADP allocation, deselecting from other development projects) against that PSs. Proposals are made in Volume 1 / Section 2 (urban planning) Page 276 of 423

293 4 Section proposed work plan for PDP preparation needs to be revised. PDP preparation should move in parallel for all 10 towns, not two towns at a time. PDP preparation process are ongoing simultaneously in all 10 towns. The proposed work plan was enclosed earlier in the Draft Final Report where PDP preparation was mentioned two towns at a time due to the countrywide political unrest. The Work Plan is being revised for completing the PDP of all 10 PSs concomitantly. Page 277 of 423

294 Comments from ADB Financial Management Specialist, PPTA 1st set of comments (11 March 2014) Comments from ADB General 1. The fund flow mechanism needs to be spelt out as part of the executive summary. I saw no mention of BMDF in the main report. Only Annex 4 referes to it. Will ADB funds be flowing through this? From the FMA fund flow diagram it appears not, but it is included in the WACC computation. The fund will not flow through BMDF, but some statements in the report are confusing. As we discussed, please provide a clear mechanism as to how to ensure subloan repayment from pourashavas to MOF (if not chanelled through BMDF). 2. Annex 4 is a very good starting point for the RRP linked document. Janet should work on how to summarize it best into the 5 page limit (after fixing it as given below). 3. A number of Financial Management Action Plan items have been identified through out the report. Some of them are built into the UGIAP, and hence projects will only get funding if they meet the entry/intermediate requirements etc. But some issues are not included in the UGIAP. (Like the filling of staff vacancies, preparing a Master Plan, metering etc. )These need to be consolidated somewhere in the FMA clearly identifying which ones are already part of the UGIAP and which ones we want to separately ensure that participating PSs do, if at all? 4. Is there any assurance to convert the fixed water tariff to a volumetric one after metering has been done? The FA is done assuming a volumetric tariff. The assumption of switching to volumetric tariff is okay (as included in UGIAP), but this will be gradual in reality. 5. Are you considering any kind of assurance relating to maintaining/improving the collection efficiency form 60% to a higher amount? Excel Sheets - Projected Financial Statements 1. From first glance, the projected financial statements look OK. They have been correctly prepared on a 'nominal' basis. Janet: Could you audit the formulas etc. and scrutinize in more detail? Remarks Bangladesh Municipal Development Fund (BMDF) is a Government-owned company which finances Pourashavas with grantsloans (mix of 85-15%). BMDF monitors financial aspects only. In the proposed project, ADB funds will not flow through BMDF but through GOB to EA. Under different projects, Pourashavas have signed subsidiary loan agreement with MoF to be repaid directly by the PSs to MoF. MoF has prepared a data base of loans to Pourashavas under different projects to monitor the timely repayment of the loans. Such loans are included in WACC computation. OK Financial Management Action plans suggested in the report are incorporated in UGIAP. Those built into the UGIAP and those falling outside the UGIAP will be presented in a tabular form in the FPR. In the technical design of water supply sub-project volumetric tariff and metering is proposed replacing the fixed tariff. Revenue from water is assessed based on projected water demand and volumetric tariff. Consumption-based tariff is the prerequisite to ensure control on NRW and maximize revenues. It is revealed from survey that the consumers are willing to pay for potable water. Improving of collection efficiency is a part of UGIAP. See also Comment on WTP below (#5 on p. 5 below). Noted. 2. The assumptions need to be consolidated and clearly stated. For instance: (i) holding tax annual demand increase In the financial projection all assumptions are clearly stated are linked. FIRR is not Page 278 of 423

295 Comments from ADB projected 2%, improvement in collection from 70% to 90% over 25 years (iii) NRW reduction from 25% to 15 % over 25 years etc. A summary of this excel sheet along with assumptions along with key ratios and an analysis should form part of the linked document. 3. Also, unless there is some error in the formula, the conclusion indicates good sustainability as the operating ratio is positive, and revenue exceeds expenditure throughout the 25 years for all the 3 PSs. So that's good. FIRR - Section 12 / Excel Sheets ( I looked at LM Hat in detail, and assume the other two are similar) 1. The financial statement projections are OK in nominal terms, but the FIRR has to be computed in real terms which it appears it is not. 2. Table 7.1 / Section 12 - Although the 'write up' in Section 12 appears correct (as it looks like it was drawn from the CTIIP Financial Analysis), the excel sheet does not support this. The conclusions themselves give me great pause. How can the urban sector in Bangladesh generate FIRR in the range of 12-24%? Its VERY unlikely and inconsistent with the FIRR for the towns under CTIIP (Amtali etc.) A review of the excel sheet supports my conclusion. The assumptions made are either too bold or were made by mistake (more likely). Although the tariff increases are stated to be 'real', they are in fact NOT real, but nominal. An increase in REAL terms of tariff from 8 BDT to 11 BDT in the 5th year implies, that tariff is actually increasing by approx 7% annually as well as by a whopping 37+8=45% upon completion of the project. This cannot be right.as indicated in para 1023 of the main report, this represents a NOMINAL increase in tariff. I fully agree with this comment. The scenario you are using seems too optimistic. Please look at the reality - Lalmonirhat bus terminal constructed under UGIIP-1 for example. Another issue is that additional investments are made for water supply in three towns by another project (37 towns water supply). Including costs of UGIIP-3 only and benefits arising both from UGIIP-3 and another is not appropriate. Please get the costs of another project and incorporate in the analysis. 3. Please document current trend in tariff increases. It was recently increased in Oct But when was the last increase? 4. The excel sheet also shows O&M increases by 2% on a real term. Can this be explained? There will no doubt be incremental O&M as a result of the project, but it should stay constant in real terms..? Is there any particular reason why it is assumed to go up? Or, if I am correct in my assumption that the whole model is actually built on nominal terms, then Remarks linked to the projection table as it is prepared idependentally. However, the required link will be provided for Water Supply. OK The FIRR is computed at present values of the projected investment costs, O&M costs and benefits over the estimated life of the sub-projects; therefore, the FIRR so derived is in real term. The estimate of benefits is made on realistic assumptions taking into consideration the prevailing rates. The SPs under the project are district town pourashavas while Amtali is an upazilla town pourashava their economy scale are completely different. The word real in FIRR table was a misnomer; it should read nominal. The increase in O&M costs and benefits considered in FIRR computation are indeed in constant price at nominal rate. The cost-benefit of 37 town water supply investment was not been considered in financial analysis. It will be included as you suggest. Tariff in Lalmonirhat increased in October 2013 from its previous increase in April The O&M increase showed in excel sheet was in nominal rate, it wrongly appeared in the sheet as real term. Page 279 of 423

296 Comments from ADB this is in fact a nominal increase. Please discuss with the engineer too. Also, the proposed tariff plan needs to be consulted and acknowledged/endorsed by pourashava. 5. Billing income cannot be audited from the sheet. Its hard coded. I would like to see how this is derived, and what formula is used. 6. The cost of investment relating to the individual components (water, sanitation, T Terminal etc) need to be reconciled with the total project cost. Currently the cost break up is by Roads+Drain+other infrastructure. This Total (by town) also needs to be broken down by the same categories as the FIRR is being done. 7. Para 151/152/ Can you add the WACC Table from Volume 4 page 62 along with the Table here into the main report also. This may need slight revision as 2014 inflation rate is 7.2, not 7.35 (but this wont make a big difference). Can you clarify/ confirm that this 85:15 ratio is representative of the overall component wise revenue/non revenue table given on Table 10-1? 8. I wasn't able to reconcile the Present water demand per day in m3 taken in the FIRR sheet of 3,316 with the Projections Sheet. PPTA team should ensure that all amounts are the same/ consistent across files. 9. Timing of capital outlay for T Terminal, Sanitation etc show 40% in Year 1 and 60% in Year 2. This is not consistent with para 3.3 f of Annexure 4 which says "The year wise project implementation period is assessed as 20%, 30%, 30% and 20% for water and for others 40% and 60% respectively over the period 2015 to (Or else this statement needs to be re-phrased in the Annexure) 10. So these need to be re-done and reflected properly in the report. Cost Estimates 1. Table As you already pointed out Price 3% is not right. This needs to be re-done Remarks The proposed tariff found within affordable limit from willingness to pay survey. The proposed tariff would be sent to paurashavas for acknowledgement. Computation of billing income is shown on top of the FIRR excel sheets (in all cases except water supply). For water supply, computation of billing income is shown in excel sheet of financial projection and posted directly in the FIRR sheet. To be addressed by the technical team. Noted. WACC is being recalculated using inflation rate (7.2). The WACC table is to be inserted in the main report. MBDF finances pourashavas (all components) at a grant-loan mix ratio of 85:15. This is in line with table Per-day demand is converted into yearly demand and shown in projection sheet in 1000m3, i.e. 1, m3. There is no inconsistency across the files. In FIRR sheet years indicate the implementing time. In financial projection the investment is shown as per implementation phasing of the subprojects over the project period, i.e to If any change arises it would be re-phased. Noted. To be re-done in the report. Noted. To be re-done in the report. Can you please suggest a rate? 2. I would also like to see the computation for the IDC Do you mean interestes during constructions? If so, it is included under line E of Table 8.1 (Exec. Sum. / Vol. 1). 3. Section 6 - Detailed Cost Estimates. Responses as provided by technical team: If we divide the total cost by the length of road / length of drains, there is a wide variation between Naogaon costs and the other 2. Roads: Roads width, traffic volume and site conditions vary from towns to towns. This leads to average cost variations. Average cost per km of road looks to be: Page 280 of 423

297 LM Hat 3.9 million BDT/ Km Magura 4.1 million BDT/km Naogaon 6.8 million BDT/km Comments from ADB Average cost of drains looks to be: LM Hat 11.9 million BDT/ Km Magura 8.8 million BDT/km Naogaon 26 million BDT/km Remarks Drains: The number of drains in Lalmonirhat and Magura PS is larger than in Naogaon. However total length of drains in Naogaon is higher. Typically, as the length of a drain increases, so do its width and depth. Drains have a larger section in Naogaon than in the two other PSs. Their costs are therefore relatively higher. Comparatively, in average Lalmonirhat and Magura drains have a smaller section and therefore a lower cost per unit of length. As you can see there is a large variability in unit cost. This needs to be understood as well as the impact on the extrapolation of the cost on the remaining towns. (We have computed million for 3 towns. So for 10 towns it would be in the region of $ 70 million without non infrastructure and contingencies etc.?) Regardless of town size and length of roads/drainage, it appears that the total cost per town is working out to be the same (Between 6.4 million million BDT ). I don't get this, is this a coincidence or did we simply reduce the scope of the infrastructure to be covered based on the envelope? As we discussed, please allocate enough resources for 3 sample towns to achieve "model town" status. Then using per capita investment costs, extraporation can be made to the 30 towns. 4. Para 930- typo in first sentence. The Table shows total cost of 282 million, not 239 million. 5. Table 10-2 :- I don't understand how we arrived at the cost in row 1.2 and 1.3 for the remaining 27 PSs. This needs to be clarified. I understand you used per capita investment cost, but please confirm. 6. Table 10-2 :- Duties and Taxes relating to each line item should be allocated to that line item, so you can see total base cost for each component. I know it is more useful this way, and will have to be footnoted, but as you recall OSFMD insisted we maintain the ADB presentation of the Investment Plan Noted. Figures being corrected. Costs in row 1.2 is a lump-sum for Window-B. Costs in row 1.3 are for 27 pourashavas in line with the per capita investment cost found for the 3 sample PSs. Noted, duties and taxes would be provided with each related line item. Comments in the Report Since its the second time I went through this, I didn't really go through it in too much detail, but a few inconsistencies still seem to exist: 1. Para 21./ 268 Two batches of towns and no Phase(s) are foreseen. Aren't there 2 phases for Window B as stated in para 142 For Window B, no phases but two batches of towns are foreseen. 2. Para copy of projected financial statements, please Projected FS are already included in Annexes / Vol 2 and 4. Do you wish a Page 281 of 423

