Jamaica - Second Highway (Road Improvement and Maintenance) Project

FILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. 1 18a-JM JAMAICA APPRAISAL OF A ROAD IMPROVEMENT AND MAINTENANCE PROJECT May 8, 1973 Latin America and the Caribbean Projects Department | This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completenes of the report.  Currency Equivalents Currency Unit = Jamaican dollar (J$) US$1.00 - J$ 0.91 J$ 1 = US$ 1.10 J$ 1 million = US$ 1.1 million Fiscal Year April 1 to March 31 System of Weights and Measures: British Metric British/US Equivalent 1 feet (ft) = 0.305 meter (m) 1 mile (mi) - 1.609 kilometers (km) 1 square mile (mi2) = 2.589 square kilometers (km2) 1 pound (lb) = 0.454 kilogram (kg) Abbreviations and AcronYms ADT - Average Daily Traffic CIDA - Canadian International Development Agency DC - Directorate of Construction DEMS - Directorate of Electrical and Mechanical Services DM - Directorate of Maintenance DMP - Directorate of Major-Projects DTS - Directorate of Technical Services GDP - Gross Domestic Product GNP - Gross National Product JRC - Jamaica Railways Corporation LVI - Lamarre Valois International Ltd., Consulting Engineers MDW - Ministry of Works NEC - National Economic Council TPOS - T.P. O'Sullivan and Partners, Consulting Engineers UNDP - United Nations Development Program USAID - United States Agency for International Development  JAMAICA APPRAISAL OF A ROAD IMPROVEMENT AND MAINITENANCE PROJECT TABLE OF CONTLNTS Page No. SUMIRARY AND CONCLUSIONS. 1. INTRODUCTION .............................................. 2. B6ACKGROUND .. A. The Country and its Lconom,ly . B. The Transport Sector .................................. 3 C. Transport Policy and Coordination ........... 5 3. THE ROAD SYSTEM AEND ROAD TRANSPORT ..... .................. 6 A. The Road Network and its Traffic .. ................... 6 B. Administration: The Ministry of tWorks ..... .......... 8 C. Road Planning and Financing ..8.................. 8 D. Engineering and Construction ........................ 10 E. Mlaintenance ........................ 10 4. TIIE PROJECT .. .. ............12 A. Project Description ..12 B. Road Improvement and Maintenance . 13 C. Provision of Road Maintenance and Workshop Equipment 14 D. Restructuring of Directorate of Maintenance; Improvement of Staffing and Procedures. 14 E. Technical Assistance ..16 F. Cost Estimates ..17 G. Financing and Disbursement . .18 H. Execution... 1 5. ECONOMIC EVALUATION ....................................... 20 A. General ....................... ....................... 20 B. Asphaltic Overlay .................................... 20 C. Asphaltic Resealing ................ .. ................ 23 D. Road Maintenance and Workshop Equipment .............. 23 6. AGREEMENTS REACHED AND RECOMMENDATION ..................... 24 This Appraisal Report has been prepared by Mr. W. Sikorski (Engineer) and Miss I. Pastor (Economist) and has been edited by Miss V. Foster.  Table of Contents - Continued TABLES 1. Road Network (1972) 2 . Lxpenditure on Roads 1965-1973 3. Road User Charges 4. Details of Proposed Asphaltic Overlay Work 5. List of New Equipment and Estimate of Cost 6. Technical Assistance to be Provided by the Consultants 1973-1Y973 7. Project Cost Estimates ,. Estimated Schedule of Disbursements 9. lnitial Traffic Levels and Growth 10. Typical Vehicle Operating Costs 11. Interpolated Values of Vehicle Operating Costs for Road Classes Project Roads 12, R?ates of Return and Sensitivity Analysis 13. Economic Evaluation of Asphialtic Resealing ANN2EX 1. Road Traffic Law anzn Regulations ChARTS 1. Structure of the tinistry of iNorlks 2. Structure of the Directorate of laintenance :.AP Jarilaic. -- Road Improvement and Maintenance Project, IBRD 10337  JAMAICA APPRAISAL OF A ROAD IMPROVEMIENT AND MAINTENANCE PROJECT SUMMARY AND CONCLUSIONS i. The road system in Jamaica is generally adequate in extent; in recent years, however, maintenance has not kept pace with the needs of the system, particularly those of the paved roads. Moreover, some of the paved roads are reaching the point whiere, with increasing traffic, strengthening, is becoming necessary. ii. Road maintenance and the institution-responsible for it have been studied in recent years, first in 1968 as part of a countrywide transporta- tion survey carried out by the Canadian consultants Lamarre Valois Interna- tional Ltd. (LVI), with financing by the Canadian International Development Agency (CIDA), and then in 1972 by the UK consultants T.P. O'Sullivan and Partners (TPOS) in a study financed by the United Nations Development Pro- gram (UNDP), for which the Bank was executing agency. The CIDA-financed study recommended, inter alia, a major resurfacing program for paved roads to prevent further deterioration of pavements, and improvement in the struc- ture and procedures of the road maintenance organization. The UNDP-financed study went a step further, recommending specific road improvement and mainte- nance, and made definite suggestions for improvement of the maintenance or- ganization. iii. The proposed project is based largely on the results of this latter study and has, therefore, a twofold thrust - physical improvement of the road network, and organizational improvement of the road maintenance organ- ization. As regards road improvement, the project envisages strengthening of about 440 miles of major roads with asphaltic overlay and resealing of a further 250 miles on which the pavements, although not yet overstressed, would deteriorate and require costly rehabilitation without this treatment. No major improvement of the geometric features of the road network are en- visaged, but particularly bad features, such as very sharp bends and dis- torted cross-section profiles, would be improved in conjunction with these works. iv. Improvement of the maintenance organization envisaged comprises (a) a change in line management structure which would have the effect of introducing professional engineers into the maintenance organization; (b) introduction of rational costing and better planning of maintenance optra- tions; and (c) a modest increase in the management staff of the organiza- tion. Also under this heading, thie project would provide equipment for routine maintenance operations and a small quantity of tools for the work- shops which service such equipment. A substantial provision for technical assistance is included to help implement all aspects of the project.  - 2ii - v. Execution would be the responsibility of the Ministry of Works (MOW) and would extend over a period of about five years. This period is determinedi largely by the time required for the civil works; these, in turn, have been spread out to reduce the load on budgetary funds to an acceptable leve' and to help ensure a more even workload on the resources of the iMinistry and the contracting industry. vi. The asphaltic overlay would be procured by international competi- tive bidding, following the Bank's guidelines, in two tranches of about US$3 million each. There would be a number of contracts in each tranche, but the work would be packaged, and bidders would have the opportunity to bid for any part or for thie whole package. The asphaltic resealing would be bid in a similar manner, but, since the work is rather scattered and small scale, it would probably be unattractive to firms not already established in the couni- try; this work would therefore be advertised only in Jamaica. The road main- tenance equipment would be procured by international competitive bidding, following international advertising. vii. The project would benefit all parts of the cotuntry. The asphaltic overlay would be applied primarily to the circumferential road and a few major cross-country routes - these constitute the most heavily trafficked roads in the country. The resealing work and the improvement of day-to-day maintenance would have its effect primarily on the secondary road network. Not all of the benefits are readily quantifiable, and the economic evalua- tion concentrates on the proposed investment in asphaltic overlay (represent- ing over 40,% of project costs). For the overlav, the econoraic return is in excess of 50%; even if significant factors in the evaluation are varied to represent more pessimistic values, the economic return is still acceptable. For the resealing, on the assumption that failure would take place in four years' time if the pavements were not resealed in the near future, the economic return on the proposed resealing is conservatively estimated at about 19%. For the equipment included in the project, a very modest re- duction (of the order of a few percent) in vehicle operating costs result- ing from the use of this equipment would be sufficient to provide an economic return of 10% on the investment in equipment. Together these three items -- overlay, resealing and provision of equipment -- account for over 90% of project cost. viii. The project is estimated to cost US$17.3 million equivalent, with a foreign exchange component of US$9.3 million. The project would provide a satisfactory basis for a Bank loan to cover this foreign exchange component for a term of 15 years, including a five-year period of grace.  JAMAICA APPRAISAL OF A ROAD IMPROVEMENT AND MTAINTENANCE PROJECT 1. INTRODUCTIGN 1.01 The Government of Jamaica has requested the Bank to help finance a project comprising road improvement and maintenance, institutional improve- ments and the provision of technical assistance and equipment. This would be the second Bank-financed highway project in Jamaica. The first (Loan 408-JM, US$5.5 million, 1965) consisted of detailed engineering, construction (to four-lane standards) and supervision of the Kingston-Spanish Town Road and the Moneague-Crescent Park road, totaling 19 miles. Initially, the proj- ect also included construction of the Spanish Town-Bog lWalk road (8 miles) but this, with the Bank's approval, was subsequently deleted because of increased costs. Execution of the project was delayed due to difficulties in right-of-way acquisition, unsatisfactory performance of subcontractors, relocation of public utilities ano inter-union labor disputes resulting in abandonment of work by the contractor after 90% completion, and his claim of frustration of contract. The work was resumed on force account basis and is now complete. The loan is fully disbursed. 