Thailand: Greater Mekong Subregion Highway Expansion Project

Transcription

1 Completion Report Project Number: Loan Number: 2608 August 2017 Thailand: Greater Mekong Subregion Highway Expansion Project This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

2 CURRENCY EQUIVALENTS Currency Unit baht (B) At Appraisal At Project Completion (13 November 2009) (30 June 2017) B1.00 = $ $ $1.00 = B B ABBREVIATIONS AADT annual average daily traffic ADB Asian Development Bank CAP corrective action plan CPS country partnership strategy CSC construction supervision consultant DOH Department of Highways EIRR economic internal rate of return EMP environmental management plan EWEC East West Economic Corridor GMS Greater Mekong Subregion IPC interim payment certificate km kilometer NH national highway PMU project management unit PPP public private partnership RCC resettlement coordination committee SEC Southern Economic Corridor TA technical assistance VOC vehicle operating cost NOTES (i) (ii) The fiscal year (FY) of the government and its agencies ends on 30 September. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2009 ends on 30 September In this report, "$" refers to US dollars.

3 Vice-President S. Groff, Operations 2 Director General J. Nugent, Southeast Asia Department (SERD) Director H. Iwasaki, Transport and Communications Division, SERD Team leader Team members Y. Tanaka, Principal Transport Specialist, SERD A. Alemania, Senior Operations Assistant, SERD E. Lara, Safeguards Officer (Environment), SERD K. Leung, Senior Finance Specialist, SERD M. Ortega, Project Analyst, SERD 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.

4 CONTENTS BASIC DATA MAP Page I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Project Outputs 2 C. Project Costs 4 D. Disbursements 4 E. Project Schedule 4 F. Implementation Arrangements 5 G. Conditions and Covenants 5 H. Related Technical Assistance 6 I. Consultant Recruitment and Procurement 6 J. Performance of Consultants and Contractors 7 K. Performance of the Borrower and the Executing Agency L. Performance of the Asian Development Bank 8 8 III. EVALUATION OF PERFORMANCE 8 A. Relevance 8 B. Effectiveness in Achieving Outcome 9 C. Efficiency in Achieving Outcome and Outputs 9 D. Preliminary Assessment of Sustainability 10 E. Impact 10 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 11 A. Overall Assessment 11 B. Lessons 11 C. Recommendations 11 APPENDIXES 1. Design and Monitoring Framework Environment Corrective Action Plans Projected and Actual Project Cost Projected and Actual Disbursement Chronology Projected and Actual Project Implementation Schedule Status of Compliance with Loan Covenants Technical Assistance Completion Report Results of Bidding and Construction Traffic Volume and Accident Data Economic Reassessment 39 i v

5 BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number 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. Closing Date In Loan Agreement Actual Number of Extensions 7. Terms of Loan Interest Rate Maturity (number of years) Grace Period (number of years) 8. Terms of Relending (if any) Interest Rate Maturity (number of years) Grace Period (number of years) Second-Step Borrower Kingdom of Thailand 2608 GMS Highway Expansion Project [Known as Four-Lane Highway Widening Project (Phase II)] Kingdom of Thailand Department of Highways Original: $77,100, May May July July December June September September 2010 none 30 June January London interbank offered rate (LIBOR)-based lending facility 15 5 Not applicable

6 ii 9. Disbursements a. Dates Initial Disbursement 18 May 2012 Effective Date 2 September 2010 Final Disbursement 13 December 2016 Original Closing Date 30 June 2015 Time Interval months Time Interval months b. Amount ($) Category Original Allocation Revised Allocation Amount Canceled Net Amount Available Amount Disbursed Undisbursed Balance Works 68,500,000 73,320,000 4,970,000 68,350,000 68,282,069 67,931 Consulting 1,600,000 1,600, ,000 1,170,000 1,127,706 42,294 Services Unallocated 7,000,000 2,180,000 2,180, Total 77,100,000 77,100,000 7,580,000 69,520,000 69,409, , Local Costs (Financed) - Amount ($) - Percent of Local Costs - Percent of Total Cost 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 Other External Financing Total IDC Costs Borrower Financed ADB Financed Other External Financing Total ADB = Asian Development Bank, IDC = interest during construction.

7 iii 3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual Civil Works Consulting Services Contingencies Taxes and Duties Financing Charges During Implementation Total Project Schedule Item Appraisal Estimate Actual Completion of Engineering Designs Q June 2011 Date of Contract with Construction Supervision Q December 2011 Consultant Date of Contract with External Audit Consultant Q September 2013 Civil Works Contract Contract Award Packages A E Q September 2012 Packages F H Q September 2012 Completion of Work a Package A Q January 2015 Package B Q October 2015 Package C Q December 2015 Package D Q December 2015 Package E Q August 2015 Package F Q January 2015 Package G Q August 2015 Package H Q June 2015 Start of Operations Completion of Tests Package A Q January 2015 Package B Q March 2015 Package C Q October 2015 Package D Q October 2015 Package E Q August 2015 Package F Q January 2015 Package G Q July 2015 Package H Q January 2015 Beginning of Start-Up b Package A Q January 2015 Package B Q April 2015 Package C Q November 2015 Package D Q November 2015 Package E Q August 2015 Package F Q January 2015 Package G Q July 2015 Package H Q January 2015 a Time for completion in the contracts. b Issuance of taking-over certificates.

