IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-48650) ON A LOAN IN THE AMOUNT OF EURO 90.0 MILLION (US$ MILLION EQUIVALENT) TO THE

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-48650) ON A LOAN IN THE AMOUNT OF EURO 90.0 MILLION (US$ MILLION EQUIVALENT) TO THE REPUBLIC OF BULGARIA FOR A ROAD INFRASTRUCTURE REHABILITATION PROJECT Sustainable Development Department Central Europe and the Baltic Countries Europe and Central Asia December 16, 2013 Report No: ICR287

2 CURRENCY EQUIVALENTS (Exchange Rate Effective July 29 th, 2013) Currency Unit = Bulgarian Lev (BGN) BGN = US$ 1 US$ = BGN 1 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ADT CBA CPS EIRR EMP EU HDM-4 ICR IRI ISR JASPERS MRD MS MU OPRD OPT PAD PBC PDO RIA RMS SIL TEN-T VOC Annual Daily Traffic Cost-Benefit Analysis Country Partnership Strategy Economic Internal Rate of Return Environmental Management Plan European Union Highway Development and Management Model Implementation Completion Report International Roughness Index Implementation Status Report Joint Assistance to Support Projects in European Regions Ministry of Regional Development Moderately Satisfactory Moderately Unsatisfactory Operational Program for Regional Development Operational Program for Transport Project Appraisal Document Performance Based Contracts Project Development Objective Road Infrastructure Agency Road Management System Special Investment Loan Trans European Network - Transport Vehicle Operating Cost Vice President: Laura Tuck, ECA VP Country Director: Mamta Murthi, ECCU5 Sector Manager: Juan Gaviria, ECSTR Project Team Leader: Orlin M. Dikov, ECSTR ICR Team Leader: Rakesh Tripathi, ECSTR

3 COUNTRY Bulgaria Project Name Road Infrastructure Rehabilitation Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design Key Factors Affecting Implementation and Outcomes Assessment of Outcomes Assessment of Risk to Development Outcome Assessment of Bank and Borrower Performance Lessons Learned Comments on Issues Raised by Borrower/Implementing Agencies/Partners Annex 1. Project Costs and Financing Annex 2. Outputs by Component Annex 3. Economic and Financial Analysis Annex 4. Bank Lending and Implementation Support/Supervision Processes Annex 5. Beneficiary Survey Results Annex 6. Stakeholder Workshop Report and Results Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Annex 9. List of Supporting Documents MAP

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5 A. Basic Information Country: Bulgaria Project Name: Road Infrastructure Rehabilitation Project Project ID: P L/C/TF Number(s): IBRD ICR Date: 08/22/2013 ICR Type: Core ICR Lending Instrument: SIL Borrower: The Republic of Bulgaria Original Total Commitment: Revised Amount: USD M Environmental Category: B Implementing Agencies: Road Infrastructure Agency Co-financiers and Other External Partners: None B. Key Dates USD M Disbursed Amount: USD M Process Date Process Original Date Revised / Actual Date(s) Concept Review: 06/29/2006 Effectiveness: 12/13/ /13/2007 Appraisal: 12/20/2006 Restructuring(s): 03/31/2011 Approval: 06/26/2007 Mid-term Review: 06/01/ /12/2009 Closing: 06/30/ /30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Risk to Development Outcome: Bank Performance: Borrower Performance: Moderately Satisfactory Moderate Satisfactory Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Not Applicable Quality of Supervision: Satisfactory Implementing Agency/Agencies: Not Applicable Overall Bank Performance: Satisfactory Overall Borrower Performance: Moderately Satisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Performance any) Potential Problem Project at any time (Yes/No): Problem Project at any time (Yes/No): DO rating before No Yes Moderately Satisfactory Quality at Entry (QEA): None Quality of Supervision (QSA): None Rating

6 Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 4 10 Rural and Inter-Urban Roads and Highways Theme Code (as % of total Bank financing) Administrative and civil service reform Infrastructure services for private sector development Injuries and non-communicable diseases Regional integration Trade facilitation and market access E. Bank Staff Positions At ICR At Approval Vice President: Laura Tuck Shigeo Katsu Country Director: Mamta Murthi Anand K. Seth Sector Manager: Juan Gaviria Motoo Konishi Project Team Leader: Orlin M. Dikov Mohammed Dalil Essakali ICR Team Leader: ICR Primary Author: ICR Co-author F. Results Framework Analysis Rakesh Tripathi Rakesh Tripathi Michael Butler Project Development Objectives (from Project Appraisal Document) The development objective of the proposed project would be to assist Bulgaria to reduce road transport costs by improving the condition and quality of its roads network during the first years of EU accession. Revised Project Development Objectives (as approved by original approving authority) No Change (a) PDO Indicator(s) Indicator Baseline Value Original Target Values (PAD) Revised / New Target Values (Restructuring) Actual Value Achieved at Completion Indicator 1 : Percentage of improved Class I roads initially in poor condition, measured in IRI (International Roughness Index) cumulative values Value quantitative or 0 6.0% 3.6% 3.6% Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Formally revised target reduced as a result of restructuring. Indicator 2 : Percentage of improved Class II roads initially in poor condition, measured in IRI (International Roughness Index) cumulative values

7 Value quantitative or 0 3.0% 3.2% 3.2% Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Formally revised target reduced as a result of restructuring. Indicator 3 : Percentage of improved Class III roads initially in poor condition, measured in IRI (International Roughness Index) cumulative values Value quantitative or 0 1.0% 0.5% 0.5% Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Formally revised target reduced as a result of restructuring. Indicator 4 : Vehicle Operating Cost (VOC) on roads to be rehabilitated under the Project (Average, 2005 EUR per vehicle-kilometer) Value quantitative or Qualitative) Date 05/31/ /31/ /30/2013 Comments (incl. % achievement) Target achieved on all completed roads sections under the Project (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Values (PAD) Revised / New Target Values (Restructuring) Actual Value Achieved at Completion Indicator 1 : Consultant Services for Project Management support for operational programs Value 260 cumulative 0 cumulative staffmonths (quantitative 0 staff-months - staff-months or Qualitative) Date 03/31/ /31/ /30/2013 Comments (incl. % achievement) This activity was canceled because the consultancy services were carried out in-house by JASPERS. (JASPERS services are free to the Govt., hence it was an economic decision) Indicator 2 : Consultant and advisory services for road sector management Value 24 cumulative 18 cumulative staffmonths quantitative or 0 staff-months - staff-months Qualitative) Date 03/31/ /31/ /30/2013 Comments (incl. % achievement) This activity was partially achieved through the 18 month contract of the Highway Advisor procured under this Project. It should be noted additional advisory services were carried out in-house by RIA s local consultant. Project management manuals reviewed, finalized and in use Indicator 3 : Value quantitative or No - Yes No Qualitative) Date 03/31/ /31/ /30/2013 Comments (incl. % achievement) This was completed with RIA s own funds under an in-house consultancy contract. Indicator 4 : Value quantitative or Qualitative) Studies on institutional set up, human resources and development of competencies in the sector carried out No - Yes No

8 Date 03/31/ /31/ /30/2013 Comments (incl. % achievement) This activity was canceled by RIA. Indicator 5 : Number of kilometers of Class I roads rehabilitated under the Project Value quantitative or 0 km 174km 117 km 117.2km Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Formally revised target reduced as a result of restructuring. Indicator 6 : Number of kilometers of Class II roads rehabilitated under the Project Value quantitative or 0 km 138km 127 km 130km Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Formally revised target reduced as a result of restructuring. Indicator 7: Number of kilometers of Class III roads rehabilitated under the Project Value quantitative or 0 km 138km 63 km 62.9km Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Formally revised target reduced as a result of restructuring. Indicator 8 : Works (W), Goods (G), and Consulting Services (CS) contracts processed and managed by Management Consultant Value quantitative or 0 (W), 0 (G), 0 (CS) 9 (W); 8 (G); 2 (CS) - 6 (W); 13 (G); 5 (CS) Qualitative) Date 05/31/ /31/ /30/2013 The restructured target was actually achieved. The number of civil works contracts was Comments (incl. % reduced from 9 to 6 as part of the restructuring, however this was not reflected in the achievement) revised results framework. Indicator 9 : Training received by RIA staff from management Consultant (in staff-hours) Value quantitative or 0 1,700 2,200 2,774 Qualitative) Date 05/31/ /31/ /31/ /30/2013 Comments (incl. % achievement) Successfully achieved. Indicator 10 : Updating of road data for Class I roads (% of total length per year) Value quantitative or 0% 100% - 80% Qualitative) Date 05/31/ /31/ /30/2013 Comments (incl. % achievement) It is expected that this will be achieved within 6 months of the project closing. Indicator 11 : Updating of road data for Class II roads (% of total length per year) Value quantitative or 0% 50% - 25% Qualitative) Date 05/31/ /31/ /30/2013 Comments (incl. % achievement) Due to insufficient budget, not all road data is being collected for Class II roads. Indicator 12 : Updating of road data for Class III roads (% of total length per year) Value 0% 15% - 10%

9 quantitative or Qualitative) Date 05/31/ /31/ /30/2013 Comments (incl. % achievement) Due to insufficient budget, not all road data is being collected for Class III roads. Indicator 13 : Implementation and Effective use of Road Management System by RIA Value quantitative or No Yes - Partially Qualitative) Date 05/31/ /31/ /30/2013 Comments (incl. % achievement) Only partially implemented because automatic traffic counters were not procured. In terms of effectiveness, the RMS is not being used to its full potential (refer to Section 2.2 for more details). Rolling Multi-year road maintenance and rehabilitation program established Indicator 14 : Value quantitative or No Yes - Partially Qualitative) Date 05/31/ /31/ /30/2013 Although RIA has prepared annual and three-year programs for maintenance, they are not Comments (incl. % developing rolling multi-year programs using the newly procured Road Management achievement) System (Indicator 13). Indicator 15 : Capacity of RIA to manage road maintenance: number of area-wide maintenance contracts prepared Value quantitative or Qualitative) Date 05/31/ /31/ /30/2013 Comments (incl. % achievement) Three PBC contracts were prepared under the Project. RIA made additional modifications to the contracts and eventually tendered two PBC covering two motorway sections. Road safety strategy and plans prepared Indicator 16 : Value quantitative or No Yes - Yes Qualitative) Date 05/31/ /31/ /30/2013 This included the road safety capacity review and preparation of road safety action plan. Comments (incl. % In addition, 25 black spots were identified and detailed designs prepared for 10 achievement) implementation is currently ongoing. G. Ratings of Project Performance in ISRs No. Date ISR Actual Disbursements DO IP Archived (USD millions) 1 11/13/2007 Satisfactory Satisfactory /06/2008 Satisfactory Satisfactory /05/2008 Satisfactory Satisfactory /06/2008 Satisfactory Satisfactory /23/2009 Moderately Satisfactory Moderately Satisfactory /05/2009 Satisfactory Satisfactory /08/2009 Satisfactory Moderately Satisfactory /14/2010 Moderately Satisfactory Moderately Unsatisfactory /10/2010 Moderately Satisfactory Moderately Unsatisfactory /29/2011 Moderately Unsatisfactory Moderately Unsatisfactory /30/2011 Moderately Satisfactory Moderately Satisfactory /22/2012 Moderately Satisfactory Moderately Satisfactory 92.44

10 13 12/25/2012 Moderately Satisfactory Moderately Satisfactory /22/2013 Moderately Satisfactory Moderately Satisfactory H. Restructuring (if any) Restructuring Date(s) Board Approved PDO Change ISR Ratings at Restructuring DO IP Amount Disbursed at Restructuring in USD millions Reason for Restructuring & Key Changes Made Level 2 Restructuring. The proposed project restructuring is necessary for the following two reasons: (i) To reflect the Government s new priorities with regard to the absorption of European Union (EU) funds and; (ii) To improve project implementation performance. 03/31/2011 N/A MS MU Key changes included: (i) reduction in the scope of rehabilitation works under Component 1 and borrower s financing share; (ii) expansion of Component 2: Institutional Development - focusing it on the absorption of EU funds; (iii) extension of the Loan Closing Date by 24 months to enable full completion of the expanded Component 2 and of all ongoing road rehabilitation works under Component 1.

