Haiti - Third and Fourth Highway Projects : Haiti - Third Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2996 PROJECT PERFORMANCE AUDIT REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) May 27, 1980 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Table of Contents Page No. PREFACE ii PROJECT PERFORMANCE AUDIT BASIC DATA SHEET iii-iv HIGHLIGHTS v PROJECT PERFORMANCE AUDIT MEMORANDUM I. Background 1 II. The Project 2 III. Project Results 3 IV. Points of Special Interest 5 V. Conclusions 7 ATTACHMENT: PROJECT COMPLETION REPORT I. Introduction 9 II. Project Preparation and Appraisal 10 III. Project Implementation and Costs 12 IV. Economic Reevaluation 17 V. Institutional Developments 19 VI. The Role of IDA 21 VII. Conclusions 21 TABLES 1. Comparison of Costs: Original vs. Amended Project 23 2. Appraisal Estimates of Final Cost of Civil Works Compared with Actual C6sts 24 3. Appraisal Estimates compared with Actual Costs of Projects 25 4. Comparison of Appraisal Estimates with Actual Traffic Counts 26 5. Appraisal Estimates Compared with Completion Rates of Return 27 6. Appraisal vs. Actual Estimates of Vehicle Operating Costs 28 MAP - IBRD 13293 (PCR) - Haiti Third and Fourth Highway Projects This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - PROJECT PERFORMANCE AUDIT REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Preface This report presents a performance audit of the Haiti Third High- way Project, for which Credit 478-HA in the amount of US$10.0 million was approved by the Board on May 16, 1974, and of the Fourth Highway Project, for which Credit 556-HA in the amount of US$20.0 million was approved by the Board on June 5, 1975. The credits for the Third and Fourth Projects were fully disbursed and closed on March 31, 1979 and May 31, 1979, respectively. The report consists of a Project Performance Audit Memorandum prepared by the Operations Evaluation Department (OED) and a Project Completion Report (PCR) prepared by the Latin America and the Caribbean Regional Office. The memorandum is based on the PCR, discussions with Bank staff, and a review of project files and the transcript of the Executive Directors' meeting which considered the project. The PCR is based on information ob- tained during project supervision missions, on consultants' progress reports and on data contributed by the Government; no separate completion mission was made by Projects staff, nor was a mission made by OED staff in connection with this performance audit. In general, the audit memorandum accepts the principal conclusions of the PCR. The memorandum, however, expands upon a number of issues which include the difficulties in forecasting construction costs; road maintenance problems; and the road design standards. The draft audit was sent to the Borrower in the normal course; how- ever, no comments were received.  - iii - PROJECT PERFORMIANCE AUDIT BASIC DATA SHEET HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-RA AND 556-HA) KEY PROJECT DATA Credit 478-HA Credit 556-HA Original Original Item Plan Actual Plan Actual Total Project Cost (US$ million) 7.76/1 13.43 26.30 26.85/2 Overrun (%) - 73 - +2 Credit Amounts (US$ million) 10.00 10.00 20.00 20.00 Disbursed )- 10.00 - 20.00 Cancelled ) as of - - - Repaid ) 03/31/80 - - - Borrower's Obligation ) - 10.00 - 20.00 Date of Project Completion 06/77 03/79 06/78 01/79 Proportion Completed by Above Date (%) 95/3 100 99 100 Proportion of Time overrun (%) - 58 - 19 Economic Rate of Return (%) 20 25 35 41 Financial Performance Satisfactory Good Institutional Performance Below Expectations Below Expectations Cumulative Estimated and Actual Disbursements (US$ million) Credit 478-HA Credit 556-HA FY75 FY76 FY77 FY78 FY79 FY76 FY77 FY78 FY79 Estimated 3.2 7.0 10.0 10.0 10.0 6.0 16.2 20.0 20.0 Actual 4.2 7.1 9.5 10.01± 10.0 7.2 15.7 18.6 20.0 Actual/Estimated (%) 131 101 95 100 100 120 97 93 100 OTHER PROJECT DATA Credit 478-HA Credit 556-IIA Original Original Item Plan Revisions Actual Plan Revisiuns Actual First Mention in Files or Timetable - 04/72 - 01/74 Government's Application 04/72 - - 10/74 Negotiations Date 04/15/74 - 04/15/74 04/75 - 04/0710/75 Board Approval Date 05/18/74 - 05/16/74 06/75 - 06/05/75 Credit Agreement Date 06/05/74 - 06/06/74 06/75 - 06/11/75 Effectiveness Date 09/05/74 - 09/09/74 09/11/75 10/10/75 10/08/75 Closing Date 12/31/77 06/30/78 03/31/79 12/31/78 03/31/79 05/31/79 09 /29/7 8 12/31/78 Borrower Republic of Haiti Executing Agency Secretairie d'Etat des Travaux Publics, Transports at Communications Fiscal Year of Borrower October 1 to September 30 Follow-on Project Name Fourth Highway Fifth Highway Credit Number 556-HA 807-HA Amount (US$ million) 20.0 15.0 Credit Agreement Date 06/11/75 09/06/78 /1 Because of higher than anticipated costs, the highway reconstruction was reduced from 148 km to 78 km. Appraisal cost of US$13.29 million was prorated. /2 Including USS1.17 million for the Limbe bridge added to project after appraisal. /3 Construction was substantially completed by November 1976, but road signing and minor repair work delayed final completion until March 1979. /4 An amount of $3,400 was not disbursed until early FY79. - iv - MISSION DATA Credit 478-HA Month/ No. of No. of Date of Item Year Weeks Persons Manweeks Report Identification 06/72 1 2 2 06/21/72 Preparation 05/73 1 1 1 06/06/73 Preparation 07-08/73 2 1 2 09/21/73 Appraisal 09-10/73 2 3 6 11/16/73 Appraisal (update) 01/74 1 2 2 02/20/74 Subtotal 7 13 Supervision I 06/74 1 1 1 07/10/74 Supervision II and Preparation Fourth Highways 07-08/74 2 1 2 08/22/74 Supervision III and Appraisal Fourth Highways 12/74 1.5 2 3 01/28/75 Supervision IVLl 07/75 2 1 2 08/12/75 Supervision V.L 12/75 1 2 2 01/30/76 Supervision VL/2 03/76 1 1 1 04/06/76 Supervision VIT/l 07/76 2 2 4 08/23/76 Supervision VIII/2 02/77 2 1 2 06/02/77 Supervision Iy/2 03/77 1 1 1 04/07/77 Supervision X/2 10/77 1 2 2 06/23/78 Supervision XL/2 02/78 0.2 1 0.2 06/23/78 Supervision XIL2 07-08/78 1.5 1 1.5 08/17/78 Supervision XIIL/2 01/79 1 1 1 03/07/79 Subtotal 17.2 22.7 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Gourde (0) Year: 1973 (Appraisal) - 1979 (Closing) Exchange Rate: US$1 = V5.00 /1 Combined mission for Third and Fourth Highway Projects. /2 Combined mission for Third, Fourth and Fifth Highway Projects. - v - PROJECT PERFORMANCE AUDIT REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Highlights After an interval of almost ten years during which the Bank Group did not lend to Haiti because of the country's internal difficulties, lending was resumed in 1973 when the Association financed the Third Highway Project followed about a year later by the Fourth Project. The purpose of the proj- ects was to reconstruct about 250 km of highway from Port-au-Prince to Cap Haitien which, because of inadequate maintenance, had become impassable during rainy periods. The improvements were expected to lead to a substantial reduction in transport costs. The projects also called for some institutional improvements and included technical assistance for transport planning and organization and to help small contractors. Assistance for road maintenance was initiated by USAID in 1973. Reconstruction work was largely completed as planned, but some technical modifications and additions were necessary (para. 9). In terms of unit prices, the Third Project had a cost overrun of about 70% and almost half of the works had to be postponed to the next project (para. 7). The actual cost of the Fourth Project was in accordance with appraisal estimates. Civil works were completed largely on time but due to extension of consul- tants' services, the Third Project had a time overrun of about 60% and the Fourth Project took about 20% longer because of additions to the civil works. Traffic on most road sections has substantially exceeded forecasts, and the projects' reestimated economic justification is higher than anticipated, with an economic return of 25% and 41% for the two projects respectively against 20% and 35% at the time of appraisal. Introduction of institutional improve- ments was slower than anticipated (paras. 10-11). Points of particular interest are: - major cost overruns and a resulting change in scope of the Third Project could have been avoided by delaying Board pre- sentation until after bid opening; however, this would have postponed the project until the next fiscal year (paras. 16- 17, 24); - considerable time can be required to build up a new road main- tenance organization (paras. 19-21); - in cases where maintenance of a newly constructed road may not yet be fully satisfactory, the project should from the start take account of this risk when deciding on the struc- tural standards of the road and/or through alternative main- tenance arrangements (paras. 22, 25). u PROJECT PERFORMANCE AUDIT MEMORANDUM HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) I. Background 1. Haiti is a relatively small country, covering some 27,700 km2, on about a third of the island of Hispanola, which it shares with the Domini- can Republic. With a population of about 4.8 million, however, Haiti is one of the most densely populated countries in the world (about 170 inhabitants per km2). It is also one of the poorest: per capita GNP was only about $230 in 1977, which is the lowest in the Western Hemisphere. Some 80% of the population live in rural areas and depend on agriculture for their livelihood; rice and corn (the principal foodcrops) account for about 40% of the value of agricultural production, while coffee and sugar (Haiti's main exports) account for another 30%. The urban population is concentrated in the capital city, Port-au-Prince, which has a population of over 600,000, and in a number of smaller centers with populations of less than 50,000. 