8 iv 5. Project Performance Report Ratings Implementation Period Development Objectives Ratings a Implementation Progress From 1 January 2010 to 31 December 2010 Satisfactory Satisfactory From 1 January 2011 to 31 December 2011 Actual Problem From 1 January 2012 to 31 December 2012 Potential Problem From 1 January 2013 to 31 December 2013 On Track From 1 January 2014 to 31 December 2014 On Track From 1 January 2015 to 31 December 2015 On Track From 1 January 2016 to 31 December 2016 On Track From 1 January 2017 to 30 June 2017 On Track a Project performance report ratings are based on a different method than that used for overall assessment of the project at completion. Ratings after 2010 are based on a new rating system, using e-operations, to evaluate project performance. Q = quarter. D. Data on Asian Development Bank Missions Name of Mission Date No. of Persons No. of Person-Days Specialization of Members a Fact-Finding 28 July 15 August b, d, e, f Pre-Appraisal 3 14 November a, b, c, i Second Loan Pre-Appraisal December a, i Appraisal May a, b, c, f, i Second Loan Appraisal June a, f Loan Negotiations 31 July a, c, g, h Inception February a, f, g Review August a Review October a Review 3 21 Jan a Review 4 26 March 2 April a, e, g, h Review July a Review December a, c, e Review 7 26 January a, f Review May a, e, g Review 9 13 September a Review December a, e Review March a, g Review May a, g Review August a, e, f Review December a Review January a, e, f Review April a Review August a, e, i Review February a, g Project Completion Review March a, g a a = transport specialist, b = infrastructure specialist, c = counsel, d = economist, e = environment specialist, f = resettlement and social development specialist, g = project analyst, h = operations assistant, i = staff consultant.

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10 I. PROJECT DESCRIPTION 1. The Greater Mekong Subregion (GMS) Highway Expansion Project upgraded 178 kilometers (km) of two-lane national highways to four-lane highway standard, 1 including National Highway (NH) 12 from Phitsanulok to Lom Sak (105 km) along the GMS East West Economic Corridor (EWEC), and NH 359 from Phanom Sarakham to Sa Kaeo (73 km) along the GMS Southern Economic Corridor (SEC). 2. The project impact is increased competitiveness of the local economy in the provinces along EWEC and SEC. By 2018, the gross domestic product in the provinces in which the project highways will be expanded, is expected to increase by 20%, and the value of crossborder trade carried by road transport with other GMS countries along the EWEC and SEC is expected to increase by 20%, compared with the baseline data of The project outcome is a more efficient and safer EWEC and SEC in Thailand. Compared with the baseline data, a reduction in passenger and freight operating costs of 10%, a reduction in travel times of 15%, an increase in traffic volume of 5%, and a reduction in traffic fatalities of 40% were expected for the project highway sections by The project is part of the Four-Lane Highway Widening Project (Phase II) of the Department of Highways (DOH) to reduce logistics costs by widening about 433 km of eight national highway sections from a two-lane to a four-lane highway standard and improving roadway network connections to neighboring countries. The project profile is shown in Table 1. The Ministry of Finance invited the Asian Development Bank (ADB) and the World Bank to jointly finance the project. ADB and the World Bank prepared separate projects to cover their respective sections. Table 1: DOH Four-Lane Highway Widening Project (Phase II) No. Highways Four-Laning Highway Sections Length (km) Planned Financer 1 12 Phitsanulok Lom Sak 105 ADB Si Kiu Nong Bua Khok 60 World Bank Nakrai Khamcha-i 33 DOH 4 24 Si Kiu Ubon Ratchathani 65 World Bank Sattahip Phanom Sarakham 28 World Bank Phanom Sarakham Sa Kaeo 73 ADB 7 4 Phang Nga Krabi 28 World Bank Ranot Sathing Phra 36 World Bank ADB = Asian Development Bank, DOH = Department of Highways, km = kilometer. Sources: Department of Highways and ADB. II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 4. Thailand prepared the Tenth National Economic and Social Development Plan, in 2006 as a strategic framework for addressing its national development challenges. 2 It 1 ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to Kingdom of Thailand for Greater Mekong Subregion Highway Expansion Project. Manila. 2 National Economic and Social Development Board, Thailand Tenth National Economic and Social Development Plan , Bangkok.

