India: Bihar State Highways Project

Transcription

1 Completion Report Project Number: Loan Number: 2443 Technical Assistance Number: 7130 August 2018 India: Bihar State Highways Project This document is being disclosed to the public in accordance with ADB s Public Communications Policy 2011.

2 CURRENCY EQUIVALENTS Currency Unit India rupee/s ( ) At Appraisal At Project Completion (25 August 2008) (31 March 2016) 1.00 = $ $ $1.00 = ABBREVIATIONS ADB Asian Development Bank BSRDC Bihar State Road Development Corporation EIRR economic internal rate of return EMP environment management plan FY fiscal year GOB Government of Bihar km kilometer OPRMC output and performance-based road asset maintenance contract PCR project completion review PIU project implementation unit PMU project management unit RP Resettlement Plan RCD Road Construction Department, Government of Bihar TA technical assistance VOC vehicle operation cost NOTES (i) (ii) The fiscal year (FY) of the Government of India ends on 31 March. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2018 ends on 31 March In this report, "$" refers to United States dollars. Vice-President Wencai Zhang, Operations 1 Director General Hun Kim, South Asia Department (SARD) Director Kenichi Yokoyama, Country Director, India Resident Mission, SARD Team leader Prabhasha Sahu, Senior Project Officer (Transport), SARD Team members Shiva Raju Dodla, Associate Project Analyst, SARD Anil Motwani, Senior Project Officer (Transport), SARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 BASIC DATA CONTENTS I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 1 A. Project Design and Formulation 1 B. Project Outputs 2 C. Project Costs and Financing 3 D. Disbursements 3 E. Project Schedule 3 F. Implementation Arrangements 4 G. Technical Assistance 4 H. Consultant Recruitment and Procurement 5 I. Safeguards 5 J. Monitoring and Reporting 6 III. EVALUATION OF PERFORMANCE 7 A. Relevance 7 B. Effectiveness 7 C. Efficiency 8 D. Sustainability 8 E. Development Impact 9 F. Performance of the Borrower and the Executing Agency 9 G. Performance of the Asian Development Bank 10 H. Overall Assessment. 10 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 11 A. Issues and Lessons 11 B. Recommendations 11 APPENDIXES 1. Design and Monitoring Framework Summary of Salient Features of the Project Project Cost at Appraisal and Actual Project Cost by Financier Disbursement of ADB Loan Proceeds Appraisal and Actual Implementation Schedules Compared Chronology of Main Events Technical Assistance Completion Report Status of Compliance with Loan Covenants Summary of Contract Packages Economic Reevaluation 36 Page i

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5 BASIC DATA A. Loan Identification 1. Country 2. Loan number and financing source 3. Project title 4. Borrower 5. Executing agency 6. Amount of loan 7. Project completion report number 8. Financing modality India 2443 from ADB s ordinary capital resources Bihar State Highways Project Government of India Road Construction Department, Bihar State Original: $420.0 million 1700 Project loan B. Loan Data 1. Appraisal Date started Date completed 2. Loan negotiations Date started Date completed 3. Date of Board approval 4. Date of loan agreement 5. Date of loan effectiveness In loan agreement Actual Number of extensions 6. Project completion date Appraisal Actual 7. Loan closing date In loan agreement Actual Number of extensions 8. Financial closing date Actual 9. Terms of loan Interest rate Maturity (number of years) Grace period (years) 10. Terms of Relending (if any) Interest rate Maturity (number of years) Grace period (years) Second-step borrower 6 May May August August September November February January 2009 None 31 January March July July 2012 None 28 January 2013 London interbank offered rate-based 25 5 London interbank offered rate-based 25 5 None 1 The balance works under two civil work contracts beyond loan closing date were financed by Road Construction Department, Government of Bihar.

6 ii 10. Disbursements a. Dates Initial Disbursement 20 March 2009 Effective Date 8 January 2009 Final Disbursement 23 November 2012 Actual Closing Date 31 July 2012 Time Interval 44 Months Time Interval 43 Months b. Amount ($) Original Allocation (1) Increased during Implementation (2) Canceled during Implementation (3) Last Revised Allocation (4=1+2 3) Amount Disbursed (5) Undisbursed Balance (6 = 4 5) Category 1 Works 367,700,00-24,154, ,545, ,545,559-2 Equipment 4,000,000-4,000, Consulting services 13,000,000-5,025,559 7,974,441 7,974,441-4 Unallocated 35,300,000-35,300, Total 420,000,00-68,480, ,520, ,520,000 - Note: The last reallocation was made on 4 June 2012 at partial loan cancellation as the government decided to finance spillover works beyond the loan closing date. C. Project Data 1. Project Cost ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost Local Currency Cost Total Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed ADB Financed Total Implementation Costs IDC Costs and other Financial Charges Borrower Financed ADB Financed Total IDC Costs and other Financial Charges ADB = Asian Development Bank, IDC = interest during construction.

7 iii 3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual A. Resettlement and Rehabilitation B. Civil Works 1. SH 68 Sheogunj Baidrabad SH 69 Dumaria Ranitalab SH 70 Gaya Rjauli SH 71 Jehanabad Parwatipur SH 73 Siwan Shitalpur SH 74 Hajipur Aseraj SH 75 Arbhanga Madhwapur SH 76 Araia Bhaptiyahi SH 77 Krsela Forbesgunj Subtotal (B) C. Consulting Services D. Project Management E. Institutional Development (Equipment) Subtotal (A+B+C+D+E) F. Contingencies 1. Physical Contingencies 19.6 a 2. Price Contingencies 18.2 a G. Interest During Construction H. Commitment Charges Total a Included in civil works. 4. Project Schedule Item Appraisal Estimate Actual A. Project Preparation Loan Processing and Approval Q Q Q Q Detailed Design Q Q Q Q B. Construction Supervision Consultants Selection Q Q Q Q Supervision Q Q Q Q C. Civil Works Procurement Q Q Q Q Construction Q Q Q Q D. Technical Assistance Implementation Q Q Q Q1 2011