2. Haiti's island location, its rugged terrain, its long coastline, the dispersion of its agricultural production and the dominance of the capital city, are of particular significance to its transport sector. In external trade, about 90% of Haiti's general cargo exports and imports are shipped through the public terminal at Port-au-Prince. Internal transport depends partly on coastal shipping (which accounts for about 18% of domestic freight tonnage and 10% of domestic passenger movements) but the bulk of traffic moves by road.-I At present, the intercity road network totals about 3,700 km of motorable roads, of which approximately 750 km are paved (or being paved), 1,550 km are gravel, and the balance are earth tracks. At the time of ap- praisal for the Third and Fourth Highway Projects, there were only some 350 km of paved road in the country. 3. To date, the Bank Group has financed five road projects in Haiti, representing a total loan/credit commitment of US$47.9 million.V/ Bank Group lending for the transport sector began in May 1956 with a loan for US$2.6 million (Loan 141-HA) to finance a maintenance and rehabilitation project aimed at improving the country's Northern Road.!/ A second project, 1/ Domestic air traffic is negligible and the only railroad is a short narrow-gauge line servicing the sugar mill in Port-au-Prince. 2/ The Fifth Project, financed by Credit 807-HA, includes about US$4.0 million for improvement of coastal shipping facilities. 3/ This road connects Port-au-Prince with several important agricultural regions and with the main population centers in the Northern part of the country. Together with the Southern Road, this road represents the backbone of the country's highway system (see Map). -2- financed by an IDA Credit for US$0.35 million (Credit 32-HA), was under- taken in 1962 to continue the above maintenance program for a period of about a year, but no turther Bank Group lending activity took place in Haiti for nearly ten years due to internal administrative and economic difficulties in the country. 4. In 1969, a transport sector report was prepared by the Organization of American States which indicated an urgent need for rehabilitation of the transport system. In the early 1970s, internal conditions in Haiti were showing improvements, which led to a renewed interest from financing agencies in Haiti's transport sector. Between 1971 and 1973, four major preinvestment studies were prepared under UNDP financing with IDB as the executing agency, covering the need for rehabilitation of the Southern and Northern Roads; a countrywide road maintenance program; and improvement of feeder roads on the southwestern peninsula. The maintenance program was accepted for financing by USAID, while the IDB undertook to finance the Southern Road project. IDA was approached to finance reconstruction of the Northern Road. An IDA project identification mission visited Haiti in June 1972 and reported that in the ten-year interval since the Second Project, the maintenance program estab- lished with the Bank's support (para. 3) had disintegrated, and that due to the lack ot maintenance, the condition of the Northern Road had deteriorated to the point that major rehabilitation was needed for almost the entire road. A reconstruction project was urgent since, under existing road conditions, important regions of the country were virtually cut off from Port-au-Prince during the rainy season. II. The Project 5. The Third Highway Project was appraised in September 1973. It was originally envisaged to include reconstruction of the entire Northern Road (250 km), even though there were some doubts that the USS10 million of IDA funds available for the project in FY74 would be sufficient, especially because prices were difficult to estimate since no work by international contractors had been done in Haiti for many years. 6. In May 1973, during project preparation, the important Estere bridge on the Northern Road collapsed, forcing traffic to make a 22 km detour along a dirt road. Since the bridge, which was of vital importance, was to be reconstructed under the project, arrangements to allow retroactive financing were made. In addition to speeding up reconstruction, this also appeared to have the advantage that, because the construction contract was to be awarded after international competitive bidding, it would provide an indication of contractors' interest and unit prices to be anticipated for the project before the credit was approved. The fact that the lowest bid was 80% higher than the engineer's estimate indicated that it would not be possible to reconstruct the entire 250 km of the Northern Road with the US$10 million in IDA funds avail- able. It was therefore decided to include only the seven highest priority sections of the road in the Third Project, with reconstruction of the remain- ing sections left tor the proposed Fourth Highway Project. The Third Project as approved by the Board consisted of: (a) Reconstruction of seven sections (148 km) of the Northern Road, including reconstruction of the Estere bridge; - 3 - (b) construction supervision of the above by consultants; and (c) technical assistance to (i) help in improving transport planning; (ii) assist in the reorganization of the Ministry of Public Works, Transport and Communications (TPTC); and (iii) assist the domestic contracting industry. 7. Shortly after Credit 478-HA had been signed, bids were received for reconstruction of the road which grossly exceeded the appraisal estimate, with the lowest bid being 124% higher than costs estimated in the detailed engi- neering and about 73% more than appraisal estimates, including all contin- gencies..1/ The total cost of completing the project would therefore have been of the order of US$23 million rather than US$13 million as planned. As the Government was unable to finance the additional costs of the project (increasing its share of costs from about US$3 million equivalent to about US$13 million), a revision of the project was required. The project amendment covered the deletion of 70 km of road construction and was approved by IDA's Board on October 29, 1974, five months after credit signature. 8. The Fourth Highway Project was a logical continuation of recon- struction work started under the Third Project, but the separate lending operation and resulting extra appraisal work were necessitated by the limi- tation of IDA funds. The Fourth Project, which was approved by the Board in June 1975, consisted of: (a) Reconstruction of 170 km of the Northern Road; (b) reevaluation of the pavement design of the work in (a) above; (c) design and construction of a new bridge across the Artibonite River at Sonde; (d) supervision of the construction elements of (a) and (c) above; (e) technical assistance, amounting to about 60 man/months, for: (i) preparation of future projects in the transport sector; and (ii) improving, further, the capabilities of the domestic civil works industry. III. Project Results 9. The reconstruction component of the two projects was successfully implemented in spite of substantial cost increases under the Third Project. With the exception of one bridge contract, construction work was offered to international competitive bidding and all contracts were won by French con- struction firms. Seven firms requested prequalification for construction of 1/ See PCR, para. 3.02. the Estere bridge; four were prequalified and submitted bids. For road works under the Third Project, a large number of firms were interested and most were prequalified, but only two firms submitted bids. Under the Fourth Project, there were also only two bids. In all cases, the contracts were awarded to the lowest bidders. The construction work was implemented without undue delays, but some contract amendments were required, mostly to cover design changes needed because of heavier than anticipated rainfall runoff and modifications in some aspects of the design standards (PCR, para. 3.05). Costs were substantially different from those estimated in the appraisal reports, which is dealt with in more detail in paras. 16-18 below. The quality of construction work has, according to the attached PCR, been gen- erally satisfactory and pavement damage described in PCR, para. 3.08 appeared to be mostly caused by a combination of overloaded trucks and the lack of fully satisfactory maintenance during a period of heavy rains. 10. Many of the agreements reached under the projects dealt with insti- tutional aspects. Even though they seemed reasonable, not all were success- fully implemented, in part because results were expected too soon. A national transport survey (NTS) was carried out as planned and the results were espe- cially used to identify and establish priorities for further investment projects. Partly because of losses of counterpart staff who had worked with the consultants for the NTS, the effect of the limited training which had taken place was lost. This proved to be a handicap for the authorities in starting their own transport planning. A transport sector planning unit was created as agreed under the credit and it has done some planning work as well as introducing a traffic counting system. 