1.02 In 1968, the Government, with financing from the Canadian International Development Agency (CIDA), appointed the Canadian firm of Lamarre Valois International Ltd. (LVI) to carry out a countrywide trans- portation survey to (a) establish and analyze costs of transportation by rail, road, coastal shipping and air; (b) examine the capital investment proposed in each mode over the next 10 years; and (c) project capital and recurrent costs through 1979, recommeniding appropriate policies and measures for the most economical development of the country's transportation system during that period. LVI's report was issued in June 1970; the main recom- mendations relating to roads were that: (a) a major resurfacing program of paved roads should be undertaken to prevent further deterioration of pave- ments and to reduce road-users' operating costs; (b) early construction/re- construction of certain high-priority roads identified in the report should be undertaken and (c) the structure and procedures of the road maintenance organization should be improved. 1.03 Acting on these recommendations, the Government, in 1971, commissioned LVI, again financed by CIDA, to carry out feasibility studies on about 320 miles of high-priority roads, and detailed engineering on 60 miles of arterial roads and 40 miles of secondary main and Parish roads. This work will be completed in 1973, and the Government is expected to pro- pose reconstruction of some 30 miles of the arterial roads as the main element of a third Bank-financed highway project inc]utded in the lending program of the fiscal year 1974. 1.04 Acting on the LVI recommendations relating specifically to the road resurfacing program and improvement of maintenance, the Government, in 1972, retained the UK consultants T.P. O'Sullivan and Partners (TPOS)  to carry out a road maintenance study; the study was financed in part by the United Nations Development Program (UNDP), and the Bank acted as executing agency. TPOS submitted its draft final report in November 1972; its recom- raendations formed the basis for appraisal of the project now proposed. 1.05 The project was appraised by Mr. W. Sikorski (Engineer) and Mtiss I. Pastor (Economist) in December 1972. The report has been edited by Miss V. Foster. 2. BACKGROUND A. The Country and its Economy 2.01 Jamaica, the third largest island of the Caribbean, has an area of 4,410 square miles, its greatest length (east-west) being 146 miles and its greatest width (north-south) 51 miles. A mountain ridge about 2,500 feet high runs east-west, separating the island into northern and southern coastal areas. The island's natural resources include bauxite and other mineral deposits scattered in various locations in the central area; a plea- sant tropical climate and beaches suitable for tourism, primarily along the north coast; fertile soils for agriculture; and fishing and forest reserves. Jamaica's population of about two million has grown in the last 12 years at a net annual rate (allowing for migration) of about 1.5%. Its high population density of about 460 persons per square mile is surpassed only by Trinidad and Tobago among the Latin American and Caribbean countries. Kingston, the capital, situated on the southern coast, is the main market for the country's agricultural produce and imported goods. Montego Bay, on the north coast, is the most important tourist resort. 2.02 The per capita GNP of Jamaica is currently about US$690. In real terms, the growth rate of GDP is estimated to have reached about 5% p.a. over the last five years. The most important single contributor to the rapid growth of the economy is the mining sector 1/, which accounted for about 17% of GDP in 1971. The other leading contributors are manufacturing, agriculture, construction and tourism. The level of agricultural output in recent years has been variable, but Government expects that, following the implementation of a major investment program, it will stabilize in com- ing years at a high level and that, considering also the output of substan- tial investments in mining, increases in industrialization and the projected expansion in tourism, a growth in GDP of 6% p.a. in real terms would be attainable over the next few years. 1/ Jamaica is the world's largest producer of bauxite; it supplies about 42% of the raw material needs for the aluminum industry of North America, which in turn produces 60% of the world's aluminum output.  - 3 - 2.03 In spite of Jamaica's satisfactory growth rate in the past years, unemployment remains high at about 16% of the labor force. The high level of unemployment is explained by the age distribution of the labor force (biased toward the younger age groups), the low rate of growth of the agri- cultural sector (the traditional labor-intensive sector) and the high propor- tion of unskilled labor among the unemployed. B. The Transport Sector (i) General 2.04 Jamaica's transport system is generally adequate in extent, although not always in condition or capacity; most of the population centers, productive areas, and ports are well served. The system consists of about 10,000 miles of arterial and secondary main (together called "public") roads and Parish roads 1/, a 200-mile Government-owned railway, a few miles of private railway, four airports (two of them international), 13 ports, and some petroleum products pipelines. In general, because of the island's rel- atively small size, the transport system is characterized by short average hauls and trip lengths. Although there are no readily available statistics on the modal distribution of land traffic within the system, all evidence demonstrates that an overwhelming proportion, particularly of passenger traf- fic, is carried by road. This pattern of allocation between modes is likely to continue over the next 10 years or so. (ii) Roads 2.05 Details of the road system and its administration are given in Chapter 3. (iii) Railways 2.06 The public railway in Jamaica is run by the Jamaica Railways Corporation (JRC), which is responsible to the Minister of Public Utilities, Communications and Transport. The system consistq of 205 miles, most of it built in the latter half of the 19th century. The main trunk line (112 miles) provides access to the country's main mining and agricultural areas and connects eight of the largest towns of the island. There are private lines owned by the bauxite mining companies. The railway system primarily serves the bauxite and alumina industry and a passenger demand; it carries only a small volume of general cargo. Railway operations, in general, are costly because of the relatively short hauls and the island's rugged topo- graphy. 1/ The administrative unit of Jamaica is the "Parish" (of which there are 13). The Parish roads are also "public" roads in the normal sense (Table 1).  - 4 - 2.07 JRC's freight traffic in 1971 was about 3.1 million tons or 83.6 million ton-km, of which over 98% was bauxite, alumina, or material associated with the industry. With the expansion of mining, this traffic grew at an average of 7% p.a. between 1966 and 1971. Other commodities (mostly agricultural) have increasingly been diverted to road--since for non-bulk commodities, road transport offers a cheaper service than does the railway--with the result that less than 40,000 tons of non-mining traffic were carried in 1971. The average haul of freight traffic remained broadly constant at 27 miles between 1966 and 1971. Total passengers carried were about 1.2 million in 1966 and 1 million in 1971, but total passenger miles increased during this period from 35.7 million to 39.5 million. The average passenger journey thus increased from 29 to 39 miles. This is attributable to more trips being taken between Kingston and Montego Bay, on which section about 70% of all passenger trips take place. 2.08 The 1970 Jamaican Transportation Survey (para. 1.02) recommended,. as first priority, that the railway's rates and fares should be revised to help solve its deficit position, and that uneconomic lines should be aban- doned, or, alternatively, that the Government should provide grants to cover the cost of "social" services provided by the railway. The Government has since increased its contract rates, and they now probably cover the capital and operating costs, including overheads, of moving the mining traffic. In addition, in 1972, the Frankfield-May Pen line, one of the uneconomic lines, was closed. Most of the loss of JRC (about J$ 500,000 p.a.) is on lines not connected with the mining industry and, in fact, most of the loss is incurred on the line to Port Antonio. However, this line serves many poor areas, and the Minister of Public Utilities, Communications and Transport is reluctant to deprive them of the service. (iv) Air Transport 2.09 Jamaica has two international airports, one at Kingston and one at Montego Bay, served by some 12 foreign airlines and by the national carrier, Air Jamaica. Internal flights between these and two domestic airports at Ocho Rios and Port Antonio are provided by a local airline, Jamaica Air Ser- vices. There are four other small public airports which accommodate general aviation and over 30 private landing strips owned by the mining and sugar companies. All public airports are operated by the Civil Aviation Department of the Ministry of Public Utilities, Communications and Transport. Revenues from landing fees, rentals, concessions and licenses, but excluding travel tax, rose from J$ 660,000 in 1962/63 to an estimated J$ 1.8 million in 1972/73. Operating expenditures have increased during the same period from some J$ 460,000 to J$ 1.7 million. 