11 2 emphasized that Thailand s path to a more competitive, productive, and open economy requires more investment in economic capital in the physical, financial, and human dimensions. Since Thailand s economy depends heavily on exports, the government planned to stimulate economic growth by increasing trade within the GMS through investment in transport infrastructure of the GMS corridors in Thailand. ADB s country partnership strategy (CPS) for Thailand, , identified infrastructure development as a core area of partnership. 3 By increasing the capacity of strategic national highways to transport goods and people, ADB planned to contribute to higher productivity and sustainable economic growth. Also, ADB s regional cooperation strategy and program update, , was intended to enhance connectivity, improve competitiveness, and engender a greater sense of community in the GMS In 2009, ADB provided DOH with technical assistance to prepare a resettlement plan, an initial environmental examination, and prequalification and bidding documents, in compliance with ADB s safeguards and procurement policies, under a small-scale project preparatory technical assistance (PPTA). 5 ADB also engaged a staff consultant in the Thailand Resident Mission as a conduit between ADB and DOH, to facilitate ADB s loan processing and DOH s advance preconstruction activities for the project, because the resident mission had no transport sector staff. The PPTA and the staff consultant helped process the project for ADB, which was reentering the transport sector in Thailand after an interval of 13 years. 6. The project s design and monitoring framework, including achievements, is in Appendix 1. The project design was consistent with Thailand s development objectives and ADB s CPS, and was adequate to achieve the project impact increased competitiveness of the local economy in the provinces along EWEC and SEC in Thailand. A minor change in the project s scope was made to revise the cost estimate for the external audit consulting services. The implementation arrangement was not changed during project implementation. The project was substantially implemented as designed and formulated at appraisal. B. Project Outputs 7. The project upgraded about 178 km of two-lane national highways to a four-lane highway standard. The work was conducted by eight civil works contractors as anticipated during appraisal. The civil works included construction of new bridges and widening of existing bridges; reinforcement and extension of concrete box and pipe culverts; installation of new asphalt pavement and strengthening and overlay of existing pavement; and roadway safety improvements such as pedestrian overpasses, improved signage and pavement markings, and pavement widening at bus stops. 8. As the additional two lanes were constructed within the right-of-way (ROW), no land acquisition was required. The resettlement plan cleared by ADB in June 2009 identified 261 households on NH 12 and 92 households on NH 359 that were affected by the project. Most of the affected households were temporary shops selling food and household goods within the right-of-way. DOH was to provide in-kind assistance to relocate the affected households such as dismantling houses and shops, transporting building materials, and rebuilding houses and shops. However, in February 2012, DOH district offices issued notices to all the affected 3 ADB, Country Partnership Strategy for Thailand, Manila. 4 ADB, Regional Cooperation Strategy and Program Update, The Greater Mekong Subregion Beyond Borders. Manila. 5 TA 7070-THA in the amount of $150,000 was approved on 28 March A supplementary TA fund of $120,000 was approved on 12 May 2008.

12 3 households requesting them to clear the ROW within 15 days upon receipt of the notices, prior to award of the civil works contracts, based on DOH s standard practice. Most of the affected households left the ROW upon receiving the notices. Some of the affected households experienced temporary disruption or stoppage of business during the relocation period, and those who moved to new sites reported a decrease in income. To address this issue, ADB asked DOH to form a resettlement coordination committee (RCC) in each of the project districts composed of representatives from the affected households, with an equal gender balance. The DOH district office, the construction supervision consultant (CSC), and the contractor, with participation of the RCC members, were to prepare a corrective action plan (CAP) to assist distressed affected households. ADB accepted the CAP in October RCCs played an essential role in consultation with the affected households, helping them relocate to new sites, and determining the necessary in-kind assistance for them. The project assisted relocation of 37 affected households along NH 12 and 26 affected households along NH 359. The resettlement was completed in December DOH prepared the project s initial environmental examination, including the environmental management plan (EMP). Due to their lack of experience in environmental management, the contractors engaged a national environmental consulting firm to prepare their site-specific environmental management plans (SEMPs). ADB provided guidance on adoption of a straightforward EMP implementation monitoring checklist to be used during site inspections. Lapses were encountered in the implementation of the EMP/SEMP related to the use of personnel protective equipment, sanitation, hazardous materials storage and handling, spoils disposal, and drainage, but these were later rectified with the adoption of CAPs (Appendix 2). ADB only found out about blasting on NH12 during its review mission in December As blasting was not initially anticipated, its impacts and mitigation measures to address these impacts were not included in the original EMP/SEMPs. To rectify this oversight, ADB asked DOH and the CSC to develop measures and procedures to properly conduct and mitigate the impacts of blasting activities. Although the SEMPs were not updated, instructions from DOH and the CSC were disseminated to all contractors for enforcement in subsequent blasting activities. All blasting activities were completed in All environment-related issues were resolved upon completion of the civil works contracts. No complaint was made through the grievance redress mechanism. 10. The CSC carried out an HIV/AIDS and human trafficking awareness program to raise public awareness about HIV/AIDS transmission, human trafficking from neighboring countries, illegal child employment, and sex workers. The program activities included (i) installation of notice boards; (ii) information, education, and communication (IEC) campaigns; (iii) school education; and (iv) training of the construction workers by local hospitals. Also, in compliance with the health and safety condition of the civil works contracts, the CSC helped the contractors (i) conduct IEC campaigns, (ii) provide condoms for their male and female workers, and (iii) provide the workers with screening for sexually transmitted infections and HIV/AIDS, diagnosis, counseling, and referral to the program with local hospitals. Tests on HIV/AIDS awareness among the construction workers after the program showed an increase in their knowledge and condom use. 11. DOH assigned a CSC to establish a project management system to monitor and evaluate project performance. The baseline survey on the project performance indicators in the design and monitoring framework was conducted in March 2013, and the project completion survey was carried out in February Project achievements based on results of these surveys are in Appendix 1.