11. Covenants under both projects called for a program to control vehicle weights, but there have been delays in the implementation. Weigh scales were bought for gathering pavement design data, which were later available for weight control, but even after staff had been trained (1977), no operating funds were made available. Also, the Government was concerned about potential difficulties in enforcement and its costs, and about the impact that the controls would have on the small independent truckers. The use of the highway network by overloaded vehicles, therefore, remains a problem leading to damage and premature wear of roads.1/ 12. The project included provision for technical assistance for the local construction industry. This proved impractical since local contractors were able to obtain only a small amount of subcontracted highway work (mostly drainage), in part because of their limited experience and financial backing (PCR, para. 3.11). The technical assistance, therefore, could not be effec- tive and the scope was reoriented to recommending the measures needed to foster development of the local construction industry. As explained in the PCR, some rehabilitation work on rural roads has recently been awarded to local contractors. 13. In spite of frequent discussions between the authorities and Bank staff and technical assistance provided by USAID, progress on introducing adequate highway maintenance has been slower than anticipated and is discussed more fully in paras. 19-21. 1/ Weight control operations began in August 1979. - 5 - 14. When international lending to Haiti was resumed on a substantial scale in about 1973-74, several international and bilateral agencies became interested in the transport sector. This manifested itself in financing of road projects by three different agencies while four separate agencies as- sisted in building up or strengthening institutional aspects such as road maintenance, a soil testing laboratory, a construction supervision and co- ordination unit, and transport planning. In order to avoid conflicting demands on limited manpower resources, the Government took the initiative to hold semestral coordinating meetings between the Haitian authorities and all relevant aid agencies. This approach has been very useful. The multiple technical assistance activities delayed the reorganization of the Ministry of Public Works, Transport and Communications, which was envisaged under the project, since it was desirable to avoid interfering with ongoing assistance programs. 15. The economic justification of the projects was based mostly on anticipated savings in vehicle operating costs. Construction costs for the Third Highway Project were much higher than expected at the time of credit approval, while final total costs for the Fourth Project were in line with the appraisal estimates. Traffic on two out of the nine road sections was within 25% of the appraisal estimates while on the other sections the 1978 traffic has exceeded the forecast by up to 230% (PCR, Table 4). Recalculated vehicle operating costs also differ from the appraisal estimates, with vehicle oper- ating savings for heavy vehicles now estimated to be much higher (PCR, Table 6). As a result, the PCR has found reestimated economic returns of 25% and 41% for the two projects, respectively, against 20% and 35% at the time of appraisal. IV. Points of Special Interest Difficulties in Forecasting Construction Costs 16. As pointed out in para. 7, bid prices for the road works under the Third Project were far in excess of the engineering estimates and also much higher than the maximum cost allowed for in the appraisal, including generous contingency funds. Providing accurate cost estimates at the time, however, would have been virtually impossible because of the unusual number of elements which were difficult to estimate. Contractors had not worked in Haiti for many years and it was therefore difficult to determine how they would assess the uncertainties connected with working in that country. This problem was compounded by the 1973 oil crisis which led to rapid increases in construction costs. As much construction work became available in oil rich countries, competition for relatively small contracts in a country such as Haiti was reduced. 17. As it turned out, the Board was requested to approve a major proj- ect revision, reducing the construction component by almost 50%, only five months after it had approved the project. The only way to have avoided this cumbersome procedure would have been to present the project to the Board - 6 - after bids had been opened. This approach, however, was judged to be im- practical because bid opening was to take place in July 1974 and it would therefore have caused substantial difficulties in carrying over the IDA funds into the next fiscal year. 18. It appears more difficult to understand the reasons for the irregu- lar cost picture under the Fourth Project. Bid opening for 85% of the civil works took place before the credit was presented to the Board. The cost of the remaining 15% of the works was still unknown but turned out to be lower than the anticipated unit costs. Total costs of awarded contracts for the civil works covered by the appraisal was U$15.3 million (PCR, Table 2). Yet, the appraisal included US$18.2 million for these works plus about US$6.1 million in physical and price contingencies. It is not clear why the apprai- sal estimate of construction costs without contingencies was almost 20% higher than the contract costs. During implementation, a number of contract amend- ments were required to allow for some technical difficulties and to increase design standards on some sections (PCR, para. 3.05), leading to a final contract cost which was about 50% higher than the original contract. Includ- ing the additional bridge, the total project cost was close to the total amount allowed for in the appraisal. Slow Progress in Achieving Improved Road Maintenance 19. Under the First and Second Highway Projects in 1956 and 1962, efforts were made to improve highway maintenance. However, when the Third Project was under preparation in the early 1970s, virtually nothing remained to show for these efforts. Apparently, there was no functioning equipment; maintenance staff had been transferred to other activities, and the three workshops along the Northern Road were either empty or in use for other purposes. A maintenance organization had to be reestablished and newly equipped. In 1972, a semi-autonomous maintenance organization, SEPRRN,17 was created along the lines suggested by the UNDP-financed study (para. 4). In 1973, USAID financed new road maintenance equipment and technical as- sistance to strengthen SEPRRN (PCR, para. 1.07). 20. Since the maintenance program was supported by USAID, the Third and Fourth Highway Projects did not finance road maintenance. However, the Association wanted to obtain, in addition to the standard covenants on main- tenance, a more specific commitment that road maintenance on the Northern Road would be carried out in order to protect the substantial new investment. A tripartite agreement was drawn up in June 1974 between the Government, USAID and IDA, setting out in detail the maintenance requirements for the Northern Road. Furthermore, a five-year road maintenance plan, including specific measures for the Northern Road as well as SEPRRN's training program and the associated budgetary requirements, was agreed on between the Government and IDA as a condition of effectiveness for the Fourth Project. 1/ Service d'Entretien Permanent du Reseau Routier National, the National Maintenance Service. - 7 - 21. However, progress on the improvement of road maintenance has been slow. Routine maintenance on the project road was not satisfactory even though funds and technical assistance were available and in spite of the Association's reminders to the Government. The problem resulted apparently from the time needed to train staff at all levels for maintenance of the entire national road system, which especially for managerial staff took longer than expected. This led SEPRRN to delay the final acceptance of the road while in the meantime insisting that the contractor carry out the maintenance. Seen in retrospect, it may have been overoptimistic to expect the maintenance organization to be operational fast enough to take over maintenace of the new road at the time of its completion. Furthermore, it was probably unrealistic to expect maintenance to concentrate on roads under construction to the exclusion of other national roads. Design Standards as Related to Future Traffic and Maintenance 22. During the project period, there were some differences of opinion between the Government and IDA about the design standards to be used, espe- cially in relation to the bearing capacity of the pavement. In view of the limited funds available, the Association insisted that the road be rebuilt to modest standards, conforming to the needs of the traffic anticipated in the near future. The Government preferred higher standards, especially where these would have helped to reduce maintenance requirements. The Association's position on the pavement design was also influenced by the fact that under a credit covenant, weigh scales for trucks were to be operated along the road which were expected to lead to a reduction in overloaded trucks. However, full implementation of this condition has been delayed (para. 11). A com- bination of a higher than anticipated percentage of overloaded trucks, un- satisfactory maintenance of the road and above forecast traffic volumes has led to the need for earlier pavement strengthening than originally antici- pated, while pavement damage shortly after completion of road sections was also attributed to maintenance and overloading problems. Seen in retrospect, it appears that in designing the pavement, the risk that maintenance and axle load control would fall short of the targets set had not been fully taken into account. V. Conclusions 23. The road and bridge reconstruction part of the project has been successful and the reestimated economic return indicates that it is making a better than expected contribution to the Haitian economy. Definite progress has been made on institutional improvements under the project, even though this has been slower than anticipated at the time of appraisal. 