298 Comments from ADB 3. It should be clarified where ever there is a reference to the 'standing Committee' which does the audit, that this is a form of Internal Audit, as I understand from our previous discussions, and that a statutory audit is done separately by the CAG Remarks cross-reference to them be inserted here? The relevant Standing Committee undertakes an audit once a year as per Pourashava Act 2009 (internal audit), while CAG conducts an external/independent audit also once a year. 4. Table 8-9 is still empty There is no Table 8.9 (?). 5. A WTP has been conducted and details are given on page 117/345 of the main report as well as in Table 12.2 the first thing is that these two pages do not match. The second thing is that PPTA needs to compare the WTP per household with the tariff structure as given in para 560. Is the WTP higher or lower than current tariff? This is given in the Annexure 4 (para 64). Should be carried forward into the main report maybe. FMA 1. This is generally well done along with the Annexure in Section 4.2. Just ensure that when we transfer the risk ratings from here into the RAMP, we stay consistent. We cannot find the Tables at the given pages. Are you refering to Table 3.2 (of main Vol.1 / p )? A comparison is actually made between the data in this Table 3.2 (p. 66 main report / Vol. 1; line 6.4) and para 64 (p. 26 of Vol. 4). It can be seen that the tariff proposed in para 64 (Vol. 4) are within the ranges of the WTP table. Ok. Noted. Volume 4- Financial Analysis 1. Para 3.3 b. Clarify why 20 years. Is this the life of the asset? 2. Edit Para 3.3 c as follows - Capital expenditures include all costs, including physical contingencies 3. Although the sequencing and the format and content is done well, the numbers/ data will change after the FIRR is re-computed as given above. Assets life may more; however, analysis is made taking into consideration 20 year cost-benefits. Noted. This will be edited. Noted. Any change arising will be recomputed. Page 282 of 423

299 Comments from ADB Financial Management Specialist, PPTA 2 nd set of comments - (18 March 2014) Document Page Paragraph Comment Response Volume 1, Main report xxvii 32 These municipalities can always expand their tax net yes if the towns are growing, no once they reach a good level of efficiency. But capacity to increase tax net looks sufficient for this project. xxviii 38 The lack of anticipation and the failure to have O&M and cost recovery already in place is consistent with the cash accounting system referred to elsewhere in the reports (See Volume 4). At present the PS are operating with very small deficits, probably because as soon as the cash runs out they stop spending. That suggests reasonable cash control, but the system itself does not encourage forward thinking, planning and O&M. Change the accounting system to incorporate these aspects, particularly if a budget system is part of the change, and the situation should improve. This is a key part of FM capacity. xxix 48 Introduction of metering and volumetric water tariff is it legally possible for PS to do this at the present time or will legal and contractual changes also be needed? No legal changes required. xxx 64 Advance purchase of land plots which are likely to increase in value this may provide an opportunity for corruption with land plots belonging to connected parties being acquired on favourable terms. Safeguards need to be introduced to avoid this and also to avoid project funds being used simply for the PS to engage in land speculation. I share this concern. But this is a general statement and will not involve project funds. xxxii Are these design considerations incorporated into the current estimates of cost? If not, how will they be assessed and added to project budget? xxxiii Drainage in PS in poor condition due to various factors including lack of maintenance. See comment above re para. 38 OK Noted. However, UGIAP includes monitoring mechanisms for budgeting. Pourashava Water Supply Model Bye-Laws 1999 makes it possible. Noted. Yes. These costs may be further fine-tuned and further precised by loan consultants. Noted. The UGIAP includes several provisions to address this, such as through the preparation/enforcement Page 283 of 423

300 Document Page Paragraph Comment Response xxxviii 109, 114 Need for regular O&M see comments above at paras. 38 and If it has to be budgeted for as opposed to a simple cash accounting system, this will help with enforcement. xli 148 Financial analysis. All three PS seem able to live more or less within their income. However, this is almost certainly a product of their cash accounting system when there is no cash, they stop spending. So there is no incentive for forward planning and creating reserves for future maintenance. Why is the collection efficiency for property tax relatively high in Lalmonirhat compared with the other two PS? The possible explanation given earlier (para 27) regarding the quality of PS staff needs to be further explored. Lessons from Lalmonirhat should be shared with the other two PS. It may be easier for them to learn from each other than from consultants. In general terms, property tax collection rates should be relatively high as the property is easy to measure, value and doesn t go anywhere. xliii Table 7-1 Overall, the FIRRs look high for what is a social/aid-type project. If FIRRs in excess of 20% are achievable, one would expect the private sector to be interested in participating. The FIRR of 52.77% for Sanitation in Magura is exceptionally high and figures should be re-checked. I suggest that no FIRR be undertaken for sanitation public toilets. Although user fees can/should be collected to cover O&M costs, they are not constructed for revenuegeneration purposes. xlvii 164 There should be a clear note that FM expertise is a key part of the requirement when building the team. FM expertise should be at a senior level within the project, also at lower of O&M plan and the mobilization of mobile maintenance teams at the PS level. Yes. See answers to comments with reference to paras 38 and above. Within the framework of the loan project, experience-sharing events are foreseen under Capacitybuilding. The level of efficiency reflects the motivation of the staff. This will be addressed by UGIAP. Another possible explanation about the relatively lower efficiency rate in Lalmonirhat relates to the fact that the PS is characterized by scattered settlements and a small and lowdensity urban core. It is more difficult for the PS staff to conduct assessments as they have to move more extensively throughout the PS administrative area. Sanitation sub-project consists of public toilet and Vacu-tug (desludging equipment), the revenue margin in case of vacu-tug is high which pushes up the FIRR rate. In Magura, the number of public toilet is lower than in the other two PSs. Public toilet fee is just enough to cover O&M. This is noted. As part of the GICD Consultant team, there is a national level consultant dealing with training in Municipal Page 284 of 423

301 Document Page Paragraph Comment Response levels for day to day work. Taxation and Financial Specialist). Also, still part of GICD, there will be regional coordinators covering municipal taxation and finance. Volume-4: Finance and Economics 3 3 Fixed tariff presently being used, but financial projections are based on metered tariff. Is it legally and contractually possible for PS to make the move to metered tariffs. If so, is there a willingness to do this? Does the project budget allow for the cost of installing meters or are consumers expected to pay for meters? What would be the cost per meter? Meter costs should be included in the project. Introduction of meters and volumetric tariff is a precondition no commitment, no water supply project The apparently high cost recovery for O&M expenditure is almost certainly driven out of the cash-based accounting system. If they PS collect it, they don t spend it. The upside of moving to a more sound accounting and budgeting basis is that O&M will be included in financial planning. The downside is that the cost recovery rates will go down as the O&M will be carried out and then cost recovery will be sought later. This should be anticipated in the various cash flow projections. Good O&M planning (with budget estimates) and actual budget allocation will be monitored through UGIAP Recommend that a PS has to get its audits up to date as a condition precedent to being allowed to participate in the project. Otherwise the situation will deteriorate further, given the added complication of the financial management of the relevant sub-projects. If necessary, support should be given to remedy any current accounting problems which may be delaying the audit process Training and support for accounting Table 2.8 staff must go to the point of providing Also, awareness-raising and capacity-building in this area will be provided (see p. 210 of Volume 1). This is possible as as per Pourashava Water Supply Model Bye-Laws Sample Pourashavas are committed to introduce metering (also part of UGIAP). Water meters will be provided from the project. Component-wise, O&M will be planed and incorporated in PS budgets so that proper maintenance is ensured. This will be monitored through UGIAP. C&AG conducts audit at part of their own program. In addition, pourashavas may request C&AG to conduct audits. Noted. Training program in this area are included Page 285 of 423

302 Document Page Paragraph Comment Response in-office support for quite lengthy periods after training. It is insufficient to send staff for training then leave them to deal with implementation. Some will be OK, but most will either make mistakes or will leave things undone. Weak financial situation it is difficult to say whether pourashavas revenue is adequate to cover all expenses in a year. Based on the information to hand, it seems that if they don t have the income, the PS just stop spending. And with no adequate budget process, there is no easy way to determine what they really needed to spend but haven t been able to. So a budget system has to be added to the FM process and training/capacity building needed for that aspect Weak PFM environment with the right recruitment, training and support, this project has the potential to make a noticeable improvement to the PFM environment across the 11/12 28 Table Table Table 2.11 country. Overall inherent risk may destabilize IA willingness to increase taxes and tariffs. Would this include an unwillingness to move from fixed rate tariff to metered tariffs? What is the impact on the project if this change isn t made? Who has the legal authority to make such a change PS level or higher? Mentioned above. Random ADB audits need to come on top of extensive capacity building. If there is no adequate FM system in place, there will be no adequate FM records to audit. The dedicated project financial management staff in PMO have to be recruited with the clear requirement that they must go out regularly to visit and support PS. 5. Internal Audit and Controls. Committee members need to be selected carefully both for skill set and availability, plus willingness to contribute and participate actively. in the capacity-building program of the loan project (developed in Vol. 1). Also, the GICD team will provide support on a continuous basis. Planning and monitoring regarding revenue mobilization is emphasizedin relation to budgeting alongside training/capacity building. Noted. This concern is already addressed above. Noted. This applies to GICD. Standing Committee on finance plays a role in this (ii) Audit & accounts committees at PS level are supposed to meet on a needs basis. Needs should be Such needs are assessed by the Mayor. Page 286 of 423

303 Document Page Paragraph Comment Response FIRR (Mr. Norio s comments) defined, otherwise meetings may never be held. Also, in order to build capacity, committees should be required to meet regularly otherwise they will not learn how to function. Magura has no audited reports since FY2009/10. Recommendation is that PS should have to get up to date before being allowed to participate in project. Support should be provided to get them up to date PIUs... will collect invoices from contractors and forward to PMO for payment. Must be clear directives as to who is responsible for checking and approving invoices, and who is then responsible for authorising payment. Magura already requested C&AG to update the audit of its reports. The PMO will authorize the payments See comment above re para 30 (ii) Same as above re para 30 (ii) 19/20 45 External audit it is often delayed. Why? What can be done to improve the position? Audit depends on C&AG audit schedule Conclusion is that there are significant FM risks. Correct. The project has many sub-projects and covers several types of infrastructure, development and soft aspects (capacity building, training etc). There is clear evidence that there is insufficient FM capacity in country. Training and support will only go so far. There seems to be a need for a more hands on approach to FM capacity building sending experienced PFM consultants out into the PS to work closely with them over a reasonably long period. This part of the project budget may therefore be insufficient both in terms of scope and estimated costs. Water billing income used in FIRR calculation does not match financial projection of each pourashava. For example, in Magura, the year2 income is7.460 in FIRR, but this is current demand billed in the financial projection, not water bills collection. Probably this is just a copy and paste error. Please check and correct. (same response as above) In the GICD Consultant team, there is a national level consultant dealing with training in Municipal Taxation and Financial Specialist). Also, still part of GICD, there will be regional coordinators covering municipal taxation and finance. Also, awareness-raising and capacity-building in this area will be provided (see p. 210 of Volume 1). Finally, UGIAP will incentivize PS over an extended period. It is not be same figure because the figure used for calculating FIRR is current billing amount. On the other hand the figure included in the projection is collection amount against current bill as well as arrear. Projection reflects cash flows. But more importantly, is it realistic to The WS engineer is Page 287 of 423

304 Document Page Paragraph Comment Response assume that actual collection of (Tk million) in will increase to in and in ? More than double in 2 years doesn't sound realistic. How can a volumetric tariff be introduced when there are no projects to buy meters (until meters are procured by UGIIP-3 in year 4 or 5)? Or will it be covered by 37 towns project? Water production volume (including basis of calculation) is also questionable. Water supply engineer and financial person should sit together to make assumptions realistic and ensure consistency. If you include benefits from the 37 towns project, costs of 37 towns project should also be included. revising the figures making them more conservative/realistic. It is correct that without meter volumetric tariff cannot be initiated. Metering of existing and new connections with introduction of volumetric tariff is a prerequisite for investment in water supply under the project. The time frame for installation of meter is phased out and will take place in due course during the loan project (as per UGIAP). For calculating the projected revenues of water supply on the basis of existing fixed rate tariff it is required to determine the rate of per m3 of water. In the detailed design,daily per capita demand of water is assessed to be 80 liters (base year). A standard household is assumed to consist of 6 persons and standard HH monthly consumption of water to be 15m3. The existing domestic minimum fixed rate tariff is BDT 130, 120 and 125 in Lalmonirhat, Magura and Naogaon respectively. Taking these into consideration, the rate per m3 of water under existing fixed rate tariff is defined as BDT 8.70, 8.00 and 8.30 in Lalmonirhat, Magura and Naogaon, respectively (Monthly rate/consumption). The water revenues in financial analysis have been calculated using the rates not exceeding the aforesaid determined rates. Water demand- Page 288 of 423

305 Document Page Paragraph Comment Response production minus NRW constitutes the amount of water revenues. In the financial analysis the projected water revenue has been calculated following the water demand-production and NRW as projected in the detailed design of water supply (Ref para 376, 420 and 459 of Volume 3). On the one hand water demand increases; on the other hand, NRW decreases. The combined effect leads to a rapid increase in revenues. The projected water revenues appeared in the financial analysis were calculated on the basis of assumptions stated hereof and were correct and justified. The projected water demand and NRW is reviewed and revised; the projected revenue will be changed accordingly. Page 289 of 423

