Jordan - Amman Transport And Municipal Development Project : Loan 2334 - Project Agreement - 2 - Conformed

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 13300 PROJECT COMPLETION REPORT HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MUNICIPAL DEVELOPMENT PROJECT (LOAN 2334-JO) JULY 5, 1994 Infrastructure Operations Division Country Department 1I Middle East and North Africa Regional Office 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. Currency Equivalents Currency Unit: Jordan Dinar (JD) = 100 Piasters = 1,000 Fils Exchange Rates' (Jordan Dinar per 1 US Dollar) Market Period Period Average 1983 0.363 .1984 0.384 1985 0.394 1986 0.350 1987 0.339 1988 0.372 1989 0.570 1990 0.664 1991 0.681 1992 0.680 First 3 quarters of 1993 0.691 Government's Fiscal Year January 1 - December 31 List of Abbreviations AA - Amending Agreement for both original Loan and Project Agreements, dated January 23, 1988 AM - Former Amman Municipality ARTS - Amman Regional Transport Study CBD - Central Business District ECA/MENA - Europe & Central Asia/Middle East and North Africa Regions ERR - Economic Rate of Return GADP - Greater Amman Development Plan study GDP - Gross Domestic Product GOJ - Government of Jordan IBRD - International Bank for Reconstruction and Development (The World Bank) ICB - International Competitive Bidding LA - Original Loan Agreement between GOJ and IBRD dated July 28, 1983 MOGA - Municipality of Greater Amman (after amalgamating former AM and surrounding municipalities in 1987) MOP - Ministry of Planning NPC - Former National Planning Council PA - Original Project Agreement between IBRD and former AM dated July 28, 1983 PCR - Project Completion Report RM - Road Maintenance study SAR - Staff Appraisal Report USAID - United States' Agency for International Development WB - The World Bank, referred to as the Ban!;. 1/ Source: International Financial Statistics, International Monetary Fund FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation July 5, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Performance Completion Report on Jordan Amman Transport and Municipal Development Project (Loan 2334-JO) Attached is the "Project Completion Report on Jordan - Amman Transport and Municipal Development Project (Loan 2334-JO)". The US$30 million Loan was approved in May 1983 and closed on June 30, 1993, four years behind schedule. Out of the loan proceeds, US$6.08 million (20% of the total) were cancelled. The Borrower did not submit a Part II. Project objectives were to improve roads, to increase the capacity of Amman Municipality (AM) to manage traffic and solid waste services, and to strengthen AM capacity to formulate policy, development plans and investment programs. Domestic support for the project was not sustained after loan effectiveness and new administrative arrangements hindered project implementation. In April 1988, the project was restructured and the loan amount reduced to US$25 million. Civil works were completed albeit with serious delays and lapses in construction method and supervision. A sustainable system of waste collection was put in place. The studies and technical assistance component had mixed results. Some study findings are being implemented but sectoral planning and monitoring still leave much to be desired. The economic rate of return appears acceptable but needs to be confirmed by more complete traffic surveys. The PCR gives an opaque account of preparation, implementation and results but the major problems stand out. The Bank allowed the project to become excessively complex without assessing the absorptive and implementation capacity of AM. Bank supervision missions were inadequate in the early years and, after the project was restructured, suffered from the absence of financial analysts. For his part, the Borrower changed priorities. Successive changes in AM's management, frequent staff turnover, and irregular payment of invoices in local currency created difficulties both for the efficient execution of physical works and for the introduction of sound planning. Overall, the project is rated as marginally satisfactory, the sustainability of its benefits as likely, and its institutional impact as modest. The project may be audited together with the Multi-Mode Transport Project (Loan 2463-JO). Attachment 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 HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MUNICIPAL DEVELOPMENT PROJECT (LOAN 2334-JO) PROJECT COMPLETION REPORT Table of Contents Title Page No. PREFACE ............................................................ i EVALUATION SUMMARY ......................... ........ . .... . PART I (Project Review from Bank's Perspective) .................................. 1 1. Project Identity.............. ........................................... 1 2. Background ............................................................ 1 3. Project Objectives and Description ......................................... 3 4. Project Design and Organization ............................................ 5 5. Project Implementation ................................................... 6 6. Project Results ............... ....... ............................... 11 7. Economic Re-Evaluation and Rates of Return ........... ........ ............ 11 8. Impact and Sustainability of the Project .................................... 12 9. Bank Performance ...................................................... 13 10. Borrower Performance .................................................. 13 11. Bank - Borrower Relationship ............................................. 13 12. Consulting Services .............. ...................................... 13 13. Project Documentation and Data .. .................................... 14 14. Status of Covenants ..................................................... 14 15. Lessons Learned................... .......... .......................... 14 PART II The Borrower did not provide Part II ... ....................... ....... 16 PART III (Statistical Information) ........................................... 17 1. Related IBRD Loans/IDA Credits ....................................... .17 2. Project Timetable ..................................... ................. 18 3. Loan Disbursements ............................... ..................... 19 4. Status of Covenants ............ ........................................ 21 5. Project Components and Implementation ..................................... 22 6. Appraisal and Actual Cost ........ ............ .......................... 24 7. Appraisal and Actual Project Financing ...................................... 25 8. Rate of Return ......................................................... 27 9. Mission Data ...................................................... 