2.10 The sharp increase in tourism in recent years has had a major impact on Jamaica's international air traffic. Passenger movements at the two major airports increased between 1965 and 1970 at an average rate of 14% p.a., to over 500,000 at each. Freight movements and general aviation traffic have also increased considerably. The sharp traffic increase has led to congestion in aircraft ground cperations and traffic handling at both major airports. Based on the recommendations of Canadian consultants (Kates,  Peat Marwick and Company and Montreal Engineering) financed by CIDA, the Government has requested Bank financing for an airport development project to improve facilities at both Montego Bay and Kingston Airports. An appraisal mission has been scheduled for May 1973. (v) Ports 2.11 Jamaica has 13 active ports, all privately owned and operated. Two of them, Kingston and Montego Bay, are primarily general cargo ports, handling most of the country's imports, while the other 11 are specialized and handle mainly exports. Kingston handles over 80% of the island's im- ports (4.0 million metric tons in 1970) and about 7% of its exports (13.0 million metric tons in 1970). Among the other ports, there are five effi- ciently handling the mining companies' export needs; the largest is Port Rhoades on the northwest coast, which deals with 5 million tons of bauxite annually. The other six are used to export agricultural products such as sugar, molasses and bananas, and some agricultural products are also handled through the mining companies' ports. (vi) Pipelines 2.12 Pipelines owned and operated by the private sector carry fuel from the ESSO refinery in Kingston to various major consumers, to the railway loading station and from some ports to the bauxite mines and alumina plants. Specific information on the extent of the pipeline network is not available. C. Transport Policy and Coordination 2.13 Transport policy is the responsibility of several Government departments and agencies. The Ministry of Public Utilities, Communications and Transport is responsible for overall policy formulation for aviation, ports and railways, while the Ministry of Works (MOW) is in charge of for- mulating policies for public roads. Parish roads are under the jurisdiction of Parish Councils, which, at the national level, are the responsibility of the Ministry of Local Government. The Ministry of Industry and Tourism deals with policy formulation on shipping matters. Overall economic planning was transferred in 1972 from the Ministry of Finance to a new National Planning Agency to allow the planning process to operate more effectively than previ- ously. One of the main tasks of the Agency, under the guidance of the Ministerial-level National Economic Council (NEC), is the planning of invest- ments, including investment in transport. 2.14 In general, the users of roads, ports and airports meet the capital and operating costs, including overheads, of these services, while railway users pay only part of the costs of the services they receive. Taxation on individual users varies even within modes. For example, diesel-engined ve- hicles are favored with a low level of taxation since there are no taxes on diesel fuel, while vehicles with gasoline engines pay a high excise duty on gasoline. Government policy on taxation of transport users has not been de- fined in terms of specific goals, and available information does not provide a basis on which to judge the adequacy of existing taxation policies in relation to the efficient use of the transport system.  -6 - 2.15 Little competition presently exists among modes. Each mode is highly specialized, and diversion from one to another has occurred only on a small scale, largely limited to diversion from railway to road. No seri- ous competition among modes is foreseen. 3. THE ROAD SYSTEM AND ROAD TRANSPORT A. The Road Network and its Traffic 3.01 The road network of Jamaica is, for the size of the island, relatively extensive, totaling nearly 10,000 miles, of which over 8,000 miles are suitable for vehicular traffic (Table 1). The network was de- veloped from horse-drawn carriage and bridle roads by gradual improvement and adaptation to motor vehicle traffic; it is not surprising, therefore, that the geometrical standards of the roads are, by modern criteria, poor, but, nevertheless, generally appropriate in the context of Jamaica. Most of the asphaltic pavements were constructed between 1950 and 1960 but, be- cause of deferment of periodic resurfacing, widespread aging anid fatigue are evident in the surface of paved roads, although there are few potholes or pavement base failures. High intensity rainfall results in frequent flood damage. 3.02 Vehicle license registration in Jamaica increased from 23,262 units in 1955 to 102,000 in 1969, representing an annual growth rate of about 11%. No reliable information on annual vehicle licenses is available for the last few years. Cars account for about 75% of the total vehicle fleet. The vehicle density, 50 vehicles per 1,000 persons, is the fifth highest among Latin American and Caribbean countries, following Trinidad and Tobago, Uruguay, Argentina and Venezuela. 3.03 Traffic counts were carried out by MOW at about 50 points on the main road network between 1964 and 1972. From these, it appears that the highest traffic volumes on the island are on the Kingston-Spanish Town road (ADT 13,000) and the Spanish Town-Mandeville road (ADT 6,000). Other main roads near Kingston, Spanish Town, Montego Bay and Ocho Rios have relatively heavy traffic with ADT's from 3,000 to 6,000. Most of the remaining arterial roads have ADT's between 500 and 2,000 while, for most of the secondary main roads, ADT is between 50 and 250. Because of the island's relatively small size (para. 2.01), average trip lengths are short. Seasonal fluctuations of traffic on the main roads are no more than 10%. 3.04 The MOW traffic counts indicate that traffic volumes grew at an average rate of 8.5% for the whole island during 1964-1972, with growth rates on specific roads varying between 4% p.a. and 13% p.a. Traffic growth has been particularly high on roads associated with bauxite (over 12% p.a.) and with tourism (over 10% p.a.). The corresponding figure for roads serv- ing agricultural areas - mainly Parish roads - is no more than about 4% p.a. These rates are generally consistent with the growth of traffic expressed  in vehicle-miles, estimated by LVI (para. 1.02) at 9.5% p.a. from 1962 to 1970, and with the growth of gasoline consumption (11.8% p.a. between 1964 and 1970). 3.05 Speeds on the network are limited by alignments and average only about 30 mph for cars and 25 mph for trucks. From a study of (a) a report by the Road Research Laboratory (UK) in 1962, (b) the report on the Jamaica Transportation Survey in 1970 (para. 1.02) and (c) TPOS' work in 1972 (para. 1.04), it is evident that speeds have not increased significantly in the past 10 years. Vehicle operating costs are generally high and reflect the poor surface quality and low geometrical standards. The proposed project aims mainly at strengthening the pavement and improving the riding quality, although minor improvements of the alignment and other features are included (para. 4.05). Major improvement of geometric standards for certain roads with high traffic volume will be carried out within the new construction program being prepared by the Government (para. 3.15). 3.06 Prices charged by the road transport industry have not been studied in detail, but there is evidence that freight rates are relatively high. For example, between Kingston and Spanish Town (15 miles), the rate for a five-ton load is normally quoted at the equivalent of US4 40/ton-mile; between Kingston and Montego Bay, the longest typical haul on the island (120 miles), the rate for a 30-ton load is equivalen;t to US4 21/ton-mile. However, rates are not maintained unduly high because of insufficient capac- ity or difficulty in acquiring vehicles. It is conmmon for smaller truckers to have the purchase of their trucks financed by commercial companies for whom they carry freight. The rate at which the truck fleet has been growing in the past few years suggests that there are no restrictions on the expan- sion of the fleet to meet demand. 3.07 Permissible vehicle weights are governed by the Road Traffic Law and are set out in detail in the Road Traffic Regulations, 1938, as amended through 1971. The essentials of the Regulations, insofar as they apply to trucks and other heavy vehicles, are given in Annex 1 to this report. In summary, for trucks, including articulated trucks, permissible total weights, but not permissible axle weights, are specified; a maximum axle weight is, however, specified for public passenger vehicles. Vehicle weights in excess of those specified in the Regulations may, however, be authorized by the Minister (responsible for transport). The "penalty" for operating trucks in excess of vehicle weights normally permitted by the Regulations is E1.00 per annum for each 1,000 pounds authorized in excess of the limit permitted by the Regulations. 3,08 These Regulations are deficient in that they: (a) specify gross weights rather than axle weights; and (b) greatly undercharge owners of vehicles, heavier than those normally permitted by the Regulations, for the effect of overloading on the pavements.  - 8 - The problem, is one which does not permit of rapid or easy solution, since the licensing system is well entrenched. However, as a move in the desir- able direction, the Bank, during negotiations, obtained an assurance from Government that, within three years of the date of the Loan Agreement,or such other period as shall be agreed between the Government and the Bank, it will: (a) revise the Regulations to appropriately define permissible vehicle weights and axle loadings for all vehicles and (b) review the road user charges in relation to vehicles which are licensed to exceed normally permissible limits in order to see if the charges can reflect more adequately the effect of op- erations of such vehicles on the road network. B. Administration: The Ministry of Works 3.09 The planning, construction and maintenance of arterial and secon- dary main roads (Table 1) are the responsibility of MOW. The tecutnical work of MOW is organized under the Chief Technical Director on a funct4onal basis (Chart 1); thus the Ministry's responsibility for roads is shared among five directorates. The Directorate of Technical Services (DTS) is responsible for survey, design, estimates, specifications, procurement of contract work above US$11,000 which is financed from budgetary sources, land acquisition, traffic surveys, laboratory investigations and research; it has an establishment of 172, including 27 civil engineers. The Directorate of Electrical and Mechanical Services (DEMS) is responsible for electrical installations in Government build- ings and for all vehicles and equipment of MOW; it has an establishment of 742, including six mechanical engineers. Specifically, DEMS allocates and controls the funds for the operation, maintenance and repairs of all plants and vehicles allocated to the directorates of MOW. The Directorate of Maintenance (DM) is responsible for maintaining roads, bridges, buildings and drainage channels; it has a staff of 1,484, including 359 technical staff, but no professional engineers. The Directorate of Construction (DC) is responsible for execution and administration of all capital projects carried out by MOW and financed from the national budget; it has an establishment of 79, including four civil engineers. The Directorate of Major Projects (DMP) administers and controls externally financed projects. It has an establishment of 10, including five civil engineers. 3.10 The organizational structure of the MOW was overhaulled some nine years ago and is generally satisfactory. Although a separate entity respon- sible only for roads would be more efficient from the narrow viewpoint of the administration of the road system, there would be no justification for such a restructuring of MOW at this time. No difficulties arise from grouping of maintenance of roads and buildings within one directorate, since separate personnel are assigned to each work, and budgetary allocations and equipment are also separated. The relatively small scale of operations would, in any case, probably preclude a rational case being made for such a separation of functions. C. Road Planning and Financing 3.11 The road planning responsibility of MOW is exercised mainly by the Chief Technical Director assisted by DMP. However, the Government has normally relied on consultants to prepare major highway investments, first  - 9 - the UK Road Research Laboratory in 1962 and later LVI (para. 1.02). LVI recommended establishment of a Directorate of Planning, which would be re- sponsible for (a) economic evaluation of all transportation projects and for maintaining an adequate data base for planning and (b) development and imple- mentation of a national transport policy, but this recommendation has not yet been fully implemented by Government. However, the Government is presently recruiting staff to strengthen its highway planning unit in MOW. Additionally, within the recently established National Planning Agency (para. 2.13), there is a unit responsible for infrastructure planning, including transportation. Meanwhile, DMP is carrying out the planning function insofar as it relates to road projects to be externally financed. During negotiations, the Govern- ment assured the Bank that basic traffic and technical data will be collected on a continuing basis and that studies will be carried out as and when neces- sary for transport planning and policy formulation. 3.12 Annual estimates are submitted by MOW in November for the fiscal year commencing the following April. Authorized budgetary allocations are, however, sometimes received by MOW only in the following September. This slow budgetary process results in an inefficient programming of work, since directorates naturally tend to hold back during the first half of the fiscal year as an insurance against over-expenditure of allocations. 3.13 Road expenditures over the period 1965-1973 have been financed mostly (94%) with local funds through budgetary appropriations; external financing (6%) has been provided by IBRD (para. 1.01), CIDA and USAID. The Bank's participation, although small compared with total road expenditure, represented about two-thirds of external financing during the period. 3.14 Total expenditure on roads rose from US$10.3 million in 1965/66 to US$21.1 million in 1970/71, and to an estimated US$32.1 million in 1972/73 (Table 2). Expenditure on construction almost tripled over the period 1965- 1971, increasing from US$5.6 million to US$14.0 million; in the same period, maintenance expenditures increased from US$3.5 million to US$5.4 million. Currently, maintenance expenditures are about US$8.3 million per year. This substantial increase derives primarily from two factors: a US$1.4 million special labor-employment maintenance program, a result of Government employ- ment policy; and general cost and salary increases. Revenues from road users, although not specifically earmarked for road financing, have been consist- ently higher than total road expenditures (Table 3). 3.15 Jamaica's current road investment plans are mainly based on the work of LVI (para. 1.02). The firm's ongoing work (in effect, the second stage of the CIDA-financed studies) is likely to recommend construction of about 120 miles of arterial roads and 200 miles of secondary and parochial roads over 10 years. Government has provisionally planned for half of this program to be implemented during the period 1973-1977 at a cost of about US$29 million for the arterial roads program, and US$14 million for the secondary roads program, with external financing from IBRD and IDB. The Government contributions would amount to about US$22 million or about USS4.3 million p.a. over the five-year period, on the basis of 50% of foreign financing.  - 10 - 3.16 In addition to the above proposed program, Government, supported by a USAID loan of US$10.0 million, has already embarked on a US$16.8 mil- lion rural feeder road program for the construction of about 300 miles of such roads over the period 1970-1977. This program has been economically justified on the basis of increases in production from higher yields and extension of the cultivated areas, stimulated by improved access to markets. D. Engineering and Construction 3.17 DTS is responsible for all aspects of engineering (survey, site and laboratory investigation and design) of capital projects financed wholly from the budget. The standard and quality of the work appear adequate. DMP is responsible for similar services for projects financed externally and operates through the use of consultants. 3.18 Construction is carried out both by force account and by contract. DC, for example, carries out some work such as earthmoving and road base construction by force account, but paving works in general are executed by contract. International competitive bidding is used for externally-financed work; work financed internally is awarded to Jamaican firms either by com- petitive bidding or by negotiated contract (para. 3.19). The local capacity for road work comprises three firms specializing in asphaltic concrete pre- mix and about 20 firms capable of undertaking small scale civil works. 3.19 MOW has a practice of fragmenting road construction and improvement work into small lots; because of this practice, bidding becomes uneconomical and, as a result, contracts below US$11,000 are procured by negotiation. This has encouraged the development of a local small scale contracting in- dustry, but it has had an adverse influence on unit rates, which are much higher than in many other countries. LVI reported, for instance, that rates for typical road construction operations in Jamaica are 150-300% higher than those obtaining in eastern Canada, the reasons being mainly fragmentation of work, low total volume of work and low utilization of generally out-of-date equipment. The large road program proposed for the next five years may re- sult in a wider interest by both international and domestic contractors, leading to increased competition and a lowering of rates. E. Maintenance 3.20 The structure of the DM is shown on Chart 2. The structure at Area level is sound, but there is a noticeable imbalance in the span of control between Areas and Headquarters. Specifically, nine officers report to the Director of Maintenance who, additionally, is required to deal with a considerable number of claims, complaints and requests from the public in connection with the road network; thus, he has little time left for his pri- mary duties of planning and supervision of road maintenance. To help correct this imbalance, TPOS (para. 1.04) recommended the creation of an additional (professional) level, the County, in the structure of the Directorate.  - 11 - 3.21 The establishment of DM is sizable and is about 50% of all MOW personnel; however, there is no professional engineer in the Directorate (para. 3.09). At Headquarters, there are only eight staff in total, in- cluding clerical staff, which is insufficient to ensure planning, programming, costing and control of maintenance work. TPOS recommended the appointment in Headquarters of a senior administrative officer to deal with complaints and administrative matters on behalf of the Director, and an increase in clerical staff. The consultants also recommended that a senior professional member of the staff of DTS be given responsibility for forecasting and meeting technical requirements of DM. 3.22 The establishment of DM at Area and Parish levels is adequate. Each Area Senior Superintendent is responsible for two Parishes. His office is located at one of his Parish offices, and this Parish - because of his presence - is the responsibility of an assistant superintendent only; the other Parish in the area is the responsibility of a superintendent. TPOS recommended that assistant superintendents be upgraded when eligible, and be given full responsibility for their Parishes, thus relieving the Senior Superintendents from this duty for more effective supervision of maintenance in their Areas. 3.23 Each Parish has an allocation of basic maintenance equipment and vehicles. Most of the equipment is old and about 50% of the vehicles are over five years old; hence, repairs (which are carried out in the four DENS work- shops situated at Kingston, Richmond, Montego Bay and Mandeville) are fre- quent. The supply of spare parts is adequate, and time spent for individual repairs is not excessive. Nevertheless, because of the age of the equipment, availability is low, about 75% on average. To supplement available equipment, there is a considerable recourse to hiring; about 35% of haulage is done by hired trucks, and graders, traxcavators and bitumen distributors are hired for about 80% of the work. Utilization, both of departmental and hired equip- ment, is low, due to fragmentation and dispersion of work. 3.24 Maintenance work is carried out both by force account and by contract. Current practice is to contract nearly all asphalt resurfacing work and about 50% of resealing. Routine maintenance activities, such as grass cutting and drain cleaning, are generally performed on a piece- work basis in the form of "petty task" contracts limited to a maximum value of US$22 awarded to individuals. Area or Parish Superintendents can award contracts up to a maximum of US$11,000; the usual practice is to award con- tracts up to this figure by negotiation with contractors located in the Parish concerned. 3.25 Maintenance is programmed on a day-to-day basis to deal with the most urgent repairs (particularly patching of potholes and of damaged edges of pavement), most urgent resealing, and repairs of flood damage and of pavement failures. This leads to a scattering and fragmentation of work which, in turn, results in low efficiency of labor and equipment and in high cost of work. Moreover, due to delay in approval of annual budgets, there is a considerable variation in workload over the fiscal year; LVI reported, for instance, that employment of temporary labor in one Parish in 1968 varied  - 12 - from 200 in April to 2,210 in December. The fragmentation of work, non- competitive procurement and non-uniform workload result in a very high cost of road maintenance, reaching about US$3,000 per mile per year, 1/ overheads and cost of equipment included. TPOS recommended that the availability of equipment be increased by introducing preventive maintenance routines at Parish level and that a road maintenance program be prepared for each Parish for planning and control of maintenance work. 3.26 The preparation of programs and budgetary estimates for road maintenance is the responsibility, in the first instance, of the Senior Superintendents of the Areas. Allocations, when finally approved, however, tend to be appreciably less than the Areas' estimates because of reductions made during the review process in MOW and the Ministry of Finance. Intro- duction of rational planning and control of maintenance work would help reduce the cost of maintenance and would lead to more realistic budgeting and allocations. 3.27 Specifically as regards periodic maintenance of the paved roads (that is, asphaltic overlay), the current budgetary allocation is sufficient only for about 25% of the annual requirement of 200 miles of overlay. This has been the situation over recent years, and the backlog currently is so great that TPOS recommended an urgent program of resurfacing and resealing of about 1,500 miles of public roads; the consultants' economic analysis led them to conclude that 50% of the work should be completed within one year and 75% within the first two years, although, clearly, financial and physical constraints would preclude such a concentrated program. The consultants also recommended a technical assistance program of about 300 man-months to help implement the work and to train DM personnel in better planning and control. 4. THE PROJECT A. Project Description 4.01 The objectives of the project are to improve certain major roads in Jamaica; to reduce the backlog of maintenance on others; and generally to improve the structure, staffing and procedures of the Ministry of Works, insofar as they relate to maintenance of the country's road system. In de- tail, the project comprises: (a) Improvement of about 440 miles of paved main roads, generally by provision of an asphaltic overlay; (b) Maintenance of a further 250 miles or thereabouts by provision of asphaltic resealing; 1/ About half this figure would be considered adequate in many countries.  - 13 - (c) Certain minor works in conjunction with (a) and (b); (d) Provision of road maintenance equipment and a small quantity of workshop equipment and tools; (e) Restructuring of the DM and improvement in the staff- ing and procedures of the MOW, insofar as they relate to road maintenance; (f) Provision of technical assistance to aid in"the imple- mentation of (a) through (e) preceding. The project would be spread over about five years to ensure (a) an acceptable load on budgetary resources and (b) a broadly uniform load on the local contracting industry, which is expected to participate in a great portion of the civil works. B. Road Improvement and Maintenance 4.02 The proposed project provides for resurfacing with asphaltic overlay, generally about 1-1/2 inches thick, of some 380 miles of arterial roads (representing about 80% of the island's total mileage of arterial roads) and of some 60 miles of secondary main roads (Table 4 and Map). The road sections, selected on the basis of TPOS' work, are characterized by pavements which, although generally sound, are beginning to show signs of surface distress and are becoming increasingly susceptible to excessive wear by the relatively heavy traffic to which they are subjected. The asphaltic overlays proposed would help restore the riding quality of, and significantly strengthen, the pavements and would help maintain the integrity of the existing pavement structures. 4.03 An overlay of 1-1/2 inch thickness on average (and probably within the range of 1 inch to 2 inches) has been assumed for estimating cost. The specific thickness for each section would be determined more precisely by a rational design based on the present strength of the pavement, determined by deflection measurements, and the expected axle weight profile. To deter- mine this profile, a survey would be made by MOW, assisted by the consultants, to ascertain the axle load distribution of current traffic; this distribution would then be projected over a 10-year period (the life used in the economic evaluation), assuming a certain growth and composition of traffic. 4.04 The project also provides for resealing with a double asphaltic surface treatment of a further 250 miles of secondary main roads on which the pavements, while showing no obvious signs of structural distress, are becoming dry and are losing their waterproof properties. The proposed asphaltic surface treatment would reseal the pavement surfaces against the ingress of moisture and thus help conserve the pavement strength. While it would be possible to indicate in general terms which sections may be in need of resealing in the light of current conditions, bearing in mind that the work would be spread over about five years and that deterioration, for many reasons, may not proceed as currently envisaged, the roads to be resealed  - 14 - have not been formally listed in the project description; they should, how- ever, be agreed with Government from time to time during the execution of the project, in the light of road and traffic conditions then prevailing. The procedures by which the Government and the Bank would agree on the road sections to be included for resealing were discussed and agreed during nego- tiations. 4.05 The project additionally provides for limited minor works to be carried out in conjunction with this resurfacing and resealing work, with the aim of improving the worst of the geometrical features of the roads and the roadside drainage. The geometrical improvement envisaged comprises easing the sharpest bends and restoring the profile of the pavement where it is seriously out of shape. C. Provision of Road Maintenance and Workshop Equipment 4.06 The unsatisfactory condition of the basic equipment in the Parishes has been described earlier (para. 3.23). With the aim of improving the cap- ability of the 13 Parishes for routine maintenance operations, the project includes provision of essential equipment such as trucks, personnel carriers, graders, and loaders. This provision is equivalent to about US$200,000 a Parish, and is based on the recommendations of the TPOS study; details of the equipment are given in Table 5. The provision for workshop equipment and tools for the four DEMS workshops (para. 3.23) is also in line with TPOS proposals for introducing preventive maintenance for Parish maintenance equipment. D. Restructuring of DM; Improvement of Staffing and Procedures 4.07 The present structure, staffing and procedures of DM (paras. 