ANNUAL PERFORMANCE AGREEMENTS BETWEEN THE ROAD AGENCY AND ROAD FUND OR PARENT MINISTRY

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Derek Harrington
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1 ANNUAL PERFORMANCE AGREEMENTS BETWEEN THE ROAD AGENCY AND ROAD FUND OR PARENT MINISTRY Source: General suggestions by Ian G. Heggie, UK Highways Agency example from Mel Quinn and Tanzania example from Tanzania Road Fund (prepared June 2004). GENERAL SUGGESTIONS ABOUT THE SORT OF MEASURES THAT GO INTO ANNUAL PERFORMANCE AGREEMENTS For the National Roads Agency (NRA) By the end of the year: When Establishing a New Road Agency Supervisory Board appointed, officers selected (e.g., Chairman, Vice Chairman, Secretary) and Board meeting on a regular basis Public relations program implemented to make the public aware of the new organisation, the proposed road program and seek feedback from the public 80 % of all managerial (senior) posts filled 80 % of all staff positions filled Design standards reviewed, amended (if necessary) and adopted Standard bidding documents for concession agreements reviewed, amended (if necessary) and adopted (for new works and maintenance, as well as maintenance only) Financial Targets Avoidance and evasion of vehicle license fees/tolls/supplementary licences reduced to less than X/Y/Z% Appeals/complaints procedure for license fee penalties set up (by the Police?) and implemented Ongoing publicity program for licenses/tolls developed and under implementation Borrowing against road fund revenue not to exceed 10 % of expected annual income Rolling 5-year road program updated year cash flow forecast and financing plan updated Full commercial accounts prepared with at least an income statement, balance sheet (for new assets only) and sources and application of funds statement Maintenance Targets All roads brought under regular routine maintenance Contracts for X km of roads let for periodic maintenance At least one combined routine/periodic maintenance concession under preparation Rehabilitation needs identified and program of remedial works under preparation Targets for New Motorways At least X km of new motorway contracts prepared and being let

2 At least Y km of motorway contracts under preparation At least one Design, Build, Finance and Operate (DBFO) concession under preparation Targets for Strengthening Contracts for at least X km of roads let for pavement strengthening Contracts for at least Y km of roads under preparation for pavement strengthening Targets for Road Safety Senior manager appointed as Road Safety Officer to liase and work with the National Road Safety Council (NRSC) Procedures introduced to undertake road safety audits on all works involving rehabilitation, strengthening and new road works Program prepared to undertake road safety audits on all other roads At least two road safety demonstration projects identified jointly with the NRSC for early implementation Parent Ministry Obligations To ensure that road fund revenues are promptly deposited into the NRA s bank account. To ensure that road user charges (vehicle license fees, fuel levy, supplementary licenses, etc.) are not reduced for at least X years. In case the government decides to reduce road user charges, or to withhold any of the proceeds, it agrees to compensate the NRA with an annual grant from general tax revenues. To permit the NRA to appoint a General Manager and pay him/her a market based wage, subject only to a Ministerial no objection. Likewise, to permit all other senior staff to be paid market based wages. EXAMPLE 1: SUMMARY OF UK HIGHWAYS AGENCY MINISTERIAL TARGETS 2001/02 Source: From the UK Highways Agency 2001/2002 Business Plan The Agency has been set targets for 2001/02 for each of our three programme areas. These are: Maintenance: To end the year with between 7 and 8% of the network requiring maintenance in the next year Pavement Management System to be upgraded and operational with agents Structures Management Information System to be in place and operational with [maintaining] agents (These support the 10 year plan outcome of effective maintenance) Making Better Use of the Existing Network: To complete at least 11 early action schemes aimed at tackling congestion

