Jordan - Highway Project

Document of Thi Wnrld Rnnk FOR OFFICIAL USE ONLY Report No. 1762 IILE CPY PROJECT PERFORMANCE AUDIT REPORT JORDAN FIRST HIGHWAY PROJECT (CREDIT 262-JO) October 18, 1977 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of1 I ... t .....r o .fic .- -o .msss "Saj InnOv e rswise uVsmcluSmu wasnout 'world -HanK athIorlzation. I  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT JORDAN FIRST HIGHWAY PROJECT (CREDIT 262-JO) TABLE OF CONTENTS Page No. PREFACE PRATECT PE RnMANr ATIT MEMORANnTIM (PTrwu-rTrUTr PROThET PERAMAMr ATTDTT RASTC DATA SHEET ATTAMENT. DDTrwrtr AMDTWTT0J PDADT Le AH LLG U LLLLMe TT Qa -r Daco-un.. A 1 1 ec LL JL riUUdidLL .HU '.d d LeL TTT. nl.1 roet 1 *eri a A . LV. roject lmplelleLLLUM HU %O,L tL' V. Institutlonal uevelopment A.19 VI. Economic justification A.1u VII. The Role of IDA A.!!i VIII. Conclusions A.!! Annexes 1. Actual and Expected Project Execution 2. Comparison of Actual and Appraisal Estimates of Project Costs 3. Average Annual Daily Traffic Volumes 1969-1993 4. Vehicle Operating Costs 5. Appraisal and Revised Estimates of Economic Rates of Return Map This document has a restricted distribution and may be used by recipients only in the performance I at thii.r ameI diute Ite contents may not otherwise be disclosed without World Bank authorization. of their *- offi - ----- - ________  PROJECT PERFORMANCE AUDIT REPORT JORDAN FIRST HIGHWAY PROJECT (CREDIT 262-Jo) Preface Thin ranort nraents a narformance audit -f the Trdan First Highway Project for which Credit 262-JO in the amount of US$6 million was closed- fillv eidhirnd in DePrtmhpr 1974. Tt rnn-QitQ nf n mm (Highlights), prepared by the Operations Evaluation Department (OED), and a Project Conmption Rponrt (PCR), prpanred by the anksl VMVMA Regional Off4ce 'J.lM LLMO LVieWeU LLU CUI L dC8ILLLOL LLM &LLdibi dLU rLtCD.LUCL Reports, and has found that it seems to cover reasonably well the issues relevanL Lu te n o LIL oLUmiO11ponents as weLL as to tle economic justification of the project. OED also has found that the PCR seems LU ve internally consistent. Furthermore, comments made oy OED on an earlier draft of the PCR are reflected in the present version. On the basis of this limited review process, OED has accepted the analysis and conclusions of the PCR and has summarized its main findings in the memorandum (Highlights). Projects staff collected data for the PCR during the final supervision mission of July 197/6. OED staff did not, however, visit Jordan. The draft audit was sent to the Government for comments in the normal course, and those comments have been incorporated in the attached final version.  PROJECT PERFORMANCE AUDIT MEMORANDUM (HIGHLIGHTS) JORDAN FIRST HIGHWAY PROJECT (CREDIT 262-JO) Loan 262-JO for US$6 million was intended to finance the foreign exchange cost of a US$8.7 million highway project. The project components were construction of a new four-lane highway (18 km) between Amman and Zarqa, the two largest population centers east of the Jordan River, including supervision by consultants (92% of project cost); purchases of road mainte- nance equipment (5%); and an urban transportation study of Amman (0%). A special feature of this project is that bids for the civil works contracts were evaluated before the project was presented to the Bank's Executive Directors so that, in the difficult economic climate of the Middle East, the prevailing uncertainty regarding contract prices could be resolved and the economic viability of the project confirmed. Despite this action, the road construction component was completed two years later than expected and a 30% cost overrun resulted. The principal reason for the delay was inefficiency of the contractor (a British/Jordanian joint venture). Other contributory factors were slowness in arranging for the clearing of obstructions (buildings,. military installations, and a strategic radar cable) and relocation of utilities from the right-of-way. These difficulties were not unique to this project. Several other projects involving construction of roads passing through densely populated areas have shown delays because of problems with right-of-way and relocation of utilities. 1/ The delays in obtaining the right-of-way, together with delays in contractor mobilization because of closure of the Jordan/Svria border, gave rise to a substantial claim paid to the contractor; this claim is the main reason for the cost overrun (about 78% of the 30% overrun). Desnite the delays. cost overrun, and traffic materialization about 30% lower than forecast, the re-estimated rate of return is higher than expected (19% as against 17%). The reason lies in the substantial in- crease in vehicle operating cost savings as a result of the higher real price of oil and increasing congestion in the transport corridor. The rand mAintnPnc snninment wqq dplivprped nn time and the Amman Urban Study was completed on schedule. The civil works recommended in that study are under ernnctriitinn with financina frrym tho Arah Fund for Economic Development. 1/ Project Performance Audit Reports on: Jamaica First Highway Project, Loan 408-JM (Report No. 807); Finland Third Highway Project, Loan 723-FI (Report No. 1197); and Yugoslavia Fourth Highway Proiect, Loan 678-YU (Report No. 1632). - 2 - The following points may be of particular interest: Successful consideration of the urban development aspects of the project (paras. 