306 Comments and Responses on Engineering Report (Vol. 3), PPTA (20 March 2014) 76 Sl. No. Executive Summary Comments It s important (the process be) demand-driven and participatory, but we need to advise how the priority should be made. Sanitation and SWM are often lowpriority for pourashavas (and citizens), but are key areas of UGIIP-3 intervention to achieve model town. Raising awareness on these issues is an important task under the PPTA. page xxiv 6) these are not phase I infrastructure interventions para 44. The intention of the last sentence is unclear. All O&M costs including materials should be borne by PS, unless you recommend otherwise Are all the estimated O&M costs included in the financial projections of PSs? Please ensure consistency. para 56. O&M costs of water supply: please compare the proposed staff requirements with the existing structure and make recommendations. para 59. How can you make cost estimates on SWM without identifying the size and population of a town, location of landfill site,etc. Please make clear all the assumptions you have made. Response Noted. PPTA s selection of schemes followed a demand-driven and participatory approach (reflected in Feasibility Reports in a general manner and that TLCC endorsed the relevant infrastructure and serviceimprovement lists). However, the same spirit and practice shall be adopted for the 7 priority towns and down the road, later, in case of remaining 20 target towns. Admitted. Inadvertently, phase 1 written at sl nr 6. It actually reflects all subproject costs enveloping all 3 phases. It has been corrected. In practice and as a norm, Routine Maintenance (RM) is a PS-responsibility. It is worth noting that in such RM only material cost has to come from the PS, while they have their own regular and muster roll staff on their pay-roll who carry out such maintenance work on a repetitive basis. Affirmative. Caution will be exercised to ensure the stated consistency. Response to the comment(s) are given in p. 6 of this document. It is calculated that the total amount of solid waste in Magura is 25MT (Metric Ton) which is computed based on the generation rate of 0.25kg/person/day and the total population in the PS (around ). Of the generated wastes only 20MT is collected by the PS. This waste will require disposal into the exiting waste dumping site of 3.04 acres owned by the PS. The following facilities may be built for the development of controlled landfill site and accordingly the costs have been considered in the calculation (cost estimation is shown in p.10): Embankment around the landfill site Groundwater protection measures (construction of impermeable layer at the base & inner slopes of the landfill site) 76 These answers were provided on 20 March 2014; however, the costs of the SWM were subsequently revised to take into account the cost of an autoclave (instead of an incinerator initially foreseen) Page 290 of 423

307 Sl. No. Comments Main Report We haven t received the draft subproject selection criteria which include (i) general (cross-cutting) 7 criteria and (ii) sector-specific criteria. Sector-specific design requirements should be added or prepared separately. Response Leachate management (leachate collection and circulation systems) Landfill control shed and sheds for land-fill equipment, labor & WS&S facilities Composting plants including plants, waste screening room, bagging room, office, labor room, etc. Green buffer zone around the site/embankment, fencing etc. As a part of the project, a pilot scheme will be implemented in Ward No 9, reaching out to 1,000 HHs. The waste mgt scheme will include waste separation by source (at HHlevel), organic wastes collection & transportation to landfill site for composting on daily basis and inorganic wastes collection, sorting and selling to waste vendors for recycling on weekly basis, engaging an existing active CBO in Ward No.9 for using their experiences. Consequent upon success records of the pilot scheme and lessons learned from 2- year operation, the scheme may be replicated gradually to other parts of the PS that will consequently reduce the amount of wastes to be disposed off into the landfill site and thereby, proportionately increase the life of landfill site. It is estimated that 1.5MT/day of organic wastes will go to the composting plant and around 0.375MT/day of inorganic wastes will be handled by the informal recyclers. The selection criteria has been recast in line with the requirements as given in the comment. It will be transmitted to ADB, Manila 8 para 111. I have concern over the judgment of PPTA consultants. Past 30 years and next 30 years could be significantly different. At minimum, designs should incorporate more intense rainfall in the future with climate change, by (i) locating major facilities above flood level (plus freeboard) and (ii) strengthening the capacity of drains. It may not be easy to precisely predict changes in the rainfall pattern over the next 30 years. However, a plausible guess/estimation may be made and especially, considering a probable increase in rainfall, urban infrastructure, especially drainage and water supply components, etc may have incorporated in their design some pragmatic parameters to address those apparent issues. Down the road, the preliminary design of roads considered issues like provision of adequate camber and cross-drainage structure and drainage considered enlarging the sections to facilitate increased Page 291 of 423

308 Sl. No. 9 Comments para 190. Is it essential and feasible to have gas collection and treatment facility in towns under UGIIP-3? The amount of gas would be insignificant, particularly with enhanced source segregation (and less organic waste brought to landfill). Response flow (if any). It is worth noting that all drains are normally designed for a life-time of around 25 years, after which, for a combination of reasons like changes in catchment area, altered land-use, etc, they may need to be redesigned. Lastly, during preliminary design considerations for WS aspects, care has been taken to incorporate raising above HFL the PTW-platform, SWTP/IRP site (wherever needed) and other foreseeable elements of concern. Detailed design will need to look at these issues more profoundly. Composting of organic waste of 5 ton/day has been designed (started with sourcesegregated wastes from 1,000 households) and provision has been kept for gradual expansion if segregated organic waste is available from the other parts of the town. The mixed waste will be dumped in the landfill that consists of organic waste in a significant quantity. There is a provision of release of landfill gas (especially methane) at an interval of 50m through passive venting system which may prevent fire hazard in the landfill. Leachate will be generated from the organic waste when it will be compacted and especially in the rainy season. A simple treatment facility of reed bed filter has been kept to treat the leachate. For existing infrastructure situation and proposed intervention, I have reviewed Magura only, and the comments below are about Magura. I trust that you can address the same/similar issues in other two towns. If there are specific issues to remaining two towns you want to discuss, please advise. They are being looked into Table This is very different from page xxix. Please make clear your suggestion on staff requirements after the project. para 328. According to the PS data, actual energy consumption is about Tk 640,000 per month. PS cannot pay this amount. Please see the response on comment Nr 5 Assessment of Energy Consumption: Average Energy Consumption by One PTW = (22.38 kw x 10 h x 30 day) = 6714 kwh/ month Average Energy Consumption by Seven Running PTWs = (6714 kwh x 7) = 46,998 kwh/ month Total Cost of running 7-PTWs (should be) = (46,998 kwh x tk. 6.30) = Tk. 296,087/ month Page 292 of 423

309 Sl. No Comments para 329. Billing collection efficiency is only about 53% in (up to Dec 13). Please check the figures and revise accordingly. page 88. Figure 4-3. Is there any waste processing plant in town? page 137. This map is very useful. Does the identification (e.g., R14) correspond to Sl no. of Table 5-27? If so, why is there R40 etc, when 37 road sections are proposed? Drain identification no. is not legible. Typical cross-section of roads and drains should be included. If it s the same as page 97, please add cross-reference. Table Is it possible to target 90% coverage (through piped network system) in a town like Magura which includes large rural areas? The target can be different from town to town. Response But PDB claims Tk. 640,000 for a month which is more than double of assessed electricity cost of running 7-PTWs. The issue has already been discussed with the Executive Engineer and Water Superintendent of Magura Pourashava. They acknowledged that PDB is claiming abnormal bills which are not realistic at all. They will sit down with PDB official soon and will resolve the issue. Noted and shall be done Some waste recovery and processing plants of inorganic recyclable materials exist in the town operated by private entrepreneurs. Initially, schemes were considered in line with the PS s need-based list of infrastructure that was fully endorsed by the TLCC following a participatory and demanddriven concept. Now while the initial list of infrastructure was prepared, all roads and drains included for the PS were depicted on pertinent map(s) in a sequence, assigning a nrr for each. Later, in our effort of incorporating requisite fund for Window B, a downward adjustment of fund per PS was made, which led to a reduction in the number of roads and drains. But the maps were not revised accordingly at that time-point. However, the stated maps have now been updated and will be provided in the Final Report. Noted. Two typical Cross-sections of RCC drains are inserted in page 100 of the report Yes, 90% water supply coverage (through piped network system) by 2030 in Magura Pourashava is quite ambitious. Target coverage for all the 3-towns have been reviewed and reorganized and the demand projection has been made accordingly. These will be incorporated in the Final Report. 17 Table Out of the existing network of 65km, only 12 km (9 km by 37 towns project and 3 km by UGIIP-3 project) is proposed for replacement. Is this sufficient to achieve the target NRW level of 15%? The proposed interventions (ref: Table 5-35) which will contribute to control NWR are: Replacement of 12 km (9 km by 37- Page 293 of 423

310 Sl. No. Comments Response towns project and 3 km by project) pipelines; Cleaning, leak detection and repair of 30 km existing pipelines; Laying of standard service connections with water meter. Leakage and NRW control activities are continuous process and targets can be achieved gradually. 18 In calculating FIRR, costs and benefits need to consider the same scope. If benefits from 37-towns project are included, costs should also be included. If benefits from new connections are included, costs relating to new connections (addl meters, laying pipes from distribution network to individual connections etc) should be included. The Current NRW and target NRW expected to be achieved by 2030 has be reviewed and reset for all the 3-sample towns Both cost and benefit from 37-town interventions are being considered 19 All maps: TA number is TA number has been inserted in all relevant maps Sanitation. This is very hardware-centric. Is this adequate to achieve 100% sanitation coverage in town (which is a feature of a model town)? Other activities (e.g., hygiene education, sludge disposal facility) must be included in the project scope. Table For SWM, layout of facilities of the disposal site should be prepared. There should be a calculation of lifetime of the landfill too (with realistic assumptions). The current proposal is too sketchy, and it hasn t reached the level of pre-fs. Please provide a cost breakdown of landfill development. Yes, it has been rightly pointed out. Hardware components are necessary but certainly not sufficient to improve sanitation parameters in a city. So along this line of thinking, a Sanitation strategy is being drawn by the WS&S Specialist, along with costs thereof, while the SWM specialist, as well, evolved a capacity-building & awareness raising on the overall Sanitation element. These will find appropriate places in the main report. Now albeit the sanitation-related additionalities will be considered under the project scope, the job will essentially be carried out under GICD component and as well, under the general capacity development component in project implementation phases. Layout of the disposal site has been prepared. For a landfill to be economic interms of investment and operation, normally close to 20 years operation is envisaged. For Magura, a significant amount of land will be filled up by embankment and composting facility, etc. Given the available size which is 290 X220 x20 =1,276,000 cft i.e 36,200 m 3 would be filled up with the waste. If 20 ton/day waste arrives at the site and it is compacted to a density of 1.0 t/m 3, Page 294 of 423

311 Sl. No Comments Where are the two transfer stations proposed? Are they selected from the existing temporary secondary disposal points (para 337). Where is the compost plan proposed? Will this be managed by PS? Medical waste collection and treatment. Clinic owners association is active, cited as a good practice. What is still lacking and what should be undertaken by PS? Please clarify the scope and provide cost breakdown. Response 20 m 3 /day waste will be deposited. In such ideal case, in around 5-6 yrs, the site will be fully filled up. The projected period may be extended by another 3-4 years if the old wastes from the deposit are excavated and used as soil-cover while the excavated space can be used for new dumping. The PS can plan to acquire adjacent land for further expansion to run it for 20 years or more. Detailed cost-components is given in the table given at p. 10. No permanent transfer stations are proposed at this point of time. Rather, through synchronization of primary collection and secondary transportation, smooth transfer of wastes to the final dumping site can be ensured.. The compost facility is proposed in the landfill site. This will be managed by the PS or they can outsource its management. The Clinic owners Association is active in separate medical waste collection but as there is no separate disposal system. They burn the waste outdoor. The in-house waste management is the responsibility of the waste generators such as clinics, hospitals, etc. The out-house waste management is the responsibility of the PS. They need to do it by themselves or they entrust local NGOs or the private sector for the job. The medical waste is planned to be treated separately by incinerator. The sharp waste could be disposed of in concrete pit. There will be provision of deep burial of burnt ashes. This part could be managed by the PS. The O&M cost can be covered by service charge provided paid by the clinics /hospitals. Cost break-down on medical waste mgt is provided at p. 10. Page 295 of 423

