Bangladesh: Road Network Improvement and Maintenance Project II

Transcription

1 Validation Report Reference Number: PVR-435 Project Number: Loan Number: 2021 November 2015 Bangladesh: Road Network Improvement and Maintenance Project II Independent Evaluation Department

2 ABBREVIATIONS ADB Asian Development Bank ARMP Annual Road Maintenance Program BRTA Bangladesh Road Transport Authority EIRR economic internal rate of return GDP gross domestic product km kilometer MOC Ministry of Communication MOWCA Ministry of Women and Children Affairs PCR project completion report RFB Road Fund Board RHD RRP Roads and Highways Department report and recommendation of the President VOC vehicle operating cost NOTE In this report, $ refers to US dollars. Key Words adb, asian development bank, bangladesh, bangladesh road transport authority, brta, lessons, ministry of communications, moc, pcr, performance evaluation, rfb, road fund board, rhd, roads and highways department, road transport, transport, validation The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of IED management, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, IED does not intend to make any judgments as to the legal or other status of any territory or area.

3 PROJECT BASIC DATA Project Number: PCR Circulation Date: Jul 2014 Loan Number: 2021 (SF) PCR Validation Date: Nov 2015 Project Name: Road Network Improvement and Maintenance Project II Country: Bangladesh Approved Actual ($ million) ($ million) Sector: Transport and ICT Total Project Costs: ADB Financing: ($ million) ADF: Loan: (SDR equivalent, million) Borrower: OCR: 0.00 Beneficiaries: Others: Cofinancier: Total Cofinancing: Approval Date: 20 Nov 2003 Effectiveness Date: 23 Sep Nov 2004 Signing Date: 25 Jun 2004 Closing Date: 30 Dec Jan 2013 Project Officers: Initial Reviewers: H. Iwasaki D. S. Pyo T. Nakazaki S. Ekelund A. Faruque W. Tawisook M. N. Islam J. Supangco, Consultant Location: ADB headquarters ADB headquarters ADB headquarters Bangladesh Resident Mission Bangladesh Resident Mission Bangladesh Resident Mission Bangladesh Resident Mission Peer Reviewer: From: Nov 2003 Mar 2004 Sep 2004 Nov 2004 Jun 2008 Dec 2008 May 2010 To: Feb 2004 Aug 2004 Oct 2004 May 2008 Nov 2008 Apr 2010 Jan 2013 E. Kwon, Principal Evaluation Specialist, IED2 F. D. De Guzman Senior Evaluation Officer, IED2 Quality Reviewer: B. Nguyen, Senior Director: B. Finlayson, IED2 Evaluation Specialist, IED2 ADB = Asian Development Bank; ADF = Asian Development Fund; ICT = information and communications technology; IED2 = Independent Evaluation Department, Division 2; OCR = ordinary capital resources; PCR = project completion report; SDR = special drawing right. A. Rationale I. PROJECT DESCRIPTION 1. During the period of project preparation, the transport system in Bangladesh consisted of about 140,000 kilometers (km) of roads, 2,700 km of railroads, 5,970 km of perennial and seasonal waterways, 2 major seaports, and 7 airports. 1 The primary road network connected national and regional roads and, together with district roads, totaled about 20,800 km. Secondary roads were estimated at 115,000 km. The Roads and Highways Department (RHD) 1 ADB Report and Recommendation of the President: Proposed Loan to Bangladesh for the Road Network Improvement and Maintenance Project II. Manila.