11 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Country background. At the time of approval, Bulgaria s economy had grown by 6.2 percent in 2006 at the same time poverty levels had dropped and unemployment had decreased from 18 to 11.7 percent over the preceding six years. At this time Bulgaria s main challenge was to narrow the income gap and facilitate convergence with the European Union (EU) by continuing to raise productivity and employment Road Sector Background Prior to EU accession, Bulgaria had aligned its transport policy and regulations with that of the rest of EU, providing the necessary framework for the country s full integration within the EU transport market. In addition, there had been several investment programs since the late 1990s to upgrade the transport infrastructure to EU standards and to enhance the transport links with neighboring countries and with the rest of the EU. Research had shown that only one-third of the national road network was in good condition and road capacity around the large urban centers was not sufficient to satisfy the growing traffic demand. Furthermore, a considerable portion of the core national road network still needed to be upgraded to European technical and safety standards. Bulgaria was committed to completing the upgrade of its main road network to EU standards by 2014, with a number of roads to be upgraded by Rationale for Bank involvement. In 2007, Bulgaria joined the European Union and it was already a major concern that the country would be ill prepared to absorb EU Transport funds. In this scenario this project being the Bank s first road sector project in Bulgaria took on an added significance by introducing institutional capacity building elements as part of this loan, which has now proven valuable on a wider road sector EU funds absorption capacity of RIA. The primary rationale for Bank involvement derived from a Public Finance Policy Review of the Bulgarian transport sector prepared by the Bank. The paper discussed the efficient use of prospective EU grant funds in the road sector, and financing options for roads that are not eligible for EU grants, with a particular emphasis on the need to strengthen institutional capacity of RIA. The Government subsequently decided that the Bank could assist Bulgaria on three levels: (i) To assist in improving the condition of roads outside the Trans-European Network - Transport (TEN- T) including Class I, II and III roads. Targeting Class II and III roads was expected to improve access to markets for the population and enterprises in small towns and rural areas. With direct development impact in rural and urbanized communities facing economic challenges in the country. (ii) To improve the road management capacity of RIA through preparation of multiyear road maintenance programs (under a constrained budget) vis-à-vis modernization of the existing road data and management systems. (iii) To assist with the establishment of the newly created Roads Policy Directorate in the Ministry of Transport in order to strengthen technical and managerial capacity to efficiently implement ongoing and future road projects. 1.2 Original Project Development Objectives (PDO) and Key Indicators The development objective of the proposed project was to assist Bulgaria to reduce road transport costs by improving the condition and quality of its roads network during the first years of EU accession. The list below specifies the project monitoring indicators, including the outcomes that were expected at the end of the project. 1

12 Project outcome indicators (i) Improvement, by the end of the project, of the condition of roads to be rehabilitated under the project, measured in IRI 1. This will translate, at the network level, into the improvement of: (a) 6 percent of Class I roads; (b) 3 percent of Class II roads; (c) 1 percent of Class III roads (ii) Reduction, by the end of the project, in Vehicle Operating Costs by at least 10 percent on roads rehabilitated under the project.2 Project intermediate outcome indicators (i) Rehabilitation by the end of the project of about: (a) 174 km. of Class I roads; (b) 138 km. of Class II roads; (c) 138 km. of Class III roads (ii) Timely processing and implementation of contracts and the staff training program. (iii) Implementation and effective use by the RIA of an enhanced Road Management System. (iv) Preparation by the RIA of a rolling multi-year road maintenance and rehabilitation program. (v) Preparation by the RIA of at least three performance-based area-wide maintenance contracts. (vi) Preparation of a road safety improvement strategy with implementation plans. 1.3 Revised PDO and Key Indicators, and reasons/justification The PDO was not affected by the restructuring of the project in April 2011, however the outcome and intermediate indicators were amended to reflect the modified scope of the components and to be consistent with the definition of the outcome indicators in the PAD. More specifically, the following amendments were made: (i) Reduction of the targets for outcome indicators related to total number of kilometers rehabilitated; (ii) Additional indicators to measure the results achieved in relation with the expanded Component 2; and (iii) the definition of the outcome indicators related to the percentage of Class I, II, and III roads to be rehabilitated included in the Arrangement for results monitoring in the PAD were substituted with the definition of the same indicator as described in the Results Framework table in the PAD. This change was necessary because the network-wide targets included in the table on Arrangement for results monitoring included impacts of other ongoing road rehabilitation programs in Bulgaria. The PDO indicators captured the road rehabilitation but did not explicitly measure achievements in institutional strengthening and road safety which were only measured by intermediate indicators. 1.4 Main Beneficiaries The PDO and key indicators showed that the primary beneficiaries of the Project would be the road users and local businesses predominantly in economically depressed rural areas of Bulgaria. The improvement of traffic conditions, especially on roads of regional importance, would improve both connectivity and road safety for its users and promote economic growth in the region. In the socio-economic context, the improvement of local roads directly influences the daily social life for 70 percent of the population who live in the rural areas or in small towns. As a result, local people would have better access to public amenities such as schools, healthcare and business centers. In addition, the execution of road rehabilitation projects would generate new jobs quickly and stimulate the local economy through indirect purchasing of local goods and services. 1 IRI means International (Road) Roughness Index. 2 The reduction in Vehicle Operating Cost in response to improved IRI is obtained from the Highway Development and Management model (HDM-4). Inputs for HDM-4 will be adjusted so as to account for improvement in road condition only. 2

13 The secondary beneficiary of the Project was expected to be the Road Infrastructure Agency (RIA). The institutional component of the Project was expected to improve RIA s management capacity of the republican road network; through better financial management and planning of road maintenance and rehabilitation, and by introducing more cost-effective contracting mechanisms. The Project would also support RIA in the implementation of the National Road Infrastructure Strategy by improving planned policy and management of road maintenance and road safety priorities in accordance with European best practice. 1.5 Original Components Component 1: Rehabilitation of selected roads (estimated cost: EUR million). This component comprised civil works for the rehabilitation of selected Class I, II, and III roads during the period and the provision of consultancy services to assist RIA during the life of the project with the review of the designs, procurement and contract management. Design and supervision of construction works were to be carried out by consulting firms, and were not included in the project. RIA had prepared a priority program for the rehabilitation of about 450 kilometers of road sections distributed throughout the country, which were selected on the basis of economic and other social benefits. The consultancy services under this component were to assist RIA through the provision of technical advisory services and training regarding the review of designs, procurement, supervision, management and reporting for the implementation of the project. This also included on-the job training for the preparation of bidding documents, review of bids, and the coordination and oversight of quality control of works and their supervision. Component 2: Institutional Development (estimated cost: EUR 2.41 million). This component comprised consulting services, studies, the provision of equipment, and training to: (i) strengthen the internal management and operations of the RIA; (ii) improve road sector planning, programming, budgeting, and program implementation with particular focus on the use of EU Cohesion and Structural Funds; and (iii) improve the efficiency of road maintenance practices. The component included (a) a technical advisor for the RIA's management, (b) technical assistance to enhance RIA's financial management capacity and to conduct the required project financial audits which include operational reviews, (c) technical assistance to develop a road management system and to prepare for piloting Performance-based Maintenance Contracts, (d) the acquisition of road data collection equipment, related software, and computer equipment, and update of traffic and road databases, and (e) a training program for RIA staff and management on road management, and absorption of EU funds. These were activities needed to gradually bring the RIA's operations and performance to the level of EU standards. Component 3: Road safety (estimated cost: EUR 1.44 million). This component included: (i) EUR 0.24 million for technical assistance targeted at specific road safety improvements, such as the development of road safety plans, public awareness campaigns, development of legal aspects of road safety, introduction of new approaches to enforcement, development of new approaches for timely medical emergency services, etc.; and (ii) EUR 1.20 million to finance priority activities aimed at improving road safety such as removing traffic crash black spots, areas with traffic conflict situations, and for additional technical assistance. The objective of this component was to assist in improving road safety in Bulgaria through a coordinated and integrated package of cost-effective, multi-sectorial road safety interventions designed on the basis of international best practice. 1.6 Revised Components Component 1: Rehabilitation of Selected Roads. The scope and size of this component was reduced in order to reflect the reduced budget for the project in 2010 and Budgetary restrictions have been imposed on public investment programs due to the impact of the global financial crisis on Bulgaria s fiscal position, and to the Government s fiscal policy aimed at keeping the budget deficit under control in 3

14 compliance with EU s budget deficit targets. This implies longer implementation periods for most contracts under the project. The reduced budget impacted the project s financing plan and prevented RIA from starting some road rehabilitation works and completing them, even with the proposed extension to the Loan Closing Date. The restructuring included a reduction in the length of roads to be rehabilitated from 450 kilometers (as described in the original Loan Agreement) to 307 kilometers of roads. Until June 30, 2010, contracts had been awarded for the rehabilitation of 392 kilometers of roads (after modifications of the scope of works from the original 450 kilometers). Therefore, contracts (lots 5, 6 and 7) corresponding to about 87 kilometers out of 392 km for which works had not started were cancelled. The original total project cost was Euro 144 million and the revised total project cost was Euro million, hence the reduction in the length of rehabilitated roads (From 450 km to 307 km). Component 2: Institutional Development. The scope of this component was expanded and focused on the two first sub-components goals as described in the PAD and in the Loan Agreement under Part II.1: (i) strengthen the internal management and operations related to the road sector; and (ii) improve road sector planning, programming, budgeting and program implementation with particular focus on road programs funded from the Cohesion Fund and the European Regional Development Fund. This expansion followed a request from the Minister of Regional Development and subsequent letter from the Prime Minister addressed to the World Bank President to cover project management support to EU funds absorption in road sector. The aim of the expanded activities was to help with the full and timely utilization of EU funds available to the road sector in Bulgaria, and accelerating the preparation, approval, implementation and disbursement of these funds. The additional areas of support was planned to start in mid 2011 and to span over a period of 24 months. The project management support was provided by JASPERS for no cost to the agency. The specific activities included the provision of consultancy services to provide advice on EU funds implementation, including the review of current status of the EU supported Operational Program for Transport (OPT) and Operational Program for Regional Development (OPRD) and the support to streamline and standardize preparation and implementation of projects. They would also directly provide technical services to strengthen RIA and MRD s directorates in charge of management of EU-funded road projects and support practical preparation of EU-funded road programs for the period There was also a cancelation of a small subcomponent related to Support to RIA to enhance its financial management capacity through the provision of technical advisory services, training and equipment and the carrying out of studies. This subcomponent was initially expected to enhance RIA s financial management system. Since project appraisal, RIA has implemented outside of the scope of the project an upgrade of its financial management system. Component 3: Road Safety. There were no changes under this component. 1.7 Revised Financing As a result of the restructuring of Components 1 and 2, the project costs were revised as indicated in Table 1 below. Table 1: Project Costs by Component (EUR million with VAT) Components/Activities Original Revised 1. Rehabilitation of selected roads Institutional development Road safety Total Project Costs

15 With the reduced project cost, and in order to provide flexibility to the government during the years following the financial crisis, it was agreed to keep the loan amount unchanged (EUR 90 million) and to decrease the share of financing from the Borrower. The increase in the share of Bank financing is reflected in an increase in the percentage of expenditures to be financed from loan proceeds as shown in Table 2 below. Table 2: Allocation of Loan proceeds by Disbursement Category and percentage of expenditures to be financed from loan proceeds Original allocation (EUR) Allocation after Restructuring (EUR) Actual project expenditures Percentage of Expenditures to be financed from the Loan Original Revised Actual (1)(2) (1) Goods and Works for the 88,000,000 81,000,000 76,835,000 75% 90% 79% Project (2) Consultants Services, 2,000,000 9,000,000 20,150,000 75% 100% 21% Audits, Training and Technical Advisory Services for the Project Total 90,000,000 90,000,000 97,146,000 3 (1) Of expenditures including VAT. (2) The percentages come into force for payments upon the effectiveness of the proposed amendment to the Loan Agreement. 1.8 Time Extension: Revised Closing Date The project restructuring also included the extension of the Loan Closing Date by 24 months; to enable the full completion of the expanded Component 2 and of all ongoing road rehabilitation works under Component 1. The new Loan Closing Date was June 30, The rationale for extension was to enable the Borrower to complete the road rehabilitation works and achieve a satisfactory outcome in the expanded institutional development component. This was the first and only extension of the project. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Soundness of the background analysis. Project preparation included a good analysis of the challenges facing the road sector at the time of appraisal and extensive dialogues with the Government to assist it define a responsive strategy. The rationale for Bank involvement in the rehabilitation of lower-tier roads was underpinned by the Public Finance Policy Review 4 prepared by the Bank in This study included a review of how Bulgaria could make efficient use of prospective EU grant funds in the road sector, including the issue of and how to finance roads that are not eligible for EU grants financing and the importance of strengthening the institutional capacity of Bulgaria s road management. At the time of appraisal, other IFI s were focusing primarily on financing construction and rehabilitation of motorways and Class I roads within the Trans-European Network Transport (TEN-T). All these major projects and programs focused on European corridors and the Government was of the view that this should not crowd out spending needed to clear the large maintenance and rehabilitation backlog on other Class I roads, and more particularly on Class II and III roads. The proposed project was envisaged to 3 There is 161 thousand Euro foreign currency exchange rate difference 4 Bulgaria Public Finance Policy Review. World Bank Report No BG

16 address this particular issue by addressing the balance between financing for maintenance of existing assets and that for new construction, as well as between roads within and outside EU corridors. During its early transition years, Bulgaria implemented reforms in the institutions of the road sector, but over the last decade there has been concern that these changes have not led to significant improvements in policy administration nor in the efficiency and effectiveness of service delivery. The implications of unfinished reforms and lack of efficiency are not negligible: poor prioritization leads to high fiscal costs, significant grant funds from the European Union (EU) are underutilized, and transport infrastructure and services are far below the expectations of Bulgarian citizens and European quality standards. The Bank team also discussed with the MRDPW, the COM and RIA the content of the separate support requested by the Government from the World Bank in terms of reimbursable advisory services (RAS). Development of the terms of reference had been initiated. It was agreed that the MRDPW, RIA and World Bank will finalize the Terms of Reference in a way to avoid any overlap, ensure full consistency and avoid any conflict of interest between the two activities Assessment of the Project design. The Project design was relatively straightforward in terms of the main civil works component, implementation arrangements and safeguard policies involved. The main civil works component financed the rehabilitation of selected Class I, II and III roads, including consultancy services for project management. The type of rehabilitation works was straightforward and did not require land acquisition. Focus on lower class roads in predominantly rural and undeveloped area align with World Bank s mission and its development impact Adequacy of Government s commitment. At the time of appraisal, the Project was consistent with the objectives of the Government s draft Transport Strategy 5, whose goals were to achieve economic efficiency, develop a sustainable transport sector, and assist regional and social development. These objectives are still relevant today and are consistent with the draft Road Sector Strategy currently being prepared by the government. The Project at entry also supported the objectives of the Sectorial Operational Program for Transport (SOPT) in terms of institutional capacity building of RIA and improving their ability to effectively utilize EU cohesion funds also consistent with the draft Road Sector Strategy Assessment of risks. At appraisal stage, the Project was identified as a moderate risk operation. Although RIA had successfully implemented IFI funded projects in the past, there was a new challenge to adjust to the increase in activities and political environment following accession to the EU. The main risk was institutional because RIA had been recently restructured with a new type of oversight arrangement and reported to three ministries instead of one; it had different type of road financing base sources; and changes to operating procedures. However, there were no controversial issues foreseen to arise during the implementation of the project. The following is an assessment of the Project risks / mitigation identified at appraisal stage: 1) Institutional change. There was a moderate risk that the ongoing organizational changes in the road sector in Bulgaria may take longer than what initially envisaged under the Project. RIA management had been restructured and needed time to adjust to its new environment and implement the remaining institutional changes. This risk was well identified and was a constant issue during implementation. The Project included technical assistance activities to assist the Government with this ongoing institutional change this mitigated the risk to a certain extent, but it was very difficult for the Bank to 5 Strategy for the Development of the National Transport System of the Republic of Bulgaria until 2015.Ministry of Transport