312 Response on Comment No.: Naogaon PS: There are total 13-PTWs, out of which 12 are operational and the remaining one has been abandoned (chocked up). Currently the wells are running for an average of hours There is altogether 30 regular staff in the water supply section of the PS with support from the engineering staff of the PS. The regular staff comprise of accounting persons, pump operators, plumbers and mechanics. In addition to the regular staff, the PS also hires temporary staff on daily wages altogether 15 daily wage staff are hired (operators and plumbers). The average monthly salary cost of such staff is about Tk lakhs. The current manpower list of the PWSS of Naogaon PS is presented below: Table 01: Manpower List of PWSS Naogaon PS Sl No. Position Number 1 Water Superintendent 1 2 Account Assistant 1 3 Bill Clerk 2 4 Plumber 2 5 Assistant Plumber 4 6 Pump Operator 6 7 IRP Operator 2 8 Pipeline Mechanic 6 9 Tube Well Mechanic 3 10 Assistant Pump Operator Assistant IRP Operator 1 12 Night Guard 2 Total = The key interventions proposed under funding of are: (i) the existing IRPs (2 nos.) will be brought into operation and (ii) water meters will be installed in the service connections. Consequently reorganizing and recruitment of additional staffs for relevant positions will be needed to operate the system efficiently after investment of funds of UGIIP III. In view of that a tentative staff list along with the indicative O & M cost need after execution of proposed interventions, is presented in the table below: Hours of Operation : 15 hours/day Hours of Supply : 15 hours/day Manpower Proposed : 47 Persons O&M Cost : Tk. 19,547,093/ Annum Table 02: Indicative O&M Cost of Water Supply Naogaon PS Sl No. Items Unit Rate/Month (Tk.) No. Months Amount per Annum (Tk.) 1.0 Personnel Cost 1.1 Water Superintendent Person 25, , Billing Clerk Person 15, , Accountant Assistant Person 15, , Pipeline Mechanic Person 12, , Maintenance Worker (Assistant Person 10, ,000 to Pipeline Mechanic) 1.6 Pump Operator Person 10, ,440, Assistant Pump Operator Person 8, ,152, IRP Operator Person 10, ,000 Page 296 of 423

313 Sl No. Items Unit Rate/Month Amount per No. Months (Tk.) Annum (Tk.) 1.9 Assistant IRP Operator Person 8, , Pump Mechanic Person 12, , Meter Reader cum Bill Person 10, ,000 Distributor 1.12 Peon / MLSS Person 8, , Night Guards Person 8, ,000 Sub-total 5,664, Electricity LS 1,102, ,233, Office Overhead, Maintenance, LS 54, ,000 Chemical etc. Total = 19,547,093 Lalmonirhat PS: 413. There are altogether 8 production tube wells (PTWs) in Lalmonirhat Pourashava, out of which 5 are in operation and 3 have been abandoned due to the reasons of producing water with excessive iron and sand pumping. In addition, installation of 3-new production wells are in progress under GOB funding 37 Towns Water Supply Project of DPHE. Currently the wells are running for an average of 10 hours There are altogether 14 staffs in the water supply section of Lalmonirhat Pourashava, out of which 4 are regular and 10 are daily wage staffs. The regular staffs comprise of water superintendent, bill clerk, one senior pump operator and one tubewell mechanic. In addition to the regular staff, the Pourashava also hires temporary staff on daily wages altogether 10 daily wage staff are hired (operators and pipeline mechanic). The average monthly salary cost of such staff is about Tk lakhs. The manpower list of the PWSS is presented in the table below: Table 03: Manpower List of PWSS Lalmonirhat PS Sl No. Position Number 1 Water Superintendent 1 2 Bill Clerk 1 3 Pipeline Mechanic 1 4 Tube Well Mechanic 1 5 Pump Operator 8 6 Night Guard 2 Total = The key intervention proposed under funding of is installation of water meters in the service connections. Reorganizing and recruitment of additional staffs for relevant positions will be needed to operate the system efficiently after investment of funds of. In view of that a tentative staff list along with the indicative O & M cost need after execution of proposed interventions, is presented in the table below: Hours of Operation : 12 hours/day Hours of Supply : 12 hours/day Manpower Proposed : 18 Persons O&M Cost : Tk. 6,131,243/ Annum Page 297 of 423

314 Table 04: Indicative O&M Cost of Water Supply Lalmonirhat PS Sl. Rate/month Amount per Items Unit Nr. Months No. (Tk.) Annum (Tk.) 1.0 Personnel Cost 1.1 Water Superintendent Person 25, , Billing Clerk Person 15, , Accountant Assistant Person 15, , Pipeline Mechanic Person 12, , Maintenance Worker (Assistant Person 10, ,000 to Pipeline Mechanic) 1.6 Pump Operator Person 10, , Assistant Pump Operator Person 8, , Pump Mechanic Person 12, , Meter Reader cum Bill Person 10, ,000 Distributor 1.10 Peon/MLSS Person 8, , Night Guard Person 8, ,000 Sub-total = 2,628, Electricity LS 269, ,233, Office Overhead, Maintenance, Chemical etc. LS 22, ,000 Magura PS: Total = 6,131, There is altogether 9 production tube wells (PTWs) in Magura PS, out of which 7 are in operation and 2 have been abandoned (chocked up). Installation of a new production well is in progress under GOB funding 37 Towns Water Supply Project of DPHE. Currently the wells are running for an average of 10 hours There is altogether 40 regular and 2 additional daily wage staff in the water supply section of the PSsupervised by a Water Superintendent. The regular staff comprise of one water superintendent; two billing clerk; one Senior Pump operator; two Tubewell Mechanics; 18 Pump Operators; 9 Guards; 4 Pipeline Mechanics (Plumbers); 4 Drain and Sewer Mechanics; 1 Peon (MLSS). In addition to the regular staff, the PSalso hires temporary staff on daily wages there are two daily wage staff 1 Peon and another pipeline mechanic (plumber). Page 298 of 423

315 The manpower detail of the PWSS of Magura PSis presented below: Table 05: Manpower List of PWSS Magura PS Sl No Position Number 1 Water Superintendent 1 2 Bill Clerk 2 3 Pipeline Mechanic 4 4 Tube Well Mechanic 2 5 Drain and Sewer Mechanic 5 6 Pump Operator 18 7 Night Guard 9 8 MLSS 1 Total = The key intervention proposed under funding of is installation of water meters in the service connections. Reorganizing and recruitment of additional staffs for relevant positions will be needed to operate the system efficiently after investment of funds of. In view of that a tentative staff list along with the indicative O & M cost need after execution of proposed interventions, is presented in the table below: Hours of Operation : 12 hours/day Hours of Supply : 12 hours/day Manpower Proposed : 28 Persons O&M Cost : Tk. 9,875,877/ Anunm Table 06: Indicative O&M Cost of Water Supply Magura Pourashava Sl. Rate/month Amount per Items Unit Nr. Months No. (Tk.) Annum (Tk.) 1.0 Personnel Cost 1.1 Water Superintendent Person 25, , Billing Clerk Person 15, , Accountant Assistant Person 15, , Pipeline Mechanic Person 12, , Maintenance Worker (Assistant 10, ,000 to Plumber) 1.6 Pump Operator Person 10, ,200, Assistant Pump Operator Person 8, , Pump Mechanic Person 12, , Meter Reader cum Bill Person 10, ,000 Distributor 1.10 Peon/MLSS Person 8, ,000 Sub-total = 3,744, Electricity LS 1,005, ,781, Office Overhead, Maintenance, Chemical etc. LS 29, ,000 Total = 9,875,877 Page 299 of 423

316 Solid Waste Management Cost Break-down Components Materials/goods Unit A. Primary waste collection i. Waste collection plastic bins for 1,000 households ii. Tricycle rickshaws each tricycle to be fitted with 6 30-L capacity plastic bins. One rickshaw will collect inorganic wastes from 200 HH iii. Uniforms & personal protective eqp (PPE) for use by the HH waste color coded (green for organic, blue for inorganic), 10L capacity, covered Numbers (Nos.) Unit s 2,00 0 Unit rate in BDT Total cost ( BDT Tricycle Nos Large size plastic bins Nos Uniform and PPE Sets collectors Sub-total B.Secondary waste collection i. 2 Trailers with 1 tractor for waste handling ii. Dump truck (3 ton) for waste transportation iii. Uniforms and personal protective equipment (PPE) for use by the waste workers at the inorganic waste sorting locations iv. Uniforms and personal protective eqp (PPE) for use by the waste workers engaged in waste collection/transfer set Dump truck Nos Uniform and PPE Sets Uniform and PPE Sets Sub-total C. Constrc n of composting plant (5 ton) with shredder, turning, sieving eqp, bagging, QC eqp, etc 20,00,000 Sub-total 20,00,000 D. Medical Waste collection and Treatment i. Supply color coded bins (three types) for source-segregation of different types of medical waste, covered vans for waste collection, treatment by autoclave i. Three types of color coded bins with labels No ii. Needle cutter No iii. 3 wheeler cover-ed van with 3 separate chambers iv. Sharp disposal pit (concrete) -3ftx 3 ft v. Chlorination tank for needle disinfection No No No vi.shredder No vii. Burial pit (ash, body parts) No viii. Autoclave (125 No Page 300 of 423

317 Solid Waste Management Cost Break-down Components Materials/goods Unit Unit s Unit rate in BDT Total cost ( BDT l/hr) including boiler ix. Facility constrtn x. Installation (5% of capital cost) 150, xi. Small ETP xii. Cost of separate disposal cell xiii. Stand bye generator (50 kw) xiv. Safety gears (musk, gloves, set etc.) Sub-total E. Controlled landfill i. Embankment co strc'tn, land dev t for composting site, inner dyke of Leachate pond m ii. Sand filling 1070*4.26*0. 09 m iii. Brick pavement 1070*4.26 m iv. Groundwater protection-1.5 mm HDPE geo-membrane and 1 layer Non-woven geo-textile 400 GSM 5929 m v. Leachate collection through peripherial pipes and pits at with brickbats vi. Leachate collection and gas vent pipe with pits at 50m@c/c with brickbats vii. Leachate collection pond with recirculation pump, reed bed filter and sprinkler etc Leachate (450mm perforated) pipe RCC Leachate connecting pipes with gas vent pipes (150 mm upvc) m m LS viii. Turfing & Plantation ix. Workers shed, control shed, equipment shed etc x. Backhoe Wheel loader with multiple attachments Sub-total Total 4,04,91,695 1 Year O&M Cost for the controlled landfill including waste dumping, medical waste treatment (autoclave operation), leachate and sludge 5,40,000 mgt, composting, etc) will be the responsibility of the contractor for the SWM pckg GRAND TOTAL 4,10,31,695 Awareness campaigning Advertisement on No Page 301 of 423

318 Solid Waste Management Cost Break-down Components Materials/goods Unit Capacity building training Unit s Unit rate in BDT Total cost ( BDT newspapers, Posters No discussion mtg, etc. No Pilot scheme-van participants) drivers & waste pickers (20 No Medical waste mgt- private clinics, diagnostic centers, govt hospital (50 participants) Waste collector/van drivers (10 participants) No No Autoclave oper n Technician (2 No techn ns) PS personnel (10 participants) No Landfill workers (10 participants) No Composting techni-cians and No workers (10) Sub-Total Note: Cost of awareness campaigning & capacity building is included in the capacity development component of the project Page 302 of 423

319 RESPONSE TO ADB COMMENTS BY PPTA ECONOMIC ANALYSIS (23 March 2014) SL ADB Comments PPTA Response General 1 The Excel files used in the economic analysis that were provided to ADB for the Draft Final Report submission are difficult to follow and check since in most cases there are no formulas in the quantification of economic benefits and conversion of benefits and costs into economic prices. Next time when the Final Report is submitted, the Excel files to be provided to support the economic analysis should all contain formulas in the quantification of economic benefits and conversion of benefits and costs into economic prices. 2 Prior to conversion of financial costs into economic costs, please ensure that capital costs and O&M costs used are consistent with those used in the financial analysis. Random check of Excel files used in both the financial and economic analysis shows inconsistencies. 3 Please review and ensure that the weighted average standard conversion factor in each scheme is applied correctly when converting benefits, capital costs and O&M costs into economic prices. Random review of Excel files provided on economic analysis revealed that taxes have not been deducted yet when converting benefits and costs into economic prices using the standard conversion factor. 4 In page 118 of Volume 4: Finance and Economics, the assumed percentages for share of costs in solid waste management to convert financial cost into economic cost are missing. Please provide percentages and revise the table consistent with items # 5 and 6. 5 Related to item # 4 above, below is a portion copied from the Excel files on economic analysis which is difficult to understand and check since there are no formulas. Adding the proportion of local material with the proportion of imported material will result to more than 1.0 or 100%. 6 Related to item # 4 above, please clarify if the percentages for share of costs in each scheme are the same when applied to capital costs and to O&M costs. If percentages are different, please provide separate table for the capital costs and for the O&M costs. Please add a column or row in the table to show the weighted average standard conversion factor in each scheme. Below are sample tables in presenting the conversion of financial price into economic price (similar to illustration in ADB Guidelines). Excel file is attached for easier understanding of the sample tables 7 Please confirm if Taka values used from the Road User Cost Study in 2009 to determine VOC and TTC have been adjusted to 2013 prices in the economic analysis. If yes, please disclose in methodology. If no, please adjust The excel files provided to support economic analysis contain all relevant formulas. It is shown in the Final Report as well that financial benefits and costs have been converted into economic prices using weighted average SCF. Capital costs and O&M costs used in Economic and Financial costs have thoroughly been re-checked for bringing consistency. Corrections made, inconsistencies removed. Before conversion of financial costs into economic prices taxes have been from the base cost. For each category of sub-project weighted average Standard Conversion Factor has been calculated and used for conversion into economic prices. The assumed percentages for share of costs in all schemes to convert financial costs into economic costs are included in the report. The previous tables are revised. The weighted average SCFs for all schemes have been revised based on ADB format. The newly prepared SCF tables are provided in the Final Report. Separate tables for capital costs and O&M costs are provided for the schemes. The weighted average SCF for each scheme calculated and placed in respective tables. Taka values used in the Road User Cost Study 2009 to determine VOC and TTC have been adjusted to 2013 prices in Page 303 of 423