3 Install at least 68 motorway CCTV cameras (These support the 10 year plan outcome of easing congestion) Reduce the number of people killed and seriously injured on trunk roads by 416 to 4,575 (compared with the average of 4,991) Reduce the slight casualty rate to slight casualties per hundred million-vehicle km (compared with the average of 22.14) To complete at least 10 early action schemes aimed at improving safety (These support the 10 year plan outcome of safer travel) Install automatic hold up warning systems on at least 128 km of motorway length (This supports the Strategic Roads 2010 outcome of smarter roads) To achieve an average annual target of 90% across the four environment programme subindicators listed in Chapter 5 (This supports the 10 year plan outcome of delivering in partnership) Major Improvements: To achieve at least 13 of the 15 (Ten Year Plan Investments) TPI scheme milestones listed in Chapter 6 (This supports the 10 year plan outcomes of easing congestion, safer travel and delivering in partnership.) During 2001/02 the Agency will put its property to economic use ensuring that the percentage of vacant residential properties at the end of the year does not exceed 15% of the residential portfolio, and the percentage of vacant habitable properties empty for more than six months at the end of the year does not exceed 3% of the residential portfolio. These targets set by the Secretary of State will be supported by the 16 customer-focused performance targets based on the service standards published in the new edition of the road users charter listed in annex 5 [not included]. Footnote: see page 6 for definition of 10 year plan outcomes [not included]. EXAMPLE 2: ANNUAL PERFORMANCE AGREEMENT FOR TRUNK AND REGIONAL ROADS MAINTENANCE WORKS IN TANZANIA Source: FY2000/01 Agreement between the Roads Fund Board and TanRoads, Tanzania. ARTICLE I: DEFINITIONS Unless the context otherwise specifies or requires, for the purposes of this Agreement, the following terms shall have the meaning set forth in this Article I. 8.1 Routine Maintenance. The term routine maintenance shall mean all maintenance works required continuously on every road whatever its engineering characteristics or traffic volume, and comprises of activities such as grass cutting, drain cleaning, culvert and bridge cleaning and maintenance, road furniture and bridge guide rails maintenance. 8.2 Recurrent Maintenance. The term recurrent maintenance shall mean all maintenance works required at intervals depending upon volume and composition of traffic using the

4 road, and include paved road patching, edge repair, crack sealing, and line remarking, and also unpaved road grading, shaping, and pothole repair. 8.3 Spot Maintenance. The term spot maintenance shall mean all maintenance works carried out on roads in poor condition in order to ensure passability, and comprises of localized activities such as embankment repairs, culvert and drainage repairs, road reshaping and regravelling, and the construction of diversions. 8.4 Periodic Maintenance. The term periodic maintenance shall mean all maintenance works carried out at intervals of several years and comprises of paved road resealing or overlay and regravelling of unpaved road. 8.5 Emergency Maintenance. The term emergency maintenance shall mean all maintenance activities required to open or repair roads or bridges after a natural disaster or other ordinary causes. 8.6 The Chief Executive. The term Chief Executive shall mean the Chief Executive of TANROADS 8.7 Agreement. The term Agreement shall mean this Annual Performance Agreement 8.8 Operational Plan. The term Operational Plan shall mean TANROADS Annual Operational Plan as approved by the BOARD. The Operational Plan shall give details of operations based on the approved strategic plan and shall include the planning of activities that need to be performed to achieve TANROADS output together with matching resource calculations, including key performance targets and priorities financial projections, budgets and revenue targets based on indicative resource allocations from the Roads Fund Board, and estimated income from its own sources of revenue personnel plan, work programs, showing clearly all activities, locations, timing and financial resources required key assumptions, including those about resources, which will underpin performance targets, and plans to improve performance with respect to value for money and quality of works and services to be delivered TANROADS will use this approved Operational Plan to calculate cash flow forecast and monitor the achievement of set targets. 8.9 Liquidity Plan. The term Liquidity Plan shall mean TANROADS cash flow projections as presented in their approved Operational Plan Budget Item. The term budget item shall mean all major items such as administrative costs, routine and recurrent maintenance, periodic maintenance, etc.

