Turkey - Istanbul Urban Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4872 PROJECT PERFORMANCE AUDIT REPORT TURKEY ISTANBUL URBAN DEVELOPMENT PROJECT (CREDIT 324-TU) December 30, 1983 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 aluth rization. FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT TURKEY ISTANBUL URBAN DEVELOPMENT PROJECT (CREDIT 324-TU) TABLE OF CONTENTS Page No. Preface ..... .......................................................... I Basic Data Sheet .. ................................................. ii Highlights ................................................... ...... iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. PROJECT OBJECTIVES ....................................... 1 II. PROJECT RESULTS ............................. ............ 3 III. LESSONS ......................................... 6 IV. CONCLUSIONS ................................. 8 PROJECT COMPLETION REPORT I. Introduction ............................................. 9 II. Project Identification, Preparation and Appraisal ........ 11 III. Implementation ...................... .................. 13 IV. Institutional Performance and Development ................ 22 V. Bank Performance ...... .................................. 23 VI. Conclusions ................................................. 24 Annexes 1-3 Map - IBRD 3823R2 This document has a restricted distribution and may be used by recipients on!y in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. PROJECT PERFORMANCE AUDIT REPORT TURKEY: ISTANBUL URBAN DEVELOPMENT PROJECT (CREDIT 324-TU) PREFACE This report is a Project Performance Audit on an integrated urban project for Istanbul, Turkey for which Credit 324-TU of US$2.3 million was made in June 1972 to the Republic of Turkey. The Credit Agreement was signed on June 30, 1972 and became effective on January 5, 1973. The original Closing Date was June 30, 1977, but it was extended and the Credit was closed June 30, 1980, when US$700,000 was cancelled. The Project Performance Audit Report consists of a Project Perfor- mance Audit Memorandum (PPAM) prepared by the Operations Evaluation Depart- ment (OED) and a Project Completion Report (PCR) prepared by Urban Division of the Europe, Middle East and North Africa Regional Office. For purposes of the PCR a project completion mission visited Turkey in February/March 1982. The PPAM is based on discussions with Bank staff, a review of the PCR, the Appraisal and President's Reports, minutes of Board discussions and other information in the files as well as an OED mission to Turkey in March 1983. The Audit Report was prepared together with an audit report on the Istanbul Water Supply Projent (Lgan 844-TU). The PPAM is in substantiol agreement with the finding of the PCR. However, it does point out four areas where additional attention in project design would have been beneficial. The report was sent to the Borrower for comments; however,/none were received. PROJECT PERFORMANCE AUDIT BASIC DATA SHEET TURKEY: ISTANBUL URBAN DEVELOPMENT PROJECT (CREDIT 324-TU) KEY PROJECT DATA Appraisal Actual or item Expectation Reestimated Total Project Costs (US$ million) 3.3 2.3 Underrun or Overrun (%) - -30.0 Credit Amount (US$ million) 2.3 1.6 Disbursed - 1.6 Cancelled - 0.7 Repaid to April 1982 /a - 0 Outstanding to April 1982 - 1.6 CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS (US$ millions) FY73 FY74 FY75 FY76 (i) Estimated 760 1,703 2,312 2,312 (ii) Actual - 669 1,100 1,593 % of (ii) to (i) 0 39 47 68 OTHER PROJECT DATA Original Item Plan Revisions Actual First Mention in Files 07/69 or timetable Government's application 10/71 Negotiations 05/72 Board Approval 06/72 Loan/Credit Agreement Date 06/30/72 Effectiveness Date 10/05/72 01/04/73 01/05/73 Closing Date 06/30/77 12/31/76, 06/30/77, 06/30/80 12/31/78, 06/30/80 Borrower Republic of Turkey Executing Agency Ministry of Reconstruction and Resettlement Fiscal Year of Borrower July 1 - June 30 Follow-on Project /a Repayment begins 10/82. MISSION DATA /b Month/ No. of No. of Date of Item Year Weeks Persons Manweeks Report Identification 06-07/70 2.0 3 5.0 12/70 Preparation I 03/71 2.0 3 6.0 06/21/71 Preparation I 07/71 2.0 2 4.0 07/29/71 Appraisal 11/71 3.5 9 17.5 06/05/72 Sub-Total 9.5 32.5 Supervision 08-09/72 2.5 2 4.5 11/22/72 Supervision 1I 11-12/72 3.0 2 6.0 01/15/73 Supervision III 07/73 2.0 1 2.0 08/27/73 Supervision IV 09-10/73 2.0 2 4.0 10/19/73 Supervision V 02-03/74 4.0 5 10.0 04/17/74 Supervision VI 04-05/74 3.0 3 5.0 06/11/74 Supervision VII 07/74 3.0 5 7.0 08/20/74 Supervision VIII 09/74 3.0 4 6.0 11/01/74 Supervision IX 12/74 1.0 3 3.0 02/04/75 Supervision X 02-03/75 2.5 2 5.0 05/07/75 Supervision XI 07/75 3.5 2 7.0 08/12/75 Supervision XII 05/76 1.0 2 2.0 06/29-07/22/76 Supervision XIII 09-10/76 2.0 2 4.0 - Supervision XIV 02/77 0.5 3 1.5 02/23/77 Completion 02-03/82 1.5 2 1.5 Sub-Total 34.5 68.5 TOTAL 44.0 101.0 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Turkish Lira (TL) Year: Appraisal Year Average US$1.00 = 14.15 Intervening Years Average US$1.00 - 36.00 Completion Year Average US$1.00 = 135.00 /b Field work only. - iv - PROJECT PERFORMACE AUDIT REPORT TURKEY: ISTANBUL URBAN DEVELOPMENT PROJECT (CREDIT 324-TU) HIGHLIGHTS The object of the project was to establish integrated and compre- hensive general urban planning for the Istanbul metropolitan area and to pre- pare studies of a number of projects which could be financed by the Bank. Direction of the study was given to the Metropolitan Planning Bureau (MPB), an agency of the Ministry of Reconstruction and Resettlement, which was to undertake the general planning studies with the assistance of consultants and undertake or coordinate the work of others in preparing the project studies. For a variety of reasons, which are discussed in the PCR (paras. 3.04-3.28 and 6.01) and PPAM (paras. 8-14), the general study and, with one exception, the specific project studies were unsuccessful. The project was implemented during a period of political uncer- tainty and governmental changes and serious inflation (PPAM, para. 18). The conclusion of the PCR (para. 6.01) points out that the project was over ambitious, government support declined after 1975, the MPB was overburdened, managerial capabilities could not be brought together and the planning models used in the studies were too sophisticated. The PPAM concurs and highlights four areas where additional caution in project preparation and design would have been beneficial (PPAM, paras. 20-25). These are: (i) the complexity of governmental structure in the Istanbul metro- polis (PPAM, para. 21); (ii) limited managerial experience of the staff in the project agency (PPAM, para. 22); (iii) language problems between English-speaking consultants and Turkish counterparts (PPAM, para. 23); and (iv) the initiative taken by the Bank Group to move the project forward and use it as a vehicle to explore comprehensive urban planning (PPAM, para. 24). PROJECT PERFORMANCE AUDIT MEMORANDUM TURKEY: ISTANBUL URBAN DEVELOPMENT (CREDIT 324-TU) I. PROJECT OBJECTIVES 1. The Istanbul Urban Development Project had its genesis in an urban sector transportation mission in 1969 and in the Bank Group's wish to include Istanbul among those cities to be studied for integrated planning of urban development and the application of coordinated Bank operations. An urban reconnaissance/preparation mission visited Istanbul in June 1970 and proposed a project consisting of the Istanbul-Izmit expressway, some urban cluster infrastructure for new settlements along this expressway, and urban develop- ment studies. 2. After extensive discussions and review in the Bank Group, it was decided to prepare and process a project only of urban studies which would be implemented in parallel with imminent Bank Group projects for water supply and power distribution. This was expected to result in three separate appraisals (water supply, power distribution, and urban development studies) but which would be processed simultaneously. In this manner the Bank Group intended to encourage an integrated approach to the urban problems of Istanbul, which was to embody a number of policy decisions and admirti- strative reforms and include a work program of metropolitan planning. Two more preparation Lissions took place in March and July 1971. Both the water supply and the urban studies projects were appraised in November-December 1971 and a loan agroement (Loan 884-TU for water supply) and a credit agree- ment (Credit 324-TU for urban studies) were signed on June 30, 1972. The power distribution appraisal took place in June-July 1972 and a loan (892-TU) was signed on May 25, 1973. 3. The urban development project was to provide, according to the appraisal report, for: (a) assistance in the preparation of an integrated urban development program for the Istanbul metropolitan area which was designed: (i) to provide for planned development and expansion of the metro- politan area; (ii) to meet in a systematic way the short- and long-term needs of the growing population for employment, basic urban infrastruc- ture and services, housing, education, health and other ameni- ties; and (iii) to serve as a framework for detailed planning and investment decisions. -2- (b) assistance in the development and integration of the existing institutions and improvement of the administrative, legal and fiscal rules, regulations and policies to enable the institutions to plan, coordinate and implement efficiently the program in (a) above and to effectively mobilize and manage their fiscal re- sources; and (c) preparation, in collaboration with government counterpart staff, of an urban transport/land use model to be used by the Turkish author- ities in future years as an investment decision-making tool. These objectives were ambitious and, although they had been discussed during appraisal, they went well 'beyond what had been accepted formally by the Turkish authorities. Their accomplishment would require a degree of planning and a level of integration of the municipalities in the metropolitan area and of the central government line ministries which had not been attempted before in Turkey or by the Bank Group in other countries. 