17 eliminate the bottlenecks in RIA s procurement procedures. However, the management consultant was very helpful assisting RIA in this regard. 2) Funding for road maintenance and rehabilitation. There was a moderate risk that insufficient funding for road maintenance and rehabilitation would continue after Project effectiveness. The Government expected that additional funding for the road sector in general from EU Cohesion and Structural Funds after EU accession may free some money for road maintenance. The Government also anticipated higher revenues from the road vignette. When the global financial crisis hit in 2009, which could not have been anticipated at project appraisal, Bulgaria had to tighten its fiscal controls and this subsequently led to the freezing of counterpart disbursements. 3) Implementation of road works under the project. There was also a moderate risk that the project may suffer from delays in procuring road works. Some past road investment projects in Bulgaria such as those financed with EU pre-accession funds had suffered from significant delays. This risk was mitigated very well by the Bank the Project included the services of a consulting firm to assist with overall procurement and contract management this was very effective in ensuring faster procurement procedures. 4) Efficient maintenance planning and implementation. There was a moderate risk that it would take time for RIA to prepare and implement medium-term rolling plans for maintenance using the equipment, tools and methodologies procured or developed under the proposed project. There was also a risk that testing new methods for maintenance implementation such as area-wide performancebased maintenance contracting may be delayed or abandoned. 2.2 Implementation Implementation efficiency. Delays in implementation have been a challenge throughout the Project s lifecycle and this was mostly as a result of changes in government and RIA management, and budgetary austerity measures during the global financial crisis of Despite a positive start to the project, including the launch of initial works contracts and mobilization of contractors, Implementation Progress was downgraded to Moderately Satisfactory in early 2009 after substantial delays in contract management and slow disbursement from the loan. This was as a result of major restructuring and changes in RIA management, creating severe bottlenecks in procedures and delays in procurement. Although there was a significant recovery in late 2009 (63 percent of the loan committed to signed contracts), a new government came into power which led to further restructurings within RIA management and budgetary constraints. As a result of intense fiscal pressure in the country s economy, the new government decided to freeze disbursements from the loan for the entire 2010 construction season 6. Some contractors continued to work despite the uncertainty of payment because they were already mobilized and in some cases close to completion. However, most of the contracts were delayed for several months severely impacting the implementation progress and downgrading its rating to Moderately Unsatisfactory for Implementation efficiency was eventually improved in late 2011 following the project restructuring and improvement in the fiscal environment untendered lots were dropped and remaining works were completed within an extended timeframe, albeit with some delays in the road safety component (see below) Mid-term review and project restructuring. The mid-term review provided a good opportunity for the Bank to discuss new priorities with the new government and how the Project could support these goals. The government expressed that its top priority was to ensure the speedy and full utilization of the EU 6 A letter was sent by the government to all contractors stating that payment of works would be delayed until further notice. 7

18 Cohesion and Regional Development Funds that were available to the Bulgarian road sector. A year later the project restructuring played a crucial role in turning the course of Project implementation for the better. After substantial delays in 2010, as mentioned previously, the Project was restructured by scaling down civil works contracts, extending project timeframe and scaling up the institutional components to assist in the government s new priorities. Most importantly, the project restructuring reduced the share of counterpart funding, allowing them more flexibility and ability to disburse on time. Although this was critical in ensuring the completion of civil works, it would have been more advantageous to have restructured the project earlier to improve efficiency of delivery Quality of completed rehabilitation works. Works were executed in compliance with the approved design documentation and approved modifications to the lots. All modifications were clearly documented and reviewed in the Supervising Consultant s reports. The supervisor conducted regular site inspections to check the quality of executed works and materials in order to satisfy the Technical Specification and the approved design. As a whole, the Works were executed with good quality and workmanship. Further to the supervisor s assessment, additional testing of construction materials and completed sections of the Works were conducted by the technical institute within RIA. There were only a few instances when the quality of works and/or materials were insufficient in such cases the materials were removed from the sites and/or the works were re-executed until achieving the required characteristics. The achievement of the required level of quality of executed Works was tested and monitored by the site laboratories prior to the handing over of the assets. The defect liability period for all civil works contracts is now complete and the quality of works has been accepted by RIA Delivery of Road Management System. The main objective of the institutional development component of the Project was to implement a modern and sustainable Road Management System (RMS), which was envisaged to be fully effective by the end of the Project. Unfortunately, this objective was only partially achieved. The majority of RMS hardware (i.e. data collection and testing equipment) and software (i.e. computer programs for data analysis, management and strategic planning) was installed during the implementation. The first attempt to supply supplementary (but not mandatory for the RMS) equipment such as the automatic traffic counters was not completed due to limited response from suppliers. There was a second attempt to procure traffic counters which was again unsuccessful. In addition, the specialized consultant provided training to RIA staff on the effective usage of the RMS equipment and computer software. Although the training itself was successful, many of the trained personnel are no longer in their original positions, leaving the technical institute with limited human resource capacity Performance Based Contracts (PBC). The PBC initiative was a major undertaking and a paradigm shift for a very traditional roads agency to start implementing an innovative delivery method. This institution capacity building dimension can be considered a major milestone in the way maintenance delivery is looked at in Bulgaria. Due to the success of PBC, currently the RIA is designing a major PBC contract which would cover a large proportion of secondary roads, all of which will result in significant improvement in the efficiency of road assets in the country. A consultant engaged for this component successfully completed the studies for the design and procurement of PBC in Bulgaria. The PBC models developed under this project were modified by RIA as follows: (i) adapted to public procurement legislation; and (ii) contract duration reduced from 5 to 2 years (due to budgetary constraints). The modified contracts are now being piloted on Liulin and Lot 2, 3 and 4 of Trakia motorway. RIA has expressed its overall satisfaction with PBC and had some useful lessons learnt. Since the winters in Bulgaria are not always consistent, there were suggestions to change the winter maintenance performance indicators (coefficients) by improving the level of intervention. Another important lesson is that PBCs need to be at least 5 10 years in order to be cost efficient. Overall, this institutional development activity was successfully implemented. 8

19 2.2.6 Delivery of road safety activities. The program for training of road safety instructors in RIA and the Ministry of Transport was satisfactorily implemented. At the end of the program 24 participants became certified in Road Safety Design & Audit and Network Safety Management in accordance with the EU directive for management of road infrastructure safety. Although this is a positive outcome, it is important that more training is provided in the coming years to keep up the momentum and ensure that road safety capacity is raised to a level where Bulgaria can independently conduct Road Safety Audits and incorporate road safety improvements into road designs. It should be noted that this is already being done and the recently completed road sections under this project incorporated many important road safety improvements with commendable results. The road safety value engineering was done as a joint collaborative approach between RIA, traffic police and other important stakeholders. The following were met: (i) road safety capacity review and preparation of road safety action plan; and (ii) preparation and implementation of road safety interventions. The first activity has been completed and the outcome target has been achieved. Under the second activity, road safety consultants investigated 25 black spots and prepared detailed designs for 10 of them. Unfortunately, the interventions were not implemented within the project closing date. RIA intends to implement the proposed interventions for all 25 black spots Consultancy Services for increasing EU absorption. In relation to the support to RIA in increasing EU funds absorption (included at the request of the Minister after project restructuring in April 2011) under Operational Programs for Transport and Regional Development (OPT and OPRD), this was only partially completed. RIA canceled the loan proceeds (6 million EUR) relating to the consultancy service for OPT/OPRD; including institutional assessment of RIA, and review and improvement of project management manuals. Although the component was canceled from the project, the discussions about its scope of work helped RIA better clarify its weaknesses and focus its own interventions on those areas that needed be urgently addressed. The project restructuring also included the hiring of a Highway Advisor responsible for providing strategic advice to the high level policy makers at the Ministry of Regional Development and Public Works for the road sector in Bulgaria. The overall services of the advisor were successful and provided strategic advice on issues such as road financing, road sector policy, evaluation of roles and responsibilities of MRDPW and RIA, performance assessment and indicators for road sector, public private partnerships (PPP) and long-term maintenance and development. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Project monitoring during project implementation was carried out by RIA. Their responsibilities included close supervision of the civil works and technical assistance, auditing financial statements, and monitoring project performance indicators for the duration of the project. Project reports were prepared by RIA on a quarterly basis and submitted to the Bank for review. The technical institute within RIA was responsible for collecting data for the performance indicators over the course of the project s lifecycle. Data collection & management within the technical institute was strengthened under the project through the financing of better instruments for data acquisition and management. The Results Framework of the PAD consisted of a list of outcome indicators and intermediate results for monitoring progress and outcomes (Section 3.2). The project design included specific output indicators for each component, and covered physical as well as institutional results (Annex 2). In 2009, four Core Sector Indicators were introduced for monitoring. The Results Framework was updated as part of the restructuring in 2011 to incorporate core indicators and new/modified indicators that reflected the revised scope of works and new priorities of the government (Section 3.2). 9

20 The project included two components for Institutional strengthening and road safety with significant development impact. However these components did not have a corresponding PDO development indicator but rather intermediate indicators. 2.4 Safeguard and Fiduciary Compliance Environmental Safeguards. The Project triggered Bank safeguards policy Environmental Assessment (OP/BP 4.01) and was classified as an environmental Category B project. An Environmental Management Plan (EMP) was prepared by RIA and included all measures to address potential environmental impacts (e.g. the approach to ensure during works adequate passage for animals, drainage or other issues that are relevant to the specific areas) and monitoring activities to be implemented during the construction stage. Overall, the EMP was satisfactorily implemented by contractors and monitored by the Supervision Engineer and RIA Social Safeguards. Since all of the civil works under this project was within the existing right of way, there was no land acquisition needed. There were no reports of complaints from local people during the project life Procurement. The procurement of works, goods and technical assistance (non-consulting services) was carried out in accordance with Bank Guidelines. All contracts under the latest update of the procurement plan were signed and completed before the project closing date on June 30, All civil works lots were procured through international competitive bidding Financial Management. The financial management aspects of the Project were managed by the existing financial experts from the Projects Financial and Payments Department within RIA. Although the experts did not have previous experience working on Bank-funded projects, they learned on the job, adapted well and became fully familiarized with the Bank s financial management and disbursement guidelines. RIA had adequate internal controls which were in accordance with the Bulgarian legislation and the Bank s project financial management manual. Overall, the FM performance of the project has been moderately satisfactory throughout the project life. The quarterly unaudited financial monitoring reports have been received in general on time, although there were some small delays. The most recent reports received covered the final quarter of the project, which closed June 30, With certain follow up actions required to clarify any discrepancies, all the audit reports have been accepted by the Bank. The project team used to wait until the Designated Account was depleted, before requiring replenishments, despite several recommendations to the contrary made by the Bank team along the project life. This caused at times some delays in the timely payment of suppliers and contractors, despite loan funds being readily available. All the project audit reports have been received and accepted by the Bank by the due dates. The audit opinions were clean and some internal control issues were mentioned. Some of the internal control issues mentioned, such as using the different eligibility percentage required a long time to be addressed. The final adjustments in correcting the Bank eligible percentages have been done at the end of the project life. The final project reports, including figures up to the end of the grace period (October 31, 2013) were submitted. The auditors submitted the final project audit reports by end November, The counterpart financing has been satisfactory in the final years of the project, following the improvement of the counterpart funds from 2011 onwards and the 2011 project restructuring which reduced the burden on the Government and increased the Bank-eligible expenditure percentage. The project has been affected to a certain extent by delays in the provision of timely and adequate counterpart funding, especially during 2010, when the CF rating has been less than satisfactory. This has also led to some issues with the eligibility percentage used for some project expenses, and these issues have been only fully sorted out at the end of the project. 10

21 2.5 Post-completion Operation/Next Phase The newly rehabilitated road sections under the Project have all been handed back to RIA following the successful completion of the defect liability periods. Summer and winter maintenance of the entire Republican Road Network in Bulgaria is contracted out to the private sector under multi-year maintenance contracts (usually 4 years in duration). The maintenance contracts are split amongst each of the 27 country districts and cover the respective roads within that area. Unfortunately, current maintenance practices in Bulgaria are insufficient in terms of planning of works, contract methodology and funding requirements. Moreover, planning and budgeting for routine maintenance and repairs is a subjective exercise undertaken annually at the end of the winter season - quantities are determined in joint meetings with the districts maintenance staff and RIA s maintenance management leading to lack of quality control. It was evident from site visits that summer maintenance, such as vegetation cutting and clearing of open drains, was not being done on many of the newly rehabilitated sections. There is a real threat to sustainability if these issues are not proactively addressed. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Relevance of the PDO. The PDO remains relevant as first, second and third class roads outside of Bulgaria s TEN-T road network still require rehabilitation and improvement to improve access to markets for the population and enterprises in small towns and rural areas, augment employment opportunities after EU accession, and reduce traffic conflicts and road crash black spots. The institutional capacity of RIA still needs strengthening, especially in terms of road management capacity of RIA and its capacity to independently prepare multiyear road maintenance programs under a constrained budget. However, it was not particularly covered in the PDO. Improving Bulgaria s road transport links with the rest of the EU is still of critical importance. Moreover, improving internal transportation is essential for connecting the high proportion of people living in rural areas to key markets and services, especially when you consider Bulgaria s geographic and economic features. In addition, the PDO is still in line with the Bank s CPS Relevance of Design. Improvement in the conditions of the lower-tier republican road network remains the backbone of efforts to decrease rural poverty, promote regional development and better integrate the economy at the national level. Furthermore, by improving the connectivity of the road network in the most remote regions, there is improved accessibility to key services such as education and healthcare. This is still very relevant today because many hospitals are far away from villages and small towns; therefore improved accessibility of ambulances is very important for time sensitive emergencies. The road safety activities designed under the Project are still very relevant today and remain an important agenda for the government, especially in terms of achieving the EU directive to reduce the number of fatalities in the country Relevance of Implementation. Rehabilitation of roads under component 1 constituted 90% of the overall Project cost, therefore it was one of the main focuses during implementation and critical in terms of disbursement. The civil works remained relevant throughout the Project and it was very important that they were completed on time to ensure no cost overruns. As mentioned earlier, there were delays during implementation, which severely threatened the sustainability of the government s investment. The implementation of the institutional strengthening activities was very relevant in respect to RIA improving its road management capabilities and role in road safety improvements. Constant organizational change and personnel turnover has resulted in depleted institutional memory with respect to RMS. The on-going of Road Safety measures and acceptance the Road Safety report are encouraging signs. Under the Memorandum of Understanding (MoU) signed by the Prime Minister of Bulgaria and the World Bank President on August 10, 2010, the Government of Bulgaria requested a stronger role for the World Bank as a technical adviser to the government in the road sector. Mechanisms for utilizing funds 11