29 Maps: IBRD No. 25756R and 25758R 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. I HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MUNICIPAL DEVELOPMENT PROJECT (LOAN 2334-JO) PREFACE 1. This is the Project Completion Report (PCR) for the Amman Transport and Municipal Development Project in the Hashemite Kingdom of Jordan, for which Loan 2334-JO in the amount of US$ 30.0 million, was signed on July 28, 1983, arid became effective on March 30, 1984. US$ 5.0 million was cancelled on August 20, 1987. The loan was closed on June 30, 1993, four years behind original schedule, and the remaining undisbursed balance of US$ 1.08 million will be cancelled. 2. The PCR was jointly prepared: the Infrastructure Operations Division, Country Department II of MENA Regional Office prepared the Preface, Evaluation Summary, and Parts I and III; the Government of the Hashemite Kingdom of Jordan, and the implementing agency: the Municipality of Greater Amman (MOGA), formerly the Municipality of Amman (AM) and surrounding municipalities did not provide Part II. 3. Preparation of the PCR started during the Bank's final supervision mission of the project in July 1993. The report is based, intLr aia, on the Staff Appraisal Report, correspondence between the Bank and the Borrower, and the Bank's internal memoranda and reports. II HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MUNICIPAL DEVELOPMENT PROJECT (LOAN 2334-1O) EVALUATION SUMMARY Objectives 1. The principal objectives of the project were: (i) to improve the transport infrastructure in the capital Amman and reduce traffic problems; (ii) to increase the capacity of the Municipality of Greater Amman (MOGA) to manage transport and solid waste services; and, (iii) to strengthen MOGA's institutional capacity to formulate appropriate policy decisions and future development planning. The project primarily focused on achieving these objectives through an integrated pattern of organizational reforms, staff upgrading and policy and procedural innovations supported by a wide range ef studies and training. Direct physical investments in civil works and equipment were the main vehicle for proceeding with the necessary reform. Implementation Experience 2. The experience with the preparation and implementation of the project shows two distinct phases. The first phase, form identification to loan effectiveness, was characterized by strong commitment across the management hierarchy of MOGA. The second phase, however, coincided with several successive events which diluted support for the project (para. 5.1). Project implementation effectively was held in abeyance until it was restructured in April 1988 (para. 3.3). 3. The closing of the loan was extended by four years as a result of various administrative, technical, financial and political factors (paras. 5.1 and 5.5). At closing, June 1993, however, all the project's components as restructured were satisfactorily completed (para. 6.1). Likewise, studies and technical assistance contemplated by the project were also completed. Recommendations thereof were either implemented or are under implementation (para. 6.2). 4. The project encountered several procurement problems, which primarily centered on deviations in tendering procedures and review process from agreed to provisions under the loan agreement (paras. 5.7-5.9). The rectification of these problems proved costly in time and effort and were largely because of insufficient knowledge of Bank procurement procedures. Furthermore, rigidities imposed by standard public procurement procedures in Jordan impeded the ability of implementing agencies to expedite the process. 5. The decline in the JD exchange rate along with a recession caused contractors and suppliers difficulties. Several equipment tenders, bid in JDs, were cancelled and had to be re- tendered (para. 5.10). 6. The overall project cost, in nominal terms, without taking into consideration the changes that occurred in the project scope after restructuring, increased in JD by 5 percent, while it decreased in US$ by 38 percent (para. 5.11). If, however, the changes in the project scope are factored in, the adjusted cost increased, in nominal terms, by 20 percent in JD, while it decreased in US$ by 9 III percent mainly due to the change in the average exchange rate of the JD over the duration of the project (para. 5.12). 7. The remaining undisbursed balance of US$ 1.08 million will be cancelled in addition to the US$ 5.0 million which were cancelled in August 1987 after project restructuring (para. 5.13). & During the early stages of project implementation, project accounts and audits did not conform to agreed formats. However, the situation improved shortly after when the technical assistance advisors came on board. Subsequent audits were adequate but frequently late despite frequent reminders by the Bank. 9. Notwithstanding its slow implementation, the project did complete all components as restructured. Moreover, MOGA also completed components cancelled during restructuring using its own resources (para. 6.1). The re-estimated ex-post economic rate of return for the major physical components was 33 percent for the two major intersections and 8 percent for the three corridor inidrovenients (para.7.t). Other components which included the solid waste collection and disposal system and the food hygiene laboratory are expected to yield good returns although these are not readily quantifiable. Sustainability 10. The most sustainable component of the project seems to be the solid waste collection and disposal system where the high degree of "ownership" and commitment by MOGA was extremely instrumental to its success. It can serve as a model for other countries in the region. Furthermore, the successful implementation of an effective method for collec-tion of user charges for the solid waste system (included in the monthly electricity bill) has prompted MOGA to explore options to privatize the waste collection system and a trial area was identified for piloting (para. 8.2). Other positive steps towards achieving sustainability especially in institutional matters are being slowly implemented by MOGA (para. 8.3), and it seems early at this stage to pass judgement on these efforts. Findings and Lessons Learned 11. In retrospect, it seems that the project was jAnade unduly complex making it harder to manage and coordinate by the implementing agency. Exogenous factors further exacerbated this situation. The following are specific lessons, which emerged from the experience of this project although many others are scattered within the body of the report: - Avoid complex projects with too many integrated components when the implementing agency has limited executing capacity. The Bank should also endeavor to ensure that project objectives have the full support of the Borrower and its implementing agency. The positive experience of the solid waste components reinforces this point. - The Bank should appraise projects based on final engineering designs. Also, significant design changes should be subject to rigorous economic justification. - The Bank should assess, as part of the appraisal process, the need to organize a project