4. The project also provided for preparation studies (to be made jointly by consultants and government staff) of the following priority proj- ects: (a) a new site and services p".oject to settle low income population and to accommodate expected new migrants and natural increases in the low income population; a project to improve the living conditions in existing squatter settlements by providing minimum basic urban infrastructure; (b) a new urban cluster along the proposed Istanbul-Izmit Highway to serve as a nucleus for planned urban expansion; (c) relocation of the existing wholesale market from the congested inner city to outside the old city walls to improve traffic flows in the central business district and to provide for more efficient operations of the marketing facilities; (d) a wastewater disposal scheme for which a feasibility study that had been prepared earlier by consultants needed to be updated; and (e) traffic control installations to improve, at low cost, the use of the existing network. These studies were expected to generate projects for future Bank Group fi- nancing. As discussed below, they met with serious difficulties and only one resulted in a project. They were to have provided, if successfully com- pleted, vehicles for continued participation by the Bank Group in Istanbul urban development, and serve as models for participation in similar schemes -3- in other urban areas in Turkey. Each one was to be designed so that it could be constructed by itself and independently of successful progress toward the wider goals set out in paragraph 3. 5. The project was to be assisted by the provision of foreign con- sultant advisory services to the Metropolitan Planning Bureau (MPB) to review the plan and investment programs, and the means for their implementation. The consultants were also to assist in the preparatio% of a gecekondul/ im- provement and prevention project and an urban cluster development project. Other foreign consultants were to prepare an urban transport and land use model, study relocation of the wholesale market, and prepare a project for 4 wastewater disposal. 6. The appraisal report had proposed an IDA credit of $2.7 million- to cover the f'oreign exchange cost of some 490 manmonths of foreign con- sultants. The Borrower's representatives claimed that more expertise could be obtained from Turkish staff and the number of manmonths was reduced to 326 (before contingencies) and the credit amount to $2.3 million. Most of the reduction in foreign consultant manmonths took place in traffic engineering and control. II. PROJECT RESULTS 7. Delays in effectiveness of the credit and in meeting three specific project covenants are thoroughly discussed in the Project Completion Report (PCR), (paras. 3.01 - 3.06). There were conditions of cross-effectiveness and cross-default between the water supply loan and the urban development credit. The urban development credit effectiveness was held up by delays in meeting the effectiveness conditions of the water supply loan in respect of the employment of consultants. Apart from this linkage, these two projects and the power distribution project proceeded independently; and ]THrt drafte.: proposed legislation for a regional water (and sewage) agency, but the inte- grated approach originally sought was not attained. The PCR also summarises the delays in selection of consultants in the urban development project and the unexpectedly long time it took to produce the various reports (paras. 3.07 - 3.23). 8. General planning advisory assistance was provided by a U.S. and British consulting joint venture. A Draft Interim Report, "General Planning Study Phase I," was available for review in mid-1975, and the final report was dated September 1976. Neither the Bank Group nor the Turkish authorities were satisfied with the draft report which was essentially a review of Istanbul's master plan. The Bank criticism was harsh and gave rise to a pro- test by the consultants. The same joint venture was to assist in the pre- paration of the gecekondu improvement and prevention project and the urban cluster development project, based on terms of reference which were to have been prepared under the General Planning Study Phase I. However, the interim 1/ Squatter settlements literally "put down at night". -4- report did not contain the required terms of reference and there was no agreement between the consultants, the MPB and the Ministry of Reconstruction and Resettlement (MRR) on one side, and the Bank Group on the other, as to the nature of future projects for study. The former preferred urban cluster development and trunk roads, while the Bank Group wanted low income sites and services. 9. A different British consultant was retained to prepare an urban transport and land use model. This consultant began work in December 1974 and the first phase was also completed in mid-1975. The second phase, which would have used the model to evaluate transportation policies, was never carried out. The model was not used and its utility was critized by the MPB because, among other reasons, MPB claimed it was not compatible with the capacity of locally available computers - which turned out to be less than had been expected at the time of appraisal. Bank Group staff, however, felt the land use model, while potentially useful, was too sophisticated for both 1PB and Istanbul decision-makers. 10. The study of the wholesale market complex was contracted with a French consulting firm in November 1973, and an interim report completed in June 1974. It was to have been followed by detailed design. However, the market site had been progressively occupied by squatters until they numbered 2,000 families, and the Municipality found it impossible to move them. The Bank had repeatedly brought the occupation to the attention of the Istanbul Municipality and emphasized the need to remove the occupants. Bank Group staff judged a proposed alternative site to be too expensive and probably too small, so this project proceeded no further. At the time of the audit, a market complex was being designed by the Technical Institute of Istanbul for still another site. 11. The wastewater study was executed by a US-Turkish joint venture. The work began in January 1974 and the draft report was ready a year later. An appraisal was anticipated for May 1975 but was postponed until a regional wastewater (and water supply) authority was established. The Istanbul Water :apply and Sewerage General Directorate was created on November 20, 1981 and a loan for a sewerage project was approved by the Bank in May 1982 (Loan 2159-TU). 12. The traffic engineering and control study was to have been done by MPB staff, including staff seconded from the Directorate of Highways, during 1973. However, local staff with the required experience were not provided and it was arranged that the consultant working on the urban transport and land use study would provide technical assistance from January 1974. A draft final report was completed in February 1975. The results of this effort were partially used in addressing the traffic problems of Istanbul. 13. All the studies started much later, took considerably longer to execute, and required many more manmonths of foreign and local manpower than had been estimated by the appraisal. Moreover, some stuilies were not carried out at all or only partly completed. Finally and wost importantly, the studies failed to establish integrated metropolitan planning and investment and, except for one study, resulted in no investments. The $700,000 eventu- ally cancelled from the credit was attributed to "savings" due to originally - 5.. scheduled work being dropped, i.e. the sites and services and gecekondu improvement projects, the urban cluster project, Phase II of the transport and land use model, the wholesale market design, and training. 14. There were several reasons why the sites and services and gecekondu improvement study did not proceed. The MPB explained to the OED mission that low income sites and services (as defined by the Bank) could not be a priority in Istanbul. They noted that by the time low income squatter settlements had attained sufficient (semi-legal) status that they could be attended, they were no longer low income. The Ministry of Housing and Recon- struction (successor to MRR) stated that under existing legislation sufficient public land for sites and services was not available, noting that this was during a period when legislative enactments were, as a practical political matter, unattainable. 15. The credit was extended twice for a total of 3 years so that $700,000 remaining in the credit might be used for foreign or local consul- tants' services to prepare a second Bank Group project for Turkey's urban sector. The Bank Group saw little likelihood of prompt achievement of the wider original goals for integrated development in Istanbul, so it decided to consider separate urban projects. A public transport project identified in 1975 foundered in 1976 on the Government's changing priorities. The Bank Group continued to search for sites and services projects, even modifying its insistence on low income, but successive agreements in the field by missions to Turkey for a variety of reasons failed to eventuate in a project. During the 3 years that the Credit was extended, no additional funds were spent. 16. The MPB was overburdened with responsibilities and possessed inade- quate managerial experience to implement the project. These two factors contributed significantly to the shortcomings of the project. The MPB had been a small physical planning office which suddenly faced expanded re- sponsibilities, a large increase in staff, and the task of selection and negotiations with foreign consultants. The appraisal report made no mention of the management capability of MPB, and it neither discussed the numbers and types of staff nor compared the proposed workload with the past level of activities of MPB. The report only noted that staff of other government agencies would be assigned, the Government would provide all staff and other * support required for successful project execution, and that the foreign con- sultants would provide an experienced chief consultant responsible to the Director of MPB for the execution of the project. 17. A major problem lay in the 1971 civil service personnel law, which had increased wages of support staff but held down salaries of profession- als. This law caused a general exodus from public service of experienced staff and affected project implementation generally in Turkey. It was dealt with to a degree by special parliamentary authorization for the MPB to con- tract 40 Turkish specialists. Most of these specialists started to work by the end of 1973, but most had left by 1975 as expiring contracts were not renewed. Of the staff who worked on the project, only 3 remain in the MPB today. -6- 18. An assessment of the performance of MPB and of the consultants and the project as a who.e, should not be made without full recognition of two urforeseen events: (a) the political uncertainty in Turkey during the mid-1970s with numerous government changes; and (b) the severe inflation resulting from, inter alia, the oil crisis in 1973. Numerous changes within government agencies resulting in varyinF degrees of support for the project and difficulties of coordination among various gov- ernment agencies and municipalities in a highly politicized environment had an effect on the implementation of the project. A March 1973 supervision report noted that four ministers had come and gone since the project was conceived. However, at least in terms of its routine work in collecting and processing data and drafting plans, the MPB was somewhat isolated from these difficulties. 