22 under the Operational Programs to obtain these services from the World Bank were explored with the European Commission (EC) and Advisory Service Agreement was signed in October The support complements and significantly scales up the Road Infrastructure Rehabilitation Project cooperation between Bulgaria and the World Bank in the roads sector. Under Government leadership, the World Bank support program was fully coordinated with other ongoing and planned technical assistance provided by the EC, EIB and JASPERS, driven by a common vision to create synergies and better leverage support from the respective institutions. 3.2 Achievement of Project Development Objectives A big picture achievement of this project is that it went beyond the actual project development objectives. This project gave the Bank a space for very fruitful policy dialogue with the Bulgarian government. It helped the Bank get widely involved in the road sector reforms and institutional capacity enhancement. The Project achievements on the institutional front helped the Bulgarian government better understand the value proposition of the Bank s technical support during supervision. Separately from the Project, the Government of Bulgaria engaged the Bank in Reimbursable Advisory Services. The achievement of the PDO is rated as moderately satisfactory. While the achievement of the revised outcome indicators relating to the civil works were satisfactory at the end of the project, the achievement of PDO by the time of restructuring is considered moderately unsatisfactory, thus weighted outcome is moderately satisfactory. Also the achievement of institutional capacity outputs was only moderately satisfactory, due to partial completions and some cancelations. There is a threat that the positive outcomes associated with the capital improvements may diminish if road management/ contracting practices are not improved. Critical success factors will depend on the optimization of the RMS and the paradigm shift towards preventative maintenance, rather than reactive maintenance which is very prevalent in Bulgaria. Road safety component was implemented successfully with moderately satisfactory outcome, due to the not implemented black spots improvements under the project. Both institutional and road safety components, not covered in the PDO, are rated as moderately satisfactory. PDO ratings, related to the rehabilitation works, were weighted in proportion to the share of actual loan disbursements made before and after the approval of the Level-2 restructuring. The final rating that results is Moderately Satisfactory, after rounding to the nearest whole number. The summary of the assessments is provided in table The PDO weighted rating is consistent with the other two components rating. 12

23 1 Table Assessment of the Overall Outcome Against Original Outcome indicators Relevance of the PDOs, design, and implementation Relevant Relevant Against Revised Outcome indicators Overall Comments 2 Achievement of the Project Outcome Moderately Unsatisfactory Satisfactory Moderately 3 Efficiency Unsatisfactory Satisfactory 4 Overall Rating Moderately Unsatisfactory Satisfactory 5 Rating value 3 5 Weight (% disbursed 6 before/after PDO change) 30% 70% Weighted value (5 x 6) Final rating (rounded) Moderately Satisfactory Rounded to 4, which arrives at Moderately Satisfactory When the Project closed, its achievement in relation to the revised outcome indicators were successfully achieved as follows: (i) (ii) The targets for the indicator Improvement, by the end of the project, of the condition of roads to be rehabilitated under the project, measured in IRI was successfully achieved for Class I (3.6%), Class II (3.2%) and Class III (0.5%) roads at the network level. The target for the indicator Vehicle Operating Cost (VOC) on roads to be rehabilitated under the Project was EUR per vehicle-kilometer and successfully achieved. The following revised Output Indicators were successfully achieved: The targets for the number of kilometers of Class I, II and III roads rehabilitated under the Project were all achieved The required Works (W), Goods (G), and Consulting Services (CS) contracts were all successfully processed and managed by the Management Consultant. However, the targets in the restructuring paper should have been modified to reflect the reduced works packages that were formally dropped. The management consultant provided 2,774 hours of training to RIA staff, exceeding the target by 500 hours. The road safety strategy and plans were successfully prepared Three PBC contracts were successfully prepared under the Project. RIA made additional modifications to the contracts to be in line with the public procurement law and also consolidated two contracts into one; eventually tendering two PBC covering two motorway sections, which remain in operation. The following Output Indicators were only partially achieved: The updating of road data for Class I, II and III roads (% of total length per year) was only partially completed. RIA claims has insufficient budget to collect all data on road network, especially for Class II and III roads. 13

24 The implementation and effectiveness of the Road Management System (RMS) was only partially completed. Firstly, the automatic traffic counters were not procured, which are an important part of the optimization of the system. Secondly, the RMS did not reach full effectiveness because most of the trained personnel who can effectively use HDM-4 for strategic planning and programming purposes left RIA. This problem is further exacerbated by the lack of introducing RMS in management decision process. RIA prepared annual and three-year programs for maintenance; however they did not use RMS as a technical/economic basis for developing rolling multi-year programs. The usage of RMS as a technical/economic basis for decision making takes away the subjectivity of selection and prioritization of road maintenance and rehabilitation. It is important that RIA continue to improve their road management decision making systems in order to achieve sustainable development outcome. The four Output Indicators relating to the consultancy services for project management support for operational programs; advisory services for road sector management; review/update of Project Management manuals; and studies on institutional set up, human resources and development of competencies in the sector were not achieved as a result of cancelation from the Project. However, the consultancy services have been undertaken in the meantime with RIAs own resources, and project preparation for OPT and OPRD were supported by local consultant. Despite the cancelation, the achievements can still be rated as moderately satisfactory as a result of RIA s own intervention and efforts. 3.3 Efficiency Efficiency is rated as satisfactory. After project completion, the Borrower carried out an ex-post economic evaluation of the 6 lots implemented under the Project, including 21 road sections covering 310.2km. The ex-post economic evaluation was done using the HDM-4 model adopting an evaluation period of 15 years and a discount rate of 12 percent. Vehicle operating costs were derived for the three vehicle types which predominate in the traffic mix based on current vehicle fleet characteristics. The new economic evaluation would supersede the economic analysis done at project appraisal. The Economic Internal Rate of Return (EIRR) was recalculated for the 21 project roads (Annex 3) by updating the baseline economic data with actual construction costs (US$/km) and latest traffic growth rates (vehicles/day). An evaluation of the annual traffic growth rate observed on project roads from 2005 to 2010 shows that the average annual traffic growth rate was on average about 2 percent per year, which is half of what was estimated at appraisal. The ex-post EIRRs show a significant variance, ranging from 15.9 and 86.0 percent. All individual road sections have an EIRR higher than 12 percent under the project scenario. The overall EIRR is 28.3 percent, which is higher than the overall EIRR estimated at appraisal for the 6 lots (25.8 percent), indicating that the project has a robust economic justification. The ex-post economic evaluation results show that the project benefits are higher than the ones estimated at appraisal due to the lower actual rehabilitation costs per km, despite the lower than expected annual traffic growth rate measured from 2005 to More details on Economic and Financial Analysis are available in Annex Justification of Overall Outcome Rating Rating: Moderately Satisfactory The overall outcome is rated moderately satisfactory, because of the relevance of PDOs, Project design and implementation to the Bank s current CPS, national and global priorities, the moderately satisfactory achievement of the PDOs, and the satisfactory efficiency of the project. The main civil works component 14

25 was successfully completed in accordance with the revised scope in the restructuring the quality of works was good and there were no outstanding social or environmental issues. The main drawbacks in the Project were in relation to implementation delays and partial execution of the institutional component. Although the outcome was achieved, there is a risk of the benefits diminishing if road management / financing capacity are not improved; hence the rating for the Project is moderately satisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development As mentioned in the Beneficiary Survey (Annex 5), there have been overwhelmingly positive responses from residents living along the road, local businesses and the road safety of the users. The better road quality has reduced commuting times between villages and towns significantly, allowing much easier access to markets and key services such as healthcare and education. Public transportation companies have increased the regularity of its trip schedules, allowing much more frequent low-cost commutes. This is especially important to the vulnerable population such as the elderly, children and pregnant mothers regular bus services allow them to reach schools and hospitals much easier. In addition, the Project has most certainly contributed to economic development by reducing transportation costs and opening economic opportunities for communities living along the completed roads better linking them to central business districts and providing an outlet for agricultural products and commercial goods. (b) Institutional Change/Strengthening Since the Bank s initial involvement in 2005/2007, there has been numerous restructurings within RIA and many changes in terms of management and technical personnel. Despite this, RIA has still retained a lot of its strengths in terms of road engineering and maintenance, which have always been at the core of the business. The agency continues to develop and this has become ever so important since EU accession and pressure to absorb EU funds. The involvement of the World Bank through the project has had a positive influence on institutional capacity building within RIA, especially in terms of new procurement practices; monitoring and evaluation; and safeguard compliance in project. The Bank has introduced many new concepts under this project, which were critical in ensuring sustainability in the road sector. The institutional strengthening activities relating to RMS has given RIA the tools to be able to effectively manage its road network and strategically prioritize and plan works to optimize the lifecycle cost of its assets. As mentioned previously, more training and additional resources need to be allocated to the RMS for its full effectiveness. The introduction of PBC has also opened up a more efficient and cost-effective contracting methodology for routine and periodic maintenance of the road network. It is important that this progress is sustained in coming years and phased into the existing areawide maintenance contracts which are currently in operation. Finally, road safety capacity of the borrower has also been raised significantly as a result of the Bank s technical assistance relating to the training of the road safety auditors, road safety value engineering on the completed road sections and removal of black spots. Although this is a positive start, it is paramount that these efforts continue in terms of additional training, more collaboration between traffic police and RIA, and better overall governance of road safety at the ministerial level. (c) Other Unintended Outcomes and Impacts (positive or negative) The beneficiary survey showed that the completed road sections had tremendous benefits on the local population residing in the local villages and towns. As a result of improved ride quality and commuting time between villages and major towns, there has been a noticeable increase in public transportation with more regular schedules. This is critically important when it comes to connecting local people to key services such as education and healthcare many hospitals are far away from poorer districts, but now 15

26 ambulances can easily access these areas in much faster time. In addition, the level of tourism to local museums and other attractions has also increased as a result of better connectivity. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Refer to Summary of Beneficiary Survey in Annex Assessment of Risk to Development Outcome Rating: Moderate The government continues to support the improvement of first, second and third class roads outside the TEN-T road network and this is evidenced by the sustainability goals listed in the draft Road Sector Strategy. The Strategy stresses the importance of achieving a sustainable road network by 2020 and includes proportionate budget allocations for rehabilitation and maintenance of the secondary road network, as well as the motorways and first class roads. However, there are still concerns that newly rehabilitated road sections under this project will not be adequately maintained post-construction, due to inefficient road management and inadequate budgetary allocation. Institutional strengthening of RIA should continue until the RMS is fully operational and road maintenance / rehabilitation programming capabilities are optimized. In terms of road safety, RIA has certainly taken a step in the right direction, but there is still plenty more to be done in terms of governance and planning of road safety activities within the ministry and RIA. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory Overall, the Project was well prepared and reflected the government s priorities at the time of appraisal. The selection of the road sections were appropriately justified based on sound economic criteria and needs assessment of the country. The inclusion of the Road Management System (RMS) and Performance Based Contracts (PBC) for the first time was very valuable in introducing international best practices in road management. However, the dissemination of RMS training could have been better structured and targeted at technical and managerial staff to ensure proficient competency and manager buy-in to the new system and to manage the risk of the high staff rotation in RIA. The inclusion of the road safety component was also very important and was appropriately focused on removing trouble road safety locations (black spots) from the network and training road safety auditors in international best practices as a result this had a very positive impact on the road safety improvements undertaken on the completed road section under the Project. (b) Quality of Supervision Rating: Satisfactory The Bank team conducted regular supervision missions and maintained close motoring of the civil works. Since there were very limited issues with construction quality and environmental safeguards throughout the Project, the quality of supervision of civil works component can be considered satisfactory. There were some shortfalls in the supervision of the institutional component, especially in relation to the effectiveness of the RMS. Aide-memoires stated that the RMS was full operational and being used for road programming, when in fact this was not used for management decision-making. However, all the necessary equipment, software and training were in place and data collection is ongoing. The Bank supervision was very responsive to the government when they asked to include new priorities. Aidememoire and ISRs were prepared on time and with high quality. 16