4 2 in the Ministry of Communications (MOC) administered the national, regional, and district roads, while the Local Government Engineering Department in the local government division was in charge of secondary roads. 2. The performance of the road sector improved in the past decades, with the extension of the road network and rapid increase in demand for road transport, at an annual average rate of 8.4% for passengers and 8.2% for freight in the 1990s. This was almost double the average growth of gross domestic product (GDP) of 4.7%. From 1975 to 1997, the modal share of road transport rose from 54% to 73% for passenger traffic, and from 35% to 63% for freight. Of national and regional roads, 96% were paved. For district roads, which were used mostly by farmers to access markets and social facilities, only about 60% 65% were paved. The poor condition of district roads limited rural farmers connections to national markets, and to education and health facilities, which were mostly located in commercial centers connected through national roads. The improvement of national, regional, and district roads were needed to develop an integrated road network linking the rural poor to economic opportunities. 3. Although the country s major strategic corridors were almost completed over the past decades, there were remaining missing links. These caused serious bottlenecks and economic costs to the country. As a result, the National Land Transport Policy was approved in 2004 in the light of the government s pledge to establish a transport system that is safe, cheap, modern, technologically dependable, and environment friendly. 4. Roads have also become important for regional cooperation. It is expected that Bangladesh will accommodate most intra-regional transit shipments in the region. These benefits have yet to be fully realized in view of the poor land port facilities in Banglabandh and the narrow and poorly maintained border access roads. As the government improves the land port facilities, cross-border traffic through Banglabandh is expected to grow and help spur economic benefits and initiatives for regional cooperation. B. Expected Impact 5. The project s envisaged impacts were economic development and poverty reduction through improved transport efficiency. The performance indicators were (i) an increase in GDP and expansion of employment and earnings, and (ii) a decrease in poverty incidence in the project areas by 10% in 5 years. C. Objectives or Expected Outcome 6. The project had three intended outcomes. The first was to provide rural farmers with better access to markets and promote cross-border traffic through Banglabandh with (i) increased traffic in district roads higher than that in national and regional roads for the next 5 years; (ii) improved road condition of district roads to the level of national and regional roads in 10 years; (iii) reduced travel time to nearest markets, health services, and schools; (iv) growth of rural enterprises; (v) generated employment in the off-farm sector; (vi) increased labor mobility; and (vii) increased cross-border traffic from Nepal to Banglabandh by 20% on a year-on-year basis for 5 years after project completion. 7. The second intended outcome was to secure government resources and promote private sector participation in road maintenance. The performance indicators were (i) increased yearly allocation of road maintenance budget per km for RHD roads for 5 years after loan

5 3 effectiveness, and (ii) implementation of performance-based road maintenance contracts. The third intended outcome was enhanced road safety with a 30% reduction in accident rate in the project roads over 5 years after project completion. D. Outputs 8. The project had seven expected outputs. The first is on sector and institution reform program and involved the preparation of the sector road map with milestones and specified time frame for key reform measures, and the preparation of the road master plan. 9. The second output was road improvement. This involved 86.4 km of national roads, 15.8 km of regional roads in Nandail Kishoreganj, and 142 km of district roads (45.4 km district road in Bhaluka Kishoreganj, 44.0 km district road in the Parbatipur Madyapara, and 52.6 km district road in Boda Nilphamari). For the national roads, missing links in major road networks were to be improved, focusing on the 26.2 km of national roads in Chittagong Dohazari and 3.2 km of national roads in Kaliakoir bypass. Also to be improved were 57 km of national roads in Pachaghar Dohazari. 10. The third output was periodic road maintenance. It involved financing a 2-year time slice of priority road maintenance activities under the Annual Road Maintenance Program (ARMP). For each of the 2 years, periodic maintenance of an estimated 300 km was to be carried out through civil works contracts. The roads were to be selected annually using the Highway Design and Management model ranking as part of the ARMP. Support was to be restricted to periodic maintenance works (i.e., sealing and overlay). 11. The fourth output was performance-based routine road maintenance and involved routine and recurrent maintenance activities for about 100 km of regional or district roads to be contracted out to domestic contractors based on 3-year performance-based contracts. The fifth output focused on road safety and involved the safety audit of project roads for improvement and periodic maintenance. The safety audit was to cover about 800 km of existing roads with the highest accident rate and targeted to improve accident-prone areas or black spots. 12. The sixth output was the privatization of the vehicle inspection center. It involved providing assistance to the Bangladesh Road Transport Authority (BRTA) to repair existing testing equipment and machinery, and privatizing the operations of five vehicle inspection centers. The seventh and last output was to improve public awareness on the risks of HIV/AIDS and trafficking in women by (i) identifying effective and viable modes of anti-trafficking operations, and (ii) improving the awareness of vulnerable groups on HIV/AIDS. 13. Several changes in the scope of work were made during implementation. Except for the regional roads target that was retained, targets were substantially reduced for national roads (planned: 86.4 km, revised: 58.3 km) and district roads (planned: 142 km; revised: 71.1 km) (PCR, Appendix 1). The Kaliakoir bypass road (3.2 km), envisaged as a link to the national road networks, was canceled because its financing was confirmed by the Government of Japan (PCR, para. 9). The target of the periodic road maintenance was reduced by one-third from 600 km to 400 km (PCR, para. 10). Lastly, the privatization of vehicle inspection centers was canceled from Asian Development Bank (ADB) financing (PCR, para. 13). As a result of these scope changes, 43% of the approved loan amount was canceled (approved: $ million; canceled: $54.31 million).