320 SL ADB Comments PPTA Response to 2013 prices and disclose in methodology Naogaon 8 Economic analysis is missing for a scheme in Naogaon which will be financed in Phase 1 involving river bank improvement with foot path and street lighting. Please provide qualitative assessment of benefits and simplified analysis (e.g. adherence to design criteria that ensure cost-effectiveness) if economic benefits are difficult to quantify. 9 In page 117 of Volume 4: Finance and Economics, improvement of solid waste disposal ground is included in the List of Sample Schemes from Naogoan Pourashava in the first phase. However, Chapter 7 (Proposed Subprojects Phase 1) of the Main Report does not include improvement of solid waste disposal ground as a scheme from Naogoan Pourashava in the first phase. Please reconcile and correct reports 10 If solid waste management scheme is indeed included in the first phase, please provide economic analysis. If economic benefits are difficult to quantify, please provide qualitative assessment of benefits and simplified analysis. 11 There were 3 road schemes subjected to economic analysis out of 9 road schemes to be financed in Phase 1. Were there criteria used (e.g. investment size, traffic count, etc.) in the selection of the 3 road schemes to be subjected to detailed economic analysis or were they arbitrarily selected? Please provide criteria, if any. Lalmonirhat 12 Capital costs and O&M costs used in the financial analysis of the water supply scheme are not consistent with the capital costs and O&M costs used in the economic analysis prior to conversion into economic price. In the financial analysis, physical contingency of 5% was added to the capital cost while none in the economic analysis. Physical contingency should be included in the economic cost. The calculation of O&M costs in the financial analysis is different from the economic analysis prior to conversion into economic price particularly in years 2, 3 and 4. Please review and revise accordingly. 13 The capital cost and results (EIRR, BCR and NPV) in the Excel file provided for the water supply scheme analysis are different from the summary table results in page 120 of Volume 4: Finance and Economics. Please reconcile and correct reports. 14 There were 4 road schemes subjected to economic analysis out of 7 road schemes to be financed in Phase 1. Were there criteria used (e.g. investment size, traffic count, etc.) in the selection of the 4 road schemes to be subjected to detailed economic analysis or were they arbitrarily selected? Please provide criteria, if any. the economic analysis. This has been mentioned in the methodology. Economic analysis for River Bank Improvement with Foot Path and Street Lighting scheme has been incorporated in the report. It was decided that economic analysis of Solid Waste Management would be conducted only for Magura. Inclusion of the scheme for Naogaon was a typing error. SWM scheme in Naogaon has therefore been removed. Economic analysis for solid waste management scheme has been conducted only for Magura. The three road schemes out of 9 in Naogaon were selected using systematic random sampling. In this connection, a proposal was submitted earlier to ADB and approval obtained. Physical contingency of 5% has been added to capital cost in order to get base cost in financial term. The data consistency has been ensured after thorough rechecking. Necessary amendments made to ensure consistency. The four road schemes out of 7 in Lalmonirhat were selected using systematic random sampling. A proposal was submitted to ADB prior to the selection and approval obtained. Page 304 of 423

321 Magura 15 Discussion of the economic benefits quantification is missing in the report for the market scheme in Magura while EIRR calculation results have been provided in page 120 of Volume 4: Finance and Economics. Please provide the discussion of economic benefits quantification and describe clearly the quality deterioration approach. 16 The capital cost and results (EIRR, BCR and NPV) in the Excel file provided for the market scheme analysis are different from the summary table results in page 120 of Volume 4: Finance and Economics. Please reconcile and correct reports. 17 The capital cost and results (EIRR, BCR and NPV) in the Excel file provided for the solid waste management scheme analysis are different from the summary table results in page 120 of Volume 4: Finance and Economics. Please reconcile and correct reports. 18 There were 4 road schemes subjected to economic analysis out of 14 road schemes to be financed in Phase 1. Were there criteria used (e.g. investment size, traffic count, etc.) in the selection of the 4 road schemes to be subjected to detailed economic analysis or were they arbitrarily selected? Please provide criteria, if any. 19 There were 3 drain schemes subjected to economic analysis out of 8 drain schemes to be financed in Phase 1. Were there criteria used (e.g. investment size, number of beneficiaries, etc.) in the selection of the 3 drain schemes to be subjected to detailed economic analysis or were they arbitrarily selected? Please provide criteria, if any. Quality Deterioration (QD) model was developed by G. Mustafa and Z. Ullah in their cross sectional study of 10 markets for SEME Study, RDP, LGED in Later on this approach has been used in a number of studies. The Quality Deterioration Savings method measures the benefits of perishable goods after the development of market. According to this methodology, a significant portion of the perishable commodities brought into the market (unimproved) remained unsold because of the less static demand and poor infrastructural facilities. This would result in reduction of a substantial amount of revenue. This degenerated revenue would not have taken place provided markets would have been improved. Quality deterioration (QD) thus measures the savings of the developed and undeveloped markets considering the reduced price of the unsold amount and price fluctuation. Data consistency ensured. Data consistency ensured. All roads were selected using systematic random sampling. Prior to the selection a proposal was submitted to ADB and necessary approval was obtained. All drain schemes were also selected using systematic random sampling procedure. Prior to the selection a proposal was submitted to ADB and necessary approval was obtained. Page 305 of 423

322 Response to Mr Norio s comments Procurement Plan (24 March 2014) 1. National vs local contractors 419. It is true that ADB may not have a policy to prioritize local contractors over national contractors, rather it emphasizes boosting development of domestic contractors. In our proposition, we have the following three aspects on mind. a) Making use of the contractors from the locality (say district) as much as possible, since they are more familiar with the local conditions, have experience working with the entities of the area and because of working in their own area, can cut down on the cost, especially relating to labor and simpler equipment/logistics (hence felt to be more economic); b) Because of the stated size (say around 100 mill BDT) of contracts, we believe (also supported by LGED district engineers), there will be a generation of greater competition through participation of a larger number of contractors. This may lead to a lower bid amount and hence, more economic. c) Involving the stated contractors of capacity lower than those of larger ones Dhaka or regional HQs, may not bring in benefits on all fronts. As learned from the LGED district engineers, large packages woo bigger contractors who eventually subcontract them (not unlawful), but mostly done unofficially. This practice often leads to delay in implementation (as experienced by LGED s field engineers). However, large contracts that cannot be split owing to their unique or single unit nature (like a large bridge) will essentially justify a bigger package. But other works like roads and drains (in the sample PSs and rest of the project PSs), individual schemes of roads and drains and the likes are mostly small in length and cost but are many in number. So, if a package has a very big number of such units, it is not essential that such bigger contractors will work on them simultaneously. So they resort to unofficial subcontracting. But if the packages are smaller, such situation may not arise for obvious reasons. 2. E-procurement 420. E-procurement is currently being practiced under different contracts of LGED. True it is that this may not readily help in the bidding process of the project PSs. But to remain free from the physical influence of the politicians and their muscle-men who apply their unholy force on such contractors, restraining them from bidding, can certainly be averted through use of e-procurement. However, to effect this, intensive training can be provided by the project vis-à-vis LGED to familiarize the PSs on the system and practice of e-procurement. 3. Training and capacity building of contractors 421. Training of contractors and running different course on quantity surveying (estimating), bid preparation, QC, use of purpose-developed software and many a different area are a regular practice under LGED s training program. So far they trained up a large number of contractors enlisted with LGED. The same training program now will include PS-enlisted contractors as well. Apart from these, the MDS consultants as well stand to provide training on different areas, especially, QC parameters and construction techniques which will certainly improve the incumbent contractors meeting the QC and other requirements better. Apart from these (from UGIIP II experience), special trainings are also extended to the local-level contractors. So all put the training program of LGED and the ensuing can orient such contractors towards performing better in their bidding and construction efforts. Page 306 of 423

323 Response to Mr Norio s comments Procurement Plan (26 March 2014) Package size Comments/advice 422. We need to move on although our views are still different. At minimum, please introduce multiple lots as long as the total amount does not exceed the LGED/DPHE threshold (Tk140 million?). You are saying that smaller packages will be cheaper, but use of multiple lots will make clear whether that is really the case. Among the three sample towns, we can do it in Lalmonirhat Please fill in necessary information to the attached draft procurement plan. Response 424. We appreciate your views. But we still feel that smaller package may trigger more competition (as stated by LGED engineers), hence there is a strong possibility of quoted prices coming down Nevertheless, as advised by you, for Lalmonirhat, we have combined the earlier proposed 2 (two) packages for Phase 1 into a single package but split it into 2 (two) lots The latest standing for the all-important phase 1 and remaining 2 (two) phases for the three sample towns are as given below. Pourashava Nr of Pckgs Phase 1 Phase 2 & 3 Total Naogaon Magura Lalmonirhat Total The given Procurement Plan has been filled in with appropriate data as far as was possible at this formulation stage. It can be seen at Annex-I. 2. Procurement Capacity Assessment Comments/advice 428. It's not updated. Please update to make it consistent with what we are going to do in UGIIP-3. What's critically missing is the lesson-learning from UGIIP-1 and 2. It would be true that our 3 sample towns have no experience of $0.5 million or larger packages. But that should have been true for UGIIP-2 towns before the project. Were there serious procurement problems because of that in UGIIP-2 towns, to make you believe that all packages above $50,000 need to go through a prior review? What is the role of LGED, who has enough experience in ADB-financed projects? Mitigation measures to reduce corruption and other risks are not well discussed either. Please note that ADB's procurement department will normally review this document. Response 429. The issues raised particularly focus on: a) Lessons learnt from the procurement facets of UGIIP I and II; b) updating the capacity assessment document; Page 307 of 423

324 c) If all the packages above $50,000 need to go through prior review? d) Mitigation measures to reduce corruption. In the following sections, an attempt is made to address these issues. A) Lesson Learnt UGIIP I: 430. UGIIP I, consisting of 33 Pourashavas (PSs), implemented its 3 Phases over the FY to The infrastructure works included Roads, Drains, Bus Terminals, Truck Terminals, Public Toilets, Kitchen Markets, Culverts, Slaughter House, etc., which are very similar to activities. All procurement under the project was subject to compliance with Public Procurement Rules, 2003/2008 and ADB Procurement Guidelines though the PS authorities which were unfamiliar with those Guidelines. There was no threshold value for demarcation of prior and post review-need. All contracts were, invariably, implemented through prior review By and large, the packages consisted of several schemes, mostly of similar nature. Package size was less than BDT 20 million. There were only four PSs (Gazipur, Narayanganj, Narshingdi and Pabna) which implemented 11 contracts of values in excess of BDT 20 million. The maximum value of such contracts was BDT 34 million It was observed that even if the packages were not of very high value, the number of contractors were quite limited as very few big contractors worked at PS-level since the PSs financial capacity was relatively limited. On many a occasion, it was observed that 3 to 4 contractors participated in tenders of different packages based on an internal understanding among them. It became difficult to single out a competent contractor out of such a small number of contractors and also at competitive rates. This was due to the reason that the local contractors financial capacity was very low, hence they could not meet the prerequisites of technical and financial requirement as enunciated in the National Open Tendering Method. A limited number of contractors, working elsewhere like RHD, PWD and BWDB, were hired by local contractors to submit bids on Joint- Venture basis with the local contractors. However, during implementation, these big contractors were seldom or never found at work level in the field. Therefore, the experience of these contractors could not be reflected in the works One other matter of concern was that such big contractors often illegally split/subcontracted the work among several smaller contractors with very low financial standing, often inexperienced, with a consequent bad quality apparently visible in the works performed that warranted rectification.. However, at the beginning of the project, in some cases, there had been certain deviations (mainly stemming from inexperience and lack of proper understanding among the bidders), leading to cancellation of tenders and consequent retendering. These problems were subsequently overcome through convening orientation, workshops, training and close collaboration with the PS on ADB Procurement Guidelines. From there on, no major problem was encountered while contracts were implemented A reflection of the training/workshop conducted in the stated context can be seen in the table below. 77 Project Completion Report, UGIIP I Page 308 of 423