3.03, 7.01, and 4.15-4.16), but note that some urban develonment asnpcts recommended in the study included in this project were not pursued in what might have become a fnllnw-un nrnirft fnr TnA finnra hsrnA -iffiriont TnA funds were not available (para. 4.19); Need for a more critical review of joint venture agreements (narAsQ 4.02 and R-ng)* and Dea-s n,arcase by, -loness in the n claring of obsctruions4 -, and relocation of utilities from the right-of-way (paras. 4.07 and 7 02)9/ PROJECT PERFORMANCE AUDIT BASIC DATA SHEET rnnnAarW wrflmnwrourTAv flln ro. Innflonre 49 1 1 KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate Total Project Cost (US$ million) 8.7 11.7 Overrun (%) - 34 Credit Amount (US$ million) 6 Disbursed ) 6 Repaid to ) August 31, 1977 0 Outstanding to ) - 6.00 Date Physical Components Completed 10/73 12/75 Proportion of Time Overrun (%) 27 mo. 100% Ennmic Rate of Return (excluding passenger time savings) 10 16 (including passenger time savings) 17 19 OTHER PROTECT DATA Original Actual or item Plan Revisions Est. Actual First Mention in Files - - 4/02/69 Government's Application - - 3/69 Negotiations - - 3/1-5/71 oard Appuval - - u11it71 Credit Agreement - - 6/28/71 Effectiveness Date -- . 8/16/71 Closing Date 12/31/74 - 11/76 Borrower Hashemite Kingdom of Jordan Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Amman Penetrator Road (Financed by Arab Fund) MISSION DATA Month, No. of No. of Date of Item Year Weeks Persons Manweeks Report Preappraisal 10/69 1 3 3 11/19/69 Appraisal 4-5/70 3 2 6 6/04/70 Supervision I 7/71 2 1 2 8/24/71 Supervision II 11/71 1 1 1 11/13/71 Supervision III 4/72 1 1 1 5/31/72 Sunervison TIT 7/72 1 1 n 9/r /72 Supervision V 12/72 1 1 1 1/08/73 Supervision VI 4/73 1 1 1 5/29/73 Supervision VII 7/73 1 1 1 11/12/73 Supervision VIII 5-6/74 2 2 4 7/15/74 Supervision IX 3/79 1 1 1 4/09/75 Supervision X 10/75 1 1 1 10/17/75 Supervision XI 7/76 2 2 4 7/22/76 Total 14 19 Country Exchange Rates Name of Currency Dinar (JD) Year: 1971 JD1 = US$2.80 1972 JD1 - US$2.80 1973 iDl = US'93.23 1974 JD1 = US$3.2 - 3.0 1975 JD1 = US$3.02  ATTACHMENT PROJECT COMPLETION REPORT JORDAN: FIRST HIGHWAY PROJECT (CREDIT 262-JO) I. INTRODUCTION 1.01 In 1969 the Government of Jordan requested a credit from the (18 km) and related consulting services, the purchase of road maintenance equiipment nd an ur-ban transportation study of Amman.* This -4ha proJ - ject was identified by a Bank/IDA mission in early 1969 as one of those 'A- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ &= U .LOL . L LfJ.* Aj a, uuuac .u C &. LLU UC C VCLLLA.U j integrated into the country's long-term development. The project was a .LVaacu A. L L.LILay ALIV. VWLLt, LU LLt L.LV.L U.LLULU CLL WI.LA LUU place in the summer of 1970, negotiations were deferred until it was ascetaiueu tt Lue pruject coulu e carrica out unaer reasUnaDly UL.Lb- factory conditions. On June 28, 1971 the Association approved the Credit lul-JJ, Iu Lne amounc o - o.u miion, closed in January 1977. I.vAnu wa- ne first nank Group operation in Jordants transportation sector. The Project Completion Report is based on information contained in the Project Appraisal Report (No. PTR-64a, May 21, 1971) and a review of Bank files, including supervision and progress reports of the project. II. SECTOR BACKGROUND 2.01 Jordan's transport system comprises highways, railways, ports and airports. The main transport corridor is north-south oriented and connects Amman with Syria to the north and with Gulf of Aqaba to the south. The corridor is served by both highway and railway. There is only one seaport, Aqaba, located at the northern tip of the Gulf of Aqaba, an arm of the Red Sea. Air transport is significant primarily for international passenger traffic. 2.02 The major centers of population and domestic production are relatively close to each other and therefore only limited domestic trans- portation is required. The situation is quite different for imports and exports, which generally have to be transported over long distances. 2.03 Highways are the main mode of transport. The total length of the highway network at the beginning of 1975 was about 5,700 km of which about 4,100 km was paved. In general, the highway system adequately con- nects all populated parts of the country and is, by and large, adequate to meet present transport demand. However, the main highway connecting Amman with Syria is becoming increasingly congested due to rapid growth in traffic. In addition, with the improvement of the Amman-Zarqa project road, the pressure of traffic on the Amman metropolitan area has increased, as anti- cipated, but suitable ways and means of dispersing traffic from the road into the Amman urban network have been studied and relief routes are under construction. - A.2 - 2.04 The railway system comprises 544 km of standard gauge line and links the phosphate mines at Ruseifa and El Hassa northwards to Syria and Lebanon and southward to Aqaba. The newly completed 116 km line from Hattiya to Aqaba is expected to add a new dimension to the rail transport in Jordan and will cater mainly to phosphate exports. 