3.20- 3.25) militate against the Directorate's efficient working. The project therefore includes appropriate measures to initiate action for improvement in all three aspects. 4.08 Regarding the structure of DM, TPOS recommended that the six Area offices be replaced by three "county" offices. However, while accepting the proposal to introduce three "county" offices, the Government considers that the Area offices should be retained. Since the Area offices are currently well organized and the Senior Superintendents carry out their work satis- factorily, there is a persuasive case for their retention. Nevertheless, the "county level" should be introduced by the creation of three new "county engineer" posts to be staffed by professional engineers (Chart 2). The effect of this change in the structure of the DM would be twofold: it would provide an opportunity to introduce professional engineers into line manage- ment and it would reduce the span of control of the Director, which is at present excessively wide. An assurance was obtained from the Government dur- ing negotiations that three "county engineer" posts would be introduced as a professional level with duties and responsibilities to be determined in agreement with the Bank and to be reviewed from time to time in the light of changing circumstances.  - 15 - 4.09 As regards personnel, the project envisages appointment to DM, and their retention, of four professional civil engineers, a senior administrative officer and an accountant. An assurance to this effect was obtained from Government during negotiations. Three of the four civil engineers would begin to act as "county engineers" (para. 4.08) and the fourth as technical assistant to the Director; the accountant would be responsible for the costing of all maintenance work and the senior administrative officer would be responsible for much of the administrative and public relations load currently borne by the Director. This additional staff, and indeed all staff of DM, would be trained by the technical assistance to be provided under the project (para. 4.14); from this point of view, the additional staff would be considered as counterparts to the experts supplied under the technical assistance. 4.10 The conditions of service and career prospects for the additional staff should be such as to attract and retain personnel of appropriate caliber. Since appointment of this additional staff would be crucial to the implementa- tion of the project, specifically to improvement of the DM, it would be made a condition of effectiveness of the loan. 4.11 Improvement of maintenance procedures under the project may be considered in the context of the Area/Parish level and the national level. At the Area/Parish level, the improvement most urgently required is the introduction of costing of work; a knowledge of the total cost (including, for instance, the running cost and depreciation of equipment) would provide an essential part of the feedback to Area/Parish management for proper plan- ning of work and control of labor and equipment. Costing of maintenance work would in no way be a substitute for, or conflict with, Government's normal accounting procedures; these latter would continue in DM as in all other branches and agencies of Government, but they do not enable the true cost of maintenance work to be determined since it is accounted for in more than one directorate of the Ministry (para. 3.09). Costing should be gradually introduced, possibly on a pilot basis initially, using the additional staff to be appointed to DM (para. 4.09), aided by the experts to be provided under the technical assistance. An assurance that Government would introduce costing of road maintenance operations within a time limit to be agreed with the Bank was obtained during negotiations. 4.12 Also at the local level, the practice of negotiated contracts (paras. 3.19 and 3.24). other than petty contracts below about J$ 500, should, in gen- eral, gradually be eliminated. With the introduction of costing and better planning, it should be possible to plan the work to be placed with local con- tractors so that it would be large enough to be attractive for competitive bidding. An assurance was obtained from Government at negotiations that the practice of negotiated contracts, apart from petty contracts or in exceptional circumstances, would be phased out within two years of the date of the Loan Agreement, or such other time as the Government and the Bank may agree upon. 4.13 At the national level, there is need for a comprehensive maintenance plan; such a plan, covering a five-year period, was proposed by TPOS but was incompatible in some respects with the physical and financial constraints of the country. A revision of the TPOS plan should logically take into account  - 16 - the true cost of maintenance operations; thus, its formulation should be deferred until some experience of costing is available. Moreover, the for- mulation of such a five-year plan would benefit from the technical assistance to be provided under the project. However, this assistance would be occupied to a large extent during the early part of the project period with the estab- lishment of planning and costing procedures, procurement and supervision of the civil works. A period of about six months should be sufficient for this preliminary work; an assurance was obtained from the Government that a com- prehensive five-year national road maintenance plan would be prepared in physical and monetary terms within one year of the date of the Loan Agreement or such further period as the Government and the Bank may determine. Meanwhile, annual budgetary allocations for road maintenance should be maintained in real terms at the present level, pending implementation of the five-year maintenance plan; an assurance to this effect was obtained during negotiations. E. Technical Assistance 4.14 The project includes provision for about 220 man-months of tech- nical assistance which, although less than the 300 man-months proposed by TPOS, is considered sufficient for this project; the disciplines and periods for which this assistance would be provided are given in Table 6. The tech- nical assistance team would help in: (a) planning and execution of minor works to be carried out in conjunction with the road improvement and maintenance; (b) preparation of procurement documents for equipment and civil works, and in evaluation of bids; (c) development of costing and work planning procedures including the work necessary in DEMS for equipment maintenance and costing; (d) introduction of the "county" concept in the structure of DM; (e) supervision of the civil works under the project; (f) development of a five-year national road maintenance plan; and (g) training of the DM personnel. The counterparts for the members of the team would primarily be the additional staff to be appointed to DM (para. 4.09). Participation in the foregoing work by the technical assistance team should automatically provide training for the counterparts and others of the staff of DM and DEMS. The Government has already initiated negotiations with the consultants TPOS for a contract to undertake the technical assistance assignment. Since this technical assistance would be essential for the successful implementation of the project, signature of the contract on terms and conditions satisfactory to the Bank would be a condition of effectiveness of the loan.  - 17 - 4.15 Training of the DM personnel in the improved procedures of road maintenance will be one of the main duties of the consultants engaged for technical assistance. The objectives of this program will be to train the new professional staff and the superintendents in costing, budgeting, plan- ning, organization, procurement and supervision of road maintenance and to train the technical personnel in Area and Parish units in elementary costing of works, in efficient organization and execution of works, and in supervision and administration of work by contract. Training will be carried out by the in-service method and by short courses. It will take place mainly during the first three years of the project, during which period the greater part of the consultants' input would be made. It is estimated that at least 25% of the experts' time or a total of about 50 to 60 man-months would be used for training purposes. F. Cost Estimates 4.16 Cost estimates for the project are given in detail in Table 7 and are summarized below: % Foreign J$ '000 US$ '000 Exchange Local Foreign Total Local Foreign Total Component I Asphaltic overlay /1 2,890 3,180 6,070 3,180 3,500 6,680 52 Asphaltic resealing /1 1,500 1,100 2,600 1,650 1,200 2,850 42 Minor works in connection with the above /2 1,700 - 1,700 1,870 - 1,870 - II Purchase of equipment - 2,180 2,180 - 2,400 2,400 100 III Technical assistance 200 870 1,070 220 960 1,180 81 IV Contingencies 946 1,109 2,055 1,040 1,218 2,258 54 Total (in round figures) 7.240 8,440 15,680 7,960 9,300 17,260 54 Say (millions) 8.0 9.3 17.3 /1 Including allowance for restoration of profile. 7/2 Mainly ditches, bends,etc.  - 18 - 4.17 The cost estimates for asphaltic overlay and for asphaltic resealing have been based on the TPOS estimates which the consultants prepared, using current contract rates in Jamaica; preparatory work has been estimated at about US$2,750 per mile. The cost of equipment has been based on the c.i.f. cost Kingston of the equipment listed in Table 5. The cost of technical assistance has been based on TPOS' estimates. The bases for the contingency allowances are given in Table 7. 