8 iv 5. Project Performance Report Ratings Ratings a Implementation Period Development Objectives Implementation Progress From 1 September to 31 December 2008 Satisfactory Satisfactory From 1 January to 31 December 2009 Satisfactory Satisfactory From 1 January to 31 August 2010 Satisfactory Satisfactory From 1 September to 31 December 2010 Satisfactory Highly Satisfactory From 1 January to 31 March 2011 on Track b From 1 April to 31 December 2011 on Track b From 1 January to 31 March 2012 on Track b From 1 April to 31 December 2012 on Track b a Project performance report ratings are based on a different method than that used for the project completion report. b Based on new ratings for project performance in the E-operations D. Data on Asian Development Bank Missions Name of Mission Date No. of Persons No. of Person- Days Specializati on of Members Fact finding 5 7 and November t, s, t Appraisal 6 13 May t, o, t, s, y, t, t Inception November t, t, s, l, a, t Inception for TA 31 August 4 September t, t Review 7 10 December t, c Review December t, t, t, s, c, c Review May t, t, t, s, c, c Special Loan August t, s, a, c, c, p administration Consultation January p, a Review July p, a Safeguards Review October f, e Project Completion Review November a, c a = analyst, c = consultant, e = environmental specialist; f = safeguards officer, l = control officer, o = counsel, p = project officer, s = social development specialist; t = transport specialist, y = young professional.

9 I. PROJECT DESCRIPTION 1. Bihar is a landlocked state in the middle Gangetic plain region of India. It is surrounded by Nepal (north) and by the Indian states of Jharkhand (south), Uttar Pradesh (west), and West Bengal (east). The state is one of the most populated, economically backward, low-income state in India. At appraisal, the road network in Bihar was poor in terms of coverage and condition and strengthening the road network was a high priority of the state government to provide momentum to the economic development of the state. 2. At the request from the Government of India, on 18 September 2008, the Asian Development Bank (ADB) approved a loan of $420 million from ADB s ordinary capital resources for the Bihar State Highways Project for rehabilitating and reconstructing state highways identified under the State Highway Development Program of the Government of Bihar (GOB). 1 The GOB was the executing agency through its Road Construction Department (RCD). The project s anticipated impact was increased economic growth in Bihar and the anticipated outcome was enhanced road transport efficiency and safety. The project outputs were (i) rehabilitated and improved state roads; and (ii) improved sector management. At appraisal, the project comprised rehabilitation and reconstruction of about 820 kilometers (km) of state highways identified under the State Highway Development Program. Along with the loan, technical assistance (TA) was also provided to support the GOB s sector development initiatives. 2 The aim of the TA was to develop the RCD into a state-of-the-art road agency equipped with modern systems of business procedures, planning processes, quality assurance, engineering, and human resources development. II. DESIGN AND IMPLEMENTATION A. Project Design and Formulation 3. The project was relevant to Bihar s road transport sector needs and aligned with ADB s country strategy and program update for India ( ) and ADB s country partnership strategy for India ( ) 3 as it was designed to help Bihar achieve its poverty reduction and economic development goals. At appraisal, the road network in Bihar was very poor in terms of coverage and condition while demand for road transport was increasing. Insufficient funding for road maintenance had increased the number of roads that were in a beyond maintainable condition. To address this issue and improve the road network, the GOB undertook the State Highway Development Program, which aimed to rehabilitate and upgrade 2,831 km of the 3,127 km of state highways during the Eleventh Five-Year Plan period ( ). 4 The improvement of 820 km of state highways under the project was part of the program, which would help the GOB meet increased demands for road transport and accelerate the process of economic development of the state. 4. The project was the first road project in Bihar funded by ADB. Given the limited capacity of the state agencies and the huge infrastructure gap, a project loan modality was considered as a first intervention towards enhancing the institutional capacity of state agencies. The project was prepared with the active participation of road agencies within and outside the state, which helped improve project readiness. Extensive community consultation and focus group discussions were carried out during project inception and continued throughout implementation. The economic and poverty analyses and social assessments were also carried out in compliance with ADB guidelines. During and after implementation, the project was found to be closely aligned with the government s 1 ADB. August Report and Recommendation of the President to the Board of Directors on a Proposed Loan to India: Bihar State Highways Project. Manila. 2 ADB Technical Assistance to the Government of Bihar for the Institutional Strengthening of the Bihar Road Sector. Manila (TA 7130-IND). 3 ADB Country Strategy and Programing Update: India, Manila; ADB Country Partnership Strategy: India, Manila. 4 Government of India, Planning Commission, Eleventh Five-Year Plan, Delhi.