19. A general reluctance to use foreign consultants appears in a number of projects, including the Istanbul Water Supply Project and this project. The issue surfaced at the negotiations when the number of manmonths of foreign consultants and the credit amount were reduced. The general planning study and the urban transport and land use model were to be team efforts by foreign experts working together with Turkish counterparts, with neither party individually responsible for the result. There was considerable diffi- culty in achieving the anticipated integration and a good deal of tension and frustration is evidenced in reports and correspondence in project files. Some of this was due to the language barrier but relations were also strained by the local reluctance to use foreign consultants, the higher salaries earned by the foreign experts, and some weaknesses in the consultants staff (the Chief Consultant had to be replaced). The situation was not helped by the Bank's blunt criticism (para. 8) of the work of one group of consultants. III. LESSONS 20. The PCR cogently discusses five factors (paras. 6.01 - 6.02) which hindered project success. In addition, there are four other areas that contributed to the failings of the project and might have been better appreciated by the Bank Group and discussed in the Appraisal Report: (i) the difficulties inherent in a complex governmental structure and political environment, (ii) the limited managerial experience of staff in the project agency, (iii) the language barrier, and (iv) the Bank Groups' active role in the preparation of the project and its use as a vehicle to initiate comprehensive planning. 21. The project was directed to a metropolitan area fragmented into A number of municipalities, with most important decision-making concentrated in strong line ministries of the Central Government. There was inevitable tension between urgently felt municipal needs and central government control, -7- often exemplified by opposing political parties in power in Istanbul and in the Central Government. This was illustrated a number of times during implementation by a deliberate mutual avoidance of communication between the municipality . .d MPB (an arm of the Central Government). The appraisal report had mentioned the existence of 30 municipalities in the metropolitan area, the concentration of responsibility of most functions in the Central Government and its line ministries, creation of the MPB only 4 years earlier, and a recent civil service personnel law which was leading to a general exodus of professional staff. However, it did not discuss the impact these factors would have on the implementation of the project and how they could adversely affect achievement of project objectives. In the event, they were major factors in the failure to achieve the project objectives. 22. The probable ability of MPB to cope with the leadership roles placed upon it was another factor that could have been addressed. The Appraisal Report was also silent on the structure and management capability of the MPB. Th!.s proved a major lacuna. 23. The language barrier was a major constraint in a project which depended upon close collaboration between large teams of expatriates and counterparts. This is particularly important where the studies concerned urban development which require careful attention to political and thus linguistic nuances. A common thread throughout project implementation was the difficulty of English-speaking consultants and Turkish counterparts working together. Further, local data and information had to be translated into English for the consultants and their reports had to be put into Turkish for comment and review by many MPB staff and Turkish authorities. One of the difficulties in reports reviewing -- and in achieving the acceptance and implementation of their recommendations -- was the delay in translation of even report summaries into Turkish. Oral communications were also limited and foreign and local groups seemed to find it easier to work apart. 24. The project began to evolve into something closely identified with the Bank Group and its policies when the Bank Group advised the Turkish Government in May 1970 that it wished to choose Istanbul as an area wherein the Bank Group could develop an integrated approach to urban problems. It proposed a mission in June 1970 to undertake studies and discussions. In March 1971, the Bank advised that a coordinated approach was necessary and that a mission was to arrive that month to assist in project preparation. On the basis of that mission, the Bank Group outlined essential matters in June 1971 and proposed a program of studies and a mission in July 1971 to discuss the approach and agree on methods. The Bank Group also suggested appraising the urban development project in tandem with the Istanbul water supply and power distribution projects. In August 1971, the Bank forwarded a draft work program and suggested appraisal the following October. The Government replied on October 10, 1971, agreeing with some steps to begin studies and noting that the work program was under review in the ministry and comments still were expected from the State Planning Organization and the Ministry of Finance. Appraisal began October 27. The major feature of the urban development project and its processing were thus specified at the initiative of the Bank Group. This appears to have met with the willing endorsement of technocrats in Istanbul and Ankara, although the attitude of senior officials varied from neutral to supportive. -8- 25. These problem areas, and those cited in the PCR, are difficult issues. They are not easy to solve or address in a single project or by out- siders, The idea of attempting comprehensive urban planning was usefully innovative. However, it was being attempted in an environment replete with difficuities, which apparently were not adequately appreciated. Fuller recognition of their importance could have suggested more realistic expecta- tions and a more practical program and more modest promises of what the proj- ,ict could achieve. Alternatively, a more propitious candidate project might have been identified. V. CONCLUSIONS 26. The major goals were not achieved and integrated metropolitan planning has still to be attaiaed. However, the project contributed to the generation of materials and ideas which probably shaped the evolution of metropolitan government in Istanbul. The failings identified in the PCR (para. 6.01), namely, an overly ambitious project design, lack of sustained, long-term Government support, an overburdened KPB, inadequate managerial capabilities, and an excessively sophisticated planning model, are major con- tributors to an unsatisfactory project. Moreover, the measures to meet the needs and reach the goals were insufficiently considered. Certainly the political events and inflation which were to unfold could not have been anti- cipated. However, the complexity of the government structures in Istanbul, the limited managerial experience in the project agency and the effect of the 1971 personnel law on staff turnover and morale, and the language barriers were known. A more realistic assessment of the ability of MPB to manage the program and the procedural requirements to obtain approvals and actions would also have been possible. 27. The need for comprehensive integrated urban planning for the Istanbul metropolitan area was apparent and the Bank Group's goals were, in the abstract, a-propriate. However, the general aims of comprehensive planning and regional coordination, as well as the list of studies, were overly ambitious for a single project cycle. An alternative approach would have been a 2- or 3-project program emphasizing training of Turkish staff, supported and encouraged by discrete projects (e.g. water supply and sewerage, power distribution, telecommuncations, bus transport) which could have been expanded as comprehensive regional planning developed. However, even this might have had little success given the high staff turnover in MPB and other agencies. -9- TURKEY; PROJECT FOP THE PREPARATION OF AN INTEGRATED PROGRAM.l FOR ISTANBUL (1IUP) PROJECT COMPLETION REPORT t. INTRODUCTION 1.01 Istanbul is the largest and most important urban agglomeration in Turkey. Almost half the Turkish pom*.lation is now urbanized, and Istanbul alone accuunts for almost a quart-c of the urban sector. As the primate city, it is the main national center of trade, ccmmerce, banking, finance, and other services. Once strategically located at the crossroads of Europe and Asia, it is also a major cultural and historic center. A focus of rural-to-urban migration since World War II, it has also served as the main center of the country's industrialization. Project Background 1.02 The metropolitan area of Istanbul (IRA) had a population of 2.8 million, about half the current total, in late 1971 when the IIUP Project was appraised. The public wastewater system served only 20% of the people. Contamination of water used for drinking and for hygiene was widespread. Even ti.ough the low car ownership was not beginning to increase, traffic congestion was already becoming a problem on city streets designed for carts. Half the built-up area consisted of inadequately serviced squatter settlements (gecekondus) which were home to some 35-40% of the total urban population. These settlements of mostly lover income families were growing at a rate of 10,000 dwelling units annuall. In the absence of a functional metropolitan management system, there were conflicts of objectives and programs among different administrations with overlapping responsibilities, inadequate financing, personnel shortages, and means for land-use control. While Turkey had created several master planning bureaus for the largest metropolitan areas, including the Greater Istanbul Master Plan Bureau (MPB), they were essentially physical planning agencies with little technical capacity and no functional connection with the local and central budgeting mechanisms. 1.03 Urbanization was then under way rapidly throughout the country. Urban population growth was projected to average 5.5% annually between 1975 and 1995 with a concurrent demand for jobs and for social and other urban services. Because of its role as a primate city, Istanbul was feeling the pressures of population growth more than any other urban center, as evidenced by the influx of a half million or so migrants into its metropolitan area from 1965 to 1970 alone. 