launch workshop in order to familiarize the staff of the implementing agency iv with Bank procurement and disbursement procedures and how these procedures assimilate to national ones. Moreover, these workshops should be tailored to the specific needs of the sector/project. Bank supervision missions should have an adequate skill-mix. Data collected and retained on the project by various entities (within and outside the Bank) seemed like "information islands":. unreconcilable and often ineffective in monitoring aspects of loan supervision and administration. It would be worthwhile to investigate comprehensively means of improving the management and dissemination of project related information Bank-wide. HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MTNICIPAL DEVELOPMENT PROJECT (LOAN 2334-JO) PART I: PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Project Identity Project Name Amman Transport and Municipal Development Project Loan Number 2334-JO Loan Amount US$ 30.0 million Loan Cancellations US$ 6.08 million Regional Vice Presidential Unit Middle East and North Africa Country Hashemite Kingdom of Jordan Sector Urban Transport 2. Back round Introduction 2.1 The population of the Hashemite Kingdom of Jordan, which grew from 0.9 million in 1961 to an estimated 4.0 million in 1992 through high natural growth rates (historically between 4-5 percent annually) and successive waves of massive migration because of regional conflicts, is largely confined to one sixth of the Kingdom's total area of 91,000 km. About 70 percent of the population is urbanized (living in localities of 5,000 or more persons). Seventy percent of the urbanized total lives within 30 kilometers of the capital Ammanj which also accounts for the production of most of the country's output of services and manufacturing industries. 2.2 This rapid increase in the Amman region's population, coupled with existing uneconomic zoning policies resulted in an urban sprawl manifesting itself in inefficiently scattered urban developments with less than adequate services. Furthermore, the concentration of commercial and business activities in the Central Business District (CBD) resulted in massive traffic jams and substantial delays in transport. Recognizing the importance of developing the Amman region, the Government of Jordan (GOJ) was involved over the past two decades, with Bank support, in several urban related development projects. Major strides were made in recent years in improving urban services. 2.3 The GOJ initially expressed interest in October 1981 to secure Bank assistance to finance investments for urban transport improvements in high priority areas of Amman. The immediate origin of this project was a demand by the Prime Minister that congestion should be eliminated as quickly as possible at specific intersections in Amman. The project was initially -2- identified in October 1982 as an urban transport project, following the completion of the Amman Region Transport Study (ARTS) and the Bank's Urban Sector Review (Green Cover Report: 3965-JO, dated July 23, 1982). During the preparation of the proposed urban transport project, components involving other municipal infrastructure and services, notably solid waste, were added at the Government's request. The project was appraised (as an urban transport and municipal development project. in January 1983, vnd further refined in follow-up discussions in Amman in April 1983. Negotiations were held in Washington in May 1983, and the loan was approved on July 7, 1983. The loan was signed on July 28, 1983 and became effective on March 30, 1984, after two extensions (3 months followed by 1 month) because of delays in matters related to land acquisition and recruitment of key personnel within the newly established project unit (both were conditions for effectiveness). Sector Development Objectives 2.4 The Bank's strategy regarding urban development was to assist the Government in providing urban services efficiently where they are needed most to stimulate economic growth and to benefit less advantaged members of society. Both objectives implied a focus on the Amman region. The strategy also required strengthening local governments to plan and manage increasingly complex urban areas. In line with this strategy, the Bank's Urban Sector Review highlighted sub-sectors (transport and solid waste collection and disposal among others) within the urban context as requiring special attention because of their investment needs and widespread ramifications for Amman regional development. Other sectors such was water and low-income housing were addressed in separate projects (Table 1, Part III). 2.5 The project proposed to improve several sector-related policy issues including investment ranking, better coordination of major infrastructural investments and more efficient operation and maintenance of municipal services. The inclusion of well focused development planning and strategy formulation along with numerous other studies and technical assistance in key operations departments was intended to strengthen MOGA's ability to formulate related policy issues. Linkages Between the Project and Macro Policy Objectives 2.6 Jordan enjoyed a buoyant economy during the late 1970s with real GDP growth averaging 10 percent per annum. Workers' remittances, foreign grants, and industrial production (particularly manufacturing) were the engines of growth during that period. 2.7 In the mid-1980s, however, conditions became less favorable: worker remittances fell sharply and foreign grants declined in absolute terms. In addition, future growth was heavily dependent upon the development of exports of light manufactured products and services heavily concentrated in and around Greater Amman. Such activities rely, among other things, upon well developed and managed urban services. Reduced growth prospects also implied a need for greater budgetary stringency and more attention to cost effective means for providing suitable services. -3- 3. Project Objectives and Description Project Objectives 3.1 The principal objectives of the project at appraisal were: (i) to undertake high priority road and traffic improvements by strengthening Amman's transport infrastructure and reducing traffic problems; (ii) to increase the capacity of the Municipality of Greater Amman2 (MOGA) to manage transport and solid waste services by upgrading plant and equipment; and (iii) to strengthen its capacity to formulate appropriate policy decisions, development plans and investment programs through technical assistance and training. These principal objectives remained substantially unchanged after project-restructuring in 1987 (para. 3.3). Project Components 3.2 The project, as appraised, pursued the above objectives through the following four major parts (detailed components are listed in Table 5(a), Part III): Transport and Traffic - (US$47.74 million, 73 percent of the total estimated cost) consisted of improvements to 4 major intersections, and traffic