24. The Third Project indicates the importance of obtaining bids for civil works contracts before a project is approved by IDA's Board when there is great uncertainty about construction prices. -8- 25. Where it is not uncommon that building up a road maintenance or- ganization and introducing effective axle load control require many years, it appears that more allowance should be made in the project design to cope with the lack of fully satisfactory maintenance of the project road and its fre- quent use by overloaded trucks. A slightly heavier road construction and the possible inclusion of a longer maintenance period by the contractor as part of the construction contract may be useful in the future. - 9 - PROJECT COMPLETION REPORT ATTACHMENT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) I. INTRODUCTION 1.01 The reconstruction of the Northern Road (250 km), the main artery linking the capital, Port-au-Prince, to the principal port of the northern region, Cap Haitien, was assisted with two IDA credits totaling US$30 million. Originally the works were appraised as a single project (para 2.01). However, IDA's ceiling on the available credit amount (para 2.03) and the need to keep the amounts of required counterpart funds within practicable limits (para 3.02) resulted in implementing the project in two phases: Phase I, the Third Highway Project, Credit 478-HA (US$10 million) and Phase II, the Fourth Highway Project, Credit 556-HA (US$20 million). This Project Completion Report (PCR) covers both phases and is based on IDA supervision reports, data in LAC Information Center Files and the progress reports of the supervisory consultants (INGEROUTE). Overview of the Sector 1.02 Roads dominate all other transport modes in Haiti in terms of freight flows; 80% of about 700,000 tons of domestic freight transported in 1975 used the road network and about 20% used coastal shipping. Internal air transport and a small sugar cane railroad accounted for a negligible share of freight flows. The network consists of some 3,700 km of motorable roads; about 20% is paved, about 42% has varying qualities of gravel sur- facing, and the rest consists of unsurfaced tracks of 4.5 m width or less. 1.03 Although IDA's involvement in the transport sector dates back to 1956 (para 1.05), no assistance was provided during the period 1962-1972, mainly because the Government's policies discouraged preparation and implemen- tation of development projects. During that period, road improvements stopped and road maintenance capability disintegrated (para 5.03), resulting in rapid road deterioration and the isolation of food-producing regions from the consuming centers. 1.04 Since 1971, the Government has reoriented its policies toward reconstructing and improving maintenance of the network. The instrument expressing the Government's new policies, the first Five-Year National Development Plan (1972-1976), although not based on orthodox sectoral analyses, addressed the obvious priorities in transport, making it possible for IDA and other international lending agencies to identify viable projects. The Government recognized the need to improve project implementation and sectoral planning, and it was in this context that IDA re-initiated its assistance to the sector with the reconstruction of the Northern Road and technical assis- tance in preparing the National Transport Survey. Past and Ongoing Assistance to the Sector 1.05 The Bank Group's involvement in the Haitien transport sector started in 1956 with US$2.6 million (Loan 141-HA) for the reorganization and expansion of maintenance capacity and the rehabilitation of 100 km of roads. This loan was followed by a US$0.32 million credit (Credit 17a) in 1962 to preserve the improvements initiated under Loan 141-HA. Political and managerial problems hampered the timely implementation of the projects. Since 1974, three more - 10 - credits totaling US$45.0 million (Credits 478-HA, 556-HA and 807-HA) have supported the reconstruction of the Northern Road (250 km), secondary roads, bridge improvements, a coastal shipping component, and the preparation of the ongoing Fifth Transport Project (Credit 807-HA). Other IDA Assistance 1.06 In addition to aid to transport, IDA assistance totaling US$74.6 million has been accorded to education (Credits 618-HA and 770-HA), power (Credits 645-HA and 895-HA), rural development (Credit 675-HA) and water supply (Credit 757-HA). Other Institutions Involved in the Sector 1.07 The Haitien transport sector has received assistance from other bi- and multi-national institutions. The Inter-American Development Bank (IDB) has supported the construction of the Southern Road (150 km) with three loans totaling US$52.6 million, and the Port-au-Prince international port improve- ments with US$17.5 million. French Bilateral Assistance (FAC), with two loans totaling about US$7.0 million, financed construction of the 40-km spur between the Southern Road and Jacmel and helped to equip the domestic airports with navigational devices. The United States Agency for International Development (USAID) has been involved since 1973 in financing equipment purchases providing technical assistance and training for road maintenance (US$5.2 million in 1973 and US$8.6 million in 1977). USAID is supporting, also, reconstruction of agricultural roads (US$7.4 million in 1977). II. PROJECT PREPARATION AND APPRAISAL 2.01 The reconstruction of the Northern Road (250 km) was identified as a possible project by an IDA mission in June 1972. In tune with IDA's lending strategy aimed at removing physical constraints to development and in the context of the 1972-1976 National Development Plan, the primary objectives were to provide all-weather access between Port-au-Prince, the capital, and Cap Haitien, the main port of the northern region, and to link the fertile Artibonite Valley to the main food-consuming centers of the country. Although no previous study was available at the time of project identification, the priority of the selection was fully justified by the subsequent National Transport Study (completed during 1975-1976, paras 3.10-3.11) and the growth in traffic using the road (para 4.06). The feasibility and detailed engineer- ing were prepared by the consultant INGEROUTE (France) under a US$0.6 million United Nations Development Programme (UNDP) grant (the Bank was the executing agency). The project was appraised in September 1973. Phase 1: The Third Highway Project (Credit 478-HA) 2.02 In May 1973, during project preparation, the Estere Bridge, a major structure located between St. Marc and Gonaives on the Northern Road, collapsed. The collapse forced traffic over an inadequate dirt road, entail- ing 22 km of additional distance. Repairing this steel structure, dating back - 11 - to the 1880s, was not practical, and, considering the bridge's importance to the project objectives, IDA agreed to the Government's request to include retroactive financing for the replacement in the project. Construction began in February 1974, nearly four months before the Credit Agreement was signed. 2.03 The length of the road to be reconstructed under the project was limited in view of the IDA credit ceiling of US$10 million and the concern about the size of the project which could be undertaken initially, resulting in only about 60% of the needed improvements to the Northern Road being appraised as Phase I, the Third Highway Project. As presented to and approved by the Board (May 16, 1974), the project provided for: (a) reconstruction of various sections of the Northern Road totaling 148 km; (b) reconstruction of the Estere Bridge; and (c) consultant services for supervision of civil works and technical assistance to prepare a study of the transport sector, including proposals for restructuring the Ministry of Public Works, Transport and Communications (TPTC), the executing agency, improving transport planning and developing the domestic contracting industry. The project was negotiated on April 15, 1974, and the Credit Agrtement was signed on June 6, 1974. 2.04 In the wake of the high bids for civil works received in July 1974 (para 3.02), the project was amended to include only about 78 km of road improvements by deleting various sections totaling 70 km between Ennery and Cap Haitien. Without the amendment, it was estimated that local fund require- ments might increase from US$3.3 million (appraisal) to US$12.5 million. While the Government was unable to meet the increased local funds (Table 1), rebidding was considered unlikely to lower costs. Phase II: The Fourth Highway Project (Credit 556-HA) 2.05 Improvement of the remaining length of the Northern Road (70 km deleted from Phase I and 100 km originally excluded from Phase I) was appraised in December 1974 as Phase II, the Fourth Highway Project. In view of contin- uing rapid pavement deterioration, TPTC (with IDA approval) retained Canadian consultants Ewart, Lea and Tremblay (ELT) to review the proposed pavement designs (in light of updated traffic and loading data). The ELT contract also called for the design of a replacement for the Sonde Bridge, an old, inadequate, major structure which was closed to heavy traffic. At the same time, the supervisory consultants voluntarily carried out their own pavement investigations and revised their original design. ELT and INGEROUTE both produced their reports in June 1975. The INGEROUTE pavement design revisions were adopted because they offered a stronger pavement structure. The project as presented to the Board provided for: (a) improvements to 170 km of the Northern Road; (b) design and construction of a new bridge across the Sonde River; (c) consultant supervision of civil works; and (d) technical assistance for the pavement reevaluation study and the preparation of high priority projects and assistance to the domestic civil works industry. Negotiations were held on May 23, 1975, and the Credit Agreement was signed on June 11, 1975. 