1.04 The indications were that a high growth rate was liable to continue, although Government policies were generally aimed at reducing the expansion of major cities. Numerous and complex urban problems had already manifested themselves, and they were getting worse. It was against this background that the Bank evidenced an interest in the Turkish urban sector in general, and in Istanbul in particular. No previous Bank investments had been P%ade in the - 10 - sector. But preparations for Bank loans to improve the supply and distribu- tion of water and electricity paralleled the preparation of the Urban Development Project.1/ 1.05 Many of Istanbul's problems were clearly interrelated and connected with haphazard arrangements for urban administration and finance. The Bank therefore considered it appropriate to support government efforts to develop more rational objectives and performance-oriented approaches to urban develop- ment planning and investment, to support the development of institutions required for this, and to coordinate its own lending for separate sectors of the Istanbul economy. 1.06 The "Project for the Preparation of an Integrated Urban Program" (IIUP) that emerged consisted of studies aimed atz (i) reviewing the objectives, assumptions and investments in MPB's Master Plan for the IMA, to develop an investment program of priority projects, to relate land-use plans to transport investment and to recommend institutional changes and resources needed to manage and coordinate IMA, urban development, particularly land policies and controls required to implement urban cluster type projects; and (ii) preparing specific development projects suitable for financing either by the Bank's urban projects department, or project divisions of other Bank departments. An IDA Credit of US$2.3 million (Cr. 324-TU) was therefore signed on June 30, 1972 for; "the preparation, in a form suitable for Government's approval and implementation, of an integrated program of action to meet the long- term urban needs of the Istanbul Metropolitan Area, an urban transport/land-use model, and high-priority projects designed to alleviate existing problems in the area" (Schedule 2, Description of the Project). The Credit was to cover the foreign exchange component--71X--of a US$3.3 million total investment. Sources of Information 1.07 This Project Completion Report is based on information drawn from the Project Appraisal Report (No. PS-12A of June 5, 1972), a review of Bank files which included supervision reports, memoranda, correspondence, consultant reports, etc.; and interviews with Bank officers who had participated in project implementation, appraisal and supervision. Additional information was gathered during a project completion mission to Istanbul and to Ankara in February 1982 from Government officials who had been associated with the project. 1/ A US$37 million loan for the Istanbul Water Supply Project was signed on the same day as the Urban Development Credit. In April 1973, a US$14 million loan was signed for the Istanbul Power DisLribution Project. - 11. - II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 2.01 The origin of this project can be traced to a supervision mission for the Transport Coordination and Railroad Studies which visited Turkey in May 1969, and recommended that the Bank consider organizing an urban transport study. The following year, an urban reconnaissance mission proposed that the Bank assist the Government in implementing the strategy of the MPB, which was to encourage urban cluster development on the Asiatic side of the IMA. Specifically, the mission recommended (draft yellow cover report, October 1970) Bank financing of an urban development project consisting of: (i) construction of 46 km of the proposed Istanbul-Ismit expressway; (ii) a set of urban development studies; and (iii) a study of transport problems. 2.02 Comments on the proposed project noted the lack of justification for the development strategy in the Master Plan and the absence of investment pric :ies. It was suggested that the proposed project would not solve Istai->ul's critical problems of providing urban services. It was further obs( d that the main item, the proposed expressway, could not really be rega. .ad as an "urban" project. 2.03 In February 1971 the Bank decided to support the preparation of an integ ated urban development program for Istanbul and separate, but coordinated, projects in individual sectors. The supervision of the devel oment of the program, and the implementation of the basic planning studi,- were to be the responsibility of the Urban Projects Department. Specifically, the project conststed of the following undertakings, for which consultant services were to provide assistance: (a) the preparation of an integrated urban development program for Istanbul; (b) the development of institutions and improvement of regulations and policies to enable the institutions to coordinate and imple- ment the program; (c) the preparation of high priority investment projects which were to aim at alleviating the most pressing needs, one set of which could be carried out before the integrated program was completed and another set which were to be identified from activities (a), (b) and (d); and (d) the preparation of an urban transport/land-use model (UTLUM) which was to provide a basis for future investment decision- making. The projects to be identified and prepared on the basis of (a), (b) and (d) were to include the development of; (i) basic infrastructure for existing squatter settlements and future low-cost, low-income residential areas; and (ii) urban clusters to form the nucleus for planned urban expansion along the proposed Istanbul-Izmit Highway. The preparation of three other projects under (c) was to begin immediately and include; (i) a new wholesale market to relocate and improve the efficiency of the existing overcrowded market in the - 12 - city center; (ii) wastewater disposal facilities; and (iii) traffic engineer- ing and control measures to improve at low cost the use of the existing urban transport system. In addition, provision was made for fellowships and seminars to train Turkish staff in the fields involved, and equipment ane vehicles were to be provided to carry out the studies. 2.04 The overall responsibility for project execution, including partic- ularly the coordination of other ministries involved in the project, was assigned to the Ministry of Reconstruction and Resettlement (MRR). The MRR dele,:ated the responsibility to the MPB, a regional agency of the MRR. (para. 1.02., Although financed under Credit 324-TU, the preparation of the Waste Water Disposal Project was assigned to the Iller Bank (a semi-autonomous agency of the MRR) and supervised by the EMENA Water Supply and Sewerage Projects Division. Later, on the other hand, the Istanbul Power Distribution Project (l.n. 892-TU) provided for consultants to study the operational, administrative and financial aspects of the Istanbul Electricity, Tunnel and Transport Undertaking (IETT) and to propose improvements in the organization of public transport services. The responsibility for supervising the IETT transport studies was assigned to the Urban Projects Department in view of its operational interests and the need of ensuring coordination with the traffic engineering and control study financed under Credit 324-TU. 2.05 Preparations for the project took place largely at the initiative of the Bank and the MPB, with the tacit support of the MRR. Bank missions in close collaboration with the MPB outlined the scope of the urban studies, and pointed out the inadequacies of land use planning, urban management, legisla- tion, taxation, and user charge levels for implementing the MPB's Master Plan and other urban development projects. 2.06 The problems of Istanbul and the existence of three separate levels of government and related agencies with overlapping jurisdictions in many development sectors, dictated a need for a program and project coordinating institution with a strong capacity for financial and economic planning and analysis. This critical--and new--function was allocated to the MPB; but it was recognized that the MPB's existing work program with its physical planning orientation, its small staff who were predominately architect/planners lacking adequate counterparts with expertise in financial and economic analysis, and its line of responsibility to an essentially sectoral ministry--the MRR--was far from ideal. 2.07 Turkish officials insisted that there was professional and technical capacity in Turkey to execute a substantial part of the planning studies and project preparation envisaged under the project and that if the project was to be effective, the effort of consultant and Turkish staff had to be fully integrated. Bank staff agreed that this might be the case, provided that Government could establish conditions of employment that would attract qualified Turkish professionals and provided that consultants were employed to fill the gaps in Turkish expertise. - 13 - 2.08 Strong recommendations were accordingly made to the MPB to use about 326 man-months of assistance from foreign consultants to carry out the studies in collaboration with a greatly strengthened MPB staff and possibly local consultants. The Bank also insisted and it was agreed, that the Government identify and implement specific means of employing and paying the specific categories of MPB technical staff identified in the Appraisal Report (Annex 7) and amounting to 644 man-months by about 30 professionals. The MRR was concerned about possible criticism by public and private officials who were generally opposed to the use of foreign consultants. Its reluctance was demonstrated during actual negotiations for the Credit, when the original amount of US$2.7 million was reduced to US$2.3 million because local professionals were preferred to foreigners for the work. This factor was responsible for a latent conflict between the Bank, the MPB and the con- sultants that was to persist throughout project implementation. III. IMPLEMENTATION Conditions of Effectiveness, Covenants, and Start-Up 3.01 The original Effectiveness Date was to be October 5, 1972. Because of delays in fulfilling requirements of effectiveness of the Loan Agreement for the Water Supply Project (844-TU), the effectiveness of the Credit and the Loan being linked, the Bank postponed the Effectiveness Date once, to January 4, 1973, when the Credit (and the Loan) were declared effective. 3.02 The Credit covenants required that the Borrower would; (i) take the necessary action to acquire all the land, and rights over the land, needed for the relocation of the wholesale market (Section 4.01, Credit Agreement); and (ii) make initial proposals regarding institutional, financial and other organizational arrangements required to coordinate planning, implementation and operations of the water supply and wastewater facilities in the Istanbul metropolitan area (Section 4.02, Credit Agreement). Both these covenants were to be fulfilled by December 31, 1972. The deadline was, however, extended to March 31, 1973 at the request of the Borrower. Also, by March 1, 1973, the MPB staff were to be augmented, in a manner satisfactory to both Borrower and IDA, in order for the MPB to be able to handle program coordination, planning and project preparation (Section 3.04, Credit Agreement). 