improvement measures along various highly trafficked corridors and within the CBD in Amman. Other works included rehabilitation of roads and staircases, minor improvements to access roads to low income areas and junctions identified as serious accident black spots. Non- physical components included measures to increase traffic enforcement effectiveness in addition to studies for completing the arterial road network in Amman. Solid Waste Collection and Disposal - (US$8.46 million, 13 percent of the total estimated cost) consisted of providing solid waste collection equipment, the construction and equipping of 4 sanitary landfills, and studies to increase the efficiency of solid waste collection. Municipality's Technical Departments - (US$6.68 million, 10 percent of the total estimated cost) consisted mainly of strengthening the Engineering and Studies Departments through organizational streamlining, staff upgrading, technical assistance, and installation of a suitable cost accounting system. Provision of equipment for road maintenance, construction of a materials laboratory and design and quality control of pavements were also included along with a two-year pilot road maintenance program. 2/ MOGA was created in 1988 by the amalgamation of Amman Municipality (AM) with the surrounding small municipalities. This report used MOGA for all references to AM. -4- Institutional Development - (US$2.73. million, 4 percent of the total estimated cost) consisted of the preparation various investment strategies and programs as well as training in specialty areas. 3.3 In April 1988, the project was restructured' (reasons for restructuring are discussed elsewhere (para. 5.1)). Modifications called for reducing the project scope and simplifying conditionalities in line with MOGA's new priorities. The loan amount was also reduced by about 17 percent to US$25 million (from the original US$30 million). The main changes in the physical components included: (i) cancelling several traffic improvements and road maintenance components which were implemented by MOGA using own resources either for the purpose of modifying the design standards agreed upon at appraisal or to avoid the requirements of the Bank's procurement guidelines; (ii) postponing several traffic scheme improvements with strong linkages to the Greater Amman Development Plan (GADP) study pending its outcome. These components were subsequently cancelled because the adoption of GADP's recommendations was delayed and, therefore, these items could not be completed within the time frame of the project; (iii) cancelling the road rehabilitation component because of the availability of regular financing from MOGA's own resources; (iv) modifying equipment lists largely to reflect the changed needs of MOGA after the amalgamation of the surrounding municipalities; (v) cancelling one landfill site for waste disposal because of difficulty in land acquisition; and , (vi) extending the construction of the materials testing laboratory to include an additional food hygiene testing laboratory. The principal changes in the non-physical components included: (i) merging all aspects of strategic development planning in Amman under the GADP study umbrella; and, 3/ Project restructuring was initiated in December 1986 and was later finalized in April 1988 (with an amendment to the Loan Agreement) after extensive discussions with MOGA to accommodate its changed priorities. -5- (ii) providing for financing from the loan's technical assistance component for hands- on training of MOGA's technical staff after the departure of the technical advisors. This proved to be advantageous during the redesigning and construction of the three corridors (para. 5.1). A list comparing the various components before and after restructuring is given in Table 5(a), Part III. 4. Project Design and Organization 4.1 To achieve the overall original objectives described above, the project was designed as an interlocking pattern of organizational reforms, staff upgrading, and policy and procedural innovations. 7hese were to be supported through studies and advisory services with direct investments in civil works and equipment components providing the leverage for the necessary policy reforms. 4.2 The project had too many components; in some cases, physical and non-physical ( studies and tec'nical assistance) components formed complete packages (e.g., solid waste, or road maintenance); while in others, the components were designed to be free standing (e.g., major intersections, or cost accounting). The pattern was complex and somewhat loose; numerous covenants were devised to pin it down. Moreover, sources for financing components within various packages also varied. For example, the solid waste package was financed from the one source (the Loan) while the original road maintenance package was financed from several different sources4. The intricate financing arrangement was influenced by the GOJ's desire to use "soft" money for non-physical components where available. However, this subsequently proved to be problematic especially when "softer" bilateral money was no longer available as components were delayed. This added another dimension of complexity to managing the process effectively and was one of the reasons for subsequent project restructuring. 4.3 The project was processed on an accelerated timetable, taking nine months from identification to Board approval. This was possible because of two favorable circumstances: GOJ gave highest priority to the intersections component, and initial commitment at MOGA was strong. It was widely thought at the time that by responding promptly to the Government's request, the Bank would be able to catalyze actions on a number of institutional issues related to improving the capacity of MOGA to provide services in the future. 4.4 Because of pressures to process the project rapidly, the quantitative justifications for a large part of the project's physical investments were based on preliminary designs and cost estimates. As these designs were eventually subject to major changes during final engineering 4/ This situation was rectified at restructuring, the complete package of physical and soft components were financed from one source (the Loan). -6- designs .(paras. 5.2 and 5.3), the case for the original economic justification was weakened, while records do not indicate any updated justifications. Many other components which were not rigorously investigated (in terms of their justification, risk and linkages to other ongoing works by MOGA) were cancelled at restructuring (para. 3.3). 