10 2 objectives and strategy and the country partnership strategy for India, Overall, the project s design and formulation were adequate, and the implementation results fulfilled both the government s development objectives and ADB s country strategy. Considering the importance of roads to stimulating economic growth and human development, the project remains as relevant with the government s objectives and strategy and ADB s country strategy at completion as at appraisal. B. Project Outputs 5. The project outputs were (i) rehabilitated and improved state roads (the physical component of the project) and (ii) improved sector management (institutional development component). 6. Rehabilitated and improved state roads. This output was derived from the project s physical component. At appraisal, the project consisted of the improvement of about 820 km of state highways. Civil works under the project included upgrading the existing roads to two lanes, strengthening culverts and bridges, constructing new bridges and cross-drainage structures; and building structures for resettlement and rehabilitation. Upon completion, a total of km of state highways in nine road sections were rehabilitated or upgraded. This work included widening the existing single-lane roads to two lanes, strengthening culverts and bridges, constructing new bridges and cross-drainage structures, and building structures for resettlement and rehabilitation. 6 During implementation, minor engineering revisions to the design were done based on actual site conditions to enhance the road design, minimize social impacts, and enhance durability and performance. Revisions included adjustments in road alignment and center line, pavement composition, and road width depending on site requirements. The civil works contractors carried out the quality control of the construction in accordance with their contractual requirements. The construction supervision consultants assessed and supervised the works to ensure that the specifications were met. No significant defects or quality problems were reported during the defect liability period. ADB s project completion review (PCR) mission in November 2017 observed that the project roads were of good quality, enabling comfortable and safe ride. A summary of the outputs of the investment component is in Appendix Improved sector management. This output was derived from the project s institutional development component. At appraisal, it was envisaged that the project would provide the equipment required by the GOB to enhance sector capacity in areas such as quality control, survey and design, and control of overloading and vehicle emissions. The major equipment included laboratory equipment, survey and design equipment and software, a vehicle emission and fitness testing machine, and weighbridges. During project implementation, the RCD adequately planned and equipped from its own resources their central and regional quality control laboratories with laboratory equipment, and survey and design equipment. The state s commercial tax department constructed six commercial check posts, each equipped with weighing bridges at the important entry points into the state. As the equipment requirements of the RCD envisaged under the project were met, the allocation for the same was canceled from the loan account as a part of the partial loan cancellation. All project works were completed without any major delay by the loan closing date, except for two civil works contracts (para 11). The associated TA provided useful training and deliverables to improve the institutional framework for roads and overall sector management (para. 13). In recent fiscal years, the RCD made full utilization of the allocated funds for road development and maintenance. The RCD has implemented proactive measures, including maintenance of roads 5 Government of India, Planning Commission Tenth Five Year Plan, Delhi; Government of India, Planning Commission Eleventh Five Year Plan, Delhi; Government of India, Planning Commission Twelfth Five Year Plan, Delhi. ADB Country Partnership Strategy: India, Manila. 6 About 658 km of state highways were rehabilitated or upgraded by Single-lane roads were widened primarily to two lanes but at a few locations were widened to an intermediate lane due to right of way restrictions. Overall, the project contributed km of upgraded roads with average daily vehicle-kilometer as 3,404,528 vehicles in 2016 to the ADB Results Framework.

11 3 through output and performance-based road assets maintenance contracts (OPRMCs). 7 The RCD is considering an operate-maintain-transfer model with private sector participation to ensure the sustainability of the state road network. The proactive measure taken by RCD are likely to reduce the maintenance costs (para. 28). C. Project Costs and Financing 8. At appraisal, the total project cost was estimated at $468.0 million equivalent in the local currency, including base cost, contingency, and financial charges. At project completion, the total project cost was $450.6 million equivalent. The cost of civil works at completion was higher in rupee terms than the cost at appraisal due to the prolonged construction period in some of the civil work contracts. However, due to (i) depreciation of the rupee against the dollar since appraisal; 8 (ii) the non-utilization of the allocation of $4 million for equipment under the institutional development component; and (iii) lower cost of interest during construction than at appraisal, the total project cost in dollar at completion was about 3.7% lower than that at appraisal. 9. At appraisal, it was envisaged that the project would be financed through an ADB loan of $420 million (89.7% of the project cost) and government funds of $48 million (10.3% of the project cost). Upon completion, the final project financing was $351.5 million (78% of the project cost) from ADB and $99.1 million (22% of the project cost) from the government. The financing ratio changed as the GOB increased its finance expenditure on program management and funded the spillover works beyond the loan closing date. The detailed comparison of the project financing at appraisal and at completion is in Appendix 3. D. Disbursements 10. The ADB loan was approved on 18 September 2008, signed on 10 November 2008, and made effective on 8 January The loan proceeds were disbursed in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time). Reimbursement procedures were used for civil works and consulting services. Individual payment not exceeding $100,000 was reimbursed using the statement of expenditures procedure. After the first disbursement on 20 March 2009, the disbursements gradually picked up and peaked in 2010 ($114.6 million) and 2011 ($125.3 million). All the civil works contracts except two were completed by the loan closing date of 31 July 2012, with a disbursement of $50.8 million in The GOB decided to finance spill over works beyond the loan closing date and a surplus loan amount of $68.5 million was canceled on 4 June The loan financial account was kept open beyond the loan closing date to complete disbursement of expenditures incurred up to loan closing. Upon completion, ADB disbursements totaled $351.5 million (83.7%) of the original loan amount. The actual disbursements of the ADB loan proceeds are in Appendix 5. E. Project Schedule 11. At appraisal, it was envisaged that the project would be completed by 31 July To expedite procurement, ADB approved advance contracting on 10 November 2007 and the contracts were envisaged to be awarded by Q3, During project preparation, the RCD s procurement and consultant recruitment activities were well advanced. All nine civil work contracts were bid out in February By December 2008, six of the nine civil works packages were awarded while the remaining three packages were awarded in July 2009 after re-bidding. The consulting services contracts for the supervision of civil works were signed in December Despite some construction delays, seven of the nine contracts had been completed by the loan closing date of 31 July The remaining two contracts were substantially delayed due to the poor performance of the contractor, local insurgency in the project area, and financial difficulties of the contractors. 7 OPRMC is an output and performance-based contract adopted for the long-term maintenance of existing road assets. 8 The rupee depreciated about 52% against the dollar between appraisal [2008] and completion [2016].