325 Training/Workshops Sl No Training/Workshops Man-months 1 Orientation Program for ADB Procedures & Requirement for their procurement role & Responsibilities 25 2 Procurement Management Training for Municipal Engineers 55 3 Procurement Management Training for Municipal Engineers 172 UGIIP II: 435. UGIIP II is a still on-going project. Civil work-contracts under it started from the 2 nd phase onward, while the 1 st phase was dedicated for capacity development. All civil works have been or are being implemented conforming to National Competitive Bidding (NCB) Method. Till todate: a) The Project Management Office (PMO) approved 485 work-contracts. Out of this, 354 were awarded in the 2nd phase of the project. b) It is worth mentioning that the package sizes (cost) was relatively smaller in the 2 nd phase which meant that number of contracts were considered to be high and hence somewhat difficult to manage from administration stand-point. Justifiably, the package sizes were made larger in phase III, eyeing to reduce the number of such packages. c) Observably, average size of contract in phase II was of BDT million ($125,000). To-date (the project is still under implementation), 131 contracts have so far been awarded in phase III, with an average value of BDT million ($450,000). d) Now, it is observed that with the enlargement of the size of individual packages, the number of contracts per PS has significantly dropped in phase 3. Inasmuch, average participation of bidders has also reduced from 6 to 4 although the situation still remains competitive. As a result, such descent helps in increasing efficiency and convenience of contract management at every stage of bidding process. e) Experience of the project management is that the situation where there were more contracts of smaller sizes, the milieu was by and large more competitive, more local-level contractors could participate, risk of illegal sub-contracting was less, although both PMO, as well as ADB, found it relatively arduous to manage such big number of contracts. On the other hand, a subsequent expansion in individual contract size and consequent reduction in their number, persuaded a lesser number of bidders (see comparison in d ), brought down participation of local-level contractors, raised the risk of illegal sub-contracting, albeit the changed situation has made it more convenient both for PMO, as well as ADB in respect of project administration. f) In UGIIP II, there is a threshold value $50,000 (BDT 4 million) in respect of prior and post review. But in practice, all contracts irrespective of costs are being implemented through prior review. B) Updating of the capacity assessment document 436. Consequent upon receiving ADB s comments, the Capacity Assessment Document (prepared by the PPTA) has been updated with the addition of required materials. Importantly, the threshold values, especially ICB, NCB and review requirements have been spelled out as discussed and agreed by the EA. Besides, important issues raised, namely procurement related lessons from UGIIP I & 2 have been included. So included are relevant assessment of LGED and DPHE (these were not included earlier) The revised capacity assessment (no major changes brought to the earlier submitted one) is attached at Annex II. C) If all the packages above $50,000 need to go through prior review? This issue has been addressed in an appropriate section of the Capacity Assessment Document (Annex II). However, they are: Works: >=$ 2m ICB -Prior review Page 309 of 423

326 $ 1-2m NCB- Prior Review <$ 1m Post review 1 st contract of any value prior review 1 st contract of any nature prior review Goods >=$ 1m ICB all prior review $ 0.1-1m NCB- Prior review <$ 0.1 m post review Services (Firms) >= $0.5 m QCBS & prior review Service (individual) all prior review D) Mitigation measures to reduce corruption 438. GoB has an in-place independent Anti-Corruption Commission which is active in eliminating / lowering the extent of corrupt practices that essentially includes contractual elements and the process so involved. In the case of the contractual environment involving the ensuing, certain issues worth focussing on in respect of possible corruption and their mitigation. Corruption-related risks and mitigations are portrayed below : 1. Bid opening committee: The risk is, should the members come from the same entity, then there is the danger of manipulation of quoted rates and other documents. To avoid this, the going committees are formed with members from different organizations. Incidentally, it includes a member who remains on both bid-opening and bid evaluation committee. This kind of team can ensure adherence to the key areas of correctly recording/disclosing quoted rate(s) and proper submission of the bid(s) including attachment of all required papers/documents. This as well needs close surveillance. 2. Bid Evaluation Committee: Here as well, this committee constitutes members from different organizations. However, one of the members of this committee comes from the bid opening committee (includes a member common to bid evaluation and bid opening committees). This team composition can ensure adherence to the key areas of correctly examining all submitted documents in details and compare them with the prescribed requirements and specifications. It identifies the responsive, lowest responsive bidders and as well, nonresponsive bidders. The risk of influence will have been bigger should all members were from the same entity. Rather, as they come from different entities, ill-influencing them may not be easy, which is itself a mitigation measure. 3. Lack of knowledge on corrupt practices and their consequences may not be adequately known to the persons involved with procurement. This can be mitigated through orientation/exposure on Anti-corruption rule of GOB. 4. Lack of internal monitoring system to ensure compliance of procurement rule may usher corruption. To mitigate this, the following mitigation measures may be taken: a) CPTU developed ProMIS (Procurement Management Information System) to monitor the compliance of PPR and performance of procurement functions of the govt. departments. There are 42 indicators by which the procurement performance can be monitored in real-time manner. b) Pourashava can use this system or any customized system can be developed to monitor the procurement performance. c) Prior review is a good tool to ensure compliance. If it is difficult for the Asian Development Bank to undertake a large prior review. However, at least 30% schemes can be reviewed at project level by procurement experts (MDS Consultant of the PMO). d) Frequency of post review can be increased, at least twice a year. 5. Undue external influence: This is a serious risk which is quite a common feature in procurement context of the country. This could come from any quarter, but more so from political corners. Its mitigation can be effected through: a) Electronic procurement will be introduced on a pilot project basis to minimize external undue influences. This is no difficult task. LGED already implemented this year more than 4,000 packages in e-gp (electronic government procurement) system extended Page 310 of 423

327 up to the Upazila level where in many cases internet connectivity problem exists. Pourashavas have advantages of connectivity in this case. b) Unless e-gp is introduced, ensure administrative measures to create equal opportunity, e.g., law-enforcing agencies should take protective measures to ensure that all bidders have safe passage to make their bid; bidders should be encouraged to resort to the GRC, if and where applicable. c) Multiple dropping can be suggested to minimize obstructive actions. Page 311 of 423

328 17 VARIOUS MINUTES, POWERPOINTS, ETC. INCLUDING TRANSLATION OF STEERING COMMITTEE MINUTES 17.1 Letter to 3 Sample Pourashavas & 7 Non-Sample Priority Pourashavas Letter top 3 Sample Pourashavas Page 312 of 423

329 Page 313 of 423

330 Page 314 of 423

331 Page 315 of 423

332 Page 316 of 423

333 Letter to 7 No-Sample Priority Pourashavas Page 317 of 423

334 Page 318 of 423

335 Page 319 of 423

336 Page 320 of 423

337 Page 321 of 423

338 Page 322 of 423

339 Page 323 of 423

340 Page 324 of 423

341 Page 325 of 423

342 Page 326 of 423

343 Page 327 of 423

344 Page 328 of 423

345 Page 329 of 423

346 Page 330 of 423

347 Page 331 of 423

348 Page 332 of 423

349 Page 333 of 423

350 Page 334 of 423

351 17.2 Minutes of the Steering Committee Meeting Translation from Bangla into English Government of the People s Republic of Bangladesh Ministry of Local Government, Rural Development & Cooperative Local Government Division Planning 1 Branch Ref no Date: 07/11/2013 Subject: Sending of minutes of the 1 st Steering Committee Meeting dated of Preparing the Third Urban Governance and Infrastructure Improvement (Sector) Project The 1 st Steering Committee Meeting of Preparing the Third Urban Governance and Infrastructure Improvement (Sector) Project held on 9 th October 2013 Chaired by Mr. Abu Alam Md. Shahid Khan, Secretary, Local Government Division. As per instruction the minutes of the meeting has been sent for your kind information and taking necessary action. Annex: Minutes of the Steering Committee Meeting (1 copy). -/sd (A B M Mahbub Alam) Senior Assistant Secretary Phone: mahbub71@gmail.com Distribution (not in accordance to the seniority): 1. Member, Physical & Planning Division, Planning Commission, Sher-e-Bangla Nagar, Dhaka 2. Member, GED, Planning Commission, Sher-e-Bangla Nagar, Dhaka 3. Member, Programming Division, Planning Commission, Sher-e-Bangla Nagar, Dhaka 4. Secretary, Economic Relations Division, Sher-e-Bangla Nagar, Dhaka 5. Secretary, IMED, Sher-e-Bangla Nagar, Dhaka 6. Secretary, Ministry of Women & Children s Affairs, Bangladesh Secretariat, Dhaka 7. Secretary, Ministry of Public Works & Housing, Bangladesh Secretariat, Dhaka 8. Director General, Local Government Division 9. Additional Secretary (City Development), Local Government Division 10. Chief Engineer, Local Government Engineering Department 11. Representative, Department of Public Health Engineering 12. Director General, National Institute for Local Government, Agargaon, Sher-e-Bangla Nagar, Dhaka 13. Deputy Secretary (Municipal), Local Government Division 14. Deputy Director, Local Government Division 15. Project Director, Second Urban Governance & Infrastructure Improvement (Sector) Project, LGED 16. Country Director, Bangladesh Resident Mission, ADB, Dhaka Copy to: Personal Secretary to the Honorable Secretary, Local Government Division, Dhaka Page 335 of 423

352 Government of the People s Republic of Bangladesh Ministry of Local Government, Rural Development & Cooperative Local Government Division Planning 1 Branch Subject: Minutes of the 1 st Inter-ministerial Steering Committee Meeting for the implementation of the Third Urban Governance and Infrastructure Improvement (Sector) Project funded by ADB The 1 st Inter-ministerial steering committee meeting of Preparing The Third Urban Governance and Infrastructure Improvement (Sector) Project funded by ADB held on 09-October-2013 Chaired by Mr. Abu Alam Md. Shahid Khan, Secretary, Local Government Division. The attendance of the meeting attached herewith in Annex Presentation The meeting started with warm welcome to participants by the Chair. He requested to the Project Director to start the meeting according to the agenda. As per permission from the Chair he (the Project Director) urged to Mr. Vincent Rotge, Team Leader of PPTA Consultant to present the PowerPoint Presentation in brief. 2.1 Mr. Vincent Rotge, Team Leader of PPTA Consultant presented up to date status of the project in brief through the PowerPoint presentation. He said the progress of In-depth information collection survey work on Pilot Pourashavas along with Inception Report, Inception Work on-going. How did the target Pourashavas has been selected as described by Dr. Vincent Rotge in the meeting. He has provided the category of A and B Pourashava in scoring and ranking in the basis of population, population growth rate, density, revenue income from the Pourashavas in category A and B from all over Bangladesh as per Terms of Reference of TA contract signed between the Asian Development Bank (ADB) and Government of Bangladesh presented in the meeting and recommended to included of those ranking Pourashavas under this project. 2.2 Team Leader also informed that the ADB is interested to include comparatively large town and those Pourashavas which is rapidly growing and economically importance. As such he also informed in the meeting that a short list has been prepared from all Pourashavas in category A and B, which were getting funds from the large investment project earlier, present and in future. In here, district town Pourashavas (without Jessore district) under the projects of UGIIP-II, CRDP, NOBIDEP and CTIIP and other A and B categorized Pourashavas has been removed from the list. Otherwise, the Bogra Pourashava has been considered and removed from the brief list due to large amount received from a special project. 2.3 The Team Leader said that the Pourashavas compared with rapidly growing but slightly big in areas and economically prosperous in population <40,000, areas<10 sq.km and own income <10,000,000/= to get it feasible has been removed from the brief list. After Page 336 of 423