2.06 In October 1975, ten days after Credit 556-HA became effective, the Limbe Bridge, located between the township of Limbe and Cap Haitien, collapsed. IDA subsequently agreed to the Government's request to include a replacement structure to be financed under Credit 556-HA. 2.07 The works financed with Credits 478-HA and 556-HA are shown on Map IBRD 13293 (PCR). - 12 - III. PROJECT IMPLEMENTATION AND COSTS 3.01 Credit 478-HA became effective on October 9, 1974, followed by Credit 556-HA, which became effective on November 10, 1975. Work for Phase I (Credit 478-HA) started in October 1974 and, for Phase II (Credit 556-HA), in August 1975. Emergency construction for the collapsed Estere Bridge (Phase I) started in February 1974 (para 2.02). All works have now been completed. The average costs (including bridges, supervision and complementary works) for Phases I and IT have been US$161,927/km and US$149,941/km respectively, yielding an overall cost of US$154,000/km. The Credits have been fully disbursed. 3.02 Civil works in Phases I and II were advertised for international competitive bidding in January 1974 and February 1975 respectively. Fourteen of the sixteen firms which submitted documentation were prequalified. The lowest evaluated bid received in July 1974 for the reconstruction of 148 km of the Northern Road was US$15.3 million (para 2.04) from the French joint venture formed by DUMEZ (contractor for the Estere Bridge) and COLAS. The bid was 124% higher than the appraisal estimate of base costs and about 73% higher than the appraisal estimate of final costs, including the 20% special risk contingency. After the scope of works was reduced to 78 km (para 2.04), the contract was awarded to DUMEZ-COLAS for US$8.47 million. Contracts for Phase IT were awarded on June 15, 1975 to the lowest bidders: COLAS in the amount of US$5.6 million (various sections totaling 85 km between Port-au-Prince and Ennery) and DUMEZ in the amount of US$7.2 million (various sections total- ing 76 km between the village of Bellami and Cap Haitien). While preparing bidding documents, TPTC inadvertently included about 65% of the work quantities from the 7 km suburban stretch (which, although appraised, was not ready for bidding) in the 85 km section which COLAS won. When the error was discovered, TPTC, with IDA concurrence, amended the COLAS contract (September 1975) to include the rest of the works on the 7 km section, which increased the COLAS contract by US$478,400 to US$6.1 million. Including this amendment, the contract amount for works in Phase II was about 22% lower than the appraisal estimate of base costs (US$17.0 million). 3.03 Civil works for Phases I and II of the Northern Road's reconstruction were scheduled for completion in 22 months and were accomplished with no delays despite a series of contract amendments which were necessary in view of the field conditions encountered during execution of works. The planned monthly physical progress targets were either met or beaten through a combina- tion of good planning and site management by the contractors. Works in Phases I and II were completed by June 1976, and through March to May 1977 respec- tively, and accepted by TPTC in November 1976 and June 1977 respectively. 3.04 The actual cost of road works (excluding bridges) in Phases I and II amounted to US$11.01 million and US$21.12 million respectively, for a total of US$32.13 million. Although these costs were higher than the original appraisal estimates for the Northern Road, they compare favorably with the estimates for the amended projects; Phase I was about 8% less than the amended project estimate of US$11.94 million, while the cost for Phase II was about the same as planned (US$22.74 million), although the Limbe Bridge was added after Credit effectiveness (para 2.06). - 13 - 3.05 As road works progressed, one contract amendment in Phase I and eight in Phase II were necessary to accommodate extra road work quantities not foreseen during preparation of detailed engineering. The additional quantities increased the original contract costs (excluding bridges and supervision) by about 30% (US$2.54 million) in Phase I and about 60% (US$7.84 million) in Phase II (Table 2). The main reasons for the in- creased quantities and costs were: (a) sections of road excluded from Phase I (paras 2.03-2.04) had begun to deteriorate more rapidly than expected, with attendant increases in quantities; (b) less than adequate geotechnical and hydrological data were used for designs in some sections; (c) pavement and shoulder widths needed to be increased in some sections to provide a more uniform roadway width; and (d) the pavement structure had to be strengthened on some sections because of traffic increases. Nearly 50% of the total cost increases over the original contract amounts related to earthworks. Shoulder and pavement quantities accounted for between about 20% and 40% of the increase (depending on the section), while the rest was required by drainage and minor structures. Major Bridges 3.06 The Estere, Sonde and Limbe Bridges were constructed under separate contracts. Bids were advertised internationally for the Estere and the Sonde Bridges in September of 1973 and 1975 respectively. Three of the seven inter- national firms which submitted documentation were prequalified for the Estere works and presented valid bids which were evaluated in December 1973. The lowest bidder DUMEZ (France) was awarded the contract in the amount of US$0.51 million in January 1974, and work commenced a month later. The bids for the Sonde Bridge, received in October 1973, allowed prequalified firms to bid for a standard design (steel structures on piles) prepared by ELT in addition to design alternatives of their own. DUMEZ, once again the lowest bidder, was awarded the US$1.98 million contract in April 1976 on the basis of the firm's alternative post-tensioned single-span concrete design. The lowest bid was 24% higher than the appraisal estimate of final costs. A US$1.14 million contract for the Limbe Bridge was negotiated with DUMEZ, which prepared the design and had constructed a similar bridge previously on the Jacmel Road (financed by FAC, para 1.07). 3.07 The Estere Bridge was completed on schedule by December 31, 1974. Both the Sonde and the Limbe Bridges were completed three months ahead of schedule in March 1975 and February 1978 respectively. From the technical and aesthetic points of view, the Sonde structure is considered to be an above-average accomplishment. Its construction marked the introduction of post-tensioned concrete to Haiti. The Estere Bridge had a final cost of US$0.66 million, about 3% more than the appraisal estimate of US$0.64 million - 14 - (including contingencies). However, the final cost for the Sonde Bridge ex- ceeded the appraisal estimate (including contingencies) of US$1.6 million by some 33%, mainly because of increased foundation quantities. The Limbe Bridge, for which no appraisal estimate was available, had a final cost of US$1.17 million, about 3% increase over the initial contract amount (Table 3). Assessment of the Completed Works 3.08 The Northern Road, constructed at an average cost of about US$154,000/km, was intended to be a low cost undertaking as reflected in the feasibility study and detailed engineering. The design was kept modest, with reconstruction on the original alignment emphasized and the pavement structure designed with a minimum of "safety" margins. Soon after completion, some sections under heavy traffic loadings developed potholes and cracks, and, in the zones of unstable soils, rock slides began to appear. INGEROUTE con- ducted an inquiry into the causes of surface damage. In July 1978, an IDA mission, in the company of senior Government officials, inspected the works: the pavement (mostly DBST) was generally adequate for the current traffic volumes (Table 4); the quality of works was acceptable; the surface damage was patched; and rock slides were cleared and are now under control. 3.09 However, the completed Northern Road has been criticized by TPTC and SEPRRN 1/ engineers who would have preferred a higher externally financed investment and less locally financed maintenance. Initially, maintenance costs are somewhat high, mainly because of inefficiencies in SEPRRN operations, but, as USAID-assisted training and practice take hold (para 3.11), substantial cost reductions may be expected. It is probable that a number of sections of this road, although built to plan and specifications with generally good construction quality, may not have the originally expected useful life in view of more rapid than expected traffic growth (para 4.06). Technical Assistance 3.10 The National Transport Study (NTS) was carried out as part of the technical assistance under Phase I (Credit 478-HA) over the period 1975-1977 by Louis Berger Inc. (USA). Although initially provided for under the Credit, the subsequent availability of a US$0.60 million UNDP grant (with the Bank as the executing agency) led to IDA's original allocation being moved to Category I of the Credit Agreement to partially augment the civil works allocation. The NTS analyzed the evolution of transport demand and recommended policies suited to the country's potential. Transport demand being scattered and flows being generally light (consisting mainly of high bulk/low value agricultural commodities), the sector can support only limited infrastructure investments, with preference for less capital-intensive alternatives, i.e., 1/ Service d'Entretien Permanent du Reseau