12 4 Based on the uncertainty in the progress of works and the completion schedule of remaining two contracts due to insurgency issues, which also affected contractor s performance, RCD did not seek an extension of the loan closing date and decided to complete the balance works under these contracts from government resources. The works under these two contracts were substantially completed by March The actual implementation schedule compared with the schedule at appraisal is in Appendix 6, and a chronology of the main events is in Appendix 7. F. Implementation Arrangements 12. The GOB was the executing agency for the project through its RCD. A project management unit (PMU) was established under the RCD. The PMU was subsequently strengthened and assigned under the Bihar State Road Development Corporation (BSRDC), a subsidiary agency of RCD incorporated in April BSRDC consisted of a chief general manager, three general managers, and 20 deputy general managers along with other staff. The BSRDC was responsible for (i) the overall coordination, management, and monitoring of the project implementation; (ii) supervision of the compliance with the safeguards policies; (iii) recruitment and procurement; and (iv) financial management, including the preparation of withdrawal applications. Four project implementation units (PIUs) were established in the field for the implementation of project roads under the loan. Each PIU was headed by a deputy general manager who was supported by two managers and five six supporting staff. The PIU managers were delegated adequate technical and administrative authority for expeditious project implementation at the site. The PIUs were assisted by construction supervision consultants (CSCs). These consultants were assigned the power of an engineer in accordance with the Fédération Internationale des Ingénieurs-Conseils (FIDIC) condition of contract. The RCD also engaged three nongovernmental organizations (NGOs) to assist in resettlement activities and addressing social safeguard issues. The BSRDC was effective in the implementation of the project. Overall, the project s implementation arrangements were sufficient and effective. G. Technical Assistance 13. In conjunction with the project, TA of $1,000,000 was approved by ADB on 18 September 2008 on a grant basis from the ADB TA funding program. 10 The objective of the TA was to provide support to the GOB s sector development initiatives with a focus to (i) redefine and restructure the RCD to a state-of-the-art road agency; and (ii) implement new business procedures and provide training to RCD officials to enable the RCD to restructure and adopt a new institutional and management structure. New business procedures covered (i) procurement and contracting processes; (ii) planning processes; (iii) quality assurance systems; (iv) engineering (pavement design, maintenance methods, and safety); and (v) human resource management. 14. An international consulting firm was recruited in accordance with ADB Guidelines on the Use of Consultants (2007, as amended from time to time). The TA commenced on 19 July 2009 and was completed on 30 June During implementation, the consultants reviewed the institutional and organizational issues of the RCD and closely worked with the newly formed BSRDC. As main deliverables, the TA prepared a draft Road Administration Act 11, draft Road Safety Policy, proposed adopting performance-based road maintenance, and developed a pilot Road Management System. The TA provided useful reports and recommendations and trained RCD and BSRDC officers in areas such as project management, road safety audit, road maintenance, private sector participation in road sector, financial modeling, and risk analysis. The TA deliverables laid a strong foundation for more competent road development agencies in Bihar and these deliverables 9 All road works were completed by March 2016 except for some structure works (bridge approaches and finishing items on bridges), which are scheduled to be completed in ADB Technical Assistance to India for Institutional Strengthening of the Bihar Road Sector. Manila (TA IND). 11 The scope of the Act includes provisions related to road governance and road management including road maintenance.

13 5 have been useful in the formulation of polices, development programs and monitoring systems. The TA realized its objectives of assisting the GOB to strengthen institutional development initiatives in the road sector of the State of Bihar. The TA implemented all the tasks specified in the TOR and the achievements were well recognized by the government. The TA is rated successful. The TA completion report is in Appendix 8. H. Consultant Recruitment and Procurement 15. As envisaged at appraisal, two international consulting firms were recruited using the quality- and cost-based selection method to supervise construction of civil works under the project. The supervision consultants were selected and engaged in accordance with ADB s Guidelines on the Use of Consultants (2007, as amended from time to time). Contracts were signed with the consulting firms on 5 December During implementation, the consultants mobilized the experts and staff required in the terms of reference and established a main office at Patna and the required site offices for the on-site construction supervision services. The consultants carried out all tasks specified in the terms of reference, including construction supervision and quality control, overseeing compliance with the environmental and social safeguards, assisting in financial accounting, and providing on-site training. The performance of the supervision consultants was rated satisfactory. 16. The civil works procurement conformed to the ADB s Procurement Guidelines (2007, as amended from time to time). As envisaged at appraisal, nine civil works contracts were procured through international competitive bidding. ADB standard bidding documents for large works with post qualification under the two-envelope system were adopted. Under the advance procurement and retroactive financing of the project, the procurement for the civil works contracts started in February Six of the nine civil works packages were awarded in November and December 2008, whilst another three packages were awarded in July 2009 after rebidding. 17. The performance of the civil works contractors was overall satisfactory. During implementation, the contractors mobilized the required staff and equipment, established a camp for accommodating their staff, set up laboratories and other engineering facilities, provided medical facility for their workers, and installed road signage during the work as agreed by the local traffic management authority. The contractors carried out quality control as per the requirements in the contracts. The contractors were familiar with the practices needed to combat HIV/AIDS and implemented an appropriate HIV/AIDS awareness program during construction. During implementation, progress on some contracts was slow and the construction period was extended beyond the original completion date due to inefficient project and construction management by the civil works contractors. The BSRDC undertook substantial measures, including regular meetings with the contractor s management and issued notices for slow progress to some contractors. Seven out of nine contractors were able to improve performance and completed the works by the loan closing date. The performance of the remaining two contractors remained a matter of concern and the contracts continued beyond the loan closing date. The contractor s cash flow and local insurgency at the site further delayed completion of these contract packages, which were substantially completed in March I. Safeguards 18. Environmental safeguards. The project was classified as category B for the environment, in accordance with ADB s Environment Policy (2002). Initial environmental examinations were carried out for the nine subprojects during project preparation. The initial environmental examinations indicated that the project was not expected to have adverse environmental impacts. During implementation, the contractors generally implemented all measures required in the contracts. Initially, the implementation of the environmental safeguards including the environmental management and monitoring plans (EMMPs) was weak; this improved during project implementation due to regular reviews and close interaction by the ADB project team with the PMU