2.05 The opening of the Suez Canal is likely to cause a significant increase in export and import traffic through the port of Aqaba--Jordan's sole access to the sea. The volume of exports, mainly phosphate, is ex- pected to rise sharply with the implementation of the on-going integrated project for phosphate mining, rail transport and port facilities. The bulk of the transport sector investments under the Five Year Plan (1976-80) would be designed to cater to the mining, export and manufacturing Proiects which form the backbone of current plan programs. III. PROJECT PREPARATION AND APPRAISAL 3.01 Early in 1969 a Bank economic mission visited Jordan with one of its ohiectivpq to idpntifv nnARih1P nrniprfq for Rnnk Grniin finnnina_ Tn the transport sector, Government suggested three projects to the Bank with the nrnopt nf fnurth alsn (the Ammnn-7aqan hichranv sbnhu TTSATII, which financed the economic technical studies and final engineering, not be able to asis in t-hp rn.qt*- of ronstrur-ion- The three projets n-nnQati were: (i) the Ramtha (Syrian border)-Amman-Jerusalem highway; (ii) the Ma'an- Rumni ju,nction seton o-f the~ A-mnr-A-abha 14hihway- n"A (-ijj) f-he- 7n -, Al Haditha highway connecting Jordan with a then newly completed highway from 1Qra -(Ad Arba The- UTCATpiin _-. the --- - -, A----7,r-- project was quickly clarified. Because of that agency's commitments in US contractors in such a small project with little follow-up prospect, __ LU LLLJ W'JL- - L J L_ . LFL U L L I LJ L. t- J t b iU.ling tLe Amman-Zarqa highway. 3.02 Because it lies on Jordan's principal northern highway and would tu e two largest population centers in the COuntry, onen inade- quately served by a narrow winding two-lane road, Bank interest then focussed on this route 0nap IRD 3078R) as being the most urgently needed of the four initially suggested by Government. A dialogue between Government and the Bank ensued in which the technical details of the project were mutually agreed during the course of its final engineering. Of the other three projects, the Ramtha-Amman-Jerusalem route is the subject of an on-going long-term improvement program, the Ma'an-Rum Junction section has been reconstructed, while the Zarqa-Azraq portion of the road proposed to Al Haditha has been completed. All three projects have been financed by Government. 3.03 The October 1969 preappraisal mission confirmed the scope of the civil works element of the project, but on the basis of its preliminary discussions with Government, recommended that the road be extended a further 3 km into downtown Amman to provide better distribution of traffic from it. The preappraisal mission also recommended including: (i) the foreign ex- change costs of economic and technical studies of other roads for possible future Bank group financing in the project; (ii) the foreign exchange costs - A.3 - of n road mnintAnanr st-idv hv onn.iitant-. in nrder t-n imnrnvp th- ornaniza- tion and methods of maintenance; and (iii) a provision for the purchase of rnnd1 mnnpnnrP Priinpnt itiontifiel froim the roadl maintepnnce Qtuidr1v However, because of the urban planning issues (see para. 4.16) involved in bildMinga n 'Am Iri p%rt-pno-nnnfih p4onroject- roadl inton Ammon tHeP April 1970 appraisal mission recommended that construction of this extension should be deferred -n~amni-ra plan focussine, on. the traffic dis- tribution problems of the new highway could make firm recommendations. The initially prpoe Junct-on of the new h-ghLway with a s.4x-lane city street was foreseen to have sufficient capacity until about 1978, by which time agreed with this proposal, and the estimated foreign costs of the proposed study were ic~luded ±1n tL1e pjJct. SpeclL coJvenantsL LL L[IC tLCU.LLMC= ment obligated Government to the undertaking of this urban study with particular timing, and agreeiug WLLn LIe Dan a L.MeUCaDe IUL L[ne CUuLtLUCL1UM of the agreed additional traffic facilities. 3.04 The costs of a brief study to identify shortcomings in the road maintenance organization and its operations were deleted from the project as USAID had volunteered to finance this element. Howver, provision for the purchase of some urgently needed items of maintenance equipment was retained. 3.05 A unique feature of this project was the receipt and evaluation of bids for the civil works contract before the project was presented to the Bank's Executive Directors. Because of the unsettled political climate in the Middle East at the time the project was conceived, it was considered that contractors would hedge their bids to take account of any difficulties and delays they might encounter. As it was difficult to assess the extent to which such hedging might occur, the Bank agreed with the Government to bid the project contract prior to Board presentation to determine whether or not it would fall within the funds allocated and that it would remain economically viable at the bid price. 3.06 Twenty-six contractors applied for prequalification, of whom thirteen were accepted. Twelve of these contractors requested bidding docu- ments and eight bids were submitted. The nationalities of the contractors who bid were diverse: Britain, Italy (2), Jordan, Korea, United Arab Republic, Yugoslavia, and one British/Jordanian joint venture. The low bidder to whom the contract was awarded was the British/Jordanian joint venture whose price, at JD 2.19 million (US$6.19 million) exceeded the initial tentative estimate of US$5.0 million for the work by 24%. Bids ranged from US$6.19 million to US$10.1 million. A t IV. PROJECT IMPLEMENTATION AND COST A. Road Construction 4.01 Construction of the Amman-Zarqa Highway commenced on schedule on July 11, 1971 and should have been completed 27 months later In October 1973. However, the work was not finished until December 1975 after over- of the original contract period 68% of the work had been finished (Annex 1). act an arbitLatio Livunal ruLu vU LHe duUHL Un t CIdim LU Ut aWaLUU to the contractor (mainly in respect of delays in contract mobilization due to closure of the Jordan/Syria border (para. 4.03) and access Lo tne hign- way's right-of-way), the Ministry granted him a very generous time extension of 24 mouts (Lu uctover 1, 197J) LU allow nim to complete the work. At October 1, 1975, the work was 98% complete. Payments made to the contractor trom that date were reduced by the penalty imposed in accordance with the conditions of contract. 