6 4 E. Provision of Inputs 14. The total project cost was estimated at $187.1 million equivalent, comprising a foreign exchange cost of $75 million or 40% of total cost, and a local currency cost of $112.1 million or 60% of the total cost. ADB was to provide a loan of $126 million equivalent from its Special Funds Resources to finance 100% of the foreign exchange cost and 45% of the local currency cost of the project. The government was to finance $61.1 million of the project cost. 15. The ADB loan was approved in November 2003 and became effective in November It was expected to be closed by December 2008, but was actually closed in January 2013 after three extensions. The project completion report (PCR) 2 indicated that during project implementation, several loan cancellations were made following borrower requests (PCR, para. 19). Of the ADB loan, SDR3.10 million was canceled as anticipated loan savings on 28 August Another SDR10.96 million was canceled and reprogrammed under the Emergency Disaster Damage Rehabilitation Project in November In addition, SDR6.75 million was canceled on 7 July 2008 and SDR14.22 million on 29 February 2012 due to the slow implementation progress with poor disbursement performance. An undisbursed balance of SDR6.93 million was canceled at the loan closing date in January The total amount canceled was SDR41.95 million (equivalent to $54.31 million), reducing the amount of ADB financing to SDR46.18 million (equivalent to $71.69 million) (PCR, paras. 17 and 19) or 57% of the original loan of $ million. 16. The project was classified Category B under the ADB environmental categorization. The findings of the initial environmental examination indicated that the project was not expected to disturb any environmentally sensitive areas, except the Panchagahr Banglabandh and Chittagong Dohazari roads, and Kaliakoir bypass. These fell under the red category in the Bangladesh Environmental Preservation Rules 1997 and required a full environmental impact assessment (report and recommendation of the President [RRP], para. 79). Civil works for these project roads could only be started after the Department of Environment had issued an environmental clearance based on a full environmental impact assessment. At completion, the mitigation measures as set out in the initial environmental examination were fully complied with. There were no environmental issues identified during the previous ADB missions and the project completion review mission (PCR, para. 41). 17. At appraisal, the proposed 240 km of roads were to require 186 hectares of land for realignment, adjustments in road shoulders and drainage, and road widening. An estimated 4,650 households were expected to lose their assets, mostly agricultural land and structure frontage (RRP, para. 78). As a result, a resettlement plan was prepared. At completion, a total of 242 hectares of land were acquired and 19,166 affected individuals were compensated. The revision of alignments, including the Gafargaon bypass (13.3 km) and Patiya bypass (5.2 km), increased the size of land acquired and the number of affected individuals (PCR, para. 44). With increased land prices, the cost of land acquisition and resettlement increased from $7.5 million equivalent at appraisal to $27.9 million at completion (PCR, para. 18). 18. At appraisal, the project was estimated to require 225 person-months of international and 990 person-months of domestic consulting services. At completion person-months of international consulting services and 1, person-months of national consulting services were mobilized. The consultancy period was extended from 25 June 2011 to 30 June The PCR indicated that the delay in recruiting a construction supervision consultant triggered corresponding delays in all project start-up activities and an overall project implementation 2 ADB Completion Report: Road Network Improvement and Maintenance Project II in Bangladesh. Manila.