13 4 12. An implementation plan for the Strategic Intercity Motorway Network Technical Assistance Project was prepared under a piggybacked technical assistance (TA) project (para. 24). 13. The World Bank provided an additional $79.3 million loan for the highway management project to upgrade the five highway sections listed in Table 1. DOH prequalified the civil works in June 2012, and invited prequalified contractors for bids in October However, no prequalified contractors submitted bids, because they were occupied with rehabilitation efforts in the wake of a flood in much of Thailand. While DOH asked the World Bank to extend the closing date of the additional loan to allow rebidding, the request was not approved and the additional loan was closed in June DOH asked ADB to provide additional financing to upgrade the five highway sections. However, ADB was unable to provide the additional financing for a government established following a military coup. Finally, DOH upgraded the five highway sections using its own funds. C. Project Costs 14. The appraisal project cost was estimated at $179.4 million, including contingencies, taxes and duties, and financing charges during implementation. The actual project cost was $ million, which was lower by 19.1% than the appraisal project cost. The projected and actual project costs are detailed in Appendix 3. The actual investment costs for civil works and consulting services were nearly the same as the projected investment costs. Since an increase in the contract price requires cabinet approval, DOH managed to complete the works and services within the contract prices. The projected contingencies, taxes and duties, and financing charges during implementation were overestimated. The projected contingencies were not used. While the amount of taxes and duties was estimated at 10% of base cost at appraisal, only 7% of the government-funded base cost was incurred as value-added tax. The financing charges during implementation were estimated at $9.8 million, but the actual costs were $1.45 million. The difference was mainly due to the lower actual London interbank offered rate (LIBOR). The 5-year forward LIBOR used to estimate the financing charges at appraisal was 3.15%, but the 6-month LIBOR remained below 1% during project implementation. D. Disbursements 15. The loan disbursement was scheduled to start in 2010 and to be completed in The projected and actual disbursement are shown in Appendix 4. Due to a procurement delay at the project s start-up stage, the loan disbursement was delayed by 2 years. Since the loan closing date was extended by 18 months in August 2013, the disbursement projection for 2013 and onward was updated in October The actual disbursements in exceeded the updated projections in the same years. The appraisal disbursement schedule was realistic while the expected commencement of the loan disbursement was too optimistic. E. Project Schedule 16. The project chronology and the projected and actual project implementation schedule are provided in appendixes 5 and 6. The loan signing and loan effectiveness were delayed by 3 months due to political instability. At appraisal, 13 months were estimated for procurement, including prequalification and single-stage single-envelope bidding for the works on NH 12, and 9 months were estimated for the works on NH 359, but 30 months were needed to sign the first contract after the invitation for prequalification. The delay was caused by an investigation into possible collusion by prequalified contractors (para. 26), a request by the Bureau of the Budget