5. Project Implementation Loan Effectiveness and Project Start-up 5.1 The experience with preparing and implementing this project shows two distinct phases: before, and after loan effectiveness. As mentioned in the preceding sections the project was prepared at an accelerated pace with strong commitment to municipal reform across the management hierarchy of MOGA. The second phase, however, coincided with three events which had an adverse impact on the Project. First, the transformation of the National Planning Council (NPC) to the Ministry of Planning (MOP) meant the loss of personal support of the chairman of NPC. Second, the death of the Lord Mayor of Amman, under whose aegis the project was prepared, created a need to acquaint the new administration with project objectives. Last, the enlargement of MOGA's jurisdictional authority through the amalgamation of the surrounding municipalities shifted the attention of the Lord Mayor and his senior staff away from the project. As these events diluted support for the project, Jordan's economy started to decline and new priorities emerged which were not perceived by MOGA as being consonant with project objectives. To turn the situation around, the project was restructured. Construction 5.2 The construction of all civil works components, as revised after project restructuring, was satisfactorily completed. The two highly visible intersections at Sports City and Nasser Circle were completed satisfactorily, although behind schedule (para. 5.5). The original designs for both intersections were modified by doubling the width of underpasses from two lanes to four lanes to accommodate future capacity and improve safety aspects. During construction, a section of the bridge deck of the flyover at the Sports City interchange collapsed. The damage sustained was confined and quickly repaired. Subsequent investigation revealed that the failure was caused by lapses in construction method and supervision. 5.3 The three major corridor improvements were completed satisfactorily after resolving initial technical problems related to less than adequate engineering designs (as part of the institutional development objectives, the re-designs were carried out by MOGA staff with external assistance; this took longer to achieve but helped strengthen the Design Department of MOGA). During construction, considerable redesign effort was required as the location of existing underground utilities was not known beforehand. This effort incurred extra costs (about 11 %) and involved lengthy delays. Also, contractors were plagued by recession, which forced at least one of them into bankruptcy (para. 5.5(i)). Other works (the construction and equipping of the two laboratories, the rehabilitation of the staircases and other minor works in the MOGA workshops) were also completed and were satisfactory. -7- Studies and Technical Assistance 5.4 The original technical assistance package, which was divided into four sub- components (technical advisors and staffing, engineering designs and supervision, studies and training), was to be financed by the GOJ and bilateral donors. Advisors were recruited but their contract periods were not extended beyond the initial contracts required by the Loan Agreement for lack of funding. Hiring of technical staff fell short of the mark due to the difficulty of finding qualified local staff at the civil service payscale offered by MOGA. After restructuring, however, the Loan Agreement was amended to provide for financing additional major studies (Road Maintenance and Cost Accounting) and other requirements deemed necessary for augmenting MOGA's implementation capacity (hiring staff on contract basis and contracting for advisory services). Implementation Delays 5.5 Project implementation experienced delays from the outset (para 5.1). Virtually all contracts experienced delays of some sort as outlined in Table 5(b), Part III. The implementation schedule suggested in the Staff Appraisal Report (SAR) (6 years) was optimistic. Current historical implementation profiles for projects (all sectors) in Jordan generally span about eight years. The following components incurred serious delays: (i) Civil works on Corridors. The street and drainage improvements on these major arterial roads in lower-income, south Amman neighborhoods took much more time than envisaged. After restructuring, the scope of this component was expanded to include comprehensive road upgrading. Consultants were retained to assist MOGA with the in-house preparation of the requisite designs which had to be continually adjusted to accommodate unsuspected presence of underground utilities. Financial difficulties of the contractors brought about by the fall in the exchange rate of the Jordanian Dinar and ensuing rise in building materials costs (para. 5.9) added more delays. (ii) The two Intersection Improvements. The award of the contract for the two intersections was a political decision by the GOJ, resulting in entrusting the Bank financed work to a weak contractors and thus causing delays. (iii) Road maintenance (RM) study. This study took several years to reach the bidding stage because of institutional difficulties mentioned in preceding paragraphs. When the contract was finally awarded in 1989, to a 5/ The consultants did not pre-qualify the contractor. However, the contractor was subsequently pre-qualified by MOGA when MOGA determined that the consultant's initial pre-qualification criteria were overly stringent. The Bank approved the application of less stringent criteria in principle, but was not given the opportunity to review these detailed criteria before they were applied. -8- Jordanian/U.S. joint venture, it collided with a new regulation by the Prime Minister concerning contract awards in foreign currency. After resolving this problem, the contract was renegotiated and signed in October 1990, only to be stopped because of a deteriorating political situation in the region during the Gulf War and travel restrictions imposed on U.S. personnel to the region. (iv) Road maintenance equipment. As a consequence of the delays in the RM study, the procurement of the relevant equipment was affected. (v) Cost accounting study. This study was the basis for introducing a cost accounting system in MOGA's technical departments. Together with the road maintenance study, it represented the backbone of institution-building activities of this project. Because of internal resistance to perceived implications of this study, it took years for MOGA to call for bids (in October 1990). Closing Date Extensions and Completion 5.6 The closing date of the loan was extended four times, each time by one year, to permit the completion of ongoing contracts6. At the time of the original closing date of June 1989, it was agreed that a one-year extension was sufficient to complete the three remaining major components7. These components, together, accounted for about US$ 8.0 million in loan funds. The second, third and fourth one-year extensions were essentially granted to complete the road maintenance and cost accounting studies which were dragging (para 5.5). At the final closing date, June 30, 1993, all components of the restructured project were completed except for the procurement of a few pieces of road maintenance equipment due to shipping delays and payment for which was effected from MOGA's own resources. Procurement 5.7 The project encountered several procurement problems during implementation. MOGA's tendering procedures and the Bank's review process were not fully discharged according to provisions in the loan agreement: MOGA cancelled two rounds of bidding for the traffic corridors without prior consultation with the Bank; procurement documents reviewed by the Bank were found, on occasion, to diverge from International Competitive Bidding (ICB) 6/ Each of the four extensions was given with the understanding that it would be sufficient to complete all ongoing activities. 