5 1.11 Performance Targets. The term performance targets shall mean service delivery performance requirements as set forth in the second schedule to this agreement Performance Indicators. The term performance indicator shall mean the means in which achievement as per set targets can be assessed as set forth in the second schedule to this agreement Monitoring. The term monitoring shall mean a systematic and continuous assessment of the achievements made as per set programmes Progress Report. The term progress reports shall mean TANROADS quarterly or annual progress reports as per Article Road Maintenance. The term road maintenance shall mean all works to preserve riding quality, road shape, drain, culverts, structures and bridges, spot improvement of bad spots to maintain accessibility, resealing, reshaping and regravelling The Fund. The term FUND shall mean the Fund established by section 4 of the Roads Tolls (Amendment) No. 2 Act of The Board means the Roads Fund Board as established in PART III section 5 of the Roads Tolls (Amendment) No. 2 Act of Agree, Agreed, or Agreement. In all provisions including the words agree, agreed or agreement require the agreement to be recorded in writing. 8.2 Written or in writing. The terms written or in writing shall mean hand written, type written, printed, or electronically made record, which results to a permanent record ARTICLE II: SCOPE 8.1 In accordance with the following paragraphs of the Framework Document for TANROADS, which is a schedule to TANROADS (Establishment) Order 200, requires among others, that the Chief Executive: (a) (b) 5.5(h) provides the Ministry of Works and the Roads Fund Board with information to enable performance to be monitored 8.3 prepare a Business Plan in consultation with the Roads Fund Board and that the Business Plan shall give details of operations including work programmes 8.2 The Trunk and Regional Roads network for which TANROADS is responsible for the purposes of this agreement are Paved and Unpaved Trunk Roads, Paved and Unpaved Regional roads. They are scheduled as follows: Trunk Roads (paved) 3,904 km Trunk Roads (unpaved) 6,141 km Regional Roads (paved) 245 km Regional Roads (unpaved) 18,220 km 3,470 bridges and 2,500 culverts (over 2 metres wide)

6 8.3 The responsibility of TANROADS is to maintain the road network scheduled in Article 2.2 as stipulated in respective Operational Plan. The maintenance shall comprise of Routine, Recurrent, Spot, Periodic and Emergency maintenance works as defined in Article I of this Performance Agreement. 8.4 This Agreement is based on the approved Operational Plan for Financial Year 2001/02. Specifically the maintenance works programmes are scheduled as follows Routine and recurrent maintenance: Trunk roads: paved 3,658 km; unpaved 2,266 km Regional roads: paved.km; unpaved. km Bridges: Trunk roads 2,009; Regional roads 1,463 Periodic maintenance: Trunk roads: paved km; unpaved - nil Regional roads: paved km; unpaved - nil Spot Improvement: Trunk roads: paved..km; unpaved.. km Regional roads: paved - nil; unpaved.. km Major Repairs - Bridges: Trunk roads: Regional roads: ARTICLE III: FINANCIAL ISSUES..+ selected bridges in TANZAM Highway 8.1 In this agreement the BOARD undertakes to provide funds to TANROADS for the purpose of Roads maintenance and TANROADS shall work to agreed quality standards for all roads maintenance in accordance with the approved Annual Operational Plan and particular attention shall be given to Design Standards, Quality Control of Materials, Workmanship, Contract Periods and Costs, as presented in the first schedule to this Agreement. 8.2 The BOARD shall have the obligation of availing to TANROADS the agreed and required funds in time and according to TANROADS Liquidity Plan 2000/01. For the purpose of this paragraph it shall be lawful for the BOARD to give funds to TANROADS in advance of TANROADS Liquidity Plan or beyond the budget, provided that the BOARD shall continue to have a right of monitoring the expenditure of the said funds. 8.3 The disbursed roads funds under this agreement must only be used for the payments of activities carried out during the financial year 2000/01 according to the Operational Plan. 8.4 Financial allocations from the Roads Fund will comprise of Monthly disbursements from the Roads Funds to be deposited on or before the 30 th day of each calendar month in TANROADS Bank account No. A/C 01J held by the Chief Executive at CRDB Tower Branch. The Roads Fund disbursement as advised by the BOARD is Tshs billions. 8.5 The Chief Executive shall be responsible, that the Roads Funds received are spent for activities as per budget items of the Operational Plan and in accordance with the Performance Targets in the schedule to this Performance Agreement. The Chief