14 6 and PIU staff, consultants, and contractors. Several workshops on compliance with environmental safeguards were conducted. The BSRDC with the assistance from the supervision consultants strengthened the monitoring and supervision on the compliance with the environment policies and implementation of the EMMPs. The PMU worked closely with the construction supervision consultants to monitor the environmental impacts and implementation of the EMMPs. A grievance redress mechanism was established at each construction site for effective and timely redressal of issues. During implementation, the BSRDC did not receive any complaints from the public. Regular environmental monitoring reports were prepared and submitted to ADB. Ten environmental monitoring reports are disclosed on the ADB website. 12 The overall implementation of environmental safeguard measures was satisfactory. 19. Involuntary resettlement. The project was classified as category A for involuntary resettlement in accordance with ADB s Involuntary Resettlement Policy (1995). The project was developed with a view to avoiding or minimizing the need for land acquisition and resultant involuntary resettlement by means of adopting the most feasible technical design. In addition, the project entailed rehabilitation of existing state highways within the available right-of-way and no land acquisition was required. During project preparation, a census of all affected persons was conducted, and resettlement plans (RPs) were prepared for each project highway, in accordance with the Government of India s National Rehabilitation and Resettlement Policy 2007, GOB s Bihar Land Acquisition Resettlement & Rehabilitation Policy 2007, ADB s Policy on Involuntary Resettlement (1995), and ADB s Operation Manual F2 on Involuntary Resettlement. Under the resettlement plans, the compensation was estimated and detailed in the entitlement matrix. 20. At appraisal, the resettlement impacts were limited to 1,984 non-titled households. 13 During implementation, overall resettlement impacts were minimized by further optimizing engineering design and, upon completion, a total of 1,553 households were impacted. Three nongovernmental organizations (NGO) were engaged by the PMU to assist the implementation of the RPs. With some initial delays, the implementation of the RPs was improved through the close coordination between the PMU, PIUs, NGOs, and local authorities. The compensation and other resettlement benefits were paid to affected households in accordance with the project entitlement matrix. The training programs for skill upgradation such as incense stick production, craftmanship of bamboo products, livestock development, and sewing and stitching, were conducted in the project areas for income restoration. During implementation, public consultations were conducted regularly as per the RPs. The project established a grievance redress mechanism; however, no major grievance or complaint from affected persons was received. The project authorities confirmed that there are no outstanding issues related to social safeguards at completion. The overall implementation of social safeguard measures was satisfactory. 21. Indigenous peoples. The project was classified as category B for indigenous peoples in accordance with ADB s Policy on Indigenous Peoples (1998). During implementation no separate indigenous people s plans were required to be prepared. However, project implemented the specific measures through additional entitlements accorded to scheduled tribes who were classified as vulnerable in accordance with the RP. J. Monitoring and Reporting 22. The borrower and the executing agency complied with most of the loan covenants for the project, which enabled the state to carry out the project with efficiency and in conformity with sound administrative, financial, engineering, and environmental practices. During implementation, the GOB provided adequate oversight, coordination, and the financial support required for project implementation. The PMU was operating with adequate staff and resources. The procurement for civil works contracts and the engagement of consultants were carried out in accordance with ADB Nine updated resettlement plans were disclosed on the ADB website.

15 7 guidelines and procedures (para 15 and 16). The implementation of measures for environmental and social safeguards was satisfactory. Road maintenance is being undertaken by the RCD through contracts, with regular fiscal allocations from the GOB. The audited project financial statements of the project for each fiscal year from 2009 to 2012 were submitted to ADB with minor delays ( months) and auditor opinions were unqualified and acceptable to ADB. The project progress reports were prepared as required and submitted to ADB on a timely basis. During implementation, ADB conducted 10 review missions including inception and special project administration missions. All aspects of the project were comprehensively covered during these missions and a separate midterm review mission was not required. The project performance was closely monitored by the RCD and the BSRDC. However, a systematic project performance monitoring system was not developed and implemented, which constrained the GOB in capturing project benefits during project implementation and in the preparation of the project completion report. The status of compliance with loan covenants of the project is summarized in Appendix 9. III. EVALUATION OF PERFORMANCE A. Relevance 23. The project is considered relevant at both appraisal and completion, as the development of highways and roads is an integral part of the government s strategy for economic growth and poverty reduction. The project supported the government s (i) Eleventh Five-Year Plan ( ) which articulated the need for adequate, cost-effective, and high-quality infrastructure as a prerequisite to sustainable growth, and (ii) Twelfth Five-Year Plan ( ), which continued the focus on inclusive growth and encouraged developments in infrastructure, agriculture, education, health, and social welfare through government spending. 14 The project was also aligned with ADB s country strategy and program update for India ( ), and ADB s country partnership strategy for India ( ) and was largely implemented as planned The project design and modality were appropriate (para. 4). Active participation of road agencies and extensive community consultations also improved project readiness. Only minor engineering revisions in the design were done based on actual site conditions and to enhance the road designs. It was the first ADB-assisted road project in Bihar, which introduced international best practices for procurement and contract management. A TA was attached to the project to support GOB s initiatives for road development. The expected performance targets and indicators formulated in the design and monitoring framework (DMF) were aligned with the project objectives and were not changed during implementation. B. Effectiveness 25. The project is rated effective in achieving its outcome and outputs. The performance targets and indicators for outcome and outputs were achieved or progressed significantly towards achievement. Upon completion, the project had improved a total km of state highways, which were widened to two lanes and observed to be in good condition, with international roughness index ranging between 3 and 4; better than an index of 5.0 as anticipated at appraisal. 16 The improvement of the project roads has led to a substantial reduction in vehicle travel time and transport costs for both passengers and freight. The traffic on the project roads has achieved 8.4% growth rate for cars and the average vehicle speed on the project roads increased from average km/hour before the project to km/hour after the project. According to the traffic surveys carried out after project completion, the average vehicle travel time on project roads reduced by 14 Government of India, Planning Commission Eleventh Five Year Plan, Delhi; Government of India, Planning Commission Twelfth Five Year Plan, Delhi. 15 ADB Country Partnership Strategy: India, Manila. 16 ADB project completion review mission. The roads were widened primarily to two lanes but at few locations were widened to an intermediate lane due to right of way restrictions.