7/ The three major components were: (i) corridors improvements; (ii) procurement of equipment for municipal food testing (hygiene) lab; and (iii) procurement of road maintenance equipment. The first two items were underway but the last was delayed since it could not be tendered until the road maintenance study validated the types and quantities of equipment on MOGA's priority list. The stat of the study was delayed by about four months (para. 5.5) -9- procedures (notably in foreign currency provisions); bid evaluation procedures for equipment tenders were not in full conformity with bid documents; bid evaluation reports sent to the Bank were incomplete to allow a thorough review of the procedure and its outcome; and, bid evaluation reports were not sent to the Bank after being drafted by the Technical Committee but following approval of MOGA's Tender Committee. The rectification of these problems proved costly in time and effort. They arose largely because of insufficient knowledge of Bank procurement procedures within the various tendering committees. Furthermore, rigidities imposed by standard public procurement procedures in Jordan (by added layers of review) impeded the ability of implementing agencies to expedite the process. 5.8 Differences of opinion in the interpretation of the wording of the Loan Agreement caused delays in the procurement of the garbage trucks. The Bank considered the contract, which was awarded in JD, as local procurement and agreed to finance only 70 percent of goods, although the goods were totally imported from abroad and were free of customs duty. The component had to be re-bid. 5.9 Specifications and bills of quantities prepared by MOGA tended to be more aggregated' (although not contrary to the existing practice in Jordan) than accepted under international practice. The Baik's position was to dis-aggregate the bill of quantities as much as practical to insure that competition was not hindered and unit prices were not distorted by uncertainties in the amount of work to be done. This was of particular importance in the three corridors contracts, where there was higher uncertainty associated with unknown underground conditions. 5.10 A sharp fall in JD exchange rate in 1988 along with acute shortages of local counterpart funds resulted in delaying payments of local portion of invoices submitted by contractors. At the same time inflationary pressures were pushing building materials prices up causing contractors additional difficulties. Several equipment tenders, bid in JDs, were cancelled by suppliers and had to be re-tendered. Subsequently, the GOJ issued a decree ordering an upward across-the-board adjustment of ongoing contracts to reflect the increased prices in building materials. Project Cost and Disbursement 5.11 Without taking into consideration the impact of changes that occurred in the scope of the project, the total cost estimated at JD 23.4 million during appraisal increased to JD 24.6 million, or an overrun of about 5 percent. The total expenditure in US dollars, on the other hand, decreased from the appraisal estimate of US$ 65.6 million to US$ 40.8 million, or an 8/ Several items would be loaded and priced under one main unit item (e.g. the price of 1 meter of sidewalk would contain many other items priced within it). -10- underrun of about 38 percent, mainly due to the depreciation in the rate of exchange of the Jordanian Dinar relative to the U.S. Dollar. 5.12 In order to provide a meaningful comparison of costs, readjustments to the appraisal estimates were introduced to reflect the impact of changes that took place in the scope of work during the period of project implementation, i.e. cancellation of portions of the Traffic Improvements, Traffic Enforcement and Institutional Development components; and increases in the scope of work at two intersections, the three Corridors and the Solid Waste components. The adjusted costs in Table 1 indicate an increase of JD 4.0 million, or about 20 percent, of actual over appraised costs, mainly attributed to the change in the rate of exchange of the Jordanian Dinar, which was devalued, over the duration of the project. The adjusted costs in terms of US$ decreased by US$ 4.0 million, or about 9 percent. 5.13 The disbursement of the loan took about twice as long as anticipated at appraisal (Table 3, Part III). By the original closing date of June 1989, only about 54 percent of the loan proceeds had been drawn down. At the request of the government, an amount of US$ 5.0 million was cancelled on August 20, 1987 (para 3.3). At the end of the 4-month grace period beyond the final closing date of June 30, 1993 an amount of US$ 1.08 million remained undisbursed and was cancelled. However, the loan was reopened in February 1994 to effect an outstanding payment of US$ 25,900 covered by a special commitment. Only US$ 23.92 million of the original loan amount of US$ 30.0 million, or about 80 percent, was finally disbursed. Table 1: Cost Adjustments due to change in scope of works (in nominal million currency units) Appraisal Estimate Actual JD US$ JD US$ Appraisal and actual costs 23.36 65.61 24.55 40.80 Net adjustments to: Cancellations from Project -7.39 -20.77 Additions to Project +4.56 -0.03 Adjusted Costs 20.53 44.82 24.55 40.80 Audits and Reporting 5.14 The loan and project agreements, as amended, required MOGA to provide the Bank with annual audits of its accounts as well as quarterly implementation reports. During the early stages of implementation the financial data supplied did not conform to the format nor the content specified in the agreements. Likewise, progress reports were short of disclosing the full range of information on implementation. The situation, however, improved later as advisors (financial and technical) came on board. -11- 6. Project Results 6.1 All components of the project, as restructured, were satisfactorily completed and are functioning well, including the components that were cancelled from the loan but completed on MOGA's own resources (para. 3.3). A list of the components implemented under the project is included in Table 5(b), Part III. 6.2 Of the studies supported under the project, the Cost Accounting study was completed but its application has been very slow because of the need for more trained staff and equipment. The Road Maintenance study was completed, procurement of the recommended equipment was also completed, and MOGA has started implementing its recommendations on the institutional set-up. However, the installation of the maintenance management model in MOGA's Central Maintenance Department proved infeasible without further investments in computer hardware in order to connect field divisions with the central department. The GADP study was also completed after considerable effort by a joint team form MOGA and its consultants. It came up with several important recommendations of which the parts related to transport were accepted and are being implemented, while the section on zoning was not approved by the concerned authorities. 