7 5 delay. The delay was mainly attributed to the lack of adequate capacity by RHD to evaluate the consultants proposals, and the prolonged clearance by the MOC and the government (PCR, para. 23). F. Implementation Arrangements 19. As envisioned at appraisal, RHD was the executing agency, except for the privatization of the vehicle inspection centers and on raising public awareness on the risks of HIV/AIDS and trafficking of women subprojects. The BRTA was the executing agency for the vehicle inspection center privatization and road safety subprojects. The Infrastructure Investment Facilitation Center (IIFC) was designated as the implementing agency to manage all privatization processes, with a task team to implement the privatization and to report to BRTA s engineering director. The Ministry of Women s and Children s Affairs (MOWCA) was the executing agency for the subproject to improve public awareness on the risks of HIV/AIDS and trafficking of women. The MOWCA established a steering committee consisting of representatives from the RHD, MOWCA, Ministry of Health, Ministry of Home Affairs, nongovernment organization network (Action Against Trafficking and Sexual Exploitation of Children), and ADB which had more members than planned. The implementation arrangements seemed adequate, although RHD performance fell below expectations due to inadequate staffing. 20. The PCR noted that the government and the executing agencies complied with the majority of the covenants. However, it was delayed in complying with several covenants including those on the (i) reorganization of the RHD, (ii) introduction of maintenance funding, (iii) privatization of the operation of five vehicle inspection centers of the BRTA, and (iv) adequate funding for land acquisition and resettlement. This validation finds that a few covenants were either not complied with or only partially complied with. Of the 61 loan covenants, 58 were complied with and three not complied with during loan effectivity. Introduction of the maintenance fund only started in July 2013 with the approval of the Road Fund Act by the government, while the actual operation of the Road Fund Board is still pending. The BRTA failed to comply with the covenant on the privatization of the five vehicle inspection centers, while the reorganization of the RHD was not implemented within the loan period. The PCR noted that the covenant on the implementation of the project performance monitoring and analysis and the conduct of baseline surveys were complied with. However, data collected appeared to have not been utilized during the PCR preparation. II. EVALUATION OF PERFORMANCE AND RATINGS A. Relevance of Design and Formulation 21. The PCR rated the project relevant. It noted that road maintenance and safety were consistent with the shift in focus of RHD to road maintenance, with RHD promoting private sector participation in road maintenance to improve operational efficiency. This validation observes that the project remained consistent with the government s new Perspective Plan aimed at implementing Vision 2021 and the Sixth Five Year Plan FY2011 FY2015. Under this plan, a top priority was to build transport network corridors that provide regional connectivity to the national ports of Chittagong and Mongla. This validation assesses that the project remained consistent with the ADB Country Partnership Strategy for Bangladesh. 3 General Economics Division, Planning Commission, Government of the People s Republic of Bangladesh Perspective Plan of Bangladesh : Making Vision 2021 a Reality. Dhaka.