14 5 for use of country-specific contract conditions during contract negotiations, and insufficient coordination between DOH and the Royal Forest Department regarding cutting trees (para. 31). While the civil works were generally completed within the estimated construction period, completion of the works was delayed by 21 months. The loan closing date was extended by 18 months to finance the works and services. F. Implementation Arrangements 17. The project was implemented as designed at appraisal. DOH was the executing agency. The deputy director general for engineering acted as project director to supervise overall implementation. The director of the project management unit, Bureau of International Highways Cooperation, assumed responsibility for the project s day-to-day implementation. DOH and the CSC jointly supervised the construction. The CSC team leader was assigned as the Engineer of the civil works contracts. In addition to supervision by CSC area engineers, resident engineers of DOH on site inspected the civil works daily to ensure compliance with the contracts and the quality of the works. After the Engineer certified interim payment certificates (IPCs), resident engineers submitted the certified IPCs to DOH for review. While DOH s acceptance committee respected the Engineer s certifications, the review process may have delayed payments to the contractors. 18. According to the regulations in Thailand, cabinet approval is required to increase a contract price even for increases due to price adjustment based on the contract conditions; inclusion of contingencies in the contract price is not allowed. Since review of contract variations to increase the contract price is time-consuming, DOH managed to control the quantity of works to avoid cost overruns in the later stage of the civil works. Although contingencies in the amount of $14.0 million were allocated in the project s financing plan, they were not cared for project implementation. G. Conditions and Covenants 19. There was no project-specific condition for loan effectiveness. The loan agreement was signed on 11 June 2010 and became effective on 2 September There was no delay in meeting the conditions of effectiveness. 20. Compliance with the project-specific loan covenants is in Appendix 7. The loan covenants were relevant to the project, but the gender-related covenant was found to exceed DOH s capacity. Male and female representatives of the affected households were elected in RCCs, men and women of the affected households attended public consultation meetings, and the HIV/AIDS and human trafficking prevention programs were undertaken as standard practice. However, the project failed to develop disaggregated monitoring indicators by gender and ethnic group for purposes of monitoring and reporting and conduct sensitization training on gender and resettlement for DOH staff. The gender strategy should have been developed through a detailed assessment at the project site and discussions with DOH staff at appraisal, considering that DOH had no gender specialist. 21. The project was generally compliant with ADB s Safeguard Policy Statement (2009) requirements, although noncompliance with the resettlement plan and EMP was encountered during the early stages of project implementation (paras. 8 and 9). A significant example of noncompliance with the Safeguard Policy Statement was the use of blasting to break hard rocks on NH 12 without securing clearance from DOH and the CSC.

15 6 22. DOH assigned the tasks of updating the project website and uploading the quarterly environmental and resettlement monitoring reports to the CSC. The project website was not updated regularly. The monitoring reports were uploaded on DOH s project website in the project s early stage, but the uploading was not sustained. This assignment discontinued when the CSC staff who prepared the project website resigned. DOH s information technology experts should be appointed to update the project website and upload the monitoring reports. 23. The borrower and ADB should have conducted a comprehensive midterm review at the end of the project s second year. They failed to do so due to a delay in the preconstruction activities. Project implementation went smoothly after commencement of the civil works. The midterm review was cancelled, because there was no specific need for changes in the project s scope and implementation arrangements. H. Related Technical Assistance 24. The project provided piggybacked capacity development TA with DOH to prepare an implementation plan using an appropriate public private partnership (PPP) for a motorway project selected under the TA study in The TA outputs were (i) initial screening and appraisal for motorway project selection, to be implemented using PPPs; (ii) viable PPP schemes for implementing the selected motorway, complying with policy, institutional, legal, and regulatory requirements; (iii) financial and commercial viability analyses; (iv) risk assessment and management plan; (v) value for money analysis; (vi) capacity development workshops for DOH; and (vii) a detailed implementation plan and procurement arrangement using PPPs. Based on the TA outputs, DOH further developed a PPP scheme for the Bang Yai Kanchanaburi Motorway Project, and it became the first PPP-based motorway project in Thailand. DOH finances land acquisition and resettlement, and construction of the motorway. The private sector will finance installation of the motorway operation system and rest areas. DOH and the private investors will conclude performance-based contracts for operation and maintenance (O&M) of the operation system and rest areas. The TA contributed to capacity development of DOH staff and development of a feasible and practical implementation plan for the PPP-based motorway project. A TA completion report is provided in Appendix 8. I. Consultant Recruitment and Procurement 25. DOH took advance action to recruit the CSC through a quality-and-cost based selection process with a quality cost ratio of 80:20. After a first-ranked consultant was selected, DOH and the consultant undertook several contract negotiations. The Office of the Attorney General asked DOH to modify the contract during negotiations. It took more than 2 years to select the CSC; the contract was signed in December DOH seemingly intended to postpone the contract signing, because procurement for the civil works was delayed. Nonetheless, there was about a 1-year gap between contract signing of the CSC and the civil works. DOH also recruited an external audit consultant through the consultants qualification selection. That contract was signed in September DOH opened biddings for eight civil works packages with prequalification, of which five were allocated for NH 12 and three for NH 359. In response to a procurement advertisement, 57 contractors (1 from the People s Republic of China [PRC], 1 from Japan, 1 from India, 2 from Republic of Korea, and 52 from Thailand) applied for the prequalification, and 49 contractors (1 6 TA 7483-THA: Implementation Plan for Strategic Intercity Motorway Network Technical Assistance Project in the amount of $1,000,000 was approved on 15 December 2009.