4.02 The principal cause of the delay was the inefficiency of the con- tractor. Tne Government prequalified the British/Jordanian joint-venture, Farrans/General Enterprises for the work on the basis of Farrans, the British partner's, participation. Yet Farrans contributed so little to the work that the Minister of Public Works, in March 1972, wrote to them insisting that they provide without delay adequate contract financing and management. This letter stimulated a temporary spurt in the efforts of the joint-venture. Unfortunately, Farrans appeared to have secured sufficient contracts in the United Kingdom so that their work in Jordan did not receive its fair share of attention. The Bank on several occasions drew Government's attention to the unsatisfactory progress of the road construction; Government and the consulting engineers repeatedly pressed Farrans to carry its share of the workload, but with no success. The brunt of the work was accordingly left to the Jordanian partner whose prequalification on his own for the project had been refused. Lack of equipment and adequate working capital hampered the local partner throughout the work, which progressed at a very slow pace. It was also unfortunate, that knowing the contractor's commitments and limi- tations, Government agencies subsequently approved the award to him of at least three major contracts: a Royal Palace in Amman, a large sewerage con- tract in Amman, and a new international airport to the south of Amman. As was to be expected, with his efforts so widely dispersed, his work on the Amman-Zarqa road proceeded slowly. 4.03 However, although the organization and operations of the contractor left much to be desired and contributed most to the delay, other factors also contributed to the slow execution of the project. Two other causes of delay were unforeseeable; they were: (i) the closure of the Jordan/Syria border at a ritical time of contract mobilization, and (ii) the increase in scope of the work due to the need to realign the project road at Ruseifa in order to allow the company exploiting the deposits of rock phosphate to ex- trcrt thp nhosphate material more comnrehensivelv and Pfficipnt-1v L - n z Prinr t-n t+_-, nwrtl r)f tHo n-ri-e- t- t'-nt-rn-1- t-hp. In-q1 r-rn-rqrtnr was completing his work on the construction of Aqaba Airport in the south of Jordan. On ad uf he immately fr aba he was ne ojt. However, personnel and equipment immediately from Aqaba to the new project. However, - A. 5- some equipment and imported construction materials such as steel reinforce- ment and metal culvert pipes ordered for the work were in transit via the port of Beirut and thence by road through Lebanon and Syria to the job site. Political events in the Middle East escalated in the meantime resulting in the closure in July 1971 of Jordan's border with Syria. The re-routing of the contractor's supplies from Beirut via the Cape and the Red Sea to Aqaba for delivery was a major set-back to the contractor's mobilization, as the first shipments of the diverted materials were not received until December 1971. nearly 6 months after contract award. 4.05 To avoid some delay, the larger drainage structures, where prac- ticable, were redesigned in reinforced concrete instead of using the delayed corrugated steel nines. The Ministry of Public Works (MPW) also offered to assist the contractor by hiring him such equipment as could usefully be emnloved on the works until his dlavd Pnninment arrivd on qit-. T- is not recorded to what extent the contractor took advantage of this offer, but from thp tonor of t-ho nrvuicino enallant's prnorace rannrtc, n can infer that no Government equipment was hired by the contractor. How- wirar i- ic~ r1m frn t-hao nncti-nntla 'ranrta ndt the repovrts of BnkI supervision missions that the contractor was consistently under-equipped and furthermore often diverted resources fromn th14s projeCt to his other con- tracts. 4.06 One main design change was made after contract award. In order its Ruseifa open-cast workings which straddled the project road, the Company asked that the alignment of the new highway be moved oU where ue extracton had been completed. The realignment, over a length of 6.6 km,was estimated to cost an additional JDvI4U,UUU (aDuo 0?JJU,UUuj. Ine auitional wurk involved was another reason for the delay in contract completion and its increased cost. 4.07 Government also contributed to the projects aelay by not arrang- ing sufficiently in advance for clearance of obstructions and relocation of utilities from the right-of-way, giving the contractor cause to claim for delays in access to the project site. The Bank raised this issue with Government on a number of occasions by letter and supervision missions, but some obstructions remained for excessive periods. Among the most notable was one 12-inch water main which was relocated in November 1974, two and a half years after the engineer first notified the concerned authorities that it should be removed; another water main was never moved, and the temporary junction between the project highway and King Abdullah Street in Amman had to be redesigned to accommodate it. Some of the items which had to be moved were buildings, army installations, water mains, sewerage mains and pipes, power lines, wells, and a strategic radar cable. 