4.18 The foreign exchange component of asphaltic overlay has been as- sessed at about 52%, on the assumption that the work would be undertaken by foreign contractors. However, the subdivision of the work (para. 4.22) may result in some of it being undertaken by local firms, in which case a small amount of local financing would result. The foreign exchange component of asphaltic resealing has been assessed at 42% on the assumption that this work would be undertaken by Jamaican contractors. The foreign exchange component of technical assistance has been assessed at 81% on the basis of the recent experience in the TPOS study. G. Financing and Disbursement 4.19 The proposed Bank loan would finance the foreign exchange component of the project, estimated at US$9.3 million equivalent, except to the extent mentioned in paragraph 4.18, should some of the work be undertaken by local firms. Local costs would be met from budgetary allocations. On the assumption that the technical assistance team would be operational before signing of the Loan Agreement, retroactive financing for this item, from April 16, 1973, estimated at no more than US$120,000, would be required from the proposed loan. 4.20 The disbursement from the loan account would be made on the follow- ing basis: (a) for asphaltic overlay, 52% of the contractor's bills; (b) for asphaltic resealing, 42% of the contractor's bills; (c) for purchase of equipment, 100% of the c.i.f. cost Kingston; (d) for technical assistance, 100% of the foreign exchange cost. The projected disbursements through the project period are indicated in Table 8. Surplus funds remaining in the loan account on completion of the project would be cancelled, unless needed for concurrent work related to the project and/or feasibility studies approved by the Bank for further investments. H. Execution 4.21 Implementation of the project would be the responsibility of the Ministry of Works acting through the Chief Technical Director. The technical assistance team would assist in all aspects (para. 4.14).  - 19 _ 4.22 The asphaltic overlay would be carried out by contract following international bidding in accordance with the Bank's Guidelines for Procurement; the work would be bid in two tranches of about US$3 million each, and sepa- rated by a period of two years, to spread the load on the budgetary funds and to ensure effective supervision. The details and schedule of procurement were agreed with the Bank. Each tranche would consist of a number of lots, and bidders would be allowed, consistent with their capacity, to bid for any com- bination of lots. An assurance was obtained from Government during negotiations that: (a) prior to bidding the overlay work, the strength of pavements to be overlaid would be determined, and an axle load survey of present traffic would be made (para. 4.03) so that the overlay could be designed rationally. The technical as- sistance team would help in the design of the overlay and preparation of the bidding documents, and in supervision of the work; (b) the contracts for the overlay would include restoration of the profile of pavements where these have become dangerously deformed. 4.23 The asphaltic resealing would be scattered over the secondary main roads throughout the island and spread over about a five-year period. The nature of the work makes it unlikely that it would be attractive to firms not already established in Jamaica; procurement would generally be in accord- ance with the Bank's Guidelines, except that the work would be advertised only in Jamaica. The details and schedule of procurement were agreed with the Bank during negotiations. 4.24 Prior to commencement of the asphaltic overlay and resealing, the worst of the geometric features (dangerous horizontal bends, sharp vertical curves, etc.) of the roads involved would be removed by DM (para. 4.05). An assurance to this effect was obtained at negotiations and the procedure to be followed by the Government and the Bank for defining such work agreed upon. A further assurance was obtained from the Government that, for all lengths of road to be overlaid or resealed, roadside drainage, where deficient, would be improved during the period of the project by provision of (a) adequate sur- facing to, and drainage of, shoulders; and (b) longitudinal ditches of ade- quate section and depth to drain the pavement structure. 4.25 Procurement of equipment would be through international competitive bidding, in accordance with the Bank's Guidelines; the procedure and schedule for procurement was agreed by the Bank. Bidding documents would stipulate that successful bidders would arrange for an adequate supply of spare parts through local commercial representatives. The bulk of the equipment would be procured during the first half of the project, leaving about 25% for a second procurement, probably in the third year. This phasing would prevent a large arrival of equipment at one time and would provide flexibility regarding the type of equipment that may be required in the light of experience gained dur- ing the first two years of the project.  - 20 - 4.26 Technical assistance to help in all aspects of the project would be procured by the Government under terms and conditions acceptable to the Bank. The counterpart personnel would basically be the additional staff to be provided in DM (para. 4.09). Signature of the technical assistance contract as a condition of loan effectiveness (para. 4.14) would ensure that this essential element would be available from the inception of the project. 5. ECONOMIC EVALUATION A. General 5.01 The proposed project would improve both the physical condition of the road network and the organization directly responsible for maintaining it (DM). Physically, it would benefit all classes of road from the local Parish to the arterial road; from an organization viewpoint, it would affect all levels of DM, from the Parish superintendents and the road gangs they control to the Director. 5.02 The physical impact of the project would be evident in three ways: from the provision of equipment for day-to-day maintenance; from the reseal- ing of about 250 miles of roads; and from the resurfacing of a further 440 miles, these latter including most of the island's arterial road system. As regards DM, the project would have an impact on administrative procedures, particularly those relating to costing; on the structure of the organization; and on its staffing. Determination of the true costs of maintenance opera- tions would provide all levels with a management tool not currently available; it should lead to more effective maintenance and, hence, either to a reduc- tion in the current cost of maintenance or, more desirably, to a greater main- tenance effort for the same expenditure. 5.03 The equipment to be provided would chiefly affect 2,000 miles of secondary main roads which are scattered through all 13 Parishes of Jamaica. Adequate maintenance of such roads - an essential link in the farm-to-market system - is required for the development of internal production or,where such development has already taken place, to ensure that it would not slow down because of a deterioration in the road system. B. Asphaltic Overlay 5.04 The effect of the overlay would be two-fold in that it would, at the same time, make the roads stronger and improve riding conditions. The road sections selected (Table 4) are among the heaviest trafficked in the country; counts have been taken both by MOW and consultants over the past 10 years (paras. 3.03 and 3.04), and from these and other sources, ADT and traffic growth rates have been derived for the economic evaluation. 5.05 Specifically, traffic counts were taken over a period of five or seven days by TPOS in late 1972, and the figures were checked with those derived from LVI's single-day counts in June 1972. After adjusting for  - 21 - seasonal variations, it appears that ADT on the arterial roads considered in the project varies between 3,400 and 500 and that on the secondary main roads from 1,300 to 500. Details of current traffic composition are given in Table 9. 5.06 From the counts over the last 10 years, it appears that traffic growth has varied by type of route (bauxite or agricultural), and even with- in the same type route, depending on the volume of traffic and the area served. The economic evaluation has included estimates of future normal traffic on the roads to be overlayed by considering annual growth rates and composition of traffic over a 10-year period (the assumed economic life of the project works). For this 10-year period, growth has been considered in two five-year stages; the figures adopted (Table 9) are 5.0-9.0% for cars, 5.0-8.7% for light trucks, 4.5-8.5% for medium trucks, 3.0-8.5% fosr heavy trucks and 3.2-6.0% for buses. The sum of the products of these growth rates and the traffic on each road section matched the overall traffic growth rates deduced by TPOS. These projections of growth are aieceptable considering that improvement of the network would possibly result in a higher annual vehicle mileage than the present one. No induced traffic has been considered in the economic evaluation on the assumption that transport de- mand on the project's roads is relatively inelastic to changes in vehicle operating costs. 5.07 Quantifiable benefits arising from the asphaltic overlay and con- sidered in the economic evaluation are: (a) reduction in vehicle operating costs due to improved riding surfaces; and (b) prevention of increased vehicle operating costs that would occur if the roads were allowed to deteriorate further. Quantification of vehicle operating costs has been based on the concept of "Road Class" devised by TPOS. This is essentially a furiction of surface roughness; definitions of the various Road Classes and of the operating cost in each Area are indicated in Table 10. The evalvuation of benefits arising from improved riding surfaces is based on the assumption that all roads to be improved by asphaltic overlay will be raised to Class 1.25. Typical operating savings from this improvement are as; follows:  - 22 - Savings in J cents/veh mile assuming pavements raised to Class 1.25 (Table 11) Vehicle Existing Road Class Type 1.50 1.75 2.00 Car 0.6 (7%) 1.0 (11%) 1.4 (14%) Medium Truck 2.6 (11%) 5.0 (18%) 6.2 (22%) Large Truck 3.3 (11%) 6.8 (19%) 8.9 (24%) Note: Figures in brackets indicate reduction on existing operating costs. 