16 8 about 55% compared to before the project, which is more than the anticipated reduction of an average 40% at appraisal. The vehicle operating cost (VOC) is reduced by an average 37% The project has improved the access and the connectivity of the rural poor to social services, markets, and other economic activities. 18 The accidents rate reduced by about 23% and fatalities by about 4.4% from 2011 to This was the first project in Bihar to adopt international competitive bidding with FIDIC-based contracts and outsourcing of construction supervision. This exposure has built the capacity of the RCD and BSRDC in project implementation with best practices of procurement and contract management. The associated TA assisted the RCD and BSRDC in various aspects of institutional development initiatives. The RCD and BSRDC staff have gained exposure on advanced concepts in road development and management. The overall implementation of safeguard measures was satisfactory and there were no unintended effects due to the project (paras. 18 and 20). The TA delivered a draft Road Administration Act, draft a Road Safety Policy, proposed adopting performance-based road maintenance, and developed a pilot road management system, which has been instrumental in improving the effectiveness and efficiency of the institutional framework for managing the state highway network and sector management in Bihar. C. Efficiency 27. The project is efficient in achieving its outcome and outputs. To assess the efficiency of the project, the economic internal rate of return (EIRR) of the project was reevaluated by using a methodology similar to that at appraisal and the updated data. The economic benefits were calculated by comparing the with-project and without-project cases, including (i) savings in VOC; and (ii) savings in passenger travel time costs. The EIRR was calculated at 20.5% for the whole project, which is slightly lower than that estimated at appraisal, mainly because of the long implementation period, higher capital cost, and lower traffic volumes on some project roads. 19 However, the EIRR is above the ADB recommended discount rate of 12%. The project is therefore considered to be economically viable. The EIRR was subjected to a sensitivity analysis to test different scenarios of maintenance costs and benefits. The sensitivity analysis results indicated that the project continued to be economically viable for all tested scenarios. If a 20% maintenance cost increase would be combined with a 20% benefit reduction, the EIRR would still be 17.1% for the whole project. The sensitivity analysis confirmed that the project has robust economic viability. The sensitivity analysis also showed that the EIRR was more sensitive to changes in economic benefits. For this reason, the state government needs to pay attention to the socioeconomic development of the project area and foster local transport services. The details of the economic reevaluation are in Appendix The delay in the completion of two civil work contracts was mainly due to local insurgency and was beyond the control of the project (para. 11). This led the government to close the project as scheduled and continue financing the remaining civil works using its own funds. D. Sustainability 29. The project is rated likely sustainable by considering the institutional and financial arrangements for the road construction and maintenance. It was not envisaged to toll the project roads for revenue generation due to the nature of the roads and traffic and, therefore, financial analysis was not undertaken at appraisal. Hence, the assessment of sustainability is confined to the institutional and maintenance aspects in the PCR. The RCD is responsible for the maintenance of state roads. The RCD is organized into four wings namely: north Bihar, south Bihar, national 17 As per the economic reevaluation of the project. 18 Interview with project beneficiaries, ADB-PCR mission during November At appraisal, the EIRR was calculated for each candidate road, which varied from 17.0% to 48.7%. The project was however, considered as state road transport sector project rather than individual roads as all the subprojects are state highways with similar characteristics. EIRR satisfying the economic efficiency criteria of 12% was considered robust.

17 9 highways, special projects which are responsible for the construction and maintenance of roads. The GOB has been proactive in ensuring the sustainability of the state road network. To meet the maintenance requirement of the road network in Bihar, the RCD s annual maintenance budget almost doubled from 3,500 million in FY2012 to 6,000 million in FY2017 and annual maintenance expenditure was 3,275 million and 5,970 million in the respective years. The GOB is taking proactive cost-effective measures to reduce the cost of maintenance. Under the state s Road Assets Maintenance Policy, 2013, 20 a total 8,828 km of state highways and major district roads are currently maintained under 74 OPRMCs, with this number planned to increase. Substantial increase in the allocation of funds for road maintenance, formulation of Road Assets Maintenance Policy, 2013 along with maintenance of road assets through OPRMCs are considered adequate for sustainability of road assets. The RCD, through the BSRDC, is also considering an operatemaintain-transfer model with private sector participation for long-term sustainability. The measure taken by RCD are likely to reduce the maintenance costs per maintainable road by more than 10%. 30. The associated TA assisted the institutional development initiatives of the RCD and BSRDC. During implementation, the TA consultants provided training on project management, road maintenance, private sector participation in road sector, financial modeling, and risk analysis. A Road Master Plan 2035 has further been prepared under technical assistance provided by ADB 21 to lead road development and ensure the efficacy of the road network development in the state. E. Development Impact 31. The project s development impact is rated satisfactory. At appraisal, a poverty and social impact assessment of the project was carried out, which focused on poverty, gender, HIV/AIDS, and indigenous people. The assessment showed that there is no adverse impact on poverty, people, and gender, did not anticipate any risk on HIV/AIDS, and also revealed limited or no significant impact on indigenous people. The indigenous groups in the project area had been assimilated into the local population. Instead, the assessment indicated that the construction and improvement of the project roads would bring substantial socioeconomic benefits to the project influence areas. 32. The ADB PCR mission conducted consultation meetings with the related government agencies, local governments and residents to capture the socioeconomic impacts of the project. From the consultations and data collected during PCR Mission, it was found that (i) the Bihar s economy experienced fast development in the recent decade with an increase in contribution of road transport sector from 1.7% to 4.3% to the gross state domestic product during 2006 to 2015; 22 (ii) total employment of 56,032 person-months was provided by the project, including 7,920 person-months for unskilled labor; (iii) the vehicle travel time reduced by an average 55% and the VOC reduced by an average 37%; (iv) the upgraded project roads improved access and connectivity of the poor to social services, markets, and other economic activities, and travel time to access health care in the vicinity of project roads reduced by at least 50%; (v) many new hotels, shops, and garages were opened along the project roads, which has provided substantial new work opportunities to local people; (vi) the price for the land along the project roads increased an average 3 4 times; and (vii) the road safety features incorporated in the project road design and construction have significantly improved road safety in the project areas (para 26). 23 F. Performance of the Borrower and the Executing Agency 33. The performance of the borrower and the executing agency is rated satisfactory, especially considering that the project was the first highway project financed by ADB in the state. The related government agencies, including the Department of Economic Affairs in the Ministry of Finance, 20 Government of Bihar, Road Construction Department, Bihar Road Assets Maintenance Policy, Patna 21 ADB TA-8170: Road Master Plan for Bihar s State Highway Development. 22 Government of Bihar, Finance Department. Economic Survey Patna. 23 Interview with project beneficiaries, ADB-PCR mission during November 2017.