7. Economic Re-Evaluation and Rates of Return 7.1 A full ex-post calculation of the economic rates of return (ERR) of the project as it was implemented would require an extensive empirical study to collect data and carry out a comprehensive analysis of the actual situation with what would have prevailed without the project. No such extensive data collection and analysis could be carried out for the purpose of this PCR9. The following re-evaluation, therefore, is limited only to the implemented major transport components financed by the loan and for which an ERR was calculated in the SAR (the two interchanges and the traffic corridors). The re-evaluation analysis was carried out using the same assumptions and data input used in the SAR, however, the costs were modified to reflect actual costs. The re-evaluation analysis shows that the project components under consideration have yielded returns below those in the SAR; the ex-post return for the two interchanges (Sports City and Nasser Circle) and the corridors improvements were estimated to be 33 percent and 8 percent respectivelyo. Major design changes after the fact, particularly, the addition of two more lanes to the underpasses in each of the two interchanges and the major expansion of storm/sewerage system in the three corridors have increased costs thus lowering the ex-post ERR estimates. 9/ MOGA conducted a limited scope traffic survey in August 1991, for some of the completed components. 10/ Findings of the limited traffic survey mentioned under footnote (8) provide some credence to the ex-post ERRs for the two intersections since actual non-peak traffic volumes observed and the corresponding projections used in the SAR for 1991 were within 2-5% of each other. However, actual non-peak traffic volume observed on AL Quds Street (Corridor 2) was 9% higher than projected in the SAR for that year, implying that the ex-post ERR for the corridors under-estimates the benefits. -12- 7.2 Other components for which no ex-post ERRs"I were estimated included the Solid Waste Collection and Disposal and the Food Hygiene Laboratory which are expected to yield economic benefits, although not readily quantifiable, in the form of improved health and environment to the general population of Greater Amman. 8. Impact and Sustainability of the Project 8.1 The impact of this project is felt by the al the residents of Greater Amman in terms of improved solid waste collection and disposal, safer food supplies and reduced traffic congestion in strategic areas within the road network. The operations of the solid waste department, with overall responsibility for the delivery and management of the solid waste collection and disposal in Amman, have been markedly improved since the implementation of the project: garbage collection from central locations is carried out on a daily basis (800-1200 ton), and disposal sites are adequately managed and continually moiitored to detect early any potential adverse effects to the ground water. The solid waste disposal system was extremely successful and can serve as a model for other countries in the region. The successful implementation of an effective method for collection of user charges for the solid waste system (included in electricity bills) has prompted MOGA to explore other further improvements. MOGA is also currently considering testing the possibility of privatization of the waste collection system. A trial area was selected, the Abdali district, because of its mixed land use properties (high and low-income residential and commercial). Furthermore, the hygiene laboratory has been performing well and is generating enough revenues12 to cover operations and maintenance costs and part of the capital costs. 8.2 The major improvements to the three traffic corridors in southern Amman have, in many ways, improved the living and safety conditions of many of the area residents. Since the improvements, business activity in the area has flourished as a direct result of reduced seasonal flooding and easier traffic (both vehicular and pedestrian) circulation and parking. The construction of the interchanges at Sports City and Nasser Circle have reduced overall waiting times during peak hours (by an average of 1.5 minutes per vehicle according to the 1991 traffic survey by MOGA) while accommodating increased traffic volumes (estimated at about 5% per annum). A substantial reduction (about 98 percent between 1984 and 1990) in the number of accidents at both intersections was also observed. 8.3 Other positive steps towards more sustainable impact include: (i) a recent reorganization at MOGA (July 1992) where the role of Technical Advisor to the Lord Mayor was upgraded into a management position, akin to that of a conventional City Engineer, a move that will allow MOGA's top management to concentrate on strategic planning and policy issues; (ii) improvements to MOGA's workshops have increased the deployment rate of MOGA's assets 11/ No ERR estimates were calculated in the SAR for these components. 12/ The Laboratory generated JD 70,000 revenues (in excess of salaries of the staff) in the 1st half of 1993. -13- (e.g. shorter down-time as well as more efficient usage of equipment); and (iii) a growing revenue stream from diverse sources growing at about 12 percent annually over the last 12 years with surpluses building upO. 9. Bank Performance 9.1 In the desire to achieve many objectives, the project was made excessively complex without assessment in sufficient detail of the absorptive and implementation capacity of MOGA.. The Bank was, therefore, overly optimistic in expecting that significant changes would be made in MOGA through this project, which represented but a small part of MOGA's broader agenda of objectives and activities. 9.2 The Bank overestimated the capabilities of MOGA to implement and coordinate a complex multi-component project, and did not devote the necessary intensive supervision: Bank supervision efforts and missions were inadequate, especially when compared to the considerable efforts expended processing the loan and subsequently launching the project. However, after restructuring the Bank demonstrated more flexibility to the changing priorities of MOGA and also took on a more active role in supervision. The Bank supervision missions were well staffed with technical specialists but lacked the participation of financial analysts. Detailed cost analysis conducted by such a person on frequent basis would have eliminated many uncertainties reported over the financial status of the project in addition to training MOGA's staff in such procedures. A financial analyst would have also been useful in monitoring early steps in the annual accounting cycle to reduce the likelihood of the frequent delays experienced in audits. 