27 (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory The satisfactory rating reflects the satisfactory rating for quality at entry and the satisfactory rating for Project supervision. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory The majority of the Project implementation delays were as a result of the government s austerity measures and constant restructurings within RIA management. Firstly, the government had to deal with the global financial crises in the rest of the country and it could be justified to hold back spending while the economy stabilizes. However, the government s commitment towards first, second and third class roads outside of TEN-T became less of a priority as the Project matured, leading to excessive budget cuts within RIA and inability to disburse the counterpart funds. Secondly, the constant restructurings within RIA were causing bottlenecks in decision making and delayed procurement considerably throughout the Project. It took almost two months, after the Government s request for restructuring, to reach a common understanding among the various stakeholders in Bulgaria on the scope of the technical assistance to support EU Funds absorption to be provided under the proposed project restructuring. In addition, the World Bank restructuring process both on Bank side and review process from MoF took another two months, which left very limited time for completing the approval process in This had a detrimental effect on the Project because additional consultancy services envisioned in the restructuring were already delayed by 6 months and some had to be canceled due to changes in the business environment. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory One of the most significant shortcomings of RIA was in relation to the cancelation of the consultancy services and automatic traffic counters under the RMS. RIA was faced with management changes, loss of employees and budgetary constraints throughout the Project and most of this was out of their control. However, the agency could have been more proactive, especially in relation to timely decision making regarding procurement and clear administrative steps. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory The moderately satisfactory rating reflects the moderately satisfactory rating for government performance and the moderately satisfactory rating for RIA performance. 6. Lessons Learned Project should have included the design and supervision under the activities funded by the loan. The delays at the beginning (which required the 24 month extension) were due to delays by RIA in hiring their own consultants to do the designs, review the designs, which delayed launching of procurement of works; and in hiring the supervision consultants, which at times delayed contractors mobilization. Bureaucratic processing timeline. The restructuring under this Project and the completion of government approval procedure was completed just 3 days before project closing and almost jeopardized the achievement of the development objective this needs to be mitigated with clear commitments in advance. 17

28 Organizational stability of the Borrower. Due to the extensive changes within RIA s project implementation unit, it would have been advantageous to strengthen the unit to independently manage Bank projects and its own resources without political interference. Early training on FIDIC & World Bank procurement guidelines. Since this was the first road sector investment loan by IBRD, there should have been training on implementing the contractual terms of FIDIC at the very start of the Project. There were many bottlenecks in procurement procedures at the commencement and the end of construction, and in regards to warranty deadlines. It was often difficult to find a common ground between the contractual terms of FIDIC and Bulgarian legislation Budgetary constraints. There needs to be long-term financial commitments from the Borrower at the signing of the loan to mitigate the risks of budget cutbacks for the project. Adopting a twin-training approach when implementing RMS for the first time. Despite the implementation of RMS hardware and software, the system is still not fully effective because there are limited trained personnel and lack of management support. It would have been advantageous for the consultant s TOR to have included incremental training at both technical and managerial levels. This twin-training approach would ensure that (i) technical capacity in operating the system is optimized and (ii) management can take ownership of the system and fully utilize it for multi-year programming of maintenance and rehabilitation. Road safety value engineering at the design review stage is very effective in enhancing road safety and adding additional socio-economic benefits to projects. Many of the completed road sections under the Project incorporated road safety improvements such as re-designed junction layouts, crossing points and traffic calming measures. The beneficiaries of the Project have expressed their gratitude for these additional measures and have already notices a reduction in road accidents. Adopting hybrid rehabilitation and maintenance contracts using both traditional and performancebased contracting methodology. Since the majority of Bulgaria s Class II and III roads are in bad condition, RIA considers that it is difficult to adopt only maintenance PBC over large areas. However, it would be advantageous to adopt area-based hybrid contracts which include traditional (input-based) methodology for rehabilitation, followed by PBC methodology for summer and winter maintenance. However, these contracts are long in duration (5 10 years) and therefore very dependent on long-term budget allocation therefore financial commitment is a perquisite. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Borrower s ICR has been provided in Annex 7. Technical comments on the draft ICR were received from RIA and Ministry of Finance and reflected in accordingly. (b) Cofinanciers N/A (c) Other partners and stakeholders N/A 18

29 Annex 1. Project Costs and Financing (a) Project Cost by Component (EUR Million with VAT) Components Appraisal Estimate (EUR millions) Actual/Latest Estimate (EUR millions) Percentage of Appraisal 1. Rehabilitation of selected roads % 2. Institutional development % 3. Road safety % Total Baseline Cost % Physical Contingencies Price Contingencies Total Project Costs % Front-end fee PPF Front-end fee IBRD Total Financing Required % (b) Financing Source of Funds Type of Cofinancing Appraisal Estimate (EUR millions) Actual/Latest Estimate (EUR millions) Percentage of Appraisal Borrower % International Bank for Reconstruction and Development % 19

30 Annex 2. Outputs by Component Output Component 1 Number of kilometers of Class I roads rehabilitated under the Project Number of kilometers of Class II roads rehabilitated under the Project Number of kilometers of Class III roads rehabilitated under the Project Component 2 Consultant Services for Project Management support for operational programs Consultant and advisory services for road sector management Project management manuals reviewed, finalized and in use Studies on institutional set up, human resources and development of competencies in the sector carried out Works (W), Goods (G), and Consulting Services (CS) contracts processed and managed by Management Consultant Training received by RIA staff from management Consultant (in staff- Baseline Indicators Original Target First RS 04/14/2011 Status at Closing 7 0 km 174 km 117 km km 0 km 138 km 127 km 130 km 0 km 138 km 63 km km 0 staffmonths 0 staffmonths cumulative staffmonths 24 cumulative staffmonths 0 cumulative staffmonths 18 cumulative staffmonths No - Yes No Remarks Successfully achieved. Formally revised target reduced as a result of restructuring. Successfully achieved. Formally revised target reduced as a result of restructuring. Successfully achieved. Formally revised target reduced as a result of restructuring. This activity was canceled because the consultancy services were carried out in-house by consultant, JASPERS. This activity was partially achieved through the 18 month contract of the Highway Advisor procured under this Project. It should be noted additional advisory services were carried out in-house by RIA s local consultant. This was completed with RIA s own funds under the in-house consultancy contract No - Yes No This activity was canceled by RIA. 0 (W), 0 (G), 0 (CS) 9 (W); 8 (G); 2 (CS) - 6 (W); 13 (G); 5 (CS) The actual target was actually achieved. The number of civil works contracts was reduced from 9 to 6 as part of the restructuring; however this was not reflected in the revised results framework. 0 1,700 2,200 2,774 Successfully achieved 7 Values are obtained from Borrower s Report 20

31 hours) Updating of road data for Class I roads (% of total length per year) Updating of road data for Class II roads (% of total length per year) Updating of road data for Class III roads (% of total length per year) Implementation and Effective use of Road Management System by RIA Rolling Multi-year road maintenance and rehabilitation program established Capacity of RIA to manage road maintenance: number of area-wide maintenance contracts prepared Component 3 Road safety strategy and plans prepared 0% 100% - 80% 0% 50% - 25% 0% 15% - 10% No Yes - Partially No Yes - Partially It is expected that this will be achieved within 6 months of the project closing. Due to insufficient budget, not all road data is being collected for Class II roads Due to insufficient budget, not all road data is being collected for Class III roads Only partially implemented because automatic traffic counters were not procured. In terms of effectiveness, the RMS is not being used to its full potential (refer to Section 2.2 for more details). Although RIA has prepared annual and three-year programs for maintenance, they are not developing rolling multi-year programs using the newly procured Road Management System (Indicator 13). Three PBC contracts were prepared under the Project. RIA made additional modifications to the contracts and eventually tendered two PBC covering two motorway sections. No Yes - Yes This was successfully achieved. 21

32 Annex 3. Economic and Financial Analysis At appraisal, a cost-benefit analysis (CBA) was conducted for the rehabilitation of all road sections to be included in the project. The evaluation was done with the Highway Development and Management Model (HDM-4), which simulates life-cycle predictions of road deterioration, road works effects and their costs and road user costs, and provides economic decision criteria for road construction and maintenance works. HDM-4 analyses projects by computing costs and benefits of different investment options in terms of savings in road maintenance costs, vehicle operating costs, travel time costs and accident costs. The analysis was done for an evaluation period of 15 years and a discount rate of 12 percent. The appraisal CBA evaluated 30 road sections totaling about 450 km of class I, II and III national roads in different regions of Bulgaria that were grouped into 9 lots. The 2005 traffic ranged from 500 Average Annual Daily Traffic (AADT), in vehicles per day, for low traffic roads to about 8,500 AADT for high traffic ones, with a weighted average of 1,979 AADT. The traffic composition varied across the regions and for different road classes. An annual 4 percent increase in traffic has been assumed for all vehicle types in the appraisal analysis. The estimated total cost of the rehabilitation works was US$186.7 million, including VAT, which corresponds to about US$450,000 per km. The economic internal rate of return (EIRR) for the project roads varied between 13.1 and percent with a weighted average of 25.1 percent. All individual road sections resulted having an EIRR higher than 12 percent under the project scenario. Table 1 presents the project roads analyzed at appraisal. Table 1: Project Roads Analyzed at Appraisal Total Average Estimated Appraisal Length AADT Cost EIRR Lot Section Road Site and Sections (km) (2005) (M US$) (%) Lot 1 1 II-11 Vidin - Lom (km km ) , North-western 2 II-11 Vidin - Lom (km km ) , II-11 Vidin - Lom (km km ) II-11 Lom - Kovachitsa (km km ) II-11 Lom - Kovachitsa (km km ) II-11 Lom - Gigen (km km ) , Lot 1 Total , Lot 2 North- western 7 II-15 Vratsa - Oriahovo (km km 2+895) , and Central north 8 II-11 Guliantsi - Milkovitsa (km km ) , II-35 Pleven - Troian - Karnare (km km ) , , Lot 3 10 II-23 Rousse - Silistra (km km ) , North- eastern 11 II-51 Popovo - Dralfa (km km ) , II-51 Dralfa - Chudomir (km km ) , II-29 Varna - Dobrich District border (km km 5+400) , II-29 Varna - b.r. Dobrich (km km ) , II-29 Varna - off-site road Dobrich (km km ) , III-235 Glavinitsa - Zafirovo (km ) Lot 3 Total , Lot 4 Southwestern 17 I-6 Sofia - Pirdop (km km ) , Lot 4 Total ,

33 Lot 5 Central south 18 I-6 Pirdop - Karlovo - Kalofer (km km ) , III Plovdiv - Biala Cherkva - Kosovo (km km ) , III-663 b.r. Chirpan - Zetovo (km km 4+700) III-807 Varbica - Skobelevo (b.r. Chipan - Zetevo) (km km ) and bridge repair over Maritsa river Lot 5 Total , Lot 6 Northeastern 22 I-7 Shumen - Preslav (km km ) , I-7 Preslav - Varbitsa (km km ) I-7 Preslav - Varbitsa (km km ) , Lot 6 Total , Lot 7 Southwestern 25 II-63 Pernik - Strezimirovtsi (km to km ) III Filipovtsi - Glogovitsa-Trun (km km ) III-813 Dragoman -Vrabcha (km km ) Lot Lot 8 Southwestern 28 III-198 G. Delchev - Pirin village (km km ) III-198 Petrich - border check-point FYR Macedonia (km km ) , Lot 8 Total , Burgas - Marinka - Zvezdetz - Malko Lot 9 Southeastern 30 I-9 Tarnovo - border check point-turkey (km km ) , Lot 9 Total , TOTAL , The ex-post economic evaluation considered only the lots implemented under the project, for which actual rehabilitation costs were obtained. Table 2 presents the estimated cost per km at appraisal and the actual cost per km for the 6 road sections. On average the actual rehabilitation costs per km are 78 percent of the estimated costs at appraisal. Table 2: Estimated and Actual Costs for Lots Implemented with the Project Cost Estimated Cost Actual Cost Cost per Cost per Length km Cost Length km 23 Cost per km Actual per Lot (US$ M) (km) (US$/km) (US$ M) (km) (US$/km) Estimated Lot 1 North-western region , , Lot 2 North- western and Central north region , , Lot 3 North- eastern region , , Lot 4 Southwestern region , , Lot 8 Southwestern region , , Lot 9 Southeastern region , , Total , , An evaluation of the annual traffic growth rate observed on 14 project roads from 2005 to 2010 shows that the average annual traffic growth rate was on average about 2 percent per year, which is half of what was estimated at appraisal. The average current traffic composition of the project roads is 70 percent cars, 2 percent buses and 28 percent trucks. An evaluation of the roughness measurements done after the rehabilitation of the road works shows that the roughness of the roads after the rehabilitation is on average about 1.3 IRI, m/km, which is slightly lower than what was estimated at appraisal 1.5 IRI, m/km. The ex-

34 post economic evaluation was done using the HDM-4 model adopting the same evaluation structure done at appraisal, but considering actual rehabilitation cost, roughness after road works and traffic growth rate for the 2005 to 2010 period. Table 3 presents the ex-post economic evaluation results per road section. The ex-post EIRR for the project roads varies between 15.9 and 86.0 percent with a weighted average of 28.3 percent. All individual road sections have an EIRR higher than 12 percent under the project scenario. Table 3: Ex-Post Economic Evaluation Results Total Actual Ex- Post Length Cost EIRR Lot Section Road Site and Sections (km) (M US$) (%) Lot 1 1 II-11 Vidin - Lom (km km ) North-western 2 II-11 Vidin - Lom (km km ) II-11 Vidin - Lom (km km ) II-11 Lom - Kovachitsa (km km ) II-11 Lom - Kovachitsa (km km ) II-11 Lom - Gigen (km km ) Lo1 Total Lot 2 North- western 7 II-15 Vratsa - Oriahovo (km km 3+028) and Central north 8 II-11 Gulyntsi - Milkovitsa (km km ) II-35 Pleven - Troyan - Karnare (km km ) II-11 Passage throuth Gigen (km km ) Lot 3 11 II-23 Isperih - Dulovo (km km ) North- eastern 12 II-51 Popovo - Dralfa (km km ) II-51 Dralfa - Chudomir (km km ) II-29 Varna - Dobrich (km km ) II-29 Varna - Dobrich (km km ) II-49 and II-51 Roundabout km Road II Lot 3 Total Lot 4 Southwestern 17 I-6 Sofia - Pirdop (km km ) Lot 4 Total Lot 8 Southwestern 18 III-198 G. Delchev - Pirin village (km km ) III-198 Petrich - border check-point FYR Macedonia (km km ) Lot 8 Total Lot 9 Southeastern 21 I-9 Burgas - Marinka - Zvezdetz - Malko Tarnovo - border check point-turkey (km km ) Lot 9 Total TOTAL The ex-post economic evaluation results show that the project benefits are higher than the ones estimated at appraisal due to the lower actual rehabilitation costs per km, despite the lower than expected annual traffic growth rate measured from 2005 to Table 4 compares the appraisal EIRR and the ex-post EIRR for the 6 lots implemented with project funds. The ex-post overall EIRR is 28.3 percent, which is higher than the overall EIRR estimated at appraisal for the 6 lots (25.8 percent), indicating that the project has a robust economic justification. 24