8 6 22. This validation notes that the project scope was significantly reduced in most project outputs during implementation resulting in the cancellation of 43% of project loan amount (para. 13). The PCR attributed the reductions to delays in recruiting the construction supervision consultant due to the limited capacity of RHD for evaluating consultants proposals, and to the prolonged clearance by the MOC and related government agencies (PCR, para. 23).The PCR also noted that the cancellation of outputs related to the BRTA (privatization of vehicle inspection centers) and MOWCA (public awareness on the risks of HIV/AIDS) showed lack of buy-in from the concerned agencies (PCR, para. 30). 23. This validation is of the view that these scope reductions were due to factors (e.g., limited implementation capacity, lengthy procurement processes, ownership, etc.) that could have been considered during the project preparation stage. Given the limited implementation capacity of the concerned institutions, seven outputs to be delivered within 5 years appeared to be too ambitious. The resulting loan cancellations could have been avoided if the institutional capacity of the executing and implementing agencies were adequately assessed and the project was more realistically designed. On these bases, this validation rates the project less than relevant. 4 B. Effectiveness in Achieving Project Outcome and Outputs 24. The PCR rated the project less than effective. It indicated that the envisaged outcomes were achieved, but with shortfall in outputs (PCR, para. 31). As a result of the revised scope of work, output targets were revised. The revised targets were to improve a total of km of roads, comprising 58.3 km of national roads, 15.8 km of regional roads, and 71.1 km of district roads. Actual outputs were improvements in 53.1 km of national roads, 15.8 km of regional roads, and 71.1 km of district roads (PCR, Appendix 1, p.16). The PCR noted that the shortfall of 30.1 km of national roads and 70.9 km of district roads from the appraisal figures affected the rating (PCR, para. 31). 25. After the 3.2 km Kaliakoir bypass was canceled as its financing was confirmed by the Government of Japan, the target was revised from two bypass roads to just improving the 5.2 km Patiya bypass. Of this revised target, no section was completed due to the unsatisfactory performance of the contractor (PCR, para. 9). The selection of the roadway for the periodic road maintenance output was also delayed. The scope was eventually reduced to cover about 400 km of roads in order to complete this output on time. At completion, 449 km of RHD roads were maintained between January 2008 and December 2010 (PCR, para. 10; and Appendix 1, p.16), which was lower than the 600 km of roads envisaged at appraisal. In view of these shortfalls in outputs, this validation considers the project could not have possibly attained the level of outcomes envisioned at appraisal. While some outcomes were achieved, such as better access to markets and promotion of cross-border traffic through Banglabandh, these were commensurate to the number of km completed, which were less than envisioned at appraisal. 26. On the allocation of the road maintenance budget, the PCR noted that budget allocation for routine road maintenance increased from Tk741.0 million in FY2007 to Tk3.6 billion in FY2013. Likewise, budget for periodic road maintenance increased from Tk1.7 billion in FY2007 to Tk6.0 billion in FY2013. However, it is difficult to ascertain if these increases were of sufficient levels since the project frameworks in both the RRP and the PCR did not indicate the required numerical targets. 4 The regional department disagrees with the downgrade of the PCR rating.

9 7 27. The project failed to privatize the five vehicle inspection centers as the BRTA was unable to hire the consultant to assist in the privatization efforts within the project loan period. The PCR indicated that this output was excluded from ADB financing and the BRTA agreed to expedite the privatization process using the government s own resources. However, there was no significant progress made at the time the PCR was prepared (PCR, para. 13). On improving public awareness on the risks of HIV/AIDS and trafficking in women, MOWCA requested an extension and additional funding to provide more assistance to the project areas. The proposed physical upgrading of information centers, conduct of trainings and workshops, and development of awareness materials were not accomplished. This was due to the delay in approving the revised development project proposal (PCR, para. 14). On these bases, this validation assesses the project less than effective. C. Efficiency of Resource Use in Achieving Outcome and Outputs 28. The PCR rated the project less than efficient. It indicated that the unutilized fund reduced the project s efficiency (PCR, para. 35). The project encountered start-up delays of 36 months because of protracted loan signing and delays in the recruitment of supervision consultant and civil works contractors (PCR, para. 24). Accordingly, civil works started in May 2008 instead of June 2005 as envisaged at appraisal. Further implementation delays were experienced during the period , caused by protracted land acquisition and resettlement. These were attributed to the (i) delay in the government s release of funds due to the corresponding delay in approving the revised development project proposal by the Planning Commission, (ii) continued underperformance of the civil works contractor for road improvement, and (iii) delays by the RHD and the Department of Forestry in relocating utilities and cutting the trees from the right-ofway. At appraisal, the project was planned for completion within 5 years. Implementation of all outputs took about 9 years (PCR, para. 20). 