353 that he placed the brief list of Pourashava as per score in the meeting for consideration. He also said that more or less 25 Pourashava can be selected and considered by the development fund received from Asian Development Bank (ADB). 2.4 The Team Leader given his consent to take into account under on Large or Important Pourashava that has been included in the ongoing project specially District City for consideration/proposed where the investment is low. In that case he showed an example on Jessore Pourashava that is a large District and Regional City. As it is included in the CRDP project which may get investment amount 2-3 million dollar apparently that is not enough for the development. He proposed the Jessore and other District City to include for special consideration. 3. Discussion When the Chair urges the honorable participants of the meeting to give their consent on the presentation of the Team Leader then Mr. Rafiqul Islam, Sr. Project Officer, Bangladesh Country Mission, ADB took part in the discussion introduced on governance development of the UGIAP projects and emphasized on undertaking of those Pourashavas in UGIIP-III where low investment as per demand of Pourashava. He gives importance to increase investment ceiling to confirm as visible development of Pourashavas in the project and proposed to include limited Pourashava as much as in this project. 3.1 Mr. Md. Jahangir Alam, Director General, IMED took part in the discussion proposed to keep normal population growth and in-migration on separately into account considering the rate of population growth. 3.2 Mr. Md. Shafiqul Islam Akand, Project Director, UGIIP-2 took part in the discussion informed in the meeting that in Third Phase of UGIIP-2 out of 16 (sixteen) new Pourashavas only 9 (nine) District Town such as Madaripur, Gopalgonj, Pabna, Patuakhali, Kustia, Nilphamari, Chuadanga, Khagrachari and Banderban being included where average investment was 1 (one) million US dollar which is very low beyond requirement. He proposed to include whether those large district towns which the Asian Development Bank comparatively more interested. At last it was found in discussion that among 9 (nine) district towns Madaripur and Gopalgonj included in the MGSP project funded by the World Bank and Pabna/Kustia investment from UGIIP-1 and 2. Hopefully the Patuakhali Pourashava will be included under the Coastal Town Project very soon. But Nilphamari and Chuadanga Pourashava has got no big invest before and in future no chance to include in any other project that s why it could be included under as he (Project Director) proposed. In addition it was jointly decided that Khagrachari and Banderban Pourashavas formed as Regional Development Council under the Hill Tracks Peace Accords where reduced extracting of local resources such as those two Hill Tracks District Pourashavas could be considered for the inclusion under the as decided jointly. 3.3 The Project Director referred to the present condition of the Benapole Pourashava under that previously it was included under the UGIIP-II as C category and development fund was BDT 1,000,000. But in the meantime the Benapole Pourashava falls Page 337 of 423

354 in Category A and huge expansion of land-port, increased business number of times. It has been discussed in the National Economic Council for the implementation preparing shortterm and long-term planning considering the importance of Benapole land-port and decision was taken to build a modern planned town few far away from the land-port. The area of Benapole Pourashava increased from the UGIIP-II to the Master Plan as per ongoing decision. It is not possible to provide sufficient time and fund from the UGIIP-II for the overall short-term, mid-term and long-term infrastructural development to what is proposed to develop in the Master Plan. When proposed the Benapole Pourashava to be included in for the successful implementation of the Master Plan provided by UGIIP II then everybody in the meeting agreed. 3.4 Mr. Md. Khalilur Rahman, Deputy Chief, Municipal-1 took part in the discussion meeting said that country s only Female Mayor in Rajshahi Charghat Pourashava directly elected by public at present is holding a strong leadership. He said, She could not contributed any development work as per commitment due to sanction of limited government fund. Mr. Khalil proposed to include the Rajshahi Charghat Pourashava under to keep her contribution as local development work with her strong leadership as only one elected Women Mayor. 3.5 Mr. Ashok Madhob Roy, Additional Secretary (Urban Development) took part in the discussion meeting proposed that Kotalipara Pourashava under Gopalgonj District comparably less progressed and deprived from the development project to be included in. He told that the Master Plan of such Pourashava already been prepared and if the important infrastructure being implemented as per proposed Master Plan then the Pourashava could be developed as planned and keeps contribution in the local development as he opined. 3.6 Mr. Md. Wahidur Rahman, Chief Engineer, LGED took part in the discussion meeting gives thanks to the PPTA Consultants for their hard works in preparing a brief list from the countries long list in category A and B on the basis of some important criteria and opined to keep 30 Pourashavas in to confirm visible development. Page 338 of 423

355 4. Decision: 1. The following decisions has been taken upon detailed discussions : 4.1 Thanks given to all for the satisfactory progress related to the implementation process of PPTA project and the Project Director will take effective steps to complete the work in time as per workplan. 4.2 The criteria used in the survey by the PPTA Consultants has been approved methodically in the meeting and in order to merit from the shortlist based on criteria first 22 nubmers of Pourashava has been accepted by all in the meeting to be included directly in such as: Chapai-Nawabganj, Kishorganj, Netrokona, Moulavibazar, Hobiganj, Naogaon, Lakshmipur, Shahazadpur, Sherpur, Magura, Rajbari, Laksham, Joypurhat, Muktagacha, Rangamati, Chatak, Bera, Meherpur, Nabinagar, Ishawardi, Panchagor and Lalmonirhat. 4.3 As per discussion of chapter-9 it has been accepted by all in the meeting that only Nilphamari, Chuadanga, Bandarban and Khagrachari Pourashava would be included in out of 9 (nine) districts of UGIIP-II in phase three. 4.4 As per high level decision of the Government that the importance of Benapole land port, proposal for acceptance has been accepted by all in the meeting to be included in. 4.5 Being motivated of women leadership in the Urban Governance due to progressive and rapid growing urbanization then the only one Pourashava in Rajshahi Chargat Pourashava governed by the only one elected women mayor in the country needs to be included in as accepted by all in the meeting. 4.6 To confirm the unprogressive and rapid growing and planned urbanization for successful implementation of Master Plan of the Government, the Kotalipara Pourashava of Gopalganj District to be included in the as proposed and agreed by all in the meeting. Abu Alam Md. Shahid Khan Secretary & Chairperson Project Steering Committee Page 339 of 423

356 Subject : Meeting of Project Steering Committee (PSC) Date : 09 October 2013 Time : 4:30 pm Attendance of Officials Sl. No Name & Designation Swapan Kumar Sarkar Director General (Addl. Secretary) Md. Wahidur Rahman Chief Engineer Ashok Madhob Roy Additional Secretary Md. Mohosin Ali Khondaker Joint Chief Md. Rafiqul Islam Sr. Project Officer Md. Shafiqul Islam Akand Project Director, UGIIP 2/3 David Pol Khondoker Sawpan Joint-Secretary (Municipal) Md. Golam Moktadir Executive Engineer Md. Mohirul Islam Khan Deputy Project Director, Sk. Moshidul Islam Sr. Assistant Secretary Engr. Mohd. Delwar Hossain Deputy Team Leader Kazi Jahangir Alam Director General Khandaker Nuruzzaman Division Chief Programming Division Md. Khalilur Rahman Deputy Secretary Ministry/Department/ Organization Signature Annex-1 Telephone/ Mobile Local Govt. Division -/sd LGED -/sd Local Govt. Division -/sd Physical Infs. Division Planning Commission -/sd ADB -/sd LGED -/sd Local Govt. Division -/sd DPHE -/sd LGED -/sd ERD -/sd PPTA -/sd IMED -/sd Planning Commission -/sd Local Govt. Division -/sd Page 340 of 423

357 17.3 PowerPoint Presentation of Interim Workshop held on January 22, 2014 Nb: An updated Bangla version was presented in the workshop; some of the detailed information included in this English version may have become obsolete. 1 Page 341 of 423

358 3 Objectives: Propose modalities for an investment pckg in selected PSs based on mechanisms successfully developed through UGIIP I & II to be improved by the PPTA team (incl UGIAP). Based on the study of 3 sample PSs, absorption capacities would be defined & subsequently extrapolated to design the ensuing loan project incl PSs. Conduct feasibility studies (FS) in 10 priority PSs (incl 3 sample PSs); prepare preliminary engg design for sub-projects in 10 priority PSs & respective FSs. The latter will include governance, gender & social (incl poverty), economic & financial, safeguards aspects (social & environ tl), procurement assessments & contract pckg Design full project modalities as required During the Start-up Phase of the PPTA, provide capacity support to 10 priority PSs so that they can qualify for the entry criteria of UGIAP 4 Page 342 of 423

359 5 Urban infrastructure improvement Urban governance improvement Capacity-building and implementation assistance Achieving the concept and practice of Model Towns 6 Page 343 of 423

360 Improving the capacity of PSs to expand citizens access to municipal infrastructure &services Increased involvement of women, the poor and minority groups in PS-life (incl decision-making) & improved services rendered to them Direct and indirect impacts generated through the ensuing project are also expected to create a better living & economic environment & lead to increased tax & non-tax revenues Additional regional dimension: achieving better urban balance throughout the country Towns which can become model towns & Lessons of which can be replicated 7 District HQ towns upfront. They play specific growth role at the national & sub-national levels & are the major trade centres within the district & beyond They serve as transportation & distribution hubs connected to nearby regional centres 30 towns selected (not all Dist HQ) because they have an urban growth potential following a careful assessment 8 Page 344 of 423

361 3 sample towns (preselected before PPTA) studied by the PPTA Team to design the program through a need assessment: Lalmonirhat, Naogaon & Magura 7 addl towns to be studied by the PPTA team after Feb 2014: Kishoreganj, Muktagacha, Netrokona, Sherpur, Bera, Charghat, Rajbari 20 more towns proposed for inclusion: C. N wbgnj, Habiganj, Mvi bazar, Laxmipur, Shahajadpur, Joypurhat, Laksham, Chhatak, Rangamati, Ishwardi, Meherpur, Nabinagar, Panchagarh, Jessore, Bandarban, Khagrachari, Kotalipara, Niphalmari, Chuadanga, &Benapole 9 3 sample towns: Feasibility studies done in 2013 (PPTA); detailed design (external support) and procurement begins in additional towns: Feasibility studies (PPTA), detailed design (external support) and procurement begins in 2014 and early more towns proposed for inclusion: Feasibility studies (MDS consultants) and detailed design (MDS consultants) and procurement begins in 2014 and Page 345 of 423

362 11 12 Page 346 of 423

363 13 14 Page 347 of 423

364 Will depend on the PSs demand & the assessment made. In general, the following needs will be covered: Infrastructure Roads Drains Water supply & sanitation SWM Municipal facilities Slum improvement 15 Implementation of UGIAP Citizen awareness and participation Urban planning Equity and inclusiveness (woman and urban poor) Local resource mobilization Financial management, accountability, sustainability Administrative transparency Keeping essential Pourashava services functional 16 Page 348 of 423

365 17 3 phases (Ph.1: 1.5 year, Ph.2: 2.5 years, Ph.3: 2 years) A performance-based system: a pourashava must fulfill performance criteria before moving to the next phase There are 3 sets of performance criteria: entry (prior to Phase 1), intermediate (during Phase 1) and advanced (during Phases 2 and 3) The entry criteria is pass or fail. Passing it makes the pourashava eligible for phase 1 18 Page 349 of 423

366 Action in the Pourashavas Date (1) Need-assessment & FS in 3 sample PSs - Ongoing since Jun 13 (2) Needs assessment and FS in 7 addl PSs First half of 2014 (3) Capacity-building support in 10 priority PSs: from Dec 13 (4) Assessment of entry criteria : 2014 /early 2015 depending on PSs (5) Works begin : 2014 or 2015 depending on PSs Nb: there is also a Window B facility (USD 30 million) open to all PSs on the country selected through a competitive system 19 Organizational structure Ministry of Local Government Rural Development and Cooperatives Asian Development Bank (ADB) Local Government Division (LGD) Project Steering Committee (Chair Secretary, LGD) Department of Public Health Engineering (DPHE) Local Government Engineering Department (LGED) Consultancy Services Project Management Office (PMO) Project Director GICD MDS Others Deputy Project Director (DPHE) Deputy Project Director (LGED) Project Implementation Units (PIU) in Pourashavas 20 Page 350 of 423