18 10 actively participated in the project coordination and monitoring. The borrower and the executing agency complied with most of the loan covenants. The state government provided the requisite counterpart funding and established well-staffed PMU and PIUs. The PMU and the PIUs coordinated various activities, including the shifting of utilities, resettlement activities, tree-cutting, environmental clearances, procurement under civil works contracts, and the engagement of consultants. With assistance from the supervision consultants, the PMU prepared the required monthly and quarterly progress reports. The project accounts and financial statements were audited annually by the auditor and were acceptable to ADB, and the audit reports were submitted to ADB as required in the loan agreement. The RCD and the PMU facilitated and fully supported all ADB review missions during implementation and at completion. G. Performance of the Asian Development Bank 34. ADB s overall performance was satisfactory. The project s administration was undertaken by ADB s headquarters until December 2011, when it was delegated to ADB s India Resident Mission. ADB was closely involved in identifying and resolving issues during implementation through (i) tripartite project review meetings between the borrower, the executing agency, and ADB and (ii) regular review missions. In all, ADB fielded 10 review missions, including the inception mission, special loan administration missions, safeguard review mission, and the completion review mission. The ADB missions analyzed implementation issues affecting the project and provided substantial inputs in preparing action plans to expedite the project s implementation. The ADB project team and experts provided regular training and support to the PMU and PIU staff, consultants, and contractors on project management and environmental and social safeguards, which built their capacity. Document approval during processing and implementation was timely and all claims for payment were processed promptly. The role of the ADB missions in providing timely advice and technical support on all aspects of the project was recognized by the government. H. Overall Assessment. 35. Overall, the project is rated successful. The project is relevant to both the government s development objectives and ADB s country partnership strategy. The project was designed appropriately and implemented without any changes in scope. At completion, the project highways substantially improved connectivity and supported the socioeconomic development in the project area. The project has reduced VOCs, travel time, and transport costs. The project has brought remarkable socioeconomic impacts in the project areas. The project is rated effective in achieving its outcomes. The project s outputs and outcomes demonstrate that it was an effective intervention that substantially improved the transport efficiency of the state highway network, as well as enhanced the RCD s operational capacity in road development and maintenance. The project is rated efficient in achieving its outcome and outputs. The recalculated EIRR of 20.5% is robust and indicates that the project is economically viable. The project is rated likely sustainable considering the adequate institutional and financial capacity for road maintenance as well as polices to support the continued road network development in the state. Overall Ratings Criteria Relevance Effectiveness Efficiency Sustainability Overall Assessment Development impact Borrower and executing agency Performance of ADB ADB = Asian Development Bank. Source: Asian Development Bank. Rating Relevant Effective Efficient Likely sustainable Successful Satisfactory Satisfactory Satisfactory

19 11 A. Issues and Lessons IV. ISSUES, LESSONS, AND RECOMMENDATIONS 36. Implementation Issues. Seven of the nine civil work contracts under the project were completed by the loan closing date without any major delay. The remaining two contracts were substantially delayed, and these construction works continued beyond the loan closing date mainly due to local insurgency at the site, and cash-flow problems of the contractors. At appraisal, most of the implementation risks were identified, and remedial measures were incorporated into the project design. However, more attention is needed to identify local issues, security concerns, and the capacity of contractors so that specific measures, such as more stringent criteria for assessing the financial resources of the contractor based on package size and risk premium to address security concerns, can be incorporated in the project design and implementation schedule to avoid delays. 37. Support for project implementation and institutional development. This project was the first road construction project in Bihar to adopt international best practices in procurement and contract management. RCD and BSRDC officers were exposed to international competitive bidding procedures along with the use of FIDIC contract conditions and the outsourcing of construction supervision services. Initially, overall implementation of environmental monitoring and management plans (EMMPs) was weak; however, this improved during project implementation due to regular reviews and close interaction by the ADB project team with the PMU and PIU staff, consultants, and contractors. The project built the capacity of the RCD and BSRDC officers by providing training on procurement, safeguards, and contract management. The associated TA provided substantial recommendations for the way forward in various institutional development aspects. The efforts initiated during the TA were continued through policy dialogue and further technical assistance provided by ADB under subsequent projects to ensure continuous and long-term support to enhance the technical capacity of state government agencies in the transport sector. 38. Project monitoring and control. A PMU was initially established under the RCD and subsequently strengthened and assigned under the BSRDC. The BSRDC was very effective in implementing the project. Periodic monitoring and close involvement of high-level BSRDC officials significantly contributed to the proper control of field activities, which helped in expediting the project implementation. However, there is scope to improve the coordination with other government agencies, particularly with local authorities at field level and PIUs to address field level implementation issues (para. 11). B. Recommendations 39. Future actions or follow-up. The project was well implemented and most of the contracts were completed on time. The GOB has been implementing subsequent road projects with ADB assistance and the capacity building and institutional development activities are continuing. All future projects should take stock and build upon the outputs and knowledge from completed and ongoing projects to further strengthen the institutional capacity, particularly in road safety, road asset management, and road maintenance. The GOB should review and implement the draft Road Administration Act prepared under the associated technical assistance. 40. Project benefit monitoring and evaluation. The project has generated initial socioeconomic impacts in the project area and is likely to have larger impacts in the next few years over a wider region. For capturing project benefits, a monitoring and evaluation program should be designed and undertaken to assess and document the socio-economic benefits and lessons learned for incorporation in future projects. 41. Timing of the project performance evaluation report. The project performance evaluation report may be prepared in 2020 or later, when all the project roads would have been in full operation for some time. By then, traffic development, road maintenance and physical condition, benefits attained, and socio-economic impacts can be better assessed.