3.03 These covenanted deadlines proved to be unrealistic, although the MRR and the MPB pursued them vigorously. Since this kind of a project was a new experience for both Bank and Borrower, the Bank attempted to facilitate matters by not insisting on the covenants being fulfilled at the time specified. Assurances were sought and received from the Borrower that the covenants would be fulfilled as soon as possible; and they were. 3.04 The 12.5 hectare site for the Wholesale Fruit and Vegetable Market, long since identified in the Istanbul %egional Master Plan, was acquired by the MRR and turned over to the Istanbul Municipality about April 1973. At the same time the MRR also approved a revision in the land-use plan for the Market, and provided a total area of 55 hectares for it. The extra land was needed because by this time MPB studies, carried out with the assistance of - 14 - Bank consultants, indicated that the functions of other markets and their facilities3 were interlinked with those of the fruit and vegetable market; so the possilbility of including these in the market project were included in the Terms of Reference for consultants studies of what was to be a "Wholesale Market Complex" project (W4C). 3.05 Via a parliamentary amendment in March 1973 to the law constituting the MRR, the MRR acquired the right to contract 40 individual Turkish specialists as "consultants" to work in the MPB. But it was not until the end of 1973 that most of this new staff started to work in the Bureau. When the MPB staff was at its peak strength, in 1974, the number of Turkish professionals working in the Bureau on the planning and project preparation studies was in fact about three times more than estimated in the appraisal report. 3.06 In order to comply with Section 4.02 of the Credit Agreement (replicated in Section 4.05 of the Loan Agreement for the Istanbul Water Supply Project), the MRR designated Iller Bank as the wastewater project preparation agency and submitted to the Bank, in March 1973, draft proposals for a Municipal Union for Water Supply and Wastewater Disposal for coordinating, planning, building and operating wastewater disposal facilities in the Istanbul Metropolitan Area (IMA). The Municipal Union was seen by the MRR as a practical interim means of complying with Section 4.02 because it did not require new legislation, except--and '-his was a critical issue--to add a provision in the Municipal Incomes Law to allow charges for wastewater disposal. The latter proved extremely difficult to achieve and was not obtained until the Istanbul Water and Sewerage Undertaking (ISKI) was created in November 1981 (para. 3.23). 3.07 The delays in fulfilling the loax, covenants were to be paralleled by a one-year delay in starting (about December 1973) the implementation of the planning and project preparation studies in the MPB and Iller Bank. This was due to the longer-than-anticipated time needed by the MPB to short list consultants and to send out letters of invitation to bid. Inexperience in contracting, the necessity of receiving approval from Ankara, a persistent ambivalence about the need for consultant assistance, and initial MPB staff shortages were all factors in the delay. Planned and Actual Project Implementation 3.08 The implementation of the originally planned studies and project preparation activities was as follows; - Studies for the Preparation of an Integrated Urban Development Program: 3.09 These were carried out by two different groups of consultants: a British firm and a joint venture of a British firm and an American firm. The joint venture's Chief Consultant was to coordinate the work of all the MPB consultants and their MPB counterparts. - 15 - 3.10 Transport Land-use Modeling. One of the joint major tasks '. the two groups of consultants was to devel IMPand apply a transport land-use model (UTLUM) to test the relationship between future transport systems and land uses and to identify and evaluate medium-term transport projects, in order to provide a better basis for government investment discussions. 3.11 The first phase of transport modeling (UTLUM I) started in December 1973, 12 months later than the appraisal schedule and was completed about mid-1975; taking twice as long as had been estimated because of organizational, technical and administrative problems (Annex 1). A simple 100 zone strategic simulation model was developed and used to test the 20-year transport and other implications of various alternative INA land uses. 3.12 The second phase of the modeling work (UTLUM I) rescheduled to begin in mid-1975, to plan, test, and evaluate a program of transport policies, mode and network options and projects, was never carried out because of problems related to the availability of adequate computer facilities, the rapid erosion, after 1975, in MPB's technical staff and--most important of all-- weakening government support for the IIUP. 3.13 Institutional Studies and Investment Programming. The joint venture group, in accordance with their terms of reference, was required to review the responsibilities and resources of various central and local government agencies working in the IMA, as well as their plans, programmes, and projects, with a view to improving coordination and consistency with agreed development objectives, and to recommend institutional and other changes required for implementing the Gecekondu Improvement and Urban Cluster (shelter) projects to be prepared under the Credit. The joint venture was also required to analyse land policies and controls, including zoning regulations, and make recommendations for changes required for implementing the shelter projects and other strategic features of the Master Plan. 3.14 The joint venture, with the assistance of MPB counterpart staff, carried out the studies between February 1974 and July 1975, thus taking 15 months instead of the nine months originally planned. The findings were summarized in the Draft Interim Report of 1975. The consultants' institutional recommendations dealt with; (i) urban government; (ii) urban planning legislation; and (iii) urban land and housing legislation. As regards urban government, the consultant recommended in favor of an Istanbul Metropolitan Union, a Regional Development Authority/Bank, a reorganization of the MPB and the creation of IMA regional service authorities. 3.15 On the basis of the consultants' recommendations, the HPB proposed and was asked by the Government to prepare several institutional and organiza- tional reforms, including draft legislation for the Metropolitan Union as well as the creation of a metropolitan water and sewerage authority--BIBSKI.I/ 1/ This-work was an extension of proposals made by consultants to Iller Bank in the course of preparing the wastewater disposal project (para. 2.04). - 16 - In spite of strong Bank support, at the time, none of the consultant/MPB proposals had a positive outcome. Turkey's uncertain political situation in the second part of the '70s obstructed any concrete action for rationalizing urban administration or pursuing the efficiency and equity objectives of the IIUP. There was then, in effect, no "market" for the institutional recommendations which were a major intended output of the project. - Studies for Project Identification and Preparation 3.16 Five projects--or subprojects--were to be prepared under the Credit (para. 2.03). The preparation of three of these--the Wholesale Market, Traffic Engineering and Control, and Wastewater Disposal--was scheduled to begin immediately after the credit became effective; while the preparation of the two others--the Gecekondu Improvement and Urban Expansion--was scheduled to begin in a second phase of work after the review of the IMA Master Plan, on the basis of consultant/MPB recommendations regarding the sites and institutional arrangements required to implement them (Annex 1). 3.17 Wholesale Market Complex. The preparation of a Wholesale Market Complex Project for possible Bank financing was contracted to a French firm. This firm's work in the MPB, commenced in November 1973, was interrupted and begun again in March 1974. The Interim Report on the project was completed in June 1974. It consisted of a feasibility study on the possible construction of a WC on the 55 hectare site at Zeytinburnu (para. 3.04) and was to have been followed immediately by a final phase of project preparation including, according to the contract, final layouts, designs, costs and financial estimates. 3.18 The final phase of project preparation never began because of a controversy over the market site. About 500 squatter families had occupied the expanded Zeytinburnu site by 1974. Despite reminders from the Bank, the MRR and the Istanbul Municipality were unable or unwilling to remove them and prevent further squatting and the number of squatter families continued to multiply in 1974. 3.19 The Municipality of Istanbul proposed an alternative site, within its boundaries. A rough evaluation by the Bank staff indicated that it would be too costly to develop (and probably too small) for the W4C. Other sites were considered in 1975. However, because of the lack of a large encugh site within the Istanbul municipal boundaries, all of them had to be in the neighboring municipalities. Using one of these sites would have required inter-municipal agreement. Using the proposed Municipal Union for this purpose was considered. But the decision to explore alternative market sites in effect killed the project, and the French firm never embarked on the final feasibility study. Istanbul, today still struggles on with the existing market. 3.20 Traffic Engineering and Control Project. The preparation of the Traffic Engineering and Control (TEC) project was originally entrusted to the MPB staff (paras. 2.07 and 2.08). The 12-month work program was established in Terms of Reference jointly developed and agreed by the Bank and the MPB. By the end of 1973, it was evident that the MPB Traffic Engineering Staff - 17 - needed to be assisted by consultants to carry out the TEC work program. The British consultants wure contracted to provide extra man-months for this purpose. They began working about January 1974 and produced a Draft Final Report on the Traffic Engineering and Control Study in February 1975, taking about two months more to complete than was scheduled. The study provided recommendations regarding traffic management policies and institutional responsibilities, defined traffic engineering and control measures, organized in a five-year action program and identified projects for possible Bank financing. 