4.08 The need for two additional crossings of the project road (at 8 km and 15 km) became apparent during the course of its construction. The MPW instructed their consultants to design them as grade-separated interchanges - A.6 - and tendered their construction separately from the main project contract. IIIUY ULt! tXpeCLeU LU Ue LI_LsLIeU Lin 1I0. 4.u Unauthorized crossings of te pruJect rUou have posed P ebI uum hazards to the high-speed traffic using it. To prevent such access in fu- ture, a project to fence the entire right-of-way is being implementeU. Government is meeting the full costs of the interchanges and the right-of- way fencing. 4.10 The design consultants, de Leuw Cather international/Jouzy and Partners (US/Lebanon) also supervised the project contract. They maintained the agreed personnel strength on site and performed satisfactorily. When, from time to time, redesign was needed, the consultants carried it out promptly. They were also responsible for preparing monthly progress reports on the work for the Government, who in turn sent copies to the Bank. The reports were well prepared, concise, and contained the information the Borrower and the Bank needed to monitor the project. B. Road Maintenance Study and Road Maintenance Equipment 4.11 The USAID financed the review of MPW's road maintenance organiza- tion and its operations (para. 3.04). After agreeing appropriate terms of reference with Government and the Bank, USAID arranged for implementation of the study by the US consultants Harris-Western (a joint venture) as Amendment Number 1 of July 22, 1971, to that firm's contract with Government for a feasibility study of the Ramtha-Amman-Jerusalem Highway. 4.12 The study was executed satisfactorily, a draft report of January 1972 being followed by the final report of August 1972. 4.13 One important requirement of the terms of reference was that the consultant should prepare a special report detailing MPW's equipment needs (replacement and supplementary) and identifying which items would be the most urgently needed. On the basis of this special report, road maintenance equipment to a value of US$531,150.57 was procured from the Credit by inter- national competitive bidding. All equipment ordered was delivered on time without mishap and is in productive use. 4.14 The major recommendations of the road maintenance study have been accepted by Government and are being implemented by MPW. Budgetary alloca- tions for road maintenance have increased since the consultant's study. C. Amman Urban Study 4.15 In accordance with Section 4.02 of the Credit Agreement, the Government contracted for an urban study of Amman to the extent needed to identify the best means of distributing traffic within the city from the new Amman-Zarqa highway. Such a study was needed because at the time of appraising the highway project it appeared evident that the city streets to which the new highway would link would be congested by about 1978. - A.7 - five consulting groups and, on the basis of an evaluation carried out in LJLUU~L± L/ in WIL"ch. Ban1LK stf ad s s i sC.L L eU , Le DJanLl..L '.Lcnsul t- an ar! Bro Roughton and Partners and Skaarup and Jespersen in association with the locaL -u1Uiig iiLIU LfD~L W~~~~ U J.L LL LUy andU s4gned a oclconsuIting firm, Arabtecu, were se'lecteu 'ur tue stuuy aUu _Luc contract with the Lord Mayor of Amman. Their report was reviewed and com- mented OH Dy Government ano tne Dan', anu in a s L.LLuai LULU ecummenue Wi) construction of a four-lane urban "penetrator" road as a con- tinuation of the original project road from its present termina- tion at the Mahatta intersection on the outskirts of Amman, along the north side of a comparatively narrow valley to an !at-grade" intersection at Raghadan in the heart of downtown Amman (3.2 km); (ii) the canalization within a large double-box culvert of the Seil stream which presently meanders eastward along the valley, and on top of which the "penetrator" road would be sited (2.4 km); (iii) the construction of the north-east quadrant of a four-lane inner ring road (5.6 km) commencing at Nasr Intersection, about halfway along the east-west "penetrator," which would serve to divert traffic away from the downtown area; (iv) the construction of other comparatively minor street works to improve access from the new road to King Abdullah, Al Yarmoq and Al Hadadah streets, and a connection to the Firas circle; (v) the planning and construction of the facilities needed to re- locate about 400 squatter families and 100 small businesses from the "penetrator" right-of-way; (vi) the planning and detailed engineering needed for the redevelop- ment of the "penetrator" corridor; (vii) the preparation of a long-term development plan for Amman to serve as a framework for future investments in infrastructure, traffic facilities and traffic management; and (viii) the development of the institutional capability to implement such a plan. 4.17 During a May/June 1974 IDA preappraisal mission for the "penetrator" project, the foregoing content of the next proposed project was discussed and agreed with Government, although problems of project financing had still to be resolved. The detailed engineerine of the "penetrator" road had pre- viously been completed at the time of the first highway project, but re- quired revision in the light of the study findings. This work together with the engineering of Items (ii), (iii) and (iv) was awarded to the local con- sultant, Jouzv and Partners who had nromised substantial completion by September 1974. Project appraisal by IDA was therefore scheduled about that timp- RiihiArt t-n Ri(g"ifiracnt nrnvrPRR bnvina hppn madp in 1nnd Pynronriation- - A.8 - 4.18 However, prior to the IDA appraisal, this project was deleted from the lending program because of IDA's substantial involvement in other sectors. The Arab Fund who were intending to co-finance agreed to meet the IDA share of project costs, and the UNDP expressed interest in financing the Amman Urban Study (Item vii). 