7 Executive is free to reallocate budgets if the difference is within 10% per budget item and overall budget is not exceeded. If anticipated that the expenses per budget item exceed the budget by 10% or more, or if new activities not foreseen at all in the Operational Plan are to be implemented, or subject to other financial or operational constraints, the Chief Executive may only decide to reallocate the granted funds in consultation and agreement with the BOARD. 8.6 In default of submitting quarterly progress reports by TANROADS to the BOARD as provided for under Article 6.2 hereinafter, disbursements from the BOARD shall be withheld until such progress reports are submitted and acknowledged by the BOARD. ARTICLE IV: POLICY ISSUES 8.1 Pursuant to this agreement, TANROADS shall comply to government policies and guidelines in relation to: a) Gender issues i.e. employment of women in the road sector as a matter of priority b) Employment of local people for the purpose of availing them with employment opportunities c) The use of labour-based technologies, d) Environmental issues e) Outsourcing Vs force account systems i.e. the trend should show an increase in outsourced works and services, and f) HIV (AIDS) 8.2 The quarterly and Annual reports shall indicate how all these Policy Issues have been addressed, quantifying achievements where possible and identifying the constraints. 8.3 In fulfilling its responsibility for road maintenance of Trunk and Regional roads network, TANROADS shall have an obligation to conform to the Highway Ordinance Cap 167 of the revised laws, and other relevant related legislations. ARTICLE V: PERFORMANCE AND QUALITY TARGETS 8.1 Road maintenance works shall be undertaken as per Work Programmes contained in the Operational Plan and in accordance with the Performance Targets. Quarterly and Annual reports shall detail progress towards achievement of the targets in accordance with performance indicators listed in the attached schedule. 8.2 The quality of all road maintenance works shall be in accordance with relevant specifications as agreed and presented in the Operational Plan and as per recognized good practice, and shall respond to incidents and emergencies as they may be caused by natural disasters and other ordinary causes. 8.3 As part of maintenance works, TANROADS shall ensure that relevant road warning signs and traffic management signs relating to road safety are provided, maintained and replaced in accordance with the schedule attached to this agreement. 8.4 The BOARD reserves the right of inspecting the performance of TANROADS in connection with maintenance works in order to satisfy itself before and after the Quarterly or Annual Report has been submitted.

8 8.5 The convenience and safety of general public shall be of paramount consideration during the implementation of road maintenance works by TANROADS. TANROADS shall also pay due regard to the safety of its employees. For the purpose of this paragraph, TANROADS shall be required to be expedient in maintaining a portion of the road where such a road has been partially or wholly closed. In case of road closures, the BOARD should get a copy of the notification sent to the Permanent Secretary Ministry of Works. ARTICLE VI: SUMISSION OF REPORTS 8.1 The Chief Executive shall submit 10 copies of Quarterly progress reports and 10 copies of Annual progress report to the BOARD, covering all aspects of this agreement, the contents and format of these reports shall be agreed between the BOARD and TANROADS. 8.2 TANROADS shall submit its reports as follows: third quarter report not later than three weeks after 31 st March 2001, Annual Report in respect of the works within four weeks after 30 th June The BOARD shall acknowledge receipt of the submitted progress reports within two weeks. 8.4 TANROADS shall submit financial statements for the year 2000/01 to the BOARD within six weeks after the 30 th June ARTICLE VII: RELEVANT DOCUMENTS 8.1 The following documents shall be considered to be an integral part of this Agreement in the following sequence TANROADS Operational Plan FY 2000/01 Performance Targets as per second schedule to this Agreement Roads Tolls (Amendments) No. 2 Act of 1998 TANROADS Framework Document ARTICLE VIII: DURATION OF THE AGREEMENT 8.1 This Agreement shall commence on the first day of January in the year 2001 ( ) and shall end on the thirtieth day of June in the year 2001 ( ). IN WITNESS WHEREFOR the parties have hereunder executed this Performance Agreement in a manner hereinafter appearing Signed and delivered in four authentic copies by...

9 THE CHAIRPERSON THE CHIEF EXECUTIVE ROADS FUND BOARD this day of.2001 Dar es Salaam TANROADS this.day of 2001 Dar es Salaam

ECONOMIC AND SOCIAL RESEARCH FOUNDATION (ESRF)

ECONOMIC AND SOCIAL RESEARCH FOUNDATION (ESRF) Policy Dialogue Seminar on POST BUDGET (2007/08) DISCUSSION FORUM A QUICK REVIEW OF THE IMPLICATIONS OF THE 2007/08 GOVERNMENT BUDGET ON TRANSPORT INFRASTRUCTURE