3.21 rhe TEC study was completed at the same time the results of the IETT study (para. 2.04) and the UTLUM I modeling exercise (para. 3.10) were becoming available. The output of all these studies led to the identification of a Bank project to improve public transport and traffic management and control in Istanbul. This project received the initial support of the municipality of Istanbul which was strongly interested in Bank financing for new IETT buses. 3.22 Project appraisal, tentatively scheduled by the Bank for April 1975, had to be postponed and the project was dropped from the Bank's lending program, mainly because of IETT's reluctance to come up with a financial reorganization plan, to consider separating its transport from electricity operations (which subsidized transport), and to adopt cost-saving changes in operations and labor management. 3.23 Wastewater Disposal Project. Project preparation by an American-Turkish joint venture began about January 1974 and the Draft Report was available by the beginning of 1975. The report defined (at preliminary design level) the wastewater works and equipment needs for a possible Bank-financed wastewater disposal project and made proposals for the staged creation of a Greater Istanbul Regional Water and Sewerage Undertaking (BIBSKI) based on the existing staff and organization of the Istanbul Water and Sewerage Agency (ISI). Although the Bank in May 1975 anticipated an appraisal of the project in the near future, it had to be postponed for many years because a decision could not be reached on which agency should be responsible for project implementation and how costs were to be recovered (para. 3.06). A Wastewater Disposal Project was only finally appraised and negotiated in 1982. On November 20, 1981 the Government passed Law No.2560 to create the Istanbul Water and Sewerage Undertaking (ISKI), an Istanbul regional agency, with its legal antecedents in draft legislation prepared in 1975 under the Credit-financed institutional studies (para. 3.15). ISKI is to be developed from ISI and has, inter alia, adequate powers to charge for wastewater disposal and to protect the environment from waterborne pollution. 3.24 Gecekondu Improvement and Urban Cluster Projects. The Terms of Reference of the joint venture consultants required them to identify and prepare Terms of Reference for these projects during the originally- planned eight-month period of institutional and investment programming studies and the IMA master plan review. In Phase II the joint venture group's staff were then to prepare projects for possible Bank financing (Annex 1). It was anticipated that the agencies identified for implementing the projects (not the MPB) would also provide staff for project preparation (para. 2.03). - 18 - 3.25 By June 1974, it was evident that Phase I of the consultant/MPB work program was going to take at least 12 months to complete and the identifica- tion of the shelter projects had not begun. In order to advance project identification and possibly save time, the MPB initiated in June 1974 pilot studies for these projects under the direction of the initial joint venture group's chief consultant (who had relinquished the post). But this measure did not help to get the process of project identification under way. 3.26 When the Draft Interim Report (or Phase I) came out in mid-1975, it did not contain Terms of Reference for the shelter projects, although several drafts were prepared separately at that time. In fact, the consultants, the MPB, and the MRR (and the Bank's staff) were not able to identify and sustain an agreement on specific projects, conforming to an agreed set of objectives. The consultants and MPB tended to focus on an urban cluster project to construct the trunk infrastructure (p-articularly roads) needed to expand the urban residential area. On the other hand, the Bank staff were focused on a project which would meet the shelter needs of lower income families whose only past option had been squatting. There were also problems in identifying and agreeing upon low cost means of acquiring project land and identifying sites for both urban clusters and Gecekondu improvement. Despite the efforts of Bank staff in 1976 and 1977, project identification and preparation could not be pushed to the point where layouts, designs, and standards for infra and superstructure for specific sites were available. 3.27 In retrospect, it appears that even in 1975 neither in the MPB nor in Ankara was there a real determinatitn to tackle the problems of providing shelter for the lower income households of Istanbul. After 1975 the MPB and the Bank attempted several times to identify Gecekondu improvement and urban cluster projects; but these attempts foundered too because of the low priority attached to them by Ankara. - Training, Fellowships, and Seminars 3.28 This project component was oaly partially implemented. While training and seminars were organized in the MPB by the consultants responsible for the implementation of the various studies, no special formal training was provided outside the MPB and no fellowships were granted. Reporting 3.29 The Credit Agreement contained standard Bank/IDA provisions for progress reporting. The real substance of the progress reporting system was contained in the provisions for inception, quarterly, interim and final reports which were incorporated in each of the separate Terms of Reference for the studies financed under the Credit. Weekly and monthly reports were submitted by the UTLUM and the wastewater consultants, respectively. There was also regular, explanatory correspondence from the general planning consultants; and in order to consolidate the findings as the work progressed, a system of "working papers" was developed. These also were transmitted to the Bank. The information for evaluating performance was more than adequate. - 19 - Procurement 3.30 Although Bank consultant selection procedures were respected, the MPB's inexperience in using them led to substantial delays of about one year, in procuring consultant services. The MPB relied heavily on the Bank's assistance in selection, officially requesting and receiving the aid of Bank staff in negotiating some of the consultant contracts for studies. At the request of the Government, the Bank authorized at one point, a Credit revision to allow US$400,000 to finance the costs of hiring of local consultants for a significant proportion of project preparation. However, these contracts failed to materialize due to the general decline in support for the project. 3.31 The contractual arrangements with consultants and allocation of responsibilities to them and MPB staff for the execution of the studies is well worth mentioning. To meet the need for technical expertise in several sectors and disciplines, several firms specialized in different areas had to be recruited (paras. 2.05 and 2.06). Also recognized was the need to closely coordinate their work and to subordinate it to the directives of the MPB management (para. 2.06). This resulted in: (i) designating a "chief consultant" from the general planning consultants to take the lead in coordinating all project studies;*and (ii) obligating the chief consultant to report to the MPB's Director so as to ensure that executive responsibility for the work of mixed teams of the consultants and the KPB was organized for agreed common purposes. 3.32 While the contractual arrangements with the various consulting firms included provisions on all the points above, they did not (and could not) clearly assign ultimate responsibility for the execution of the studies to the general planning consultants. This had negative consequences on the workability of the overall contractual system, which was heavily dependent upon the willingness of the KPB and consultants to cooperate with each other and the managerial skills of the MPB chiefs and the consultant's team leaders. Project Costs 3.33 Total project costs were estimated at appraisal at US$3,270,000 of which the foreign exchange portion was US$2.3 million (Annex 2). Due to project revisions, the actual foreign exchange expenditures were US$1.59 million or 31% less than originally planned. A complete record of the actual local expenditures on the project is not available in the Bank. However, the MPB budget approved in February 1973 provided TL 16.5 million for the project for 1973-75 (the original implementation period). This was TL 3 million more than the total cost with contingencies estimated at appraisal. Inasmuch as the MPB was staffed for the project at a much higher level (at least during 1974-1975) than was estimated at appraisal, it is reasonable to assume that local expenditures for Phase I alone were at least equal to the appraisal estimate of US$958,000 for the whole project. 3.34 The actual reimbursable project costs shown in Annex 2 were mostly used on Phase I of the planning and project preparation studies. These were estimated at appraisal at about US$770,000 and did not provide for the costs of consultant assistance to prepare a Traffic Engineering and Control - 20 - project.- If the US$116,000 costs of the TEC consulting services (paras. 3.20-3.22) are added to the appraisal estimated reimbursable costs of Phase 1 the corrected estimated amount comes to US$886,000. By comparison, the total reimbursable expenditure for Phase I consulting services was US$1,549,000: a 175% overrun. 3.35 In descending order of absolute magnitude of extra costs, the source of the overruns can be traced tos (i) the general planning services of the joint ventures these cost US$886,000 instead of an estimated US$488,000 (82% over- run, or US$398,000); (ii) the UTLUM modeling services of the British firm, which exclusive of TEC services, cost US$356,000 instead of an estimated cost of US$163,000 (118% overrun, or US$193,000); (iii) the wastewater disposal project preparation services of the American-Turkish joint ';anture; these cost US$349,000 instead of an estimated US$106,000 (229% overrun, or US$243,000). Furthermore, while the French firm's work on the preprration of a wholesale market project cost US$40,000 up to the Interim Report, if the contract and the feasibility study had been completed at the contract price of US$104,000, the cost overrun on the appraisal estimate would have been 70%, or US$43,000. 3.36 The cumulative result of all the :.erruns on various project components was that by the time Phase I was completed, there was only about US$700,000 left for Bank financing of the consulting services planned for Phase II, (e.g., preparation of urban expansion and Gecekondu improvement projects, UTLUM II, and general planning advisory services). This amount of money was clearly not enough to finance all the Phase II consulting services at the level foreseen in the Appraisal Report. A decision on the actual allocation of remaining funds to Phase II activities never was taken because the Phase I studies did not provide a basis for preparing the two shelter projects (paras. 