29. The PCR recalculated the economic internal rate of return (EIRR) for the roads improvement output at 17.5%, compared with the 23.2% estimated at appraisal (PCR, Appendix 6). However, the PCR did not provide an appendix where details of the EIRR reestimation, in terms of assumptions and methodology, were discussed. The South Asia Regional Department subsequently provided spreadsheets for the EIRR calculations. 30. This validation notes that among the six project roads with reestimated EIRRs, the construction of the Chittagong Dohazari road (EIRR: 26%) was abandoned because RHD terminated the contract due to the contractor s lack of commitment. 5 Excluding this road segment, the reestimated project EIRRs was reduced to 15.8% (instead of 17.5%). In addition, of the five remaining roads (199 km), three roads with a combined length of 130 km (or 65%) appeared to have had an overestimated vehicle operating cost (VOC) and time savings. The economic benefit flows of these roads substantially increased in 2020 and 2021 without clear explanation and supporting evidence. 6 This validation finds the recalculated project EIRRs not justified. Based on process efficiency, this validation rates the project less than efficient. 5 The only physical progress made was the construction of three culverts on the proposed Patiya bypass. Land acquisition was completed for the project length and the bypass (PCR, Appendix 6, Table A6.1, footnote a). The PCR indicated that this road would be constructed by 2020 as part of the National Highway 1 (PCR, Appendix 6, para. 10 and Table A6.4). 6 For Bhaluka Kishoreganj road, increase in VOC savings jumped from 7% in 2019 to 100% in Likewise, time savings increased from 7.3% in 2019 to 508.8% in In the case of Boda Nilphamari road, VOC savings grew from 6.5% in 2020 to 99.5% in 2021, while time savings registered an increase from 7.3% in 2020 to 227.2% in For Parbatipur Madhyapara road, VOC savings increased from 7.1% in 2019 to 32.5% in 2020, while time savings grew from 7.2% in 2019 to 47.7% in 2020.

10 8 D. Preliminary Assessment of Sustainability 31. The PCR rated the project likely to be sustainable. It noted that the completed project roads were in very good condition, but there were no axle load stations. The movement of overloaded trucks could damage these roads in the near future. While the government had installed axle load stations on three major national highways, this did not include the project roads. The MOC had a priority list of eight future axle load stations, including one along the Panchagarh Banglabandh highway. However, this validation notes that there was no assurance that one would be constructed and installed in the near future. 32. The PCR indicated that the fund allocated by the government to the RHD for routine and periodic maintenance was still inadequate (PCR, para. 36). This validation notes that the establishment of a road fund mechanism to finance road maintenance under a Road Fund Board (RFB) was a loan covenant in both the previous Road Maintenance and Improvement Project (ADB Loans 1789-BAN and 1790-BAN) and this project. In both cases, the government failed to comply with the loan covenant on the creation of the said fund. The RHD has been using project funding within the Annual Development Plan to supplement its periodic maintenance budget. Total spending on periodic maintenance from both the RFB and Annual Development Plan falls short of the sustainable level indicated by the ARMP, and far short of the level required to address the maintenance backlog. Until loan closing, the road maintenance fund had not been established and there was no time-bound action plan to implement such a mechanism. 33. The government passed the RFB Bill on 14 July The RFB was expected to be operational by mid-2014 and could contribute to enhanced sustainability of roads under the project in particular. This validation is of the view that until the RFB becomes operational, there are no assurances that the project roads would be sustained, given the size of the road maintenance backlog that was estimated at appraisal at $450 million (RRP, para. 10). Likewise, the restructuring of the RHD seemed to be still under review (PCR, Appendix 5, p. 26). 34. In view of the (i) uncertainty in the allocation of road maintenance funding for the project roads, (ii) absence of the axle load stations to prevent overloaded vehicles from using the project roads, and (iii) delay in the implementation of the RHD restructuring, this validation assesses the project less than likely sustainable. 7 E. Impact 35. The PCR rated project impact significant. It noted that during , GDP increased by more than 6% per year, while the national poverty index declined by about 9 percentage points (40.0% to 31.5%) from 2005 to The poverty indices of Dhaka declined from 32.0% to 30.5%, Chittagong s from 34.0% to 26.2%, and Rajshahi from 51.2% to 35.7%. On the whole, these were lower than the 10% targeted at appraisal. The PCR indicated that the impact on poverty and GDP in the specific project areas could not be measured as no procedure was available within the Bangladesh Bureau of Statistics (PCR, para. 39). 36. The PCR provided short descriptions of the impacts that were generated by the project. This validation notes that there were no baseline and updated data for project performance monitoring that could have been cited to ascertain whether substantive socioeconomic impacts were in fact generated and to reinforce the rating given. Based on the PCR-reported poverty 7 The regional department disagrees with the downgrade of the PCR rating.