Routier National, the National Maintenance Service. - 15 - maintenance and rehabilitation of the existing network. The NTS also recom- mended priority complementary investments in roads to support the agricultural sector's integrated development programs. The potential for coastal shipping was explored considering two strategies: (a) emphasis on coastal shipping improvements combined with improved maintenance and upgrading and rehabilita- tion of selected roads in the existing network; and (b) emphasis on road improvements with no Government support for coastal shipping. The NTS recom- mended the first strategy as the least total cost alternative. As a planning exercise, the NTS was effective. Virtually all of its major recommendations on highways and ports have been accepted for financing by international lending organizations. IDA is in general agreement with the recommendations, and the Government's current five-year Development Plan (1976-1981) incorporates them as the basis for the transport component. However, the spillover benefits of the NTS in terms of training local staff capable of undertaking a similar study on their own have been virtually lost because of the frequent personnel changes in TPTC. 3.11 The need to foster the development of a competitive domestic road construction industry was recognized during appraisal of Phase I, and, to this end, a study of local contractor capability was included in the NTS. In conjunction with increased use of local construction capability, the NTS recommended the need for parallel development of TPTC's capacity to manage and administer the local contracting and consulting services. The Government is now initiating a rehabilitation program for agricultural roads with USAID support (US$5.0 million supplemented by US$2.4 million credit in 1977) to be executed by Government construction brigades (600 km) and local contractors (300 km). The program will lease equipment to contractors, and, where appropriate, encourage development of labor-intensive construction techniques for feeder and penetration roads. However, in retrospect, assis- tance to the domestic construction industry through on-the-job training appears to have been poorly conceived since the industry is receiving little in the way of public works contracts. Even the contractors, COLAS and DUMEZ, could use the local contractors only marginally, on drainage subcontracts. The local contractors continue to suffer from poor management and a limited capacity to undertake civil works as well as the lack of a steady flow of contract work. 3.12 The NTS analyzed the organizational structure of TPTC and recommended reorganization along functional lines, i.e., design, construction and mainte- nance entities. The reconstruction has been partially implemented by a 1978 law. A more thorough reorganization of TPTC is not practicable for the time being in view of the Ministry's obligations to other lending agencies. USAID, for example, has assisted in the creation of an autonomous maintenance authority, SEPRRN (its budget is separate from TPTC's budget). IDB has partially assisted in the reorganization of highway design and construction units. Similar ad hoc responses to TPTC's reorganization and the lack of continuity at the Ministerial level (changed in 1976 and 1977) have so far failed to address problems in the sectoral context. Frequent personnel changes and less than satisfactory cooperation among agencies of TPTC still continue, although the situation is improving. Further assistance in streamlining TPTC operations and adapting the NTS recommendations to local conditions will be needed and could form a part of the technical assistance in future Bank- assisted highway projects. - 16 - Special Covenants 3.13 Credit Agreements 478-HA and 556-HA for Phases I and II carried special covenants committing the Government to: (a) establish, maintain and adequately staff a transport sector planning unit in TPTC by December 31, 1976; (b) adequately maintain the highway network; (c) carry out origin/ destination (O/D) and traffic volume counts; and (d) adopt and enforce axle load and vehicle dimension regulations. The last-mentioned covenant committed the Government to install weighing scales and train appropriate personnel to operate them by June 30, 1978. The creation of the Autonomous Sector Planning Unit (SAT) (Covenant a), the transport sector planning unit, is covered in paragraph 5.05. Government compliance with the road maintenance requirements (Covenant b) is covered in paragraphs 5.03 and 5.04. Traffic, axle loads and vehicle dimensions (Covenants c and d) are covered in paragraphs immediately following. 3.14 Systematic procedures for traffic volume counts and O/D surveys began only with the inception of the NTS in Haiti. The project preparation for Phases I and II had suffered from the lack of historic growth data. Although the projections had been based on sound econometric techniques, namely derivation of the demand curves for transport, the lack of historic trends led to a general underestimation of traffic. Since the initiation provided through the NTS, volume counts and O/D data for two consecutive years are available and have formed the basis for the economic reevaluation given in Chapter IV. The available data reflect the economic recovery in Haiti after a decade-long stagnation. However, some inconsistencies between O/D pairs have been detected and brought to SAT's attention. The volume counts seem to be sound although some count stations (Cap Haitien Sud for 1977) report data which can neither be rationalized nor compared with NTS data. Attempts are being made by SAT to remedy these types of problems. Overall, the data base for traffic has improved. 3.15 Government compliance with the requirements for axle loadings and vehicle dimension control has been slow. Although mobile weighing scales, vehicles and trained staff capable of implementing the program have been available since early 1979, the budget for the Government's weight control unit is inadequate. Lack of prompt compliance with the covenant is a matter of concern to IDA in view of the minimum pavement provided on the Northern Road (para 3.09). The estimated US$4,000-5,000 per month cost of instituting axle load regulations on the Northern Road is marginal compared with the benefits of the program. IDA is following up this matter with the Government and expects appropriate action in the near future. Performance of Consultants 3.16 Detailed engineering and supervision of construction were entrusted to INGEROUTE (France), whose initial contract for Phase I (February 15, 1974) was amended to include supervision of Phase II works. The engineering design suffered from a lack of adequate geotechnical and rainfall data, leading to over-optimistic assessments of existing conditions and an eventual increase in earthwork quantities. - 17 - 3.17 During construction, quality and financial control and project management were well performed. Collaboration with TPTC was adequate despite occasional differences of opinion, but relatively little training of Haitien staff took place. The final cost of supervision was US$2.03 million, or about 5.3% of the total cost of civil works (including bridges), which is reasonable. 3.18 Feasibility and engineering for high priority projects (drawn from the NTS) which would be included in the next credit were entrusted to INGEROUTE in joint venture with SOHICCO (Haiti), while J.C. Buckley (USA) prepared a management study for the coastal shipping ports component. The studies and designs, executed on schedule and generally within the contract budgets, were satisfactory to the Government and the Association. 3.19 The Louis Berger Inc. consultants (USA) for the technical assistance produced a useful study (para 3.10), but parallel training of planning staff was subordinated to production goals and the demands of producing the final report in French and in English. Technical assistance to the domestic con- struction industry was limited by the lack of domestic contractors actually involved in road building. IV. ECONOMIC REEVALUATION 4.01 The Third and the Fourth Highway Projects were justified on the basis of quantifiable benefits accruing from reduced vehicle operating costs (VOC) and savings from reduced maintenance costs for the improved Northern Road. The Sonde Bridge was justified on the basis of distance savings in the eventuality of the bridge collapsing without a suitable replacement. The investment costs included the estimated construction costs plus a 10% allowance for physical quantities. Supplementary costs for future pavement strengthening in the tenth year after road opening were also included in the cost streams. Traffic projections (Table 4) were made on the basis of estimated demand for transport which took into account the growth of agricul- ture in Haiti. During appraisal, the best estimates of the economic rates of return (ERRs) varied between a low of about 9% and a high of about 48% (Table 5). A sensitivity analysis of the rates of return for the Fourth Highway Project yielded a range between 7% and 41%. The overall estimates of the best rates of return for the Third and Fourth Highway Projects were 20% and 34.8%, including bridges. Bases for the Economic Rates of Return for the Completed Projects 4.02 On completion of the projects, actual costs of civil works plus supervision and current traffic counts data have been used to recalculate the ERRs. Additionally, earlier than anticipated pavement reinforcement costs, over a four-year period (1982-1986), have been derived from the contract costs for lot D of the Fifth Transport Project (Credit 807-HA) and used in the cost streams. A 20% physical contingency has been added to the unit costs. Routine maintenance costs for the improved road have been derived from the NTS. Although the appraisal attributed benefits to reduced routine road maintenance, in this reevaluation, maintenance costs have been treated as recurrent expenditures and have been attributed no benefits. - 18 - 4.03 No separate analyses have been performed for either the Estere or the Limbe Bridges. However, the costs of both structures are accounted for in the cost streams of the respective sections. The benefits for the Sonde Bridge have been derived on the basis of distance savings for heavy commercial vehicles only (no benefits have been attributed to passenger cars or light pick-ups). 