16 7 from PRC, 1 from Japan, 1 from India, 2 from Republic of Korea, and 49 from Thailand) were prequalified in December The results of the bidding are in Appendix 9. The prequalified contractors were invited for the eight packages at the same time, and 3 5 prequalified contractors bid for each package. No foreign contractor participated in the bidding. DOH observed that it was difficult for foreign contractors to obtain licensing to buy soil and gravel from local suppliers. Bid prices were quite similar for all eight packages. The lowest bid prices ranged from 99.97% to % of DOH s cost estimate, and even the highest bid prices were in the range of % %. According to DOH, Thai contractors often engage consultants to prepare draft bids based on the country s standard unit prices, and consequently all bid prices were close to DOH s cost estimates. ADB s procurement committee approved DOH s recommendation on the bid evaluation, but reported the results of the bidding to ADB s Office of Anticorruption and Integrity for possible collusion by the prequalified bidders. DOH assessed that prequalification was needed for the project, given that contractors submitted prequalification applications for each of the contract packages. This implies that DOH would have to evaluate a similar number of bids for each package unless prequalification was conducted. 27. ADB s standard bidding document was used for bidding. After ADB s approval of the bid evaluation, the Bureau of the Budget, which was responsible for financing the project counterpart funds, asked DOH to change the contract conditions in compliance with the country s regulations. Given that the technically responsive and lowest-priced bidders were Thai contractors for all eight packages, DOH and the bidders agreed to incorporate country-specific conditions in Thailand into the particular conditions of the contract during contract negotiations after consulting with ADB. The contract conditions on price adjustment formulas, defect liability periods, and arbitration were modified during contract negotiations. J. Performance of Consultants and Contractors 28. The CSC supervised the project implementation well and supplemented DOH s insufficient capacity in terms of performance monitoring and evaluation, implementation of the HIV/AIDS and human trafficking prevention programs, and preparation of progress reports. However, the project suffered from several weaknesses. First, the CSC did not have field offices along NH 12 and NH 359, so the area engineers often stayed in Bangkok, with the result that supervision of the works was insufficient. Second, key experts often resigned from the consulting firm and were replaced by new experts. Third, the safeguards specialists did not provide DOH staff in its district offices with necessary advice on ADB s safeguards policy and gender strategy. The performance of the CSC was thus partly satisfactory. 29. The external audit consultant audited the project account and submitted its audited project financial statements to DOH without delay. The audited project financial statements were in order and acceptable to ADB. The performance of the external audit consultant was satisfactory. 30. The contractors completed the civil works without delay. They did not have knowledge and experience in the EMP, but learned to comply with environmental safeguards by engaging a common consultant to prepare site-specific EMPs and monitor compliance. Handling of waste and hazardous materials, personal protective equipment, and housekeeping at campsites were persistent issues. However, DOH appreciated that there was no complaint from local people about noise, dust, or inconvenience caused by the project. The overall performance of the contractors was satisfactory.

17 8 K. Performance of the Borrower and the Executing Agency 31. The project was completed with a 20-month delay. The delay occurred during the preconstruction stage; there was no delay after the civil works contracts were awarded. The delay was caused by the Office of the Attorney General s request that DOH modify the contract during negotiations with the first-ranked consultant, the Bureau of the Budget s request that DOH use country-specific conditions for the civil works contract during negotiations with the lowest-priced technically responsive bidders, and insufficient coordination between DOH and the Royal Forest Department regarding cutting trees within the highway right-of-way. The performance of the borrower before the civil works contracts were awarded was partly satisfactory, and that after the contract award was highly satisfactory. The overall performance of the borrower is satisfactory. 32. DOH s capacity to manage the civil works contracts was very high. DOH has a sufficient number of experienced engineers, and has established technical standards for quality assurance and procedures for contract disbursement. The management capacity of civil works was equal to or higher than that of the CSC engineers. However, DOH was not familiar with ADB s safeguards and procurement policies in the early stage of project implementation, and learned about environmental monitoring and mitigation; public consultation with the local people, including project-affected households; and implementation of the Fédération Internationale des Ingénieurs-Conseils based contracts over the course of project implementation. DOH also required technical support from the CSC for performance monitoring and evaluation, implementation of the HIV/AIDS and human trafficking prevention programs, preparation of progress reports and safeguards monitoring reports, and disclosure of procurement results and these reports. The overall performance of DOH is satisfactory. L. Performance of the Asian Development Bank 33. ADB undertook twenty review missions, including loan inception and project completion review missions after loan effectiveness. During the procurement stage, in response to DOH s request, ADB sent short review missions to give guidance to DOH. ADB review missions provided DOH with advisory services on social and environmental safeguards and prepared corrective action plans when noncompliance with the resettlement plan and the initial environmental examination for the Project was discovered. Provision of the corrective action plans was adequate and timely. The project avoided negative social and environmental impacts by implementing the corrective action plans. The resident mission also supported the loan disbursement through communication with DOH s financial division. However, no gender specialist was assigned to the project, and ADB s advice was insufficient to implement the gender strategy. Overall, the performance of ADB is satisfactory. III. EVALUATION OF PERFORMANCE A. Relevance 34. The project outcome was largely aligned with Thailand s development objectives and pertinent to ADB s CPS, , and its regional cooperation strategy and program update, The project is consistent with the government s development strategy and ADB s CPS at present. Strengthening regional cooperation is one of the priorities specified in the