4.19 A mission from the Arab Fund appraised the project in March 1975, but as Government had taken no action on Items (v), (vi) and (viii) above, which were project aspects to which the Bank attached greatest importance, the project comprised the civil works elements only. Without Bank parti- cipation, a unique opportunity for the planned systematic and orderly develop- ment of this central area of Amman may well have been lost. 4.20 A contract for the civil works was awarded in January 1976 to an Italian/Jordanian joint venture contractor, and the work is expected to be completed by the end of 1978. Thus Jordan will have comolied with the Section 4.02 of the Credit Agreement requiring the undertaking of an urban qt-iidv nnd rnnqt-rictinc additional traffin fnrilitiPR haRpd on thp Atudv's findings. D. Costs 4.21 The attached table (Annex 2) compares the final project costs with those estimated at the timp of annrnin1 T- tha rna nf the rnd construction element of the project, the appraisal estimate of costs is in fqr- q firm bkidi piriep Withl theP conti4ang lmnt o untt vr runs and price escalation added, the road construction should have cost TUS47 13 million. Tc final cost, hower was US$9 1 3 m -4114- an in- crease of 30%. A large proportion of the extra cost arises from the sub- stantial claim ,pad tor the-. contracto fTT!CA 1 1 4114n. O"er~ fatos most of which were unforeseeable, which contributed to the increased cost \ "~L 1W'JK r JI L LLLL.L LCIL1L. CLL LXU .Li O.LUJJ ,UVk kL1i) Cust or sewer relocation JD 38,500 kiv) Cost of relocating other utilities JD 25,UUU (v) increased cost of steel iD 38,000 (i) Additional vehicles for consultants' supervision and laboratory equipment JD 42,500 (vii) Miscellaneous JD 7,500 JD320,500 The additional costs were met from Government's budget. 4.22 Supervision costs were much higher than anticipated, largely because of the longer construction period. The Amman Urban Study cost approximately what was estimated for it. - A.9 - V. INSTITUTIONAL DEVELOPMENT 5.01 The responsibility for administering the transport system is divided between two Ministries: the Ministry of Public Works, responsible for the road network, and the Ministry of Transportation, responsible for road transport, the railroads, Aqaba port and aviation. In 1975, the Roads Law was enacted thereby expanding the responsibilities of the Ministry of Public Works to cover all matters related to roads in the Kingdom, in- cluding rural and feeder roads, and ensuring maximum safety in the use and maintenance of roads. Investments, in transport, as in other sectors, are coordinated by the National Planning Council. 5.02 Important constraints to Jordan's transport development in recent past have been the insufficient development of institutional facilities, inadequate coordination of transport policies and uneven performance in the formulation, preparation and implementation of transport projects. Short- age of technical personnel, accentuated by their emigration, has had an adverse impact on the technical performance of the Ministry of Public Works. The manpower and physical resources of the executing aRencies and local contracting industries have also been severely stretched. 5.03 Despite many difficulties, significant progress has, however, been made in formulating integrated nroiects like nhnnhate rok nrndnetion and exports, related rail transport, port and shipping facilities where inter- sectoral coordination is nartinularlv imnortant. The Ministry of Transpor- tation intends to conduct studies aimed at organizing road transportation. Fuirher, thei Aqab a Rn41mvo r~n--rnn" iina "a at-h1joinA to nsr sat- isfactory quality of railway management with particular emphasis on export ca-ro. A TNDTP-fiaced proj[=^-- 4Ia ~aon -,.n t,A --.. -n, nr..4Am specialized staff to strengthen the capability of the Ministry of Public Wors t stdy,design. and implement road work. Tann-f h ehIIn required for the operation and maintenance of the newly constructed Hattiya Aqaba Ua4 TUrrr 4 U -?1 4 Ln L A a critical element in the development of the transport sector. The train- ~ a.a&A ,J.JA .L1O.QL~.. .L.L. U ~ ~ ~L. A. L ~LL L.L J.L L L k~a..L of the newly constructed railway, which has to start from scratch. There coordination amongst the Jordan Phosphate Mines Company (both from the prouuctLon auu sales dp autm ) Lut-e raiways, LUe pOrt auu nhe trues so that all links in the production-export-shipping chain are properly inte- grateu anu moutureu. Tu ti enu, a coiuuittee furmeu vy Lhe representatives of Jordan Phosphate Mines Company, the Aqaba Railway Corporation, and the Aqaba A=&-L LL LIO Ha = CeLL =O Lco L.LOL LU LU I-UU.LULLLCL LLIC LUCULHLr LLaLLOULLML.LULL, and unloading of phosphate. - A.10 - VI. ECONOMIC JUSTIFICATION A. General 6.01 The main objective of the project was to relieve congestion and reduce the cost of transport on the most vital traffic artery linking Amman with Zarqa--the two largest cities in Jordan. The Amman-Zarqa