3.24 - 3.27) and because Government lost interest in the project objectives. Disbursements 3.37 Disbursements of IDA funds were to begin in the second quarter of FY73. They were to be completed by the end of FY75. The first disbursement was actually made a year later than anticipated (paras. 3.05 and 3.07), and accounted for less than 2% of the total Credit. By January 1975 (when the Credit was declared a "problem project") US$669,500 (29%) had been disbursed. The appraisal estimate for that period had been for US$1.7 million (74%) to be disbursed. The last disbursement was on October 11, 1977; the total at that time was US$1,592,964 (Annex 3). Performance of Consultants and Borrower 3.38 Credit 324-TU mainly financed technical assistance for foreign consultants. The work that they performed, their relationships with the Government (MPB) and Bank staff and the responses to and results of their recommendations were major factors in the achievements and failures of the project. To evaluate the consultants' performance, and that of the borrower 1/ The estimates are derived from the quarterly estimates of man-month inputs in the Table, Annex 9 of the Appraisal Report. - 21 - and the implementing agencies, it is useful to distinguish between the effort on: (i) the general studies for preparing an integrated urban development program and improving the existing institutions, regulations and policies for implementing the program; and (ii) the studies for preparing specific projects suitable for possible Bank financing. 3.39 Plan Review, Institutional and Investment Programming Studies. These studies were carried out jointly by two groups of foreign consultants and MPB staff. The work started one year later than scheduled at appraisal and took twice as long (about 16 months) to complete than was contracted. The overall management of the studies, by the joint venture group's chief consultant and the MPB required a good knowledge of various sectors of the IMA economy, the administrative institutions and financial relationships and a capacity to weld together a strong planning team from a large number of newly-hired staff, in order to execute new and unfamiliar tasks. The cons-tants and MPB management were not up to this difficult task in the time and conditions that prevailed (para. 3.38). 3.40 The British/MPB team who developed the UTLUM I model, had to rely on the joint British-American team for data about land use options, 4Investment constraints, etc. With strong support from the British firm's UK office, the British team managed the UTLUM study competently. But, attempting to meet time and cost schedules of the British firm contract was done at the expense of leaving the Turkish counterparts partly out of the conceptual management of the work. This factor and the Turkish attitude toward consultants (para. 2.07) combined to generate friction between the consultants and the MPB staff and some unproductive contests for team leadership. 3.41 The technical quality of the studies varied from study to study. While there were problems with data, and simplificatios were required to run the UTLUM I model, it was used to test the transport population, investment, and other implications of the MPB's Master Plan and several other land use options (paras. 3.09 and 3.10). Rad there been an interest in the issues it was designed to explore, the model could have continued to have been a useful tool for investment-decision making and land use planning analysis, as required by the Terms of Reference of the British/MPB team. 3.42 The Interim Report on Phase I prepared by the British-American group and MPB staff for the first time provided a sector-by-sector overview of public investment trends in the IMA up to about 1973. Substantial proposals were also made for improved institutions and much of the Report was devoted to land use and economic development strategies. A large amount of consultant and MPB staff time was spent on this effort. The Bank faulted the work for its weak economic analysis and failure to assess whether the proposed investment program could be implemented, the uncertain case made for the preferred development strategy and insufficient identification of feasible means of implementing the preferred strategies. But it also supported several major recommendations which were drawn from the Phase I Report. - 22 - 3.43 Project Preparation Studies. The Wholesale Market, Traffic Engineer- ing and Control and Wastewater Disposal project preparation studies all took longer to complete than anticipated at appraisal. The consultants and the MPB (and Iller Bank) managed these studies with reasonable efficiency and the technical quality of the studies was acceptable (paras. 3.17-3.23).!/ How- ever, by the end of Phase I, the joint venture group and the MPB were unable to identify and develop satisfactory Terms of Reference for the preparation of Gecekondu Improvement and Urban Cluster Projects (paras. 2.03, and 3.24-3.27). The reasons for this major deficiency were complex. But certainly an important one was that the joint venture group's consultents' leadership and management of this activity was inadequate. The MPB's inexperience in project identification and preparation and a lack of agreement on basic project objectives compounded the problem. 3.44 To be fair in evaluating both consultants and the implementing agencies' performance the conditions in which they worked must also be taken into account. These may be summarized as followsz (i) the MPB's workload, staff, and responsibilities were multiplied several times in a short period of time by the project; (ii) a large number of consultants, grouped in the MPB in three separate consulting firms, had to work on a number of complex indi- vidual studies with MPB teams staffed with many new recruits (para. 3.05); (iii) in the start-up phase of the project, office space, equipment, and administrative staff were inadequate; (iv) language presented a problem, as did persistent Turkish ambivalence about the need for consultants (paras. 2.07 and 2.08); (v) the consultants' contractual arrangements required a high degree of coordination, tolerance, and management capability from consultant and MPB counterpart efforts (para. 3.31). IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT 4.01 The diagnosis of Istanbul's institutional problems and those of urban Turkey as a whole that were made during appraisal appears to have been basic- ally correct. Proposals that emerged during the project to effect legislative changes were also justified. But the choice of the MP7S to develop into an investment planning and coordinating agency and to be the catalyst for insti- tutional change proved to be unfeasible in the politic.al climate of Turkey in 1974-80. The MPB was substantially strengthened but its influence and its status could not be sustained long enough to have the desired impact on urban development programming and coordination in an environment as difficult and as diverse as that of Istanbul and Turkey, where part of the problem involved the relative positions and strengths of different local and central government 1/ The same may be said of the study of the Organization, Management, and Finance of IETT's Transport Department (paras. 2.04 and 3.21). - 23 - agencies. A different approach to project implementation might have been tried, notably that of leaving the planning and coordinating functions to HPB, while allocating the responsibility for project preparation to the institutions and agencies responsible for executing projects and for providing urban services. This might have helped to enlist more consistent support from the Istanbul municipality, reduced inter-agency frictions and speeded up project identification and preparation. 4.02 The anticipated reforms were not carried out at the time of the proj- ect. But the present Government has brought about some important institu- tional changes. Some of these, for example the creation of a metropolitan government fqr the Istanbul regionl and the reform of IETT's Transport Department,27 were contemplated during project implementation. Other project recommendations might be implemented if brought to the Government's attention. 4.03 Training of local staff was a requirement of all consultant contracts, but success in such efforts was uneven. One serious problem of staff recruit- ment was the severe salary limitations imposed on government workers by the Personnel Law. This situation remains unchanged, although it was regularly discussed and promised actions regarding its amendment were vigorously pursued by the Bank. To bypass the Law, some HPB staff resigned and were then rehired as consultants at higher salaries. This occasioned some conflict among the staff and some negative effect on productivity. With the decline of the MPB, ma..y of the best personnel trained during the project left Turkey to find higher paid employment in Europe and in the oil producing countries of the Middle East and North Africa. Also, some left the MP3 to occupy positions of responsibility in other government agencies. V. BANK PERFORMANCE 5.01 Urban development projects were a novelty for the Bank at the time this project was prepared. Assumptions about the urban sector, the analysis of its needs and proposed solutions to its problems reflected the incipient knowledge and experience of the Bank and the staff with the sector. The Bank staff chose co develop the existing MPB, a central government agency with a limited mandate for metropolitan physical planning into an investment programming, coordinating, and project preparation institution, with the additional mission of identifying and catalysing important institutional and policy changes. The risk in this approach was noted in the appraisal report, 1/ The Government has achieved this by creating one municipality for local administration in the IbA, not via the creation of a Municipal Union. 2/ IETT has now implemented most of the SOFRETU recommendations, with dramatic Positive effects on its financial situation and productivity. - 24 - which said that it was unrealistic to expect that coordination in policies and programs could be quickly or easily attained. While potentially correct the approach required more time than was allowed and much more political support than was available during the period of active project implementation (up to 1976). 5.02 Problems with the project were regularly reported by Bank missions, beginning with the first supervision mission in August/September 1972, before the project became effective (on January 4, 1973; para. 3.01). The first notification of "serious" problems (over the selection of consultants, para. 3.28) was in June 1973. The project was first designated a problem project in January 1975, a year after the studies began. By this time, the completion of the Phase I studies was three months overdue and the staff (and the MRR) began to be alarmed also by cost overruns and by then the MPB had yet to identify shelter projects for possible Bank financing. 