4.04 NTS traffic growth rates have been used to project future traffic over the 20 year life of the road. The weighted growth rates vary between about 8.1% and 9.3% annually from section to section. No estimates of generated traffic being available, 25% of the benefits for each section are assumed to have been derived from this source (the Third Highway Project assumed 15% to 20% of the total traffic as generated, while the Fourth assumed a demand elasticity of about 0.1 to 1.0 to calculate generated traffic). The Appraisal versus the Completion Economic Rates of Return 4.05 A comparison of the appraisal estimates with completion rates of return (Table 5) shows that the best estimates have been surpassed on all but three sections in the Third and two sections in the Fourth Highway Project. The overall rates of return (over 25% versus the anticipated 20% for the Third and nearly 41% versus the expected 34.8% for the Fourth Highway Project, inclusive of bridges) also have been surpassed on both projects. The main reasons which explain the variations between the expected and the comple- tion rates of return are the differences in the forecast and the actual traffic and the updated estimates of VOC. Changes in Volume and Composition of Traffic 4.06 Available traffic counts show that, for all sections, actual volumes are higher than anticipated during appraisal (Table 4). The ERR for only one section (between Km 43.4 and Km 70.3) is significantly lower than the appraisal estimate (26.3% versus 48.1% appraisal estimate), mainly because of a change in traffic composition. The appraisal estimated nearly 53% heavy commercial vehicles (buses and trucks), but current traffic counts show only about 34% buses and trucks. In retrospect, it appears that the appraisal mission did not have historic growth trends and overestimated heavy traffic on this section, which passes through a rich agricultural area. The lower traffic resulted in lower VOC savings (Table 6), accounting for the relatively lower completion ERR on the section, which is still above the opportunity cost of capital. 4.07 Increased traffic volumes largely account for the higher than expected returns on the rest of the road sections with the exception of the Port-au-Prince to Croix des Missions portion of the Northern Road. Updated estimates of VOC constitute the main explanation for the over 51% return (versus expected 37.2%) on this section. - 19 - Updated Estimates of Vehicle Operating Costs 4.08 The appraisal VOC estimates for both projects were derived by INGEROUTE (Rehabilitation de la Route du Nord, Draft Final Feasibility Report 1973). Since the appraisal, Haitien VOCs have been updated as documented in the NTS and the Staff Appraisal Report for the Fifth Transport Project (Credit 807-HA). The updated estimates incorporate: (a) the increased costs of vehicles between about 1971 and 1978, which increases the fixed component of VOCs, and (b) the increased costs of fuel and petroleum products as well as spare parts, which increases the variable component of VOCs. The updated VOC estimates yield higher benefits, mainly for commercial vehicles. The savings for light vehicles are not affected significantly. Higher benefits to heavy commercial vehicles and the increased volume of traffic yield better than expected returns. 4.09 The above applies particularly to the northern end of the road from Ennery to Cap Haitien. The appraisal estimates of heavy commercial vehicles for the two sections between Ennery and Cap Haitien were 49 and 85 vehicles per day respectively in the road opening year. The actual counts show a heavy commercial vehicle volume of about 122 per day which, coupled with the higher savings accruing from the updated VOCs explains the almost doubling of the completion ERRs on these sections compared with the appraisal expectations. Conclusion 4.10 Based on the above reevaluation, the projects are economically justified relative to the appraisal as well as in absolute terms. In terms of fulfilling the objective of providing all-weather access between Port-au-Prince and Cap-Haitien, the projects have been successful. V. INSTITUTIONAL DEVELOPMENTS 5.01 Based on the experience gained during previous involvement in the Haitien transport sector, procedures for the implementation and control of the projects were discussed and agreed upon during the preparation stages with TPTC. Although TPTC's capacity to supervise and implement significant civil works has improved through INGEROUTE's collaboration, it needs further strength- ening. INGEROUTE's services therefore are continuing on a reduced scale through the joint venture with SOHICCO, their Haitien affiliates (INGEROUTE- SOHICCO), for the supervision of works financed under Credit 807-HA. 5.02 In response to the added responsibilities of TPTC resulting from the renewed civil works activity (since 1972), the ministry has been partially reorganized. The National Laboratory (assisted by FAC) is responsible for - 20 - formulating standards and ensuring quality control through materials testing. The Construction Service and Coordination Unit (IDB-assisted) is responsible for supervision of works and contract compliance. SAT, responsible for the planning and engineering of transport services, was established through compliance with Credit 478-HA covenants. Maintenance is the responsibility of SEPRRN. The creation of ad hoc services and their imposition on the existing organizational structure of TPTC have led to problems of coordination and liaison which will have to be resolved by the Government. However, since most of the highway administration is under the care of the new service organiza- tions, TPTC's antiquated structure does not seriously impede its functioning. Field liaison with other Governmental bodies is carried out effectively by the Regional Engineers. (There are ten Regional Engineers in charge of field districts in Haiti.) National Maintenance Service 5.03 The creation of SEPRRN and SAT are the most important developments in institution building. SEPRRN, an autonomous agency created in March 1972, is charged with maintaining the national network. The technical and adminis- trative structure of SEPRRN, recommended by a UNDP-financed study in 1973, is headed by a Director General responsible to the administrative council chaired by the Ministers of TPTC, Finance and Economic Affairs. Its autonomy is assured by a separate budget distinct from that of TPTC. SEPRRN's first five-year plan (1975-1980), still in effect, has adequate budgetary allocations, but the work progress is less than adequate. Lack of qualified personnel and lack of expertise in work methods and planning of maintenance tasks are shortcomings which cannot easily be resolved. Recognizing the limited capacity of the organization, the Government has obtained further USAID financial assistance to expand SEPRRN's capacity. (See SAR, Fifth Transport Project, Credit 807-HA, for a detailed assessment of SEPRRN's capacity and prospects.) 5.04 Although SEPRRN is expanding its capacity, the alert and prompt maintenance of the Northern Road will be a test of the organization's vitality. IDA, through its credit covenants and normal supervision missions, has stressed this aspect. SEPRRN's work efforts have resulted in the gradual improvements in roadside and pavement maintenance. Improved training and better integration of staff will be possible through USAID assistance and will help the organization to improve the delivery of its services and to prevent the rapid deterioration of the road network. 5.05 SAT, the creation of which was recommended by the NTS, fulfills the dual need of sectoral planning, and highway planning and engineering. The collection of systematic traffic, inventory and programming data for highway improvements and expenditures is among SAT's responsibilities. Since its creation, SAT has been instrumental in preparing key inputs to the National Development Plan, and it supervised the consultant services for the Fifth Transport Project (Credit 807-HA). It has conducted annual traffic counts and O/D surveys in addition to designing improvements for the streets of Port-au-Prince. To assist in further developing the capabilities of this young service, its work program for 1978-1980 was discussed and agreed upon during the negotiations for the Fifth Transport Project. It is expected that, over the coming years, as SAT expands and gains experience, it will be a key technical arm of TPTC. - 21 - VI. THE ROLE OF IDA 6.01 The changed economic environment in the country since the early seventies made it possible for IDA to be constructively reinvolve d in the transport sector. The support has continued through the evolution of the NTS and the creation of specialized services within TPTC such as SAT as well as encouragement for the proper planning and execution of maintenance. IDA representatives have been able to work satisfactorily with their Haitien counterparts. 