road serves about 1/3 of Jordan's total population and more than 90% or all sizeable industrial establishments on Jordan's East Bank. The railroad, which par- allels the road, is an insignificant factor in the transport of passenger and freight traffic between the two cities. B. Traffic 6.02 The average daily traffic volumes on the project road as estimated at appraisal, and from actual counts and latest estimates are shown in Annex 3. The appraisal methodology for projecting traffic was also used in the "Revised Estimate" columns. The average actual traffic on the pro- ject road is about 30% lower than the anticipated volume, though the overall growth of traffic on the Amman-Zarqa corridor is about 20% higher than the anticipated volume. Apparently, the appraisal assessment that 75% of the total traffic on the corridor would use the new highway was on the high side. In 1976 more than 10,000 vehicles (about 50% of the total traffic), mostly local traffic, were plying on the old road. However, the new road has not been in operation sufficiently long for driving habits to stabilize and it is possible that more traffic will divert to the new road over time. C. Economic Benefits/Costs 6.03 The principal benefits derived from the project are savings in vehicle operating costs and passenger time. Vehicle operating costs are shown in Annex 4. as estimated at anoraisal and as revised on the basis of updated operating cost information available for the year 1976. The figures show that the nnperating coqts (excluding nassenger time) of dif- ferent types of vehicles have increased by about 100-130% from 1971 to 197A Thic i"Pvanca ic nrtly dua to inflaton (nhout 4O'l i nnrtlv to thp marked producer price increases in petroleum products, and also because pected. The economic costs of construction of the project road has in- has also taken about five years instead of about two and a half years envisaged at tILe time~ of apisL.~al . T1 nLL the exJpos actual project costs and estimated benefits in current prices of each year nave Deen adjusted to eliminate tLue LLiAe.Ly itfect of iutLILation. D. Economic Return 6.04 The rates of return of the project road sections are snown in Annex 5, as estimated at appraisal and as revised on the basis of updated traffic and vehicle operating cost information. The Annex shows that the revised economic return (ER), excluding benefits due to savings of passenger time, works out as 16.2% compared to 10.0% in the appraisal report. if tne A 11 FCLIeiLs CuUe toE SavJJngs 0. passenger L3me are RCLUCeU, Une ZA LUcreabes LU 19.5%, compared to 17.0% at appraisal, confirming that the project is economically justified. Ine ER, both at appraisal and as revised, ex- cludes important benefits such as decongestion savings on the old road. 6.05 In spite of some reduction in the anticipated traffic level on the new Amman-Zarqa highway, and higher cost of construction compared to the appraisal estimate, the project remains economically viable mainly on account of increased operational cost savings in real prices and the overall high traffic growth on the Amman-Zarqa corridor. VII. THE ROLE OF IDA 7.01 In preparation and appraisal of the project the IDA was instru- mental in ensuring the effective utilization of the project road's capacity and the fuller realization of its future benefits with an appropriate solu- tion for traffic distribution within Amman. The Association insisted that in view of the urban development aspects of the project, the Borrower should also improve or build the additional roads needed to provide congestion-free dispersal of traffic within Amman from the project road, resulting in the construction of the "Penetrator Road" and "tnner Ring Road" as envisaged in the Project Credit Agreement. 7.02 The project did encounter some unforeseen difficulties such as unexpected needs of crossing traffic at two points, relocation of utilities from the riRht-of-way. unauthorized accesses to and crossings of this high- speed road. In these situations, the Association staff maintained a frank and close relationship with the staff of the Borrower and provided tech- nical assistance and advice to minimize the adverse effect on the project. Government then initiated the construction of the two new grade-separated interchanges and fencing of the right-of-way, contributing greatly to the new road's safety. 7_01 At the A onninn1 citaaaavinn noVt-cable attn"tion" wna nas given by the Ministry of Public Works to improving the collection and analvqiR of t-rnffir Q1tntir nna hpttar project prapmrnti4nn VIII CONCT.TTTON 8.01 The Bank was innovative in having the- pro4ect- contract- tendered and the bids evaluated before finalizing the Credit Amount so that the pre- A..L.~ L. LLJ t- aU.LLIS Li..LLLLa%LL_L 0 jJL.Lt_C,-2 LL LLC ULL0CL;_LC~U L1LLLLL.L East would be resolved. 8.02 However, with the Credit signed and the contract awarded, the Bnaunk, was obvigeu ou watcu the project's tCusuly slow progress Luhougu double the planned construction period. Unable to intervene directly in the employer/contractor relationship, Utere was lttle ntat Bauk stall could do to speed progress, except for the advice repeatedly given by supervision missions and in letters to the Government. The contractor appeared to have influence sufficient to insulate himself from the - A.12 - 11LLLn D tLry's cen ue U LU Utain LC WeLU UL UGoheL 'Lrge cULLALce T hC obvious lesson to be drawn from this experience is the need for a critical review u any joint venture Vgreement DeLween a strOng LUreign cuuractu and a comparatively weak local firm who wish to prequalify for a Bank financed civil works contract. However, even if the review is most pains- taking and an acceptable joint venture agreement results, the administra- tion of the subsequent contract is solely a matter for Government, and the Bank is on the sidelines, with, in this case, the results described in the foregoing report. 