11 9 indices, which were lower than targets, as well as the lack of evidence to attribute GDP growth and decline in poverty incidence to the project, this validation finds that there is no sufficient evidence to justify the significant rating for socioeconomic impact. Therefore, this validation considers project impact moderate. III. OTHER PERFORMANCE ASSESSMENTS A. Performance of the Borrower and Executing Agency 37. The PCR rated the performance of the borrower less than satisfactory. It also rated the performances of the RHD partly satisfactory and the BRTA unsatisfactory. The PCR noted that the government failed to provide counterpart funds in a timely manner. This delayed the payment for land acquisition and to contractors and consultants, and caused the cancellation of the remaining activities under the MOWCA. The PCR indicated that the performance of RHD was erratic, involving delays in key decision making, such as the procurement of consulting services and civil works contracts, among other things. 8 Weakness in the contract administration system of RHD and failure in adopting actions against nonperforming contractors made the situation worse. The RHD did not fully accomplish its planned outputs while the BRTA did not complete the privatization of the vehicle inspection centers. On these bases, this validation views the performance of the borrower and executing agencies less than satisfactory. B. Performance of the Asian Development Bank 38. The PCR rated the performance of ADB satisfactory. It noted that the response of ADB to the government s request for assistance was timely. The loan was also processed in a reasonably short time. The PCR indicated that ADB incorporated lessons learned from previous ADB-assisted transport sector development projects in the project design. However, this was not apparent in view of the continued institutional weaknesses of the concerned agencies. This could have been properly considered during the project s formulation stage (para. 23). Although RHD had previously implemented ADB projects, it failed to meet the planned outputs. 39. The PCR noted that ADB fielded one inception mission, project review missions, a midterm review mission, a safeguard mission, and a special project review mission. Given the Bangladesh Resident Mission s presence and access to the executing agency and other concerned agencies, it could have ensured that project implementation flowed smoothly through constant monitoring of executing agencies project activities. The expectation is that more frequent formal and informal contacts with the executing agency and other agencies could have been undertaken. On the whole, this validation views ADB performance satisfactory. IV. OVERALL ASSESSMENT, LESSONS, AND RECOMMENDATIONS A. Overall Assessment and Ratings 40. The PCR rated the project less than successful. This validation has the same overall rating but rates the project a notch lower on relevance and sustainability. On relevance, significant reductions in scope of work and cancellations of almost half of the loan amount during implementation indicate poor project preparation and inadequate assessment of institutional capacity and factors that could affect implementation. On sustainability, there was no assurance 8 Lengthy procedures at the MOC and other government agencies for land acquisition, and the revision of the development project proposal also caused delays.