5.03 Up to 1976 assiduous efforts were made by the Bank to have the problems addressed and the project was closely supervised with 67 man-weeks of field work. In mid-1975, the project staff and the Bank seriously questioned whether the general planning consultants should continue to be employed in Phase II on the identification and preparation of Gecekondu improvement and urban cluster projects. Transferring project preparation responsibility from the MPB to other established implementing agencies was considered (and rejected) for the final design and implementation of the TEC component in the Public Transport Project (para. 3.21), but was not apparently contemplated for the shelter projects. But afterwards, when it was apparent that there was little or no support for the institutional objectives of the Credit, or the objectives of the projects which were to be identified and prepared under the credit, the Bank cut its losses and sharply reduced the supervision effort. VI. CONCLUSIONS 6.01 The case for an urban project was a cogent one. Land use controls were ineffective. Squatting, largely by low-income families whose shelter needs were unmet by conventional programs, was widespread in the IMA. These and other problems were heightened by a high rate of economic and population growth. The problems were symptoms of the dispersion of responsibility and the weakness of the institutions for dealing with urban problems and managing urban growth for specified economic and social objectives. The appraisal analyses were therefore apt and the need for the kinds of action identified in the appraisal was correct. The project nevertheless only partially succeeded because of five basic factors, some of which were in the project design and some of which were in the environment in which the project was implementedz - (i) Project design was over-ambitious. The means by which the Bank could exert its influence in favor of the project's institutional objectives were too weak. While the MPB was supposed to develop its capacity and influence as a metropolitan investment programming and coordinating agency, the bank- financed (water and electricity) IMA projects (paras. 1.04 and 2.04) provided little of substance for the MPB to coordinate. In the Bank's legal agreements for these projects, the MPB was not officially assigned a coordinating role, although it played one in respect, for example, of BIBSKI (para. 3.15). - 25 - - (ii) Sustained, long-term Government support for project objectives could not be obtained. The political climate for the project s efficiency and equity objectives was neutral to positive from the time of appraisal to thte completion of Phase I. But, Government support for the project declined after 1975, just when the MPB was finally consolidating its strength. The invest- ment programming and urban management concepts of the project were being pursued in advance of their need being sufficiently recognized in Turkey. - (iii) The MPB was overburdened by its responsibilities. MPB's respon- sibilities included IMA planning, program and coordination, as well as project preparation and identification. It might have been better to have delegated project preparation and identification to traditional agencies (the Istanbul Municipality, the Provincial Construction Directorate, the Turkish Property and Credit Bank, the State Highways Department etc.) and agreed upon the specific program and project-related issues for which the MPB would have been responsible. This might have reduced MPB's growing pains and managment problems and provided it with a positive role vis-4-vis the traditional imple- menting agencies. - (iv) The managerial capabilities to support the project could not quite be brought together--at the time of implementation. Foreign technical assistance filled some of the technical gaps in Turkish capacity to implement the proj- ect; but it could not provide leadership and initiative in policy formulation, program coordination or project preparation, as the MPB and NRR staff knew at the outset. - (v) The UTLUM was too sophisticated for the MPB and for the Istanbul decision-makers at the time the project was implemented. A huge effort was required to collect and prepare data, arrange for computing equipment, recruit Turkish staff, coordinate the consultants and operate the model. The British/American firm's consultants also tended to be diverted from their other responsibilities by this effort. It may be questioned also whether at that time the quantitative techniques of the model would have been understood by the decision-makers, so as to give credibility to the findings, even had these been acceptable. 6.02 The main lessons from the project experience are; (i) major changes in institutions cannot be achieved without sustained, long-term support by Government of project priorities, objectives, and concerns. (ii) for urban planning, programming and management studies and proposals to have a practical effect, they must have agreed upon objectives and priorities, integrated if possible in specific programs and projects. These should be supported by legal agreements where projects are financed by the Bank. (iii) project preparation and identification is best left to the implementing agencies, provided that the responsibility for determining primary project objectives and conditions is clearly located in a superior branch of Government, or its designated agent. - 26 - (iv) successful investment planning, programming and coordination greatly depend on the power of the responsible institution to exercise these functions in many sectors at the upper level of local and central Government. The powers and line of authority of the MPB were inadequate for this purpose, but less so than other organs of government. Three alternatives were available in this situation; (a) to create a new institution; (b) to develop an existing, albeit imperfect institution: (c) to forego developing a capacity for the function, because conditions for succeeding with (a) and (b) were not likely to exist. The Bank opted for the second solution. Although this approach appeared to be realistic and conservative at the time of appraisal (para. 2.06), experience proved that subsequent political events could undermine the successful achievement of the original goals and that there is an inherent risk for the Bank in supporting similar efforts in institutional building. 6.03 The main achievements of the project (taken in conjunction with the Bank effort as a whole in Istanbul) were; (i) promoting an awareness of the need for major changes in institutional arrangements and assisting Government in drafting part of the relevant legislation (e.g., creation of ISKI); (ii) providing training and experience for Turkish staff, first in technical aspects and secondly in the pitfalls, benefits, and rerequisites of urban management, (in spite of its reduction in size, MPB is currently advising the Governor's-Council 1/ on IMA investment programs and projects); (iii) financing the preparation by consultants of a program to reform the organization, management, finance, and operations of IETT's Transport Department and separate transport from electricity by creating a metropolitan transport authority. (Since 1979 IETT has implemented many of the consultants' proposals and substan- tial improvements in its operations and financial situation have resulted. Also, Government is actively considering the creation of a metropolitan transport authority); and (iv) coordinating, to a significant extent, the efforts of separate Bank project divisions, in order to concentrate the Bank's influence on Government to support agreed urban policy and institutional objectives. 1/ The Governors's Council consists of; the Governor, representing Istanbul Province and the Central Government, the Mayor of Greater Istanbul (there are no longer separate municipalities), the MPB Director, and represen- tatives from Central, Provincial, Regional, and Municipal agencies as required. - 27 - rURK.f PRCUCT FOR TR AiLEWA-flfN OF AN prERAT ) URAN f Att4mm POR STANFUL ANNFX I (Credit 'O2 -TU) Project Schedule and Key events Calendar Year and Quarter 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1-90 1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4.1.2.3.4. A%. PROJF.CT SCHDUL5 1. Consultant Advisory Services a. Review of Plan, Means for Phase / 1splementation and Invest- "m m Phase 2 Sent Program mwIM"MNM b. Program Review and Direc- Phase 7T . tion of Consultants in sheas.hPs Project Preparation 2. Urban TranoportLtandUsa Phas I M_ =eONsaMaUs PtUaS& I 3. Project Preparation a. Gecekondu Improvement and Prevention b. Urban Clester Develop-, ment C . Wholesale Market d. Wastevater Disposal a. Traffic Engineering - and Control un m 4. Other a. 1ETT Operational, Admin- istrative and Financial Study b. Istanbul Public Trans- port Project a. REY EVENTS (W) Identification (ii) Appraisal (iii) Effectiveness aV (iv) WHC Land Acquisition aem (V) Wastewater Disposal a a Institutional Measures (vi) HPB Staff Augmentation a s (vii) Closing s 1/. sammamm indicates that activities of 1(a) are being directed towards the production of inputs for activities 1(b), 2 and 3. The beginning dates shown as smmmma correspond to appraiesl estimates of the latest date by which project elements were to begin. It was intended to begin elements L(a) and 3(c,d and a) in Fall 1972. ww* mmm sindicates actual period of implementation. A/* a zoriginal date. a/* * tactual date. BEST COPY AVAILABLE - 28 - ANNEC 2 TURKEY: PROJECT FOR THE PREPARATION OF AN INTEGRATED PROGRAM FOR ISTANBUL (IIUP) Actual and Appraised Fxpenditures for Goods and Services Appraisal Contract Actual Cost Estimate Price Costs Differential Item (US$1000) (US$'000) General Planning Services 1,035 1,087 886 0.86 Wholesale Market Relocation 61 104 48 0.79 Wastewater Disposal 106 349 143- 1.35 (3.29) Urban Transport/Land-Use Model (UTLUK) of which: 444 56O2! 472 1.06 (a) TEC 0 116 116 - (b) UTLUM 444 444 356 0.80 Training, Fellowships, Seminars 80 - - - Equipment and Vehicles 70 - 43 0.61 Contingencies: (a) Man-Months 247 - - - (b) Price Increase 269 - - - TOTAL 2,312 2,100 1,392 0.69 - 43 $1,549 Total cast of consultants 3/ 1/ E.g., paid from the Credit. The MRR picked up the difference: $(349 - 143) X 103 = $206,000 2/ $(560 - 444) % 103 = $116 z 103. TEC consultants extra costs. 3/ $(1,549 - 116) x 103 = $1,433,000 if TEC costs of consulting taken cut. BEST COPY AVAILABLE TURKEY: ?ROJECT FOR THE PREPARATION OF AN INTECRATED PROGRAM FOR ISTANBUL '(IIP) Disbusement Schedule of IDA Credit (in US$'OD0) Fiscal Year Actual Cumulative Z Appraisal Estimate Cumulative % and Semester Semester Cumulative of Total Credit Semester Cumulative of Total Credit 19d3 1st - 162 112 7 2nd - .544 706 31 1974 lt 115 115 5 544 1,260 54 2nd 554 669 29 443 1,703 70 1975 lt 231 900 - 39 385 2,088 90 2nd 200 1,100 48 224 2,312 100 1976 lot 300 1,400 61 2nd 193 1,593 69 - April 1982 S Copy AVAILUBLE しdF ン、→も 一