NATIONAL ROAD FUND AGENCY - ZAMBIA VALUE FOR MONEY IN THE CONTEXT OF ZAMBIA
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1 NATIONAL ROAD FUND AGENCY - ZAMBIA INTERNATIONAL CONFERENCE ON TRANSPORT RESEARCH AND EXIBITION VALUE FOR MONEY IN THE CONTEXT OF ZAMBIA Eng. Dr. Yohane Tembo Director - Programming Monitoring & Evaluation National Road Fund Agency, Zambia 11 th TO 14 th JUNE 2018, Mombasa, Kenya 1
2 Outline Introduction Mandate of NRFA Value for Money Significance of Research Conclusion 2
3
4 National Road Fund Agency is a 3 rd Generation RF: Act of Parliament (2002) Has an autonomous Board with significant private sector presence Publishes annual audited financial statements Has published financial rules/regulations Funds Maintenance and Capital Projects Has access to loans (e.g. NAPSA, DBSA) and grants Contrary to 1 st Generation RF which: Have no oversight board. Rely on earmarked revenues, not always related to road use; Are typically managed by the national road agency; Have a weak legal basis; Do not have published financial rules and regulations; Are not subject to independent technical and financial audits. And contrary to 2 nd Generation RF which: Has Act of Parliament Have oversight board Rely on fuel levies to finance maintenance only
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6 INSIDE NATIONAL ROAD FUND AGENCY Loans, Grants, Parliamentary Appropriations Road Fund (Tolling, Fuel Levy, Road Tax, etc) CPs Fin. Mgt, Accountability, audited accounts Payments All expenditure must accrue some economic impact Utilization of funds Financial & Technical Audits Checks & Balances
7 SOURCES AND FLOW OF FUNDS Vehicle Licence Fees Tolls Fuel levy Main Stream The Road Fund Construction Rehabilitation Maintenance
8 Road Network Classification Road Type/Class Length (Km) Total Paved Unpaved Core Road Network (CRN) Trunk (T) 3,116 3, Main (M) 3,701 2, District (D) 13,707 2,111 11,596 Urban 5,597 2,055 3,542 Primary Feeder Roads PFR 14, ,301 Sub-total 40,454 10,106 30,348 Non-CRN (Estimate) Secondary Feeder Roads (SFR) 10, ,060 Tertiary Feeder Roads (TFR) 4, ,424 Park Roads 6, ,607 Community Roads 5, ,000 Not properly documented Roads 1, ,126 Sub-total 27, ,217 Total 67,671 10,106 57,565 Core Road Network defined Minimum Road network required to be sustainably 8 maintained for economic growth
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10 So what is VfM??? Generally used to describe explicit commitment to ensuring the best results possible from the money spent
11 So what concerns us? Counting Project Hidden costs Inadequate designs Premature failures/workmanship Change orders (Variation Orders)/addenda Adherence to standards and specs Price Adjustments (economic indicators) Time-related obligtions Interest on delayed payments Claims for delays ordered by PM Suspension costs, standing time costs, etc Dispute Adjudication Board (DAB) costs All these superimpose additional stress and strain on fiscus, leading to likely project failure Or LOW VALUE FOR MONEY
12 Value for Money: What we do Technical Audits During and After completion 1. Internal PM&E 2. External- Consultants 1. Effectiveness 2. Efficiency 3. Economy FOCUS ON THREE Es' Scope of Technical Audit (Fair Share): a) MLG road projects (Contract & FAs) b) RDA road projects (Maint./Rehab/New Const./Upgrades/FAs) About 1,500km of road projects and associated bridges audited since 2011.