18 9 Twelfth National Economic and Social Development Plan of Thailand, The Government of Thailand also prioritizes implementation of Thailand s Transport Infrastructure Development Plan, , to boost the country s competitiveness in the global economy and to achieve inclusive and sustainable rapid economic growth. 8 ADB s CPS, , highlights the significance of inclusive growth and elevates the importance of regional cooperation and integration. 9 The project is rated relevant. B. Effectiveness in Achieving Outcome 35. DOH undertook project performance monitoring before commencement of the civil works in 2011 and after completion of the civil works in Compared to annual average daily traffic (AADT) in 2010 before commencement of the civil works, AADT in 2015 increased by 77% on NH 12 and by 19% on NH Compared to 2010, travel time reduced by 12% 15% on NH 12 and by 12% 16% on NH 359. There was no significant change of passenger and freight operating costs. Passenger and freight operating costs appear to be reduced in real terms, but this may be caused mainly by lower gas prices. 36. Data on AADT and traffic accidents provided by DOH are provided in Appendix 10. The road safety audit before construction found that 12 accidents occurred and 7 people died in the project section of NH 12; and 26 accidents occurred and 8 people died in the project section of NH 359 between 2011 and The accidents occurred mainly when a fast-moving vehicle overtook a slow-moving vehicle. Such accidents comprised 53% of accidents on NH 12 and 48% on NH 359. It was expected at appraisal that the project would substantially reduce these types of accident. However, the road safety audit after construction found that the number and fatalities of traffic accidents have increased since completion of the four-lane widening. The traffic accident rate (the number of traffic accidents per AADT) at particular highway sections increased by times after completion of the works. The main reasons for the increase in traffic accidents are speeding and turning right onto the highway from access roads. There were many accidents involving buses and pick-up trucks transporting passengers on NH 359. DOH has taken road-safety improvement measures, such as installing warning signs and concrete barriers on highway medians to prevent drivers on access roads from turning right onto the highways. As a result, the number of fatalities began to decrease in Performance targets for reductions in passenger and freight operating costs and travel time and increases in traffic volume were generally achieved. However, performance targets for reductions in traffic fatalities were not achieved. The project is rated less than effective. C. Efficiency in Achieving Outcome and Outputs 38. The economic benefits assumed at appraisal were savings in vehicle operation costs and reductions in travel time and traffic accidents. DOH s statistics showed that the accident rate (number per vehicle-km) on two-lane highways is higher by 60% than that on four-lane highways. 11 The economic assessment comparing at appraisal with after completion is provided in Appendix 11. Using the principal approach and method at appraisal, the economic 7 National Economic and Social Development Board, Thailand Twelfth National Economic and Social Development Plan, , Bangkok. 8 Ministry of Transport, Thailand Thailand s Transport Infrastructure Development Plan, Bangkok. 9 ADB Country Partnership Strategy for Thailand, Manila. 10 AADT on NH12 decreased from 2007 to 2010 and increased after AADT on NH359 varied widely by year from 2010 to Economic analysis in Appendix 12, footnote 1.

19 10 reassessment examined the effects of converting the two-lane single carriageways to four-lane dual carriageways. It was assumed that after a 2-year period of acclimatization to the new fourlane highways, fatal and nonfatal injuries would be reduced by 15%, starting in The economic internal rate of return (EIRR) of the overall project is estimated to be 16.3%, which is close to the EIRR of 15.8% at appraisal. The project is rated efficient. D. Preliminary Assessment of Sustainability 39. A number of defects on the road embankment and pavement were found during the notification period of the civil work contracts. The contractors repaired these defects under their responsibilities. DOH plans to increase budget and staff allocations for its district offices that will operate and maintain the project highways after defect notification period ends. Environmentally friendly construction methods were used in the national park areas along NH 12, where use of concrete structures is not allowed; the additional two lanes had to be constructed strictly within the right-of-way of NH 12. To meet these requirements, slopes on the mountainside were graded to avoid concrete protection works, and steep road embankments were reinforced with grid-type geotextiles in many places on the valley side. DOH monitors stability of the built slopes and embankments by patrols and built-in sensors. 40. The project-affected shops along NH 12 enjoy increased sales due to the increased traffic volume. New hotels, resorts, gas stations, restaurants, and shops have been opened and the number of tourists has increased since the project was completed. On the other hand, the project-affected shops along NH 359 reported that sales were reduced because the number of similar shops has increased and traffic on the opposite lanes cannot approach their shops due to the median. Sales of the project-affected shops along NH 359 are expected to increase to the before-project level in the near future, because traffic volume on NH 359 has been increasing dramatically. 41. DOH s institutional and financial resources are sufficient to sustain the project highways over their economic life. The project is rated likely sustainable. DOH has permanent district offices responsible for administration of NH 12 and NH 359, and the resident engineers continue O&M tasks in the district offices. DOH s annual budget for O&M of national highways throughout the country has been increasing by about 2 trillion baht every year. After the default notification period of the civil works contracts ends, DOH plans to increase the budget allocation for the O&M works of NH 12 and NH 359. E. Impact 42. DOH estimated that the provincial gross domestic product would increase by 72% in Phitsanulok and 54% in Phetchabun along NH 12, and by 60% in Chachoengsao, 29% in Prachin Buri, and 50% in Sa Kaeo along NH 359, from 2010 to These are higher than the project s performance target. DOH also estimated that the value of cross-border trade would increase by 292% at the Mae Sot border with Myanmar and 5% at the Mukdahan border with Lao People s Democratic Republic along the EWEC, and by 251% at the Aranyaprathet border with Cambodia along the SEC, from 2010 to While cross-border trade with the adjacent countries has increased, trade value at the Mukdahan border is not increasing as much as expected. The Third Mekong International Bridge between Nakhon Phanom and Tha Kaek was opened in the north of the EWEC in International cargo traffic to and from northern Viet Nam and the Guangxi Zhuang Autonomous Region of the PRC was diverted from the Mukdahan border route to the Nakhom Phanom border route. The project is likely to have positive development impacts as expected.