35 Table 4: Appraisal and Ex-Post Economic Evaluation Results Appraisal Ex-Post EIRR EIRR Lot (%) (%) Lot 1 North-western region Lot 2 North- western and Central north region Lot 3 North- eastern region Lot 4 Southwestern region Lot 8 Southwestern region Lot 9 Southeastern region Total

36 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility Lending Doncho Petrov Barbalov Operations Officer ECSIE-HIS Bogdan Constantin Constantinescu Senior Financial Management Specialist ECSO3 Mohammed Dalil Essakali Senior Infrastructure Economist AFTTR Blaga Djourdjin Procurement Specialist ECSO2 Ruxandra Maria Floroiu Senior Environmental Engineer EASER Vladislav Krasikov Senior Procurement Specialist EASR1 Mirela Mart Consultant ECSOQ Antti P. Talvitie Consultant ECSTR Terje Wolden Consultant ECSTR Romain Pison Junior Professional Associate ECSTR Julia Alexandrova Tomova Junior Professional Associate ECSIE-HIS Supervision/ICR Rakesh Tripathi ICR TTL and Primary Author ECSTR Michael Butler JPA and ICR Secondary Author ECSTR Rodrigo Archondo-Callao Senior Highway Engineer ECSTR Bogdan Constantin Constantinescu Senior Financial Management Specialist ECSO3 Juderica Zilla Josephine Dias Senior Executive Assistant DECDG Orlin M. Dikov Senior Operations Officer ECSTR Blaga Djourdjin Procurement Specialist ECSO2 Albena Alexandrova Samsonova Program Assistant ECCBG Ziad Salim EL Nakat Transport Specialist MNSTI Ruxandra Maria Floroiu Senior Environmental Engineer EASER Henry G. R. Kerali Country Director ECCU3 Alejandro Lopez Martinez Junior Professional Associate ECSTR Eolina Petrova Milova Operations Officer ECSUW Sylvia Nikolova Stoynova Operations Officer ECCBG Jukka-Pekka Strand Young Professional YPP Antti P. Talvitie Consultant ECSTR Ivelina Todorova Taushanova Communications Officer ECCBG Toma Alexandrov Yanakiev E T Consultant ECSTR (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No. of staff weeks and consultant costs) Lending FY FY FY Total: Supervision/ICR FY FY FY Total:

37 Annex 5. Beneficiary Survey Results As part of the ICR mission the World Bank team conducted site visits to four out of six of the completed lots to assess the quality of construction and also take an opportunity to interview some of the local people living and working near the rehabilitated road sections. The overall reaction from the beneficiaries was positive and they were very appreciative of the investments for the tertiary class road network. The Bank team was informed that the existing project roads were in poor condition and in much need of rehabilitation. The completed road sections have dramatically improved the livelihood of (i) road users, in terms of driving comfort and vehicle operating costs; (ii) local businesses, as a result of improved trade and connectivity; and (iii) local inhabitants due to improved accessibility to key health & education services and better road safety as results of traffic calming measure in populated location. The residents of Svetlen Village (Lot 3) confirmed that roads safety has improved significantly since the rehabilitation of the road. The reconstruction comprised a redesign of the main road junction into a Y- junction which has prevented many car accidents due to its safer layout and traffic calming potential. In the past many speeding (and drunk) drivers crashed into the church yard, but after the road rehabilitation there were no reported accidents in the village, several residents testified. Another major improvement according to the people of the village is the renovated sidewalks, which are highly appreciated as this is the latest new infrastructure in the village for many years. Furthermore, residents can now cross the road safely as result of modified speed bump crossings, which have been very effective at reducing the speed of incoming traffic. According to citizens of Varna the renovated road (Lot 3) has significantly improved ride quality and shortened the commuting time between Varna and Dobrich to 15 minutes. Travel time was shortened by at least 30 minutes for citizens of Malko Tarnovo (Lot 9). According to local residents, even public transport is faster now and has made its schedules more regular. This is crucially important when it comes to ambulances because there is no hospital in Malko Tarnovo and often the residents go by ambulance to Bourgas, the regional center. There are three roads connecting our town with other towns, but this is our main road, Silvia Baleva from Malko Tarnovo says. She works as tourist guide in the local museum and testifies that the number of tourists has doubled since the reconstruction of the road, benefiting numerous local businesses. 27

38 Annex 6. Stakeholder Workshop Report and Results N/A 28

39 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ROAD INFRASTRUCTURE AGENCY PROJECT ON REHABILITATION OF THE ROAD INFRASTRUCTURE (IBRD Loan No.: BUL) CONTRIBUTION OF THE BORROWER REPORT ON PROJECT IMPLEMENTATION OUTCOMES JUNE 2013 RIA Rehabilitation of the Road Infrastructure Project 29

40 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Contents I. Introduction II. Description of the Project Objectives of the Project, Main Indicators, Information on the Implementation of the Project III Environment IV Indicators Achieved V Challenges / Lessons Learnt VI Conclusions VII Support on Behalf of the Bank VIII Appendices Appendix Appendix RIA Rehabilitation of the Road Infrastructure Project 30

41 I. Introduction REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY The Republic of Bulgaria is a European country, located in the Eastern part of the Balkan Peninsular, which takes 22 % of its territory. To the North it borders with Romania, to the South with Greece and Turkey, to the West with the Former Yugoslav Republic (FYR) of Macedonia and Serbia and to the East with the Black Sea. The territory of Bulgaria exceeds 110 square kilometers and according to the 2011 census, the population of the country is almost 7.4 million people. The economy of the country is a highly open market economy, which according to external evaluation occupies the 70 th place in the world. It is relatively industrialized, with a private sector developed at an average level and a small number of preserved strategic state enterprises. According to its economic development today, Bulgaria falls within the group of the developing countries. Regardless of its economic development in the past few years, Bulgaria still has the lowest per capita GDP in the European Union. The transport location of Bulgaria is especially favorable. It is an important crossroad, connecting Central Europe, the Middle East and the Mediterranean. Five out of the ten Trans-European transport corridors - 4, 7 (the Danube River), 8, 9 and 10, pass through the territory of the Republic of Bulgaria, which occupies a strategic geographical position within Europe and on the Balkan Peninsular, and three of them - 4, 7 and 10, play an important role in the integration of the EU transport network with that of neighboring geographical regions and continents Asia, Africa and the Near East, as well as in the economic opening of the EU towards the markets and the raw materials of the East. The road network in Bulgaria consists of republican road network and municipal road network, the division is being done on the basis of the administrative and economic significance of the roads, as well as their function within the transportation system. The republican road network consists of roads which ensure the transport connections of national importance and routes of state interest. It has been developed with sufficient density but its state and maintenance level are unsatisfactory. At the moment, a number of programs and projects, funded with European funds and loans from IBRD and EIB are in place, their purpose being the construction of new and the improvement of the existing infrastructure. The total length of the republican road network in Bulgaria is km, of which 541 km of highways and km I Class roads, 4035 km II Class roads and km III Class roads. The Ministry of Regional Development manages the republican and municipal road networks in Bulgaria. The Road Infrastructure Agency is directly responsible for the Republican network, as a second level budget spending unit under the Ministry of Regional Development. It consists of Central Administration (Headquarters), comprised of twelve Directorates and specialized units, represented by twenty seven Regional Road Departments and a Central Institute of Road Technologies, National and European Norms and Standards. The Road Infrastructure Agency is managed by a Management Board, which comprises of a Chair and two Board members. The total number of employees within the Central Administration and the specialized units reaches 1523 people. RIA Rehabilitation of the Road Infrastructure Project 31

42 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY The Road Infrastructure Rehabilitation Project is the first project in the Road Sector in Bulgaria, funded through a loan from the International Bank for Reconstruction and Development and funds from the republican budget. The total amount of the project is Euro 144 million. According to the Loan Agreement signed on September 19, 2007, the deadline for the implementation of the project is no later than June 30, Through the amendment of the Loan Agreement, ratified on June 22, 2011 and promulgated on June 24, 2011, the deadline for the completion of the project was extended to June 30, The financial scheme was also changed. II. Description of the Project Objectives of the Project, Main Indicators, Information on the Implementation of the Project II.1 Project Objectives The goal of the project is to support the Republic of Bulgaria in reducing the expenditures on road accidents through improvement of the state and quality of the road network in the country in the first years after its EU accession. The objectives of the project can be met through: а. Improving the condition of roads Class I, II and III and the ensuing reduction in the expenses of the road users. b. Enhancing RIA capacity to stimulate the policy on efficient planning and efficient management of the programs on road maintenance, rehabilitation and construction. c. Assisting the Republic of Bulgaria in the development of the Road Safety Strategy and identification of the priority activities on improvement of the road safety. II.2 Project Components Component 1 Rehabilitation of selected roads; Component 2 Institutional development; Component 3 Road safety. II.3 Indicators II.3.1 Outcomes Indicator 1 Improving the condition of the roads which have to be rehabilitated under the project; Indicator 2 Reducing operating expenditures for vehicles by at least 10 % along the roads, which have to be rehabilitated. II.3.2 Intermediate Results Total number of rehabilitated roads Class one, two and three; Updating the roads Class one, two and three data; Number of contracts signed; Training of RIA s team of experts; RIA Rehabilitation of the Road Infrastructure Project 32

43 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Introduction and efficient use of the Road Management System; Developing a system on preventive maintenance of roads; Raising the qualification of RIA experts in the area of road infrastructure maintenance; Advisory services to support the management of projects for operational programs; Advisory services for the management of the Road Sector; Guidelines on the management of projects, reviewed, completed and used; Studies conducted on the institutional structure, human resources and development of competencies within the sector; Road safety strategies and plans developed. II.4 Financial framework The initial total value of the Project was calculated at EURO 144 Million. The participation of the Bank was carried out through a Loan Agreement for Euro of September 19, 2007, with the partnership of the national budget in the amount of Euro and duration until June 30, With the amendment of the Loan Agreement, ratified by law on June 22, 2011 and promulgated on June 24, 2011, the deadline for the absorption of the loan was extended to June 30, 2013 and the share of the co-funding from the national budget was reduced. II.5 Project Implementation II.5.1 Component 1 implementation Within the scope of Component 1, part 1, the rehabilitation of 450 km of roads Class one, two and three is included, grouped by regions (counties) into nine lots (Attachment 1 Table 1). Assignments for the design of the specific sites were approved in 2006 and the procurement tenders for the selection of designers were carried out in 2007; the projects were developed in the period International Competitive Biddings were conducted to select a Contractor for the construction works. By the end of 2009 and in early 2010 Contracts were signed for the nine lots. After the initial positive start in the implementation of the Component with the start of Lot 1 and 2 at the end of 2008, and lot 3 by the beginning of 2009, the Project was affected quite adversely by the raving global financial crisis. Construction works for Lots 4, 5, 6, 7, 8 and 9 for which contracts were signed in late 2009 and early 2010, had to be delayed until 2011 and their completion deadlines extended. These actions were necessitated by the fact that the funds allocated through the 2010 State Budget Act for State Investment Loans (SIL) managed by the Ministry of Regional Development (MRD), respectively RIA were spent mostly for payment of 2009 obligations under SIL. The Bidding procedures for Lots 5, 6 and 7 for selection of construction supervision, in compliance with the Bulgarian legislation were cancelled and delayed due to unsecured financial resources and the structural changes that occurred, which impeded RIA Rehabilitation of the Road Infrastructure Project 33

44 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY additionally their start-up and implementation. While preparing the amendment of the Loan Agreement, Lots 5, 6 and 7 were cancelled. By June 30, 2009 only 8-9 % of the Loan proceeds were disbursed, which caused a delay in the overall program. The cumbersome and lengthy procedures for approval and coordination of certificates and invoices contribute in addition to these delays. Another problem ensuing from those are the delayed payments to contractors. The Employer receives claims for unpaid sums under certificates, and incurs losses due to interest payments and indemnities. In 2011 and 2012 one by one were completed construction works for lots 1, 2, 3, 4, 8 and 9. Due to all these reasons stated in the Amendment to the Loan Agreement, extending the deadline for project completion was also included a change in the financial payment scheme and restructuring of Component 1, as the scope of the rehabilitated roads was reduced to 307 km (Attachment 1 Table 2). The initial indicative value of the lots amounting to BGN with VAT, as stated in the Procurement Plan to the Loan Agreement 4865-BUL, has not been achieved. The value of the signed contracts under the rehabilitation component amounts to BGN ,61, VAT excluded. After the end of construction works and following the one year defect liability period, in compliance with the contract terms, the total amount disbursed for the lots is BGN ,89, VAT excluded (Attachment 1 Table 3). The increased prices of construction contracts are due mainly to: Increased volume of the envisaged types of works because of the lengthy period for preparation of design documentation until the actual start-up of actual implementation, which resulted in deterioration of the condition of the sections selected for rehabilitation and increased volumes compared to those planned in the BoQs. Additional works included following the provisions of sub-clause 13.1 Change order of the terms of contract, due to the need to enhance traffic organization and road safety, as well as homogeneity of road infrastructure at local level; (Attachment 1 Table 2б) Application of sub-clause 13.8 Adjustment for cost changes, as well as payment of Contractors claims under sub-clause 20.1 due to the longer period from the Base date to the implementation and accounting for Construction works, and the occurred economic changes that have brought about misbalance in adjustment coefficients. Because of the great public interest and importance of transport infrastructure for the economic development of South-western and South-eastern regions in the country the possibilities for implementation of the following was considered: By-pass of Gotse Delchev town from km (km on road II- 19 (to km to km on road III 198)), that will take away the transit traffic from the centre of the town, and also a section on road III- 198 Vranya-Chuchuligovo-Marino pole from km to km , by which the entire rehabilitation of road III 198 will be completed; RIA Rehabilitation of the Road Infrastructure Project 34