13 Value for Money: Savings 2011 to 2017, the Agency has recorded savings of approximately US$ 8 million through the IPC Certification process 16Km Asphalt road pavement. Errors in calculations Quantities Expired securities, e.g. Bank Guarantees Results of technical audits/inspections NRFA continues to engage implementing agencies to ensure reduction in errors and unsubstantiated certifications and establishing a self-regulating approach going forward
14 Value for Money: Outsourced Technical Audits Target: Maintenance/Rehab/New Construction/Upgrades and Bridges No. Description Year Comment 1 TA of Rehabilitation of Chingola - Kasumbalesa Road 2 Financial & Technical Audit of Zambia s Road Sector by OAG 3 Priority River Crossings in Luapula and Northern +4 National Parks km of WB-funded project completed in 2008 by Gopa Consulting 2010 Covering projects from by Office of Auditor General 2012, By K& Associates/E.G. Pettit & Partners 4 Financial & Technical Audit of CAIP 2012, 2014, 2015 In-house audit of DANIDA funded 15 District Councils under Rural Accessibility Project by NRFA 5 NRFA Funded Projects I, II, III 2013/14, 2015/ /18 Selected projects in AWP by Scot-Wilson (3 No. of 390km, 10 No. of 396km, 500km respectively) 6 Luanshya-Kafulafuta Road 2015 In-house (RDA/NRFA) audit of 42km WB funded road completed in 2009
15 Value for Money: Field Work
16 Value for Money: Typical Results 1) Delayed completion of projects 2) Inadequate designs and supervision 3) High Cost of Road works (Interests, TRO, CPAs, VOs, etc - intangibles) - Less road kilometers being covered 4) Use of inappropriate Technology for Road construction and maintenance (Reduced lifespan of roads) 5) Delayed benefits of improved roads to society/economy 6) Loss of Public Confidence Perception: presence of political hand in contract award and contract administration acts as a deterrent to road administrators in taking effective action against poor workmanship and supervision. Change Agent: allow Boards of Directors for road agencies to run autonomously, avoid appointing political stalwarts to Boards, penalise erring officers in accordance with existing laws without bias.
17 SIGNIFICANCE OF RESEARCH A golden opportunity to grow and improve the way we do business.
18 Research: The Paradigm Factor Different Paradigms do exist, but there s room for a New Consensus. DREAM BIG, LEARN FROM PAST MISTAKES AND EXCEL. 18
19 Research: Moving with Times Change is always necessary. Refusal to embrace change is denial of the potential which lies in pursuit of excellence ahead. Knowledge is always increasing and refining. INNOVATE OR STAGNATE 19
20 Research: The Power of Technology Perception: Technology is not a cure-all for the challenges of failing projects (true!). Thus using appropriate technology and using technology appropriately can often help to effectively meet our needs. Limitations in ToR s have telling effects on performed works and supervision. Change Agent: Value Engineering, Innovation, Professionalism. Comprehensive ToRs, Appropriate Specs and Standards, Solid Legal Framework, are cardinal. 20
21 Research: Good Engineering Practice 1) Continuous R&D for better, more efficient and cost-effective Roads (sustainable construction materials and technologies: environmental, social benefits, etc) 2) Continuous staff training for up-to-date knowledge 3) Strict adherence to approved standards, specs and practices 4) Calibrate international standards to local and regional standards 5) Use instrumentation to measure and reach conclusions 6) Use QMS/QAS [test and report non-conforming products, taking corrective actions and ensuring non-recurrence] 7) Independent Technical Audits/ M&E activities 8) Have in place a good maintenance plan: preventive rather than reactive in order to prolong road lifecycle and reduce the effects of aging. 21
22 Research: Zambia s Needs a) Maintenance Research: a) Low cost maintenance technologies: 1) Tractor Road Maintenance cheaper equipment and technology 2) Pothole Sealant Technology (cold Mix) quick response to maintenance critical for Tolling b) Construction Research: a) Low cost paving - alternative use of : 1) Rubberized Asphalt; 2) Artificial Laterite 3) Cobblestone pavement/ walkways 4) Design of climate resilient road pavements 5) Rigid Pavements c) Funding Research 1) Cost effective Technical Audits 2) Study on Construction Unit Cost (relative to region) 3) Innovative Funding Options and their Impact 4) Study on Economic Loses due stalled road projects
23 Research: What We are doing MoUs Signed with Academia PARTNERSHIP WORKSHOPS WITH ACADEMIA under the theme Research & Development for Effective and Sustainable Road Infrastructure Development, linking Industry and Academia AGREED ACTIONS Financial Support for fellowship/scholarship programmes, research and capacity building. Industrial Attachments & Internships. Development of policy to create linkage between industry and academia Establish Industry-Academia/Research Centres Partnership forum Establish Road sector R&D Technical Subcommittee Road Sector-Academia Symposium and Exhibitions Engagement of academia for Consultancy. Support in implementing of research findings by Road Sector agencies
24 CONCLUSION
25 "Growth is never by mere chance; it is the result of forces working together." - James Cash Penney, Founder of JCPenney RESEARCH SHOULD DISTINGUISH US FROM Doing things Right to Doing the Right Things FOR EFFECTIVE AND SUSTAINABLE ROAD INFRASTRUCTURE DEVELOPMENT
26 Thank You for Your Attention! 26
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