12 10 that sufficient funding would be provided for the maintenance of the project roads. The absence of vehicle load control stations could result in overloaded vehicles plying these project roads and hastening their deterioration. While the RFB was created, there was no indication when it would start operating, how it would deal with the road maintenance backlog, and manage the current road maintenance funding requirements. Overall Ratings Criteria PCR IED Review Reason for Disagreement and/or Comments Relevance Relevant Less than relevant Significant reductions in scope of work and cancellations of almost half of the loan amount reflected poor project preparation and inadequate assessment of institutional capacity and factors affecting implementation (paras ). Effectiveness in Less than effective Less than effective achieving outcome and outputs Efficiency in achieving Less than efficient Less than efficient outcome and outputs Preliminary assessment of sustainability Likely to be sustainable Less than likely sustainable Funds allocated for routine and periodic maintenance was still limited. Road fund mechanism has yet to become operational. Absence of load control stations in project roads could result in early deterioration (paras ). Overall assessment Less than successful Less than successful Impact Significant Moderate Poverty indices were lower than targets (paras ). Borrower and executing agency Less than satisfactory Less than satisfactory Performance of ADB Satisfactory Satisfactory Quality of PCR Satisfactory Refer to para. 44. ADB = Asian Development Bank, IED = Independent Evaluation Department, PCR = project completion report. Source: ADB Independent Evaluation Department. B. Lessons 41. The PCR indicated the need for advance work for land acquisition, tree removal in the right-of-way, and commencement of resettlement before the selection of civil works contractors. This validation offers as an additional lesson the need for a more thorough assessment of the capability of the executing agencies, including their commitment to the project. The RHD, which had more experience in implementing ADB projects, was remiss in its responsibilities. The frequent change in project personnel may have placed inexperienced technical staff on the project. The BRTA and MOWCA were not committed to the project, leading to their failure to produce required outputs. Even government buy-in to the project was not apparent as the release of counterpart funding was either delayed or not released at all.

13 11 C. Recommendations for Follow-Up 42. The PCR provided a few recommendations. It indicated the need for the government to monitor the benefits from the infrastructure built under the project. It also indicated the need to closely monitor the partially complied covenants under the loan agreement. Likewise, it noted that ADB should monitor the privatization of the vehicle inspection centers and installation of axle load stations near to or at the project roads to prevent overloaded vehicles from using the roads. This validation offers a few recommendations. First, ADB could monitor developments in operationalizing the RFB and the allocation of funds for the road maintenance program, including decrease in the maintenance backlog. ADB should determine if the RHD restructuring is being implemented, including the extent and coverage of the restructuring. V. OTHER CONSIDERATIONS AND FOLLOW-UP A. Monitoring and Evaluation Design, Implementation, and Utilization 43. The PCR noted that the government and executing agency complied with the covenant to establish the system for project performance monitoring and analysis. This should have been evidenced by the conduct of baseline and other surveys to monitor and measure achievement of impacts and outcomes. However, it was not apparent that the outputs, if any, of the performance monitoring system were used in the PCR preparation. In fact, PCR ratings of the various criteria could have been supported by the results of the baseline and updated survey data on performance indicators. B. Comments on Project Completion Report Quality 44. The quality of the PCR is satisfactory. The report was candid and concise and followed the ADB Project Administration Instructions 6.07A. The recommendations that were drawn from the findings were sound. A shortcoming was noted in the economic reevaluation portion. The worksheets for the EIRR recomputation of the project roads were not initially provided in the PCR, constraining the validation of the estimates. The worksheets that were later made available brought more questions on the methodology used and data provided (para. 29). C. Data Sources for Validation 45. Data sources for this validation included the project s RRP; PCR; loan review mission reports; ADB Country Assistance Plan for Bangladesh, ; ADB Country Strategy and Program for Bangladesh, ; ADB Country Partnership Strategy for Bangladesh, ; and Bangladesh s Fifth and Sixth Five-Year plans. D. Recommendation for Independent Evaluation Department Follow-Up 46. Given the poor performance of the project and the lack of data for measuring and comparing estimates of performance indicators, the conduct of a project performance evaluation may not be warranted.