367 21 22 Page 351 of 423

368 A tool to incentivize PS & ensure incremental improvements in essential municipal areas Three levels of criteria corresponding to the three project phases PSs are assessed before each phase against the criteria Once the entry criteria are fulfilled, the first set of priority investments amounting to about 20-25% of the ceiling (that is of the total amount defined during FSs) will be invested (Ph 1). Upon substantial progress of such investments & fulfillment of intermediate criteria, funds more priority investment projects amounting to about 60% of the ceiling will be invested (Ph 2). Meeting the advanced criteria & progress of investment projects will make these pourashavas eligible for additional investment support within 15-20% of the ceiling (Ph 3) Assessments will be timely performed by MPRC Entry criteria are a prerequisite to enter the project (July 2014) 23 Performance Indicator/Criteria Area of Activity/Activity Task Remarks Entry (E) Intermediate (I) Advanced (A) Citizen Awareness and Participation i. Formation and Working of Form TLCC TLCC formed as per Meetings held at regular Meetings held at regular Discussion should Committee for Exchange of Hold TLCC meetings and procedure intervals intervals not be confined to views with the Pourashava ensure effective participation At least 2 meetings held Participation of all members Participation of all members issues Citizens: Commonly Known of concerned members Meeting agenda and minutes including women and poor in including women and poor in only as TLCC (Reference: prepared and disclosed discussion ensured discussion ensured Inactive members Article 115 of Pourashava Act, 2009) Meeting working paper and Meeting working paper and to be replaced minutes prepared and minutes prepared and disclosed and decisions disclosed on Pourashava followed-up website and decisions followed-up ii. Formation and Working of Form WLCC WLCC formed as per Meetings held at regular Meetings held at regular Ward Committee Hold WLCC meetings procedure intervals intervals (Reference: Article 14 of At least 1 meeting held Participation of all members Participation of all members Pourashava Act, 2009) including women and poor in in discussion ensured discussion ensured Meeting held and record Meeting held and record kept and communicated to kept and communicated to the Pourashava the Pourashava iii. Preparation and Prepare Citizen Charter and Citizen Charter prepared and Display continues Implementation of Citizen get endorsement endorsed by TLCC and Establish Reception and at Charter (Reference: Article Display Citizen Charter and Pourashava Council Pourashava Office 53 of Pourashava Act, deliver services prescribed in Citizen Charter displayed in 2009) it Pourashava Office and other important places and prescribed services delivered iv. Formation and Working of Receive and record Complaint/grievance box Meeting held as and when Members include Information and Grievance complaints/grievances installed in Pourashava required CSO Redress Cell (IGRC) from Citizens Office Meeting decision representative(s) communicated to complainants and Pourashava Council Informed GRC activities disclosed to TLCC and Pourashava website 24 Page 352 of 423

369 Performance Indicator/Criteria Area of Activity/Activity Task Entry (E) Intermediate (I) Advanced (A) Remarks Urban Planning i. Preparation and Prepare PDP and PDP prepared through Development activities Development activities Discussed in Implementation of obtain endorsement/ a participatory process taken up conforming to taken up conforming to TLCC and approval Pourashava PDP endorsed by the PDP the PDP WLCCs Use of PDP for TLCC and approved Development Plan Pourashava by Pourashava Council (PDP) development activities ii. Control of Development Activities iii. Preparing Annual O&M Plan including Budget Provision Formation of urban planning unit Control of development activities Prepare Annual O&M Plan and Budget Urban planning unit functional Enforce at least 80% control of building construction/ reconstruction activities/ land development Effective prevention of encroachment on public land (river, canal, khas land etc.) practiced O&M Plan prepared approved, implemented and posted on Pourashava website Increased budget allocation by at least 5% each year Urban planning unit functional Enforce at least 90% control of building construction/ reconstruction activities/ land development Effective prevention of encroachment on public land (river, canal, khas land etc.) practiced O&M Plan prepared, approved, implemented and posted on Pourashava website Increased budget allocation by at least 5% each year Respectively 80 and 90% of the buildings built during the relevant evaluation period had obtained clearance certificate prior to construction and complied with The total numbers of buildings built will be estimated on the basis of baseline data and comparing with annual incremental number of buildings built Initiatives to resist encroachment have taken place during the evaluation period This O&M plan covers overall planning of Pourashava s O&M activities. 7(iv) is considered as a part of the Pourashava s essential 25 Performance Indicator/Criteria Area of Activity/Activity Task Entry (E) Intermediate (I) Advanced (A) Remarks Equity and Inclusiveness of Women and Urban Poor i. Form & activate Form Women and Standing Committee Standing Committee Children SC formed as per (SC) on Women & Hold meetings at prescribed guidelines regular intervals Children (according to At least, 2 meetings prescribed guideline) to Prepare GAP held prepare & steer Endorse GAP in TLCC Plan for GAP preparation done customized GAP Allocate fund and implement GAP ii. Form & activate Form Poverty Standing Committee Reduction & Slum Improvement SC (SC) on Poverty Reduction & Slum Hold meetings at regular intervals Improvement Prepare PRAP (according to Endorse PRAP in prescribed guideline) to TLCC prepare and steer Allocate fund & customized PRAP implement PRAP iii. Form Slum Improvement Committee (SIC) to implement slum improvement activities Select Slums and Form SIC Hold regular meetings Steer Slum Improvement activities Standing Committee formed as per prescribed guideline At least, 2 meetings held Meeting agenda and minutes prepared and disclosed Plan for PRAP preparation done Slum selection done according to priority Meeting held at regular intervals with agenda and minutes prepared and disclosed GAP prepared with activities tasks and responsibilities GAP endorsed by TLCC GAP posted on Pourashava website GAP implementation taking place with allocated fund from revenue budget (2-3%) Meeting held at regular intervals with agenda and minutes prepared and disclosed PRAP prepared with activities tasks & responsibilities PRAP endorsed by TLCC PRAP implementation taking place with allocated fund from revenue budget Meeting held at regular intervals with agenda and minutes prepared and disclosed GAP implementation taking place with allocated fund from revenue budget (enhanced allocation by 5% over previous year) GAP implementation report posted on Pourashava website Meeting held at regular intervals with agenda and minutes prepared and disclosed PRAP implementation taking place with allocated fund from revenue budget (5% enhanced over previous year) SICs formed in selected Regular meetings held slums SI activities Regular meetings of SIC implemented by SICs held with effective SI activities participants of all implemented by SICs members with effective participants of all Annual event suggested showing PRAP activities and achievements This provision is applicable only if there are slums in the pourashava 26 Page 353 of 423

370 Performance Indicator/Criteria Area of Activity/Activity Task Remarks Entry (E) Intermediate (I) Advanced (A) Enhancement Mobilization 4. of Local Resource i. Revenue mobilization through Holding Tax Conduct Regular Assessment of Holding Tax if due, and conduct Interim Assessment of Holding Tax Collection of Regular & Interim Holding Tax including arrear Action plan for enhanced holding tax prepared and endorsed by TLCC Regular assessment Regular assessment The total demand for done at 5 year s done at 5 year s interval collection of holding tax is interval if due, and if due, and Interim prepared annually by the Interim Assessment Assessment done every done every year as year as per Pourashava and actual per rule/procedures rule/procedures collection of tax above Increased Holding Tax Increased Holding Tax 70% is considered to be collected including collected including arrear adequate arrear (at least 70% of (at least 80% of demand) demand) Major defaulters list posted on Pourashava website ii. Revenue mobilization through collection of Indirect Taxes & Fees from other sources (Other than Holding Tax) iii. Computerize Tax Record System and Generate Computerized Tax Bill iv. Fixation and Collection of Water Tariff Charge and collect indirect taxes and fees Install Computerized tax record software & prepare Database Generate Computerized tax bill & serve to customers for payment Assess and collect monthly water tariff Install meter and collect water tariff on volumetric consumption Collect water tariff through computerized Major tax payers list posted on Pourashava website Action plan for Increased Indirect Increased Indirect Taxes, enhanced tax Taxes, Fees, rentals Fees, rentals and lease revenue prepared and lease money money charged and charged and collected collected including arrear including arrear by at by at least official inflation least 5% annually rate Computerized tax Computerized database record software updated installed and database Computerized tax bill prepared generated and served to Computerized tax bill customers generated and served Tax details made to customers available on line Plan to enhance Tariff enhancement Action Plan implemented tariff prepared plan implemented Inventory of assets Commitment by Inventory of asset updated and published Pourashava to install prepared and Action initiated for water meter and published introducing volumetric subsequently collect Water bills collection water tariff tariff on volumetric through the bank Water tariff collected MGSP criteria may not fulfill UGIIP-III requirements timely and with required intensity. For transparency and accountability, application of computerized system of tax collection, water tariff and accounting report by the Pourashava is extremely important. The GICD consultants will provide support to the Pourashavas in implementing the computerization process and improve their capacity to continue the activities in future. 27 Performance Indicator/Criteria Area of Activity/Activity Task Remarks Entry (E) Intermediate (I) Advanced (A) Financial Management, Accountability and Sustainability i. Preparation of Annual Prepare estimated annual budget, obtain Annual budget Estimated budget Estimated budget Modification of Pourashava Budget comments/suggestions from Citizens and approved and modified based on modified based on estimated budget with involvement of approval from TLCC & Pourashava Council disclosed comments/ comments/ suggestions Standing Committee will be done before suggestions from from Citizens and TLCC on Establishment & Citizens and TLCC approval of the Annual budget approved Finance Annual budget by Pourashava Council Annual Budget by approved by and posted on Poura Pourashava Pourashava Council website Council Special allocation will be made in the budget as per requirement of ii. Carrying out Audit of Preparation of Annual statement of Income and Annual statement of Annual statement of Accounts with Expenditure income and income and expenditure Conduct Audit of Pourashava accounts expenditure prepared prepared involvement of Standing Make presentation of Audit Report of the standing Conducted by standing Conducted by Standing Committee on Accounts committee committee on Accounts Committee on Accounts & Audit & Audit once a year & Audit once a year and and report prepared report prepared Audit Report of the Audit Report of the Standing Committee standing committee presented to TLCC and presented to TLCC and Pourashava Council Pourashava Council, and sent to PMO within posted on Pourashava 3 months website and sent to PMO within 3 months iii. Establishing Install Computerized Accounting System and Computerized Computerized MGSP criteria may Computerized Accounting Generate Computerized Accounting Reports Accounting Accounting Reports not fulfill UGIIP-III System installed generated requirements timely System & generating and with required Computerized Accounting intensity. For Reports transparency and accountability, application of computerized system of tax collection, water tariff and accounting report by the Pourashava is extremely important. The GICD consultants will provide support to 28 the Pourashavas in Page 354 of 423

371 Performance Indicator/Criteria Area of Activity/Activity Task Entry (E) Intermediate (I) Advanced (A) Remarks Administrative Transparency SC formed as per SC meeting held at SC meeting held at procedure prescribed intervals prescribed intervals At least 1 meeting Meeting agenda and Meeting agenda and held minutes prepared and minutes prepared and disclosed to TLCC disclosed to TLCC i. Formation and Form other Standing Working of Committees (SC), as required Standing Meeting Committees (Reference: Article 55 of Pourashava Act, 2009) ii. Ensure participation and assistance in conducting all training programmes Ensure regular attendance at training programmes Conduct training at Pourashava level iii. Using Improved Identify areas of activity Information and adopt IIT and E- governance practices Technology (IIT) Design & for Good Operationalize Governance Pourashava Website (Reference: Article 54 of Pourashava Act, 2009) Participation in all Participation in all training programmes training programmes ensured ensured Training programme Training programme from own Pourashava from own Pourashava budget planned and budget planned and implemented implemented Pourashava website activated and maintained All relevant information uploaded and regularly updated Pourashava website activated and maintained All relevant information uploaded and regularly updated Other Standing Committees may be formed, as required It is needed based on UGIIP II experience 29 Performance Indicator/Criteria Area of Activity/Activity Task Entry (E) Intermediate (I) Advanced (A) Remarks Keeping Essential Pourashava Services Functional i. Collection, Disposal and Management of Solid Waste Prepare annual programme, budget and implementation arrangement ii. Cleaning and Prepare annual Maintenance of Drains programme, budget and implementation arrangement iii. Arrangement for Prepare annual making Street Lighting programme, budget functional and implementation arrangement iv. Carrying out Operation & Maintenance (O&M) of Infrastructure & establishment & Operation of Mobile Maintenance Team (MMT) v. Keeping Public Toilets Clean & Operational Prepare annual programme, budget and implementation arrangement Establish Maintenance Team Arrange regular cleaning and keep Public Toilets operational Action Plan prepared Annual programme and budget prepared Regular collection done in core areas TLCC s satisfaction level assessed Action Plan prepared Annual programme and budget prepared Regular cleaning of primary drains done TLCC s satisfaction level assessed Annual programme and budget prepared Regular collection done in core area and solid waste disposed of in safe ground TLCC s satisfaction level assessed Annual programme and budget prepared Regular cleaning of primary and secondary drains done TLCC s satisfaction level assessed Action Plan prepared Annual programme & Annual programme & budget prepared budget prepared Street Lighting Street Lighting functional functional along 80% of along 90% of streets streets TLCC s satisfaction level TLCC s satisfaction assessed level assessed Action Plan prepared Annual programme and budget prepared Priority O&M activities implemented Mobile Maintenance Team functional TLCC s satisfaction level assessed Action Plan prepared Annual programme and budget prepared Public toilets made functional and cleaned TLCC s satisfaction level assessed Annual programme and budget prepared O&M activities fully operational Mobile Maintenance Team functional TLCC s satisfaction level assessed Annual programme and budget prepared Public toilets made functional and cleaned TLCC s satisfaction level assessed 30 Page 355 of 423

372 31 32 Page 356 of 423

373 33 Page 357 of 423