45 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY By-pass road of Malko Tarnovo from км to connection to road І-9 at km = and rehabilitation of a section on road I 9 from km border with the Republic of Turkey at km In November 2012 the Project Implementation Unit with RIA jointly with the Consultant (Project Management Team), following the Guidelines for procurement of goods, construction works and non-consulting services under IBRD loans and IDA credits of May 2004, as revised on 1 October 2006 and 1May 2010, prepared Bidding Documents for selection of Contractors for construction works at sites: Lot 10 South-western region Bypass of Gotse Delchev town and Road III- 198 Vranya-Chuchuligovo-Marino pole and Lot 11 South-eastern region By-pass of Malko Tarnovo and border with the Republic of Turkey from the Road Infrastructure Rehabilitation Project. The scope of the abovementioned procedure was defined in the Procurement Plan enclosed with Loan Agreement 4865-BUL with the latest updates of December 2012 under line W-11. The final version of the Bidding documents in the Bulgarian language was sent to the IBRD mission in Bulgaria for mandatory review. As a result RIA received the required no-objection as per para 1.11 of the Guidelines for procurement of goods, construction works and non-consulting services under IBRD loans and IDA credits. In the course of preparation and coordination of the Invitation to bid in a National Competitive Bidding and the Decision for launching of a procurement procedure the Legal Directorate of the Project Contractor - RIA submitted a negative opinion, which coupled with the financial constraints of the 2012 budget and the short time remaining made their implementation impossible. The restrictions in the State Budget Act in the part relevant to externally financed projects through SILs and the observance of fiscal discipline in 2010, 2011 and 2012 resulted in Project delays and severely impeded RIA to implement Component 1 of the Loan Agreement by giving reasons to postpone construction works and extension of implementation in order to postpone payments for the next budget year.within the scope of Component 1, part 2, an advisory service has been included, assisting RIA in the analysis and justification of works, review of projects, preparation of bidding documents and bid evaluation, as well as in the coordination and conducting of quality control of works and their supervision. The procedure for selection of a Consultant started in 2006, and a contract was signed with the awarded consultant Mott Macdonald Ltd. on 24 July 2007, whose term was extended with the project restructuring. Throughout the consultancy period the Consultant has strictly performed its contractual obligations working in direct cooperation with the Project Implementation Unit with RIA and providing the required methodological guidance to the project contractor. In addition within the scope of these consultancy services a review was made of the training needs at RIA at both expert and management level and a training program was devised, which was implemented during the contract. In the process of project implementation, the following trainings of experts have been conducted at RIA: RIA Rehabilitation of the Road Infrastructure Project 35

46 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Training of auditors on road safety the course was carried out in June 2008 and was successfully passed by experts from RIA and other state institutions; Training to implement the contractual terms of Conditions of Contracts for construction of building and engineering works designed by the Employer, MDB harmonized edition, March 2006 which was carried out in 2012, and the participants in it were both at the expert and the managerial levels. II.5.2 Component 2 implementation In support of the Project Implementer (RIA), The Ministry of transport and the Ministry of Regional Development purchased instrumentation for measuring, assessment and analysis of the road network condition. Due to differences with the Public Procurement Act the procedures were delayed. The instrumentation serves to support monitoring related to all operational programs financed through loan or national funds. The Road Management System developed under sub-component C-02 by Finroad Ltd. and the HDM-4 procured under sub-component G-09/1 cannot be used very efficiently due to the fact that it is not possible to export data from one system to another. That is why RIA is looking for options that would allow its full utilization. As a part of the implementation of sub-component С-02, Finroad Ltd. developed three pilot contracts for performance based road maintenance. They were used by RIA as a basis for signing of two maintenance contracts: Motorway Liulin and Motorway Trakia. The technical parameters of these contracts devised by Finroad Ltd. were used without adjustments, and the only changes made in these pilot contracts were related to their award due to the different public procurement rules in Bulgaria. A number of training events were carried out under sub-component С-05 for the employees of RIA at management and expert level in order to enhance their project management skills. A Table showing the implemented training events is attached to the report (Attachment Table 4b) The task of the Consultant on main roads - sub-component C-11, was to strengthen the policies in Bulgaria s road sector by providing strategic advice to top level politicians at MRD. In addition to these tasks included in the base contract, the Consultant provided to RIA its services in relation also to: - Review of the long-term plan for support and development of RIA and MRD - preparation of processes, preparation of plan for implementation of recommendations; - Review of the TORs for traffic counters financed under OP Regional Development and OP Transport, and thanks to the provided help, the procedure for procurement of traffic counters under OP Regional Development was successfully finalised and a contract was later signed with the selected contractor. A similar Public Procurement procedure is to be carried out under OP Transport; - Review and good-quality implementation of projects signed under the MOU; RIA Rehabilitation of the Road Infrastructure Project 36

47 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY - Arrangement of a working visit of RIA employees in Lithuania. This working visit took place in September 2012 under the leadership of eng. Iliana Zaharieva - member of the Managing Board of RIA. Meetings were carried out at the scientific institute for transport and road infrastructure in Kaunas, the Lithuanian road administration and the state company Problematika. Good practices for road sector management and maintenance were exchanged. The procedure for selection of a Consultant to support management of projects under OP Transport and OP Regional Development - sub-component С-12, took place based on Quality-cots based selection method. That service was included in the project during its restructuring, which became effective on June 22, 2011 in relation to the MOU for extended cooperation for infrastructure development in the Republic of Bulgaria signed on August 10, 2010 between the prime-minister of the Republic of Bulgaria and the President of IBRD (the World Bank). The main purpose of the consulting service was to guarantee the timely and effective utilization of available EU funds for the road sector in Bulgaria, while building up capacity at MRD and RIA in the field of road-transport project planning, programming and management. The development of the TOR began in summer 2010 and was completed by the end of the year. The focus was on the great delay in the preparation and the procedures for approval, contracting and implementation of key projects. Within the one year period between the establishment of the need to procure a Consultant (mid 2010) and the effective loan restructuring (mid 2011) the qualification of the employees at MRD and RIA administrations was improved as evidenced by the degree of absorption of road sector funds under OPT and OPRD. This is also confirmed by the successful start-up and already pretty advanced in their implementation road projects, as well as by the preparation of the key and alternative OPT projects for the period RIA established that there is no more need of the activities within the scope of the task of the external Consultant focused on institutional strengthening of administrations and support for absorption of OP funds for the road sector and because of that cancelled the procedure. The procedure for selection of Supplier for a system of counters for continuous registration traffic registration and portable scales for measuring of axle weight-in-motion - position G- 01, was launched in Two bids were submitted, which were thoroughly reviewed in terms of fullness and compliance of bidding documents, and in terms of price acceptability, technical and technological capacity of each bidder. The bidding procedure was cancelled because of the too high price offered, failure to receive a no objection from the Bank for signing of contract as per Clause 39.1 of the Bidding documents and none of the bidders was selected as successful. In view of the needs of RIA to procure a system of counters for continuous registration traffic registration and portable scales for measuring of axle weightin-motion preparations for starting up of new procedures began by having the Technical RIA Rehabilitation of the Road Infrastructure Project 37

48 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY specification revised by the Consultant and experts of the Central Institute in view of expanding the scope of the procurement. The second procedure was launched in late 2012 and five companies submitted their bids. The procedure was terminated once again due to Project budget cuts. The budget of the Project is consistent with the established financing for State Investment Loans of the Ministry of Regional Development and respectively the Road Infrastructure Agency. The preparation and initiation of the procedure in December 2012 was based on the anticipated budget allocation for Since in respect to the date of signing a future contract with a contractor the budget parameters for State Investment Loans for 2013 have been reached, it is impossible to increase them and respectively to continue with the procedure. The third procedure for which no contract has been secured is (G-02/1 Equipment for measuring the cohesion). The procedure was terminated because of lack of bids and inconsistency of the standards in the countries of origin of the manufacturing companies of the equipment in question with the European standards. The funds allocated to this position were distributed to other lines of the procurement plan. At the present moment RIA is still in need of such equipment and is exploring financing options. The Central Institute for Roads Technologies National and European Norm and Standards had a pressing need to buy software for traffic modeling (G-09/1.7.5) but due to the lack of time until the Project completion and disagreement with the Legal directorate at RIA in regard to the procedure for purchasing the software in question, the procedure did not take place. II.5.3 Component 3 implementation Component 3 includes the implementation of a coordinated and integrated package of efficient, multisectoral road safety interventions, based on the best international practices and enhancing the institutional capacity of the agencies, responsible for improving the performance of the road safety, both of which shall be realized through ensuring construction works, technical advisory services, training, equipment and conducting of studies (Attachment 3 Table 5). The general framework of the Component could be divided into three interrelated stages: first preparation and study of the output data, second analysis and proposals on how to solve the problems, identified in the first stage and third implementation of the solutions. At the beginning of 2010, within the scope of sub-component С-10, a working group of experts was established at the Road Infrastructure Agency, whose purpose was to select 25 road sections on the territory of the country, with high concentration of road accidents and to prepare the Terms of Reference and the call to bidders/invitation to tender, in order to select the Contractor for sub-components С-07 and С-08. The imposed budget restrictions that same year prevented the continuation of operations under Component 3 Road Safety. After the restructuring of the loan in 2011, an update of the data on road accidents was updated, as well as the 25 road sections with a high concentration of road accidents. At the beginning of 2012, a bidding procedure was launched for the selection of Contractors for sub-component С-07 (local Consultant) and С-08 (international Consultant) and the RIA Rehabilitation of the Road Infrastructure Project 38

49 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY contracts with the Consultants, selected through the Methodology for Selecting of Consultants, on the basis of their qualifications, were signed in the beginning of November The tasks assigned to the local Consultant were as follows: conducting an analysis of the 25 road sections with a high concentration of road accidents and drafting proposals for measures for the treatment of the main factors, causing the accidents; review of the recommendations for amendments to the national norms having a direct relation to the road safety; developing guidelines for analysis of the road sections with a high concentration of road accidents, etc. In view of the specifics of the matter and the lack of traditions and understanding in Bulgaria of the leading trends in Europe, related to the road safety, the selected international Consultant played a major role and was extremely important for the successful completion of the Component. His objective was to support the local Consultant in his work on the 25 road sections with a high concentration of road accidents, to review and make proposals, related to the regulatory framework from the viewpoint of introducing the good practices from Europe, as well as to conduct a one-week course for an official from RIA s Headquarters and the specialized units on the subject of Analysis and Methods for the Treatment of Road Sections with a High Concentration of Road Accidents. III Environment All necessary permits have been obtained from the Ministry of Environment and Water, before the commencement of the construction works, and they are being stored together with the lot dossiers. The environmental supervision is included in the quarterly reports of the Consultant as a general impact of construction on the environment, without provision of an evaluation of each of the implemented lots. The availability of an expert within the Consultant s team, with the respective qualification is of particular importance. IV Indicators Achieved (see the Table - Indicators) V Challenges / Lessons Learnt In the process of implementing the Project, the main challenges faced by the Implementing Agency of the Project can be summarized in the following groups: Legislative: Finding the common ground when implementing the contractual terms for Construction for Building and Engineering Works Designed by the Employer, MDB Harmonized Edition March 2006 and the Bulgarian legislation (as some of the toughest moments are the commencement and end of construction and provided warranty deadlines); During the implementation: Compliance with the work schedule and cash flow. Financial: Uncertainties in determining the budget for the Project for each coming year due to the fact that RIA is a secondary budget distributor. RIA Rehabilitation of the Road Infrastructure Project 39

50 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY The restructuring of RIA through the years has influenced the implementation of the Project. VI Conclusions It is necessary to proceed to a better planning of the design - execution process, so that higher financial responsibility can be imposed on the construction supervision and designer. The term of the contracts for implementation to be from 7 to 10 years. More training of RIA personnel with regard to familiarizing with the rules for public procurement is necessary. VII Support on Behalf of the Bank The World Bank team provided the necessary support for the operations under the Project. The Bank took all decisions on time and immediately provided the No Objection statements. In the process of implementation, the professional advice of the Bank team members made a considerable contribution to the successful completion of the Project and meeting the set outcomes. VIII Appendices Appendix 1 Table 1. Road sections included in the "Project for the rehabilitation of road infrastructure" Lot Section Road Site and Sections Length km Lot 1 - North West 1 II-11 Vidin - Lom (km km ) II-11 Vidin - Lom (km km ) II-11 Vidin - Lom (km km ) II-11 Lom - Kovachitsa (km km ) II-11 Lom - Kovachitsa (km km ) II-11 Lom - Gigen (km km ) 2.55 Lot 1 Total Lot 2 North and North Central Region 7 II-15 Vratsa - Oriahovo (km km ) II-11 Gulyantsi - Milkovitsa (km km ) RIA Rehabilitation of the Road Infrastructure Project 40