10. Borrower Performance 10.1 The Borrower's performance was also mixed. The implementation of the project suffered considerable delays from the outset: changed priorities, lack of clarity of the project objectives. Successive changes in MOGA's management and frequent staff turnover were somewhat disruptive. 11. Bank - Borrower Relationship 11.1 The relationship between the Bank's missions and the GOJ and MOGA remained frank but cordial. MOGA endeavored to provide the Bank with as much requested information as possible. 12. Consulting Services 12.1 The project relied on the inputs provided by several consultants for conducting studies, and for the design and supervision of the various project components. The consultants 13/ Part of the surplus build up is related to a halt on major capital spending in response to instructions by the Prime Minister two years ago to halt unessential public capital spending. -14- included foreign and local firms as well as individual expat-1ates and local specialists who were employed by the various implementing agencies to strengthen their in-house capabilities. All the project consultants provided good services throughout project implementation. However, technical advisors on contract basis who were funded by bilateral donors, received mixed reviews from MOGA. 13. Project Documentation and Data 13.1 The SAR was comprehensive. Early progress reports and Bank mission reports lacked specificity, however, later ones improved, but lacked any systematic updating to the monitoring indicators outlined in the SAR. 13.2 The data needed to prepare this report were difficult to collect because of the length of time which elapsed since project preparation; frequent changes in components to be financed under the loan; and the numerous yet dis-aggregated information systems where data relating to various aspects of the project were maintained. Moreover, the project files were poorly organized and often incomplete. Project expenditures although updated regularly by mission members bore little relation to the information kept by Bank's central operations procurement systems or MOGA's own account reporting thus making the reconciliation of project accounts an onerous taskl4 14. Status of Covenants 14.1 All covenants were complied with or under implementation at the closing of the loan. However, covenants relating to audits were subject to frequent delays. 15. Lessons Learned 15.1 In retrospect, it seems that the project was unduly complex, making it harder to manage and coordinate by the implementing agency. Exogenous factors further exacerbated this situation. The following are specific lessons, which emerged from the experience of this project although many others are scattered within the body of the report: - Avoid complex projects with - many components when the implementing agency has limited executing capacity. The Bank should also endeavor to ensure that project objectives have the full support of the Borrower and its implementing agency. The positive experience of the Solid Waste components reinforces this point. - The Bank should appraise projects based on final engineering designs. Also, significant design changes should be subject to rigorous economic justification. 14/ Discrepancies were largely the result of different exchange rates used by various entities to record project transactions throughout the life of the project. 15- The Bank should assess, as part of the appraisal process, the need to organize a project launch workshop in order to familiarize the staff of the implementing agency with Bank procurement and disbursement procedures and how these procedures assimilate to national ones. Moreover, these workshops should be tailored to the specific needs of the sector/project. Bank supervision missions should have an adequate skill-mix. Data collected and retained on the project by various entities (within and outside the Bank) seemed like "information islands": unreconcilable and often ineffective in monitoring aspects of loan supervision and administration. It would be worthwhile to investigate comprehensively means of improving the management and dissemination of project related information Bank-wide. -16- HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MUNICIPAL DEVELOPMENT PROJECT (LOAN 2334-JO) PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE By The Municipality of Greater Amman (MOGA) (LOAN NO. 2334-JO) The Borrower did not provide Part II. -17- HASHEMITE KINGDOM OF JORDAN AMMAN TRANSPORT AND MUNICIPAL DEVELOPMENT PROJECT (LOAN 2334-JO) PART III: STATISTICAL INFORMATION Table 1: Related IBRD Loans/IDA Credits Year of Credit Title Purpose of Project(s) Approval Status Comments Urban Transport Cr. 262-JO *Construction of a highway from Amman 1971 Closed The project was successful in constructing (US$ 6.3 M) to Zarqa. 12/76 the highway serving the high traffic Highway *Provision of road maintenance equipment. Amman- Zarqa corridor. Project *Improvement to future land use and related transport patterns of the Amman area. Urban Sector in General A series of urban development projects: *Ln. 1893-JO - To initiate and spread nationwide an 1980 *Closed These projects have successfully (US$ 21.0 M); alternative approach to the provision of 06/89; demonstrated the new approach. The sector *Ln. 2587-JO - adequate and affordable shelter to the urban 1985 *Closed has consequently been reorganized with (US$28.0 M); lowest income groups. The broad 06/93; major policy change by the government to and objectives were to create conditions withdraw from future public housing *Ln. 2841-JO) - whereby these groups could help 1987 *Ongoing projects. (US$ 26.4 M) themselves at their own pace without subsidy. A series of urban water supply and sewerage projects: 'Cr. 385-JO - These projects, in general, have been part 1973 'Closed Water supply and sewerage services have (US$8.7 M); of the Government's high priority program 06/78; shown considerable improvement over the 'Cr. 780-JO - to improve the water supply and sewerage 1978 'Closed years although still facing high water losses (US$ 14.0 M); services in Jordan and urban areas in 06/83; and shortages. A newly created Ministry of *Ln. 2213-JO - particular, as well as substantially targeting 1982 'Closed Water and Irrigation reflects the high level (US$ 17.0 M); institutional capacity to improve overall 06/89; of importance attached to this sector. *Ln. 2425-JO - performance. 1984 'Closed (US$ 30.0 M); 06/90; *Ln. 2483-JO - 1985 'Closed (US$ 30.0 M); 12/92; and *Ln. 2694-JO - 1986 'Ongoing (US$ 50.0 M) Source: ECA/MENA Information Center and various Project Completion Reports