8.03 In spite of the 30% cost and 100% time over-run, the project re- mains economically viable with an ER of about 16.2% (excluding benefits due to savings in passenger time), mainly on account of increased operational cost savings and the overall high traffic growth on the Amman-Zarqa corridor. The traffic on the old road, which now caters to local needs, still con- tinues to be heavy (about 10,000 vehicles per day); congestion would therefore have reached an intolerable level without the newly constructed highway which has already attracted a large proportion of the through traffic from the old road. PROJECT COMPLETION REPORT JORDAN: FIRST HIGHWAY PROJECT (CREDIT 262-JO) Actual and_Expected Project Execution Completion of Work % of Work Completed Contractor/Consultant Bid Contract Work by Expected Completion Project Component and Nationalty_ Receift Award Bega Actual Expected Date Amman/Zarqa Road Farrans/General Construction Enterprises 4/24/71 7/11/71 7/11/71 12/75 10/11/73 68% UK/Jordan Auman Urban Study Carl Bro,Roughton/ 1/ Skaarup and Jesperson/ 11/72 5/10/73 5/10/73 10/74 2/10/74 100% Arabtech Denmark/Denmark/Jordan 1/ Consultants' Draft Final Report presented on time. Presentation of Final Report not made until 10/74 because of need to take Government and IDA comments into account and time needed to undertake some additional work not foreseen in original Terms of Reference. ANNEX 2 DRTJET COMDTPLTTO WEDOKT JORDAN: FIRST HIGH&F PROJECT (CREDIT 262-JO) -Erson u Actual and -P-a. Estimeus of Pruje wASe (us$ '000) Appraisal Estimate Final Costs Foreign Association' Component Participation Participation Local Foreign Total Local )Total i ( Road Construction 2,170 4,030 6,200 65 1,780 3,544 5,324-11 65 Costs after 6/30/74 1,453 826 2,279 36 - (when IDA partici- narin se radaA) Contractor's Claim Award 1.712 - 1.712 Cubtotal for Road Construction 4,945 4,370 9,3152 Purchase of Road Mtce. Equip. - 500 500 100 - 531 531 100 Sup. of Const. 170 420 590 70 480 798 1,278 62 Amman Urban Study 80 320 400 80 93 301 394 76 Subtotal 2,420 5,270 7,690 69 5,518 6,000 11,518 52 Continanen 2R 730 1LO - - TOTAL 2,700 6,000 8,700 69 5,518 6,000 11,518 52 1/ Amount actually disbursed against construction as at June 30, 1974, after which IDA participation was reduced. 2/ Actual value of construction for which 1/was disbursed (JD vs8u,9IZ.5). 3/ Final cost is JD 3.21 million. The US$ nuivalent taken nanunt of the Anllar devalunrion frn JD 1 - US$2.80 to JD 1 = US$3.23 after 2/28/73, at which date US$1.748 million had been disbursed against construction. Also included in the "Local" and "Total" costs in the JD 570,000 (US$1.712 million) awarded as a claim to the contractor. 36% if credit were not to be exhausted before completion of construction. ANNEX 3 PROJECT COMPLETION REPORT JORDAN: FIRST HIGHWAY PROJECT (CREDIT 262-JO) Average Annual Daily Traffic Volumes 1969-1993 Appraisal Estimate Revised Estimate Year Cars Taxis Trucks Buses Otheral- Total Cars Taxis Trucks Buses OtheralT Total 19692 2,400 3,710 1,970 620 1,720 10,420 2,400 3,710 1,970 620 1,720 10,420 19733/ 3,430 3,807 2,326 454 860 10,877 2,477 3,715 1,725 74 824 8,815 4 1978 6,045 6,131 3,418 731 860 17,185 4,400 4,600 3,000 100 900 13;000 1983 8,883 8,204 4,363 978 860 23.288 6.700 6,800 4,300 300 900 19,000 1988 13,051 10,979 5,568 1,309 860 31,767 10,000 10,000 5,500 600 900 27,000 1993 19,175 14,693 7,106 1,752 860 43,586 13,500 13,000 6,700 900 900 35,000 1/ Mostly military traffic. Actual volumes on old road. 3/ For 1973 and later traffic expected on new highway. 4/ Arrtal volumes on new highway in 1975 Source: Consultants and Association PROJECT COMPLETION REPORT JORDAN: FIRST HIGHWAY PROJECT (CREDIT 262-JO) Vehicle Operating Costs (JD per 100 A, excluding taxes) i/ X" Appraisal Estimate7 Revised Estimate Including Excluding Including Excluding Passenger Passenger Passenger Passenger Time Time Time Time r- Existing r9ad 3 1.350 2.271 2.850 3.817 New road .V 1.200 1.661 2.260 2.744 Savings 0.150 0.610 0.590 1.073 % Saving 11% 27% 21% 28% Taxis Existing road 3/ 1.399 1.583 2.950 3.143 New road 4/ 1.130 1.222 2.130 2.227 Savings 0.269 0.361 0.820 0.916 % Savings 19% 23% 28% 29% Trucks Existing road 3.641 3.641 8.410 8.410 New road 3.262 3.262 7.280 7.280 Savings 0.379 0.379 1.130 1.130 X Savings 10% 10% 13% 13% Buses ExisLtj. LVaU 3.323 4.688 6.830 8.263 New road 6/ 2.964 3.761 6.100 6.937 Savings 0.359 0.927 0.730 1.326 % Savings 11% 20% 11% 16% 1/ At 1971 price level 2/ at 1976 price level; vehicle operating costs are estimated to have increased by about 40% due to inflation 3/ passenger cars and taxis: 40 km/per hour average speed M; pa ser caLrs and tais8. kmpe hos ur average speed 5/ trucks and buses: 35 km/per hour average speed 6/ trucks and buses: 60 ka/per hour average speed Source: Consultants and Association ANNEX 5 PROJECT COMPLETION REPORT JORDAN: FIRST HIGHWAY PROJECT (CREDIT 262-JO) Appraisal and Revised Estimates of Economic Rates of Return Rate of Return (%) Appraisal Ex-post Estimate Estimate Excluding Passenger Time 10.0 16.2 Including Passenger Time 17.0 19.5 ':2ource: Ap. U\FJ In -ii I ~ LJ. L  c12 C 9 - ~ . 7' .1 -- )~ ~ 7 0 N0