20 12 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Increased economic growth in Bihar Outcome Enhanced road transport efficiency and safety Performance Targets/Indicators Contribution of road transport to the state gross domestic product (1.7% in 2006) increased to 3.5% by 2015 Actual growth rates of traffic on project roads surpasses assumed growth rates, i.e., 8% for cars Vehicle operating costs on project roads reduced by 30% for two-axle trucks (from the current average of Rs19/km) and by 35% for passenger buses (from the current average of Rs21/km) by completion Travel time on project roads reduced by an average of 40% (speed increased from current average of 35 km/hour to 60 km/hour) by completion Access of the rural poor to social services, markets, and other economic activities improved (e.g., the number of daily trips by the rural poor increased by 50% by 2012) At project completion, accident rate (fatalities by vehicle-km) reduced by 20% from 2008 rate Project roads maintained with International Roughness Index below 5 from over 10 at appraisal Efficiency of RCD operations (length of maintainable state roads per RCD engineer) increased by 100% by completion Project Achievements Achieved The contribution of road transport to the state gross domestic product increased to 4.3% by Achieved The actual traffic increased by at least 8.4% annually in Achieved The vehicle operation cost on the project roads reduced by an average of 37%, including 36% for two-axle trucks and 41% for passenger buses. Achieved The vehicle travel time on the project roads reduced by an average of 55% (speed for cars increased from average km/hour to km/hour). Achieved The project has substantially improved the access and the connectivity of the rural poor to social services, markets, and other economic activities. Achieved The accident rate reduced by about 23% and fatalities by about 4.4% from 2011 to Achieved At completion, the project roads maintained with International Roughness Index below 5. Achieved By completion, the length of maintainable state roads per RCD engineers increased by 100% (In 2016, 750 RCD engineer were responsible for maintaining about 15,150 km of state roads)

21 Appendix 1 13 Design Summary Outputs 1. Rehabilitated and improved state roads 2. Improved sector management Performance Targets/Indicators Approximately 820 km of state highways rehabilitated or upgraded to two lanes by 2011 Effective sector institution framework set and RCD redefined with adequate powers for managing 11,000 km of state highways Project delay reduced by 50% Annual maintenance costs per maintainable roads reduced by 10% Project Achievements Achieved At completion, total km of state highways were rehabilitated or upgraded to two lanes. Achieved TA provided support to RCD and BSRDC to set effective sector institution framework for managing more than 11,000 km of state highways. Achieved All project works were completed without any major delay (less than 50%), under two civil works contracts. Achieved The RCD has introduced OPRMC and is also considering the OMT model for road maintenance. The proactive measure taken by RCD are likely to reduce the maintenance costs per maintainable road by more than10% Full utilization of allocated funds Achieved In recent years, the RCD made full utilization of the funds for development and maintenance allocated by the GOB. ADB = Asian Development Bank; GOB = Government of Bihar; FY = Financial Year, IDC = interest during construction, IRI = international roughness index; RCD = Road Construction Department, TA = technical assistance; OPRMC = output and performance-based road assets maintenance contract; OMT= operate-maintain-transfer. Source: The ADB project completion review mission.

22 14 Appendix 2 SUMMARY OF SALIENT FEATURES OF THE PROJECT State Highway Road Name Actual Major Minor Pipe Box& slab Length bridge bridge culvert culvert (km) (no.) (no.) (no.) (no.) SH-68 Sheogunj Baidrabad SH-69 Dumaria Ranitalab SH-70 Gaya Rjauli SH-71 Jehanabad Parwatipur SH-73 Siwan Shitalpur SH-74 Hajipur Aseraj SH-75 Arbhanga Madhwapur SH-76 Araia Bhaptiyahi SH-77 Krsela Forbesgunj SH = state highway, km = kilometer, no. = number Source: Asian Development Bank Project Completion review mission. Total ,

23 Appendix 3 15 Item PROJECT COST AT APPRAISAL AND ACTUAL Table A3.1: Project Costs ($ million) Appraisal Estimate Actual Foreign Local Total Foreign Local Exchange Currency Cost Exchange Currency A. Resettlement and Rehabilitation B. Civil Works 1. SH-68 Sheogunj Baidrabad SH-69 Dumaria Ranitalab SH-70 Gaya Rjauli SH-71 Jehanabad Parwatipur SH-73 Siwan Shitalpur SH-74 Hajipur Aseraj SH-75 Arbhanga Madhwapur SH-76 Araia Bhaptiyahi SH-77 Krsela Forbesgunj Subtotal (B) C. Consulting Services D. Project Management E. Institutional Development (Equipment) Subtotal (A+B+C+D+E) F. Contingencies a a a 1. Physical a a a 2. Price G. Interest During Construction H. Commitment Charges Total SH = State Highway a Included in civil works. Source: ADB loan financial information system and the project management unit. Total Cost

24 16 Appendix 4 PROJECT COST BY FINANCIER Table A4.1: Project Cost by Financier ($ million) At Appraisal Actual Source Total Cost % of Total Total Cost % of Total Asian Development Bank % % Government % % Total % % Source: ADB loan financial information system and the project management unit. Table A4.2: Project Cost at Completion by Financier and Component ($ million) ADB Government % of Cost % of Cost Amount Category Amount Category Total Cost Item Resettlement and A. Rehabilitation % 1.7 B. Civil Works % % C. Consulting Services % % 11.0 D. Project Management % 8.6 E. Institutional Development (Equipment) Subtotal (A+B+C+D+E) % % F. Contingencies a G. Interest During Construction % 9.3 H. Commitment Charges % 1.4 Total % % ADB = Asian Development Bank a Contingencies are included in civil works during implementation. Source: ADB loan financial information system and the Project Management Unit.

25 Appendix 5 17 DISBURSEMENT OF ADB LOAN PROCEEDS Table A5: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million) Annual Disbursement Cumulative Disbursement year Amount % of Total Amount % of Total % % % % % % % % Total ADB = Asian Development Bank. Source: ADB loan financial information system Figure A5: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million) ADB = Asian Development Bank. Source: ADB loan financial information system

26 18 Appendix 6 APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULES COMPARED Q = Quarter Source: Asian Development Bank Project Completion review mission.