51 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY 9 II-35 Pleven - Troyan - Kamare (km km ) Lot 2 Total Lot 3 North-East 10 II-23 Ruse - Silistra (km km ) II-51 Popovo - Dralfa (km km ) II-51 Dralfa - Chudomir (km km ) II-29 Varna - Dobrich limit (km km ) II-29 Varna - Dobrich ring road (km km ) II-29 Varna - Dobrich ring road (km km ) III-235 Glavinitsa - Zafirovo (km ) Lot 3 Total Lot 4 South-West 17 I-6 Sofia - Pirdop (km km ) Lot 4 Total Lot 5 South Central region 18 I-6 Pirdop - Karlovo - Kalofer (km km ) III- Plovdiv Biala Cherkva - Kosovo (km km ) 20 III-663 bypass Chirpan - Zetovo (km km ) III-807 Vurbitsa - Skobelevo (bypass Republic - Zetovo) (km km ) over the Maritsa river Lot 5 Total Lot 6 North-East 22 I-7 Shumen - Preslav (km km ) I-7 Preslav - Vurbitsa (km km ) I-7 Preslav - Vurbitsa (km km ) Lot 6 Total Lot 7 South-East 25 II-63 Pernik - Strezimirovtsi (km to km ) III- Filipovtsi - Glogovitsa-Tran (km km ) III-813 Dragoman-Vrabcha (km km ) Lot 7 Total Lot 8 South-West 28 III-198 G. Delchev - Pirin village (km km ) III-198 Petrich - border FYR Macedonia (km km ) RIA Rehabilitation of the Road Infrastructure Project 41

52 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Lot 8 Total Lot 9 South-East 30 I-9 Burgas - Marinka - Zvezdets - Malko Tarnovo - border - Turkey (km km ) Lot 9 Total OVERALL LENGTH PROVIDED FOR REHABILITATION ROADS (KM) Table 2a. Road sections included in the "Project for the rehabilitation of road infrastructure" Lot Section Road Site and Sections Length km Lot 1 - North West 1 II-11 Vidin - Lom ( km ) II-11 Vidin - Lom (km km ) II-11 Vidin - Lom (km km ) II-11 Lom - Kovatchevitsa (km km ) II-11 Lom - Kovatchevitsa (km km ) II-11 Lom - Gigen (km km ) Lot 1 Total Lot 2 North and North Central Region 7 II-15 Vratsa - Oriahovo ( km ) II-11 Gigen - Gulyantsi - Milkovitsa (km km ) 9 II-35 Pleven - Troyan - Karnare (km , km ) Lot 2 Total Lot 3 North-East 11 II-23 Russe - Silistra (km km ) II-51 Popovo - Dralfa (km km ) II-51 Dralfa - Chudomir (km km ) II-29 Varna - Dobrich (km km ) II-29 Varna - Dobrich (km km ) Lot 3 Total Lot 4 South-West 17 I-6 Sofia - Pirdop (km km ) Lot 4 Total Lot 8 South-West 18 III-198 G. Delchev - Pirin (km km ) III-198 Petrich - border crossing with FYR Macedonia (km km ) Lot 8 Total Lot 9 South-East 21 I-9 Burgas - Marinka - Zvezdets Malko Tarnovo (km km ) Lot 9 Total OVERALL LENGTH PROVIDED FOR REHABILITATION ROADS (KM) RIA Rehabilitation of the Road Infrastructure Project 42

53 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Table 2b. - Additional areas covered through change orders Lot Section Road Site and Sections Length km Lot 2 1 II-11 Crossing through Gigen (km km ) Lot 3 2 II-49 and II-51 Roundabout at km of II Table 3. Selected contractor, price at the beginning and the end of construction, period of performance. Lot Selected contractor Estimated contract price Accepted contract price Final price Period of performanc e under the contract agreement (Days) Period of performanc e after an additional agreement (Days) Lot 1 (W- 01) Lot 2 (W- 02) Lot 3 (W- 03) Lot 4 (W- 04) Lot 8 (W- 08) Lot 9 (W- 09) Roads Association Vidin 14,551, ,993, ,095, Trace Association 28,046, ,253, ,113, Pleven Roads Association 35,909, ,784, ,964, Razgrad PAM Association 45,883, ,809, ,460, Consortia Nevrokop 33,562, ,229, ,898, Highways - Black Sea 48,817, ,815, ,959, Corp TOTAL: 206,770, ,886, ,492, Appendix 2 Table 4a. Component 2 - Institutional Development type Description of contract Selected supplier / consultant value note G-01/1 G-01/2 G-02/1 G-02/2 Permanent automatic devices for counting and classifying traffic Mobile system for the study of movement in weight Equipment for the measurement of adhesion Equipment for measuring the flatness - - the procedure is terminated - - the procedure is terminated - - had not submitted bids Dynatest Denmark A/ S 117, RIA Rehabilitation of the Road Infrastructure Project 43

54 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY G-02/3 Deflektograf to measure the VECTRA 393, bearing capacity of the floor G-06 Illuminate the road markings MARVEL Ltd 14, and road signs G-07/1 Mobile laboratory for testing Patpribor Ltd. 256, of materials G-08/1 Automated dynamic tests SIGMATICS Ltd. 35, G-08/2 Equipment for testing the integrity of pilots G-08/3 Software to calculate the bearing capacity of bridges C-02 Improve the management of road maintenance Patpribor Ltd. 10, KANISCO Ltd. 16, Finroad Ltd in association with Ramboll Denmark A / S and Roadscanners Ltd 588, G-09/1 HDM-4 software program TRL Limited $ 6, G-09/2 Delivery of digital cameras 4 VIP Treiding 1, pcs. G-09/3 GIS ESRI Bulgaria 12, G-09/4 Specialized software ROAD Roadscanners Ltd 51, DOCTOR G-10/1 Computer equipment and Kontrax Ltd. 13, networks G-10/2 System for video cameras and Roadscanners Ltd 32, inventory of road G-11 Atomobil type "Van" for the Nissan Sofia Ltd 16, mobile laboratory ipitvane material C-11 Consultant on main roads Virgaudas Puodziukas - Lithuania 308, C-12 Consultant to assist the management of projects under OP "Transport" and "Regional Development" C-05 Training RIA TSIPTNENS, SDA - - the procedure is not performed Trainings held in Turin, Italy, and Rab. Visit to Vilnius, Lithuania 40, payment of invoices C-06/1 Audit 1 of the project in Grant Thornton 11, C-06/2 2 audit of the project in 2009, and C-06/3 3 Audit of the project in and AFA Ltd. 32, AFA Ltd. 21, RIA Rehabilitation of the Road Infrastructure Project 44

55 REPORT ON THE IMPLEMENTATION OF THE PROJECT ROAD INFRASTRUCTURE AGENCY Table 4b. Trainings according to the project type Description of contract Selected supplier / consultant trained experts man hours totaling note С-01 Training to implement the terms of the FIDIC С-05 Project Cycle Management Management of projects financed by IBRD Management of projects financed by IBRD Working visit to Lithuania С-08 Analysis and methods for treatment of portions having a concentration of crashes Mott Macdonald Turin, Italy , BGN COWI Royal Haskoning DHV , BGN excluding travel expences, room and board for the participants. Those are covered by RIA budget Appendix 3 Table 5. Component 3 - Road Safety type Description of contract Selected supplier / consultant value note C-07 Road Safety Technical Assistance - Research, analysis and preparation of preliminary engineering (conceptual designs) to improve road safety in dangerous Sites. C-08 Road Safety - Technical Assistance - Construction of improved institutional capacity in the systematic identification and improvement of road safety in hazardous locations C-10 Road Safety - Research RIA with the assistance of TSIPTNENS JV "Road Safety" 119, Wim van der Wijk 54, studies were conducted by experts from RIA W-10 Road safety - works and goods - - the procedure is not performed RIA Rehabilitation of the Road Infrastructure Project 45

56 Annex 8 Comments of Cofinanciers and Other Partners/Stakeholders N/A RIA Rehabilitation of the Road Infrastructure Project 46

57 Annex 9 List of Supporting Documents Project Documentation Project Concept Note, Bulgaria: RIRP. June 29, Project Appraisal Document on a proposed Loan in the Amount of EUR 90.0 million (US$ million) to Bulgaria for RIRP, May 31, Restructuring Paper on a Proposed Project Restructuring of RIRP and IBRD-48650, March 31, Loan Agreement (RIRP) between Bulgaria and International Bank for Reconstruction and Development, Dated September 19, 2007/ Loan Agreement Amendment (RIRP) between Bulgaria and International Bank for Reconstruction and Development, Dated May 17, 2011/ Minutes of Concept Review for Bulgaria: RIRP, June 29, Results of the Quality Enhancement Review for Bulgaria: RIRP, October 19, Minutes of Decision Package Review Meeting for Bulgaria: RIRP, November 16, Negotiations Package for Bulgaria: RIRP, May 29, Bulgaria Road Infrastructure Rehabilitation Project : Environmental Management Plan, December 01, 2006 Mission Aide-Memoires and Implementation Status Reports Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 1, November 13, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 2, March 06, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 3, May 05, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 4, November 06, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 5, March 23, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 6, August 05, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 7, December 08, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 8, April 14, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 9, November 10, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 10, June 29, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 11, October 30, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 12, October 22, RIA Rehabilitation of the Road Infrastructure Project 47

58 Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 13, December 25, Bulgaria Road Infrastructure Rehabilitation Project: P Implementation Status Results Report 14, June 22, Other documents and reports Country Partnership Strategy for Bulgaria for the period FY11-13, April 20, 2011 Bulgaria Public Finance Policy Review. World Bank Report No BG Review of 25 Hazardous locations: Advice to improve black spot analysis and road safety treatments, May 02, 2013 Quarterly Report 1 RIRP-C11 Highway Advisor Quarterly Report 2 RIRP-C11 Highway Advisor Quarterly Report 3 RIRP-C11 Highway Advisor Quarterly Report 4 RIRP-C11 Highway Advisor Quarterly Report 5 RIRP-C11 Highway Advisor Quarterly Report 6 RIRP-C11 Highway Advisor Mott McDonald: Draft Final Progress Report for Bulgaria Road Infrastructure Rehabilitation Project, August, RIA Rehabilitation of the Road Infrastructure Project 48

59 R IBRD 35097R CROATIA SERBIA F Y R MACEDONIA 22 BOSNIA AND HERZEGOVINA ITALY Adriatic Sea HUNGARY MONTE- NEGRO ALBANIA To Zajecar To Kriva Palanka SERBIA KOSOVO FYR MACEDONIA GREECE Kula Belogradchik Kyustendil Gyushevo ROMANIA Danube SOFIA BULGARIA Vindin To Strumica Bobov Dol Koshava Berkovitsa Gaber Kostinbrod Bojurishte Radomir MOLDOVA Montana Kalotina Dragoman 23 Pernik Petrich Lom SOFIA Dolni Rakovets Struma R. Black Sea TURKEY Dupnitsa Gabrovnitsa Beli Izvor Vratsa SW Kozloduy Mezdra Botevgrad Novi Iskar Buhovo Rilski Manastir Blagoevgrad Razlog Dobrinishta Sandanski General Todorov Kulata To Serral 41 Danube Chiren Elin Pelin Samokov Gotse Delchev NW Mesta R. H R. Byala Slatina Cherven Bryag TRAKIA Velingrad To Drama Oryahovo MOTORWAY E M US Zlatitsa Knezha MOTORWAY Pirdop Aleko Konstantinov Zlatna Panega Panagjurishte Pazardzhik Batak Dospat Iskar R. Peshtera R O M A N I A Dolni Dubnik Klisura Gigen Dolna Mitropoliya Lovech Troyan Khisarya Vit R. Graf Ignatievo Plovdiv Pleven Karlovo Krumovo Rudozem G R E E C E Nikopol Belene Levski Kamenets Sevlievo Kalofer Orizovo Skutare Cheshnegirovo Asenovgrad SC Smolyan Madan R. Osâm Gabrovo TRAKIA MOTORWAY Podkova Zlatograd Aegean Sea Svishtov Chirpan Dryanovo Kazanluk Tulovo Kurdjali Rosica R. Stara Zagora Maritza R. Khaskovo To Komotini Jantra Mihailovo Momchilgrad Danube Byala Gorna Oryakhovitsa Lyaskovets Zlataritsa Veliko Turnovo Dubovo Elena Nova Zagora Lyubenovo Dimitrovgrad Uzundzhovo Kharmanli Malevo Studen Kladenets Ruse NC Tundja Arda R. Ivaylovgrad R. Popovo R. Turgovishte Sliven Bezmer Svilengrad Maritsa R. Omurtag Tenevo Elkhovo To Edirne To Bucharest Tutrakan Razgrad Isperih Shumen Yambol To Edirne Todorevo Dulovo Kaspichan Veliki veliki Preslav Karnobat SE 41 Silistra Alfatar Kaolinovo Ravnets Novi Pazar Kameno NE HEMUS MOTORWAY Provadiya TURKEY 27 Aytos Reka Beloslav Devnya Pomorie Sarafovo Burgas Malko Tarnovo Nesebur Chernomorets Sozopol Dobrich Sokolovo Varna Staro Oryakhovo Primorsko Michurin Akhtopol 28 Kardam Kavarna Balchik Rezovo To Constanta Shabla Tyulenovo GSDPM Map Design Unit Black Sea BULGARIA ROAD INFRASTRUCTURE REHABILITATION PROJECT PROJECT ROAD SECTIONS TO BE REHABILITATED MOTORWAYS CLASS 1 ROADS CLASS 2 ROADS CLASS 3 ROADS NATIONAL CAPITAL MAIN CITIES AND TOWNS PORTS REGION BOUNDARIES (Level-2 NUTS subdivisions) INTERNATIONAL BOUNDARIES KILOMETERS This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 42 Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 29 OCTOBER 2013