20 11 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 43. The project was generally implemented as designed at appraisal. The actual investment costs for civil works and consulting services were nearly the same as the projected costs. The only deviation from the project design was an extension of the loan closing date by 18 months due to a delay in preconstruction activities. The project outputs were delivered without any change in implementation arrangements. Although DOH still needs to improve traffic safety, other project performance indicators in the design and monitoring framework met the project performance targets. Overall rating of the project is successful. B. Lessons 44. The civil works were completed within the estimated construction period for all contracts. This was achieved by the following arrangements. First, procurement was planned with an adequate size of each contract package and an adequate contract period for construction. Second, there was no need to acquire land, which enabled the contractors to manage their construction schedule easily. Third, DOH s resident engineers stayed at each of the contractor s camp sites to supervise the civil works and report to the project director and DOH management team. 45. DOH has sufficient institutional capacity and human resources to implement the civil works and manage the contracts. It might be better to appoint a chief engineer and DOH resident engineers as the project engineer, and to have the CSC mainly assist DOH in implementing social development and protection tasks, monitoring compliance with environmental safeguards, and preparing progress and completion reports. 46. Traffic volume and travel speed increased after the highway improvement under the project. The number of traffic accidents, fatalities, and injuries also increased unexpectedly. The causes and characteristics of the traffic accidents should be analyzed, and effective measures undertaken during project implementation to avoid similar accidents. C. Recommendations 1. Project Related 47. Future monitoring. DOH shall be responsible for O&M of the project facilities by providing proper technical supervision and ensuring adequate fund allocation. Traffic safety improvement measures and works are important to operate the project facilities safely. ADB should review operation of the project facilities concurrently with review missions for the planned phase 2 project to monitor their compliance with the covenant on O&M (para. 15, schedule 5 of the loan agreement). 48. Further action or follow-up. The project was completed in November 2015 and the loan account was closed in January Operation of the completed project facilities has already started. Follow-up actions to monitor stability of the slopes and embankments of NH 12 and income restoration of the project-affected shops along NH 359 are recommended.

21 Additional assistance. No additional financial assistance will be required for the project. DOH has sufficient human and financial resources to improve the project s performance and sustainability. 50. Timing of the project performance evaluation report. DOH developed the project performance monitoring system, and undertook the baseline survey in 2013 and the second survey in 2016 with the assistance of the CSC. The third survey shall be carried out not earlier than five years after project completion (para. 17, schedule 5 of the loan agreement). Preparation of the project performance monitoring report in 2020 is considered appropriate timing. 2. General 51. Thailand is the worst country in Asia in terms of the traffic fatality rate. 12 A traffic safety component should therefore be included or a traffic safety assessment made after completion of the civil works under future highway projects in Thailand. In general, ADB loans are closed 6 months after physical completion. However, because an increase in traffic volume and speed after completion of the works resulted in an increase in traffic accidents, ADB loans should be kept open for 2 years after completion of the civil works to carry out any necessary traffic safety assessments and road safety improvement works. 52. In principle, ADB s standard bidding and contract documents shall be used for ADBfunded contracts. The executing agency often modifies contract conditions in accordance with country-specific regulations. Bidding and contract documents should be prepared through consultation with the borrower and executing agency at project appraisal. Revising contract documents in the issued bidding documents during contract negotiations should be avoided. 53. Cabinet approval is required for any increase in contract price. Contracts are not allowed to include contingencies. Due to these constraints, DOH controlled the quantity of works to avoid increases in civil works contracts. This regulation and control of the quantity of works may, however, have jeopardized the quality of the works and reduced the flexibility of project implementation. It is recommended that a reasonable contingency be included in the contract price to be able to accommodate price or quantity increases. 12 According to the World Health Organization, the traffic fatality rate in Thailand was 38.1 persons per 100,000 people in 2013, 74.1% of whom were motorcyclists.