6.02 Experience gained through Phase I and Phase II of the Northern Road indicates that successful project execution depends upon critical pre- investment studies and project preparation supplemented by constructive supervision. Despite the initial difficulty in estimating quantities and unit costs, close follow-through enabled paved access to be reopened between the capital and the northern provinces with relatively modest investments. 6.03 Even though IDA itself has not been directly involved in supporting road maintenance, it has been able to raise the consciousness of the Government and to impress upon the Haitien decision-makers the importance of preserving and maintaining the large infrastructure investments through timely repairs. IDA assistance in stimulating communications through inter-agency forums and detailed sectoral analyses (NTS) has been instrumental in assessment of investments in a sectoral context as opposed to the traditional ad hoc basis. 6.04 The slow progress in institutional developments has been a disappoint- ment for IDA. SEPRRN, in particular, will need encouragement and continued assistance to ensure adequate maintenance of the network in the coming years. Timely vehicle weight and dimension enforcement is another area of concern. Although the NTS shows that overloading is currently not a major problem, a part of the post-construction damage to the Northern Road has its origins in overloading. Competitive pressures on the road transport industry, which has no restrictions on entry, and the improved state of the road will have a tendency to aggravate overloading in the absence of timely enforcement of regulations. Overall, the Third and Fourth Highway Projects have managed to show that, with good supervision, physical objectives can be accomplished. However, future IDA assistance will need to be carefully aimed at removing the non-physical constraints to development, e.g., institutional capacity. VII. CONCLUSIONS 7.01 The Third and Fourth Highway Projects have accomplished the principal objectives of providing all weather access between the capital, Port-au-Prince, and the main port in the north, Cap Haitien, as well as linking the Artibonite Valley to the main food-consuming centers. - 22 - 7.02 The initial difficulties which led to the reconstruction of the Northern Road under two projects again accent the need for thorough project preparation, particularly final engineering and reliable cost and quantity estimates. Considering the lack of historical cost data and contract experience in Haiti, an alternative approach may have been to receive bids before Credit negotiations. 7.03 Results of institutional developments have been mixed, but can be considered partially successful. 7.04 The projects have been successful from the economic point of view. Evidence of beneficial socio-economic impacts can be seen in the increased agricultural activity and urban developments in the zone of influence of the road. There are no indications of adverse environmental impacts related to the projects. PROJECT COMPLETION REPORT HAITI THIRD HIGHWAY PROJECT (CREDIT 478-HA) Comparison of Costs: Original Vs Amended Project (US$ million) Project as Appraised Project as Cost Costs Based on Amended 1/ Estimate Bids Received (Oct. 8, 1974) Reconstruction of Sections of Northern Road 6.83 15.30 8.80 Estere Bridge .51 .51 .51 Engineering Supervision .96 .96 .96 Technical Assistance .80 .80 .80 Quantity Contingencies (10%) .73 1.58 .93 Price Contingency 3/ 2.26 4.19 2.57 Special Risk Contingencies 1.20 - - TOTAL 13.29 23.34 14.57 1/ Road length reduced from 148 km to 78 km after receipt of bids 2/ US$0.60 million financed by UNDP grant S/ Same percentage as used in the Appraisal Report April 1979 PROJECT COMPLETION REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Appraisal Estimates of Final Cost of Civil Works Compared with Actual Costs (US$ Million) % Difference between Appraisal Estimates Actual Costs and Base Final Actual Appraisal Estimate Costs Costs11 Original Contract Costsl of Final Costs Third Highway Project (Credit 478-HA) (as amended) Reconstruction of 78 km of the Northern Road 8.80 11.94 8.47 11.01 - 8.00 Estere Bridge 0.51 0.64 0.54 0.66 + 3.10 Engineering Supervision 0.96 1.19 0.64 0.96 - 19.39 Subtotal 10.27 13.77 9.65 12.63 - 8.30 Fourth Highway Project (Credit 556-HA) Reconstruction of 170 km of Northern Road 17.00 22.74 13.28 21.12 - 7.12 Sonde Bridge 1.20 1.60 1.98 2.13 + 33.10 Limbe Bridge - - 1.14 1.17 - Engineering Supervision 0.90 1.11 1.01 1.07 - 3.60 Subtotal 19.10 25.45 17.41 25.49 - 0.15 TOTAL 29.37 39.22 27.06 38.12 - 2.8 1/ Includes 20% risk premium, 10% quantity increases and price contingencies used in the respective SAR's. Price / contingencies are prorated using the weights in base costs 2/ Includes road signing and complementary works (US$0.50 million and US$1 10 million respectively) in addition to the amendments made to the original contracts during progress of works. May 1979 PROJECT COMPLETION REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Appraisal Estimates Compared with Actual Costs of Projects (US$ Million) % difference between Appraisal Estimate of Final Costs Actual Costs Actual and Appraisal Government Bank Total Government Bank Total Estimate of Final Costs Third Highway Project (Credit 478-HA) Civil Works: Lots A and B 3.14 8.80 11.94 2.96 8.05 11.01 - 7.80 Estere Bridge 0.13 0.51 0.64 0.16 0.50 0.66 + 3.10 Subtotal 3.27 9.31 12.58 3.12 8.55 11.67 - 7.20 Consulting Services: Engineering Supervision 0.48 0.71 1.19 0.24 0.72 0.96 - 19.30 Technical Assistance 0.20 0.60 0.80 0.20 0.60 0.80 0.00 1 Subtotal 0.68 1.31 1.99 0.44 1.32 1.76 - 11.60 Total Credit 478-HA 3.95 10.62 14.57 3.56 9.87 13.43 - 7.80 Fourth Highway Project (Credit 556-HA) Civil Works: Lot C 2.81 8.56 11.37 2.78 7.12 9.90 - 12.90 Lot D 2.81 8.56 11.37 2.72 8.50 11.22 - 1.3 Sonde Bridge 0.40 1.20 1.60 0.56 1.57 2.13 + 33.10 Limbe Bridge - - - 0.23 0.94 1.17 n.a. Subtotal 6.02 18.32 24.34 6.29 18.13 24.42 + 0.3 Consulting Services: Engineering Supervision 0.07 1.04 1.11 0.25 0.82 1.07 - 3.60 Sonde Bridge Design & Pavement Study - 0.13 0.13 - 0.11 0.11 - 15.40 Project Prep. Transp. V 0.21 0.51 0.72 0.53 0.72 1.25 + 73.60 Subtotal 0.28 1.68 1.96 0.78 1.65 2.43 + 24.00 Total Credit 556-HA 6.30 20.00 26.30 7.07 19.78 26.85 + 2.09 Total all Civil Works 9.29 27.63 36.92 9.41 26.68 36.09 - 2.2 Total all Consulting Services 0.96 2.99 3.95 1.22 2.97 4.19 + 5.80 Total Credit 478-HA and 556-HA 10.25 30.62 40.87 10.63 29.65 40.28 1.4 May 1979 PROJECT COMPLETION REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Comparison of Appraisal Estimates with Actual Traffic Counts (Average Annual Daily Traffic) Actual Dfeec ewe Appraisal Estimates Traffid C6tts % Difference Between Kilometer - Estimated and Counted Marker 1977 1978 1977 1978 Traffic (1978) Port-au-Prince-Croix des Missions 0 - 7.4 5,496 5,894 4,748 5,935 0.7 Croix des Missions-Duvalierville 7.4 - 31.4 1,166 1,399 1,812 2,463 76.1 Duvalierville- St. Marc 31.4 - 93.7 618 570 597 606 6.3 St. Marc- Estere Bridge 93.7 - 147.8 418 439 805 811 84.7 Estere Bridge- Gonaives 147.8 - 160.0 236 270 361 501 85.6 Gonaives-Poteaux 160.0 - 168.0 264 276 486 573 107.6 Poteaux-Ennery 168.0 - 178.0 125 132 238 289 118.9 Ennery-Plaisance 178.0 - 201.4 96 85 236 284 234.1 Plaisance-Cap Haitien 201.4 - 249.0 136 142 1/ 475 234.1 1/ Unreliable count reported in the source document "Enquete sur le Traffic" May 1979 PROJECT COMPLETION REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Appraisal Estimates Compared with Completion Rates of Return Third Highway Project (Credit 478-HA) Appraisal Estimates Completion Rates Sections Rates of Return of ileturn 13.4 - 17.3 17.1 43.9 1/ 31.4 43.2 20.2 19.4 1/ 70.3 105.5 30.4 27.3 / 105.5 122.8 18.0 24.6 2/ 122.8 128.9 26.2 23.8 2Y 145.5 147.5 11.7 19.8 / Overall Rate of Return including the Estere Bridge 20.0 25.3 Fourth Highway Project (Credit 556-HA) 0 - 6.9 37.2 51.6 3/ 6.9 - 13.4 32.7 32.8 .2J 17.7 - 32.0 35.3 38.1 3/ 43.4 - 70.3 48.1 26.3 3/ 128.1 - 143.6 18.1 18.8 2 147.5 - 159.4 22.2 21.2 3/ 159.4 - 178.0 11.2 15.6 3/ 178.0 - 201.3 8.8 15.8 YV 201.3 - 247.4 9.9 18.9 A Overall Rate of Return Excluding Bridges 25.8 24.9 Overall Rate of Return Including Bridges 5/ 34.8 40.9 6/ 1/ Pavement Strengthening in 1982 2/ Pavement Strengthening in 1983 3/ Pavement Strengthening in 1984 41 Pavement Strengthening in 1985 51 Assuming Sonde Bridge collapses in 1982 6/ Benefits include only distance saved by heavy commercial traffic, to which the original Sonde Bridge was closed May 1979 PROJECT COMPLETION REPORT HAITI THIRD AND FOURTH HIGHWAY PROJECTS (CREDITS 478-HA AND 556-HA) Appraisal vs Actual Estimates of Vehicle Operating Costs (U.S. cents/km net of taxes) Third Highway Project 1/ Fourth Highway Project 2/ Current Estimates 3/ Paved Paved Paved (Poor Condition) (Poor Condition) (Poor Condition) Paved Gravel Unpaved Unpaved Unpaved Surface (Good Condition) (Good Condition) (Good Condition' Paved Gravel (Good Condition) Paved Gravel (Good Condition) Vehicle Type Car 5.33 7,81 11.81 8.06 11.77 17.87 8.90 10.70 14.70 Jeep 6.93 9.97 15.12 9.47 12.88 18.80 9.20 11.70 16.90 Pick-up 6.26 10.31 16.60 8.30 13.45 21.31 9.20 11.70 16.50 Bus 8.75 14.17 22.60 14.17 22.69 35.47 40.60 50.00 65.40 Truck 9.39 15.04 25.79 13.46 21.19 35.88 39.10 54.90 73.50 1/ SAR May 6, 1974 2/ SAR March 20, 1975 3/ SAR, Fifth Transport Project, March 10, 1978 May 1979 IBRD-13293 (PCR) s] 3 °3 "-o0 AUGUST 1979 A NT 7C O A Al PORTDE-PAIXCA THIS MAP CONTAINS INFORMAtION SIOWN ON IBRDi10822, Point-JeaInabe/ FEBRUARY 1974 AND IBAD11482, MARCH 1915 AND IS BASED 0OMINICAN 4- REP l el - -r -- .031 - Anse--Rc - THIRD AND F'DURTH HIGHWAY PROJECTS jS I I||-- - 1 ION- l I, in' I I 1.1,• I --z I |I- I AMI i|| IIr -3NAVE----t -2 O Roce· Borea ,-----. •¾- - -' R-- -å B.,-l Po, .0 . j° C A R / 8 B E A N SEA Paint GraANoÆ /•E. /07N10100- ______________ 1