5.08 Quantification of benefits resulting from the avoidance of deter- ioratioin of pavements has been based on the (conservative) assumption that existing operating costs would be maintained for the five years commencing 1973 and would thereafter increase at a rate of about 5% per annum for the next four years, then 10% per annum for the next three years (to about 1985, that is, to the end of the 10-year economic life assumed following the end of construction in 1975). 5.09 Overall, about 60% of total benefits are attributable to preven- tion of increased operating costs and 40% to reduction in costs consequent upon better riding conditions. 5.10 The economic cost used in the evaluation includes the cost of asphaltic overlay and an allowance for the necessary restoration of profile which would be required prior to such work (Table 4). The economic cost for unskilled labor has been taken as 50% of actual wages because of the high rate of unemployment in Jamaica (para. 2.03), although even without this "shadow pricing" of the cost of labor, the work is amply justified. 5.11 The estimated net benefits discounted over a 10-year economic life give a most likely value for the economic return greater than 50%; the first year benefits on average are higher than 30% of this part of the project cost. A sensitivity test applied to measure the response of economic return to lower initial traffic, lower traffic growth, no increase in vehicle operating cost on existing roads, higher construction costs and operating costs higher than assumed on the improved roads indicates that, even with these variations, the overall economic return, 27% (Table 12), and the first year benefit ratio (14%), remain acceptable. 5.12 The economic return calculation has taken into account the likely employment effects of the project (para. 5.10). On the basis of data supplied by local contractors, the additional employment generated by the improvement program would provide up to about 1,000 additional jobs over the project period. This figure does not, of course, represent the whole employment impact, since there would be secondary effects arising from expenditures made by beneficiaries of incomes generated by the project.  - 23 - C. Asphaltic Resealing 5.13 The proposed asphaltic resealing would help preserve pavements which, although currently sound, are in danger of becoming porous and vul- nerable to damage from entry of surface water if no action is taken to re- seal them. Investment in resealing now would thus produce benefits from deferment of investment in reconstructing such pavements. This element of the project has been evaluated by comparing the cost of resealing now with the present worth of reconstructing the road if it were allowed to fail. Specifically, if the resealing cost (about US$12,000 per mile) were less than the present cost of reconstruction in a future year, the proposed invest- ment in resealing now would be justified (Table 13). 5.14 It is not possible to determine exactly, for each road section, when failure would take place without resealing. For evaluating purposes it was first assumed that failure would occur four years hence and that reconstruction then, including rehabilitation of the base course and asphaltic overlay, would cost about US$30,000 per mile. Since reconstruction then would imply an economic life longer than the 10-year period used in the project analysis, a present worth of the salvage value of the reconstructed road in year 10 has been estimated to arrive at the net cost of reconstruction in year 4. The analysis indicates that it would be economically advantageous to reseal now, rather than to do nothing now and reconstruct in four years' time; the economic return for resealing now is about 19%. If road failure were assumed to take place not in four years' time, but in two years' and six years' time, the economic returns on resealing now would be 25% and 14% respectively; obviously, the sooner failure would take place, the more jus- tifiable the proposed resealing. The possibility of failure beyond six years from now was not considered because it would imply that the pavement is currently in good condition. These economic returns can be considered conservative in that they do not take into account the increase in vehicle operating costs in the "without case" as the road pavemLent progressively breaks up. D. Road Maintenance and Workshop Equipment 5.15 The benefits from the provision of road maintenance and workshop equipment have been assessed by considering the annual benefits that would be required to produce an economic return of 10% on the cost of such equip- ment (US$2.4 million). Assuming an average life for the equipment of seven years, the annual benefits required would be about US$500,000, or about US$250 per mile per year. If, on the roads to which the investment would relate, there was an ADT of about 200 (equivalent to about 73,000 vehicles per mile per year), this would imply benefits in the form of savings in vehicle operating costs of USJ 0.3 per vehicle mile (Jamaican e 0.3 per vehL-- cle mile, approximately). These savings represent only a few percent of cur- rent vehicle operating costs (Table 10), and it is obvicusly reasonable to assume that such a modest improvement in operating costs can be made as a result of the improved maintenance from the new equipment. The investment in the new equipment is therefore justified.  - _24 - 6. AGREEMENTS REACHED AND RECOITMENDATION 6.01 During loan negotiations, thle Government agreed to the followinhi- (a) revision, within three years of the date of the Loan Agreement. or such other period as shall be agreed between the Government and -lie Bank. of the Road Traffic Regulations (1) to appropriateLy iefine permissible vehicle w:eights and axle la. 'n ;s for all vehic.le4 and (2) to review thie road user charges in relation to vehicles which are licensed to exceed normally permissible limits in order to see if the charges can reflect more ade- quately the effect of operations of such vehicles on the road network (para. 3.08): (b) collection on a continuing basis of basic traffic and technical data, including the conduct of studies, as and when necessary, for transport planning and policy formulation (para. 3.11); (c) appointment and retention within the Directoratc of Maintenance of three qualified engineers as "county engineers', one pro- fessional civil engineer, a senior administrative officer and an accountant, with duties and responsibilities to be agreed with the Bank and to be reviewed from1 time to time in the light of changing circumstances (paras. 4.08, 4.09 and 4.10); (d) introduction of costing of road maintenance operations within a time limit to be agreed with the Bank (para. 4.11); (e) phasing out of the practice of negotiated contracts, apart from petty contracts or in exceptional circumstances, within two years of the date of the Loan Agreement or such other time as the Government and the Bank may agree upon (para. 4.12); (f) preparation of a comprehensive five-year nationali road main- tenance plan expressed in monetary and physical terms wJithin one year of the date of the Loan Agreement or sticu1 further period as the Government and the Bank may determioe (para. 4.13); (g) provision of annual budgetary allocations for road maintenance at the present level, in real terms, pending implementation of the five-year maintenance plan (para. 4.13) (h) preparatory work necessary for the design of tho asphaltic overlay and the restoration of pavement profile (para. 4.22); (i) elimination of thie worst of the geometric features of the roads to be improved prior to commencement of the road improve- ment work (para. 4.24); (j) improvement of roadside drainage on the roads to be improved (para. 4.24).  - 25 - 6.02 Conditions for loan effectiveness will be (a) the appointment of the professional staff mentioned in paragraph 6.01 (c) preceding and (b) the signature of a contract with a firm of consultants acceptable to, and on ,terms and conditions agreed by, the Bank for the technical assistance. 6.03 The project provides a suitable basis for a loan of US$9.3 million equivalent. On the basis of the average useful life of asphaltic overlay and resealing and the length of the project duration, the appropriate term for the loan would be 15 years, including a five-year period of grace. M4ay 8, 1973   JAIMAICA HDAD IIXROVEIENT A1iD MAINTEI.IANCE PROJECT Road Network / (1972) (miles) Bridle Paved Gravel Path ARTERIAL ROADS - Island Belt Road I 377 - Kingston - Annotto BayJ 23 PUBLIC ROADS - Spanish Town - St. Ann's BayS 28 - - h61 - Savanna-La-Mar - Luce @/ 23 - _ - Kingston - Port Roya 10- - 2619 SECONDARY MAIN ROADS 1605 553 - 2158 9883 PARISH COUNCIL (in all thirteen parishes). 131h -4302 1648 7264 ROJADS k 3380 4855 8235 (Suitable for vehicular traffic) .2/ EExcluding private roads 9883 g/ ThRunning generally around the periphery of the island 3/ The main north-south cross country roads r Round Kingston Harbour and to Kingston International Airport. Source: Jamaica Transportation Study (LVI) 1970 TPOS Road Maintenance Study 1972 JTar'rl t rv 197 3  JAMAICA iIDAD IMPIDVEM&4NT AID Ur4TEMANCI :-.1JECT Expenditure on Roads 1965-1973 (In US$ millions) Financing Jamaica Fiscal Year Construction Maintenance Administration TOTAL Foreign li Local 1965-1966 5.6 3.5 1.2 10.3 - 10.3 1966-1967 6.6 1.5 1.2 12.3 0.1 12.2 1967-1968 7.8 4.4 1.6 13.8 0.4 13.4 1968-1969 8.6 4.2 1.4 14.2 0.8 13.4 1969-1970 9.9 4.6 1.7 16.2 0