Ghana - Road Rehabilitation and Maintenance Project

Document of The World Bank FOR OMCAL USE ONLY Report No.10747 PROJECT COMPLETION REPORT GHANA ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1601-GH) AFRICAN FACILITY CREDIT A-1-GH JAPANESE GRANT 1601-1-GH JUNE 16, 1992 Infrastructure Operations Division Country Department IV 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 EOUIVALENTS Currency Unit = Cedis c US $ 1.0(1985) = 53 Cedis (SAR) US $ 1.0(1986) - 89 Cedis US $ 1.0(1987) = 154 Cedis US $ 1.0(1988) = 203 Cedis US $ 1.0(1989) = 270 Cedis US $ 1.0(1990) = 326 Cedis US $ 1.0(1991) = 367 Cedis METRIC SYSTEM OF WEIGHTS AND MEASURES ABBREVIATIONS AND ACRONYMS AfDB - African Development Bank BHC - Bank for Housing and Construction DFR - Department of Feeder Roads DUR - Department of Urban Roads ERR - Economic Rate of Return GHA - Ghana Highway Authority ILO - International Labor Organization MMU - Mobile Maintenance Unit MTC - Ministry of Transport and Communications MRH - Ministry of Roads and Highways MTPU - Mechanical Training and Production Unit PMU - Project Management Unit PPF - Project Preparation Facility RTPU - Road Training and Production Unit SAR - Staff Appraisal Report SMC - Single-Man Contractor TRP-1 - First Transport Rehabilitation Project TRP-2 - Second Transport Rehabilitation Project TSSN - Transport Sector Strategy Note UNDP - United Nations Development Programme VOC - Vehicle Operating Costs vpd - Vehicles per day WFP - World Food Programme FISCAL YEAR January 1 - December 31  FOR OMCIUL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office o' Directw-Genital Operatkns Evaluhai(n June 16, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Ghana Road Rehabilitation and Maintenance Project (Credit 1601-GH) African Facility Credit A-1-GH JaRanese Grant 1601-1-GH Attached, for information, is a copy of a report entitled "Project Completion Report on Ghana Road Rehabilitation and Maintenance Project (Credit 1601-GH), African Facility Credit A-1-GH, Japanese Grant 1601-1-GH" prepared by the Africa Regional office with Part II of the report prepared by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment 2 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 OFmFCIL USE ONLY P&QJEq(T COMPLETION REPORT GHANA ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1601-GH) AFRICAN FArILITY CREDIT A-1-GH JAPANESE GRANT 1601-1-CH TABLE OF CONTENTS Page No, PREFACE .................................................. EVALUATION SUMMARY . .......................................i PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE .... ........ 1 A. Project Identification ................................. I B. Projea Background .................................. 1 C. Project Objectives and Description ........................ 2 D. Project Design and Organization .......................... 3 E. Project Implementation ................................ 5 F. Major Results of the Project ............................ 9 G. Project Sustainability ................................. 11 H. Association Performance ............................... 11 I. Borrower's Performance ............................... 12 J. Project Relationships ................................. 14 K. Consultant and Contractor Services ........................ 14 L. Project Docimentation ................................ 15 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .... .... 16 A. Introduction ....................................... 16 B. Adequacy of Factual Infonmation in Part III ................... 16 C. Comments on Analysis Contained in Part I of PCR .............. 16 D. Bridge Development Program ......... .................. 17 E. Pilot Feeder Road Program ........... .................. 18 F. Accra- Kumasi Road Rehabilitation ....... ................. 18 G. Contractor's Classification ............ .................. 18 H. The Road Fund .................................... 18 I. PMU Coordinating Role ................................ 8 J. The Bank's Performance ................................ 19 K. The Borrower's Performance .......... .................. 19 L. Relationship Between the Bank and the Borrower ..... .......... 19 M. Perfbrmance of Co-Financiers ......... .................. 19 N. Conclusion ...................................... 19 'this document has a restricted distribution and may be used by recipients only in the perforrnance of theitr offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  TABLE OF CONTENTS (continued) Page No. PART m: STATISTICAL INFORMATION ......................... 20 A. Related Bank Loans and Credits .......................... 20 B. Project Timetables ................................... 21 C. CreditData . 22 (i) Credit Disbursements .................................. 22 (ii) Allocation of Credit 1601-GH Proceeds .............. 23 (iii) Allocation -f Credit A-1i-H .................... 23 D. Project Costs . ...................................... 24 E. Project Results ........... .......................... 25 (i) Accomplishments ............................ 25 (ii) Economic Impact ............................ 25 F. Use of Bank Resources . . 26 (i) Staff Inputs by Stage of Project Cycle in Staff Weeks .... .. 26 (ii) Mission Data ............................... 27 G. Compliance with Credit Covenants .29  PROJECT COMPLETTON REPORT GHANA ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1601-OH) AFRICAN FACILITY CREDIT A-1-OH JAPANESE GRANT 1601-1-OH PREFACE i) This is a Project Completion Report (PCR) for the Road Rehabilitation and Maintenance Project for which Credit 1601-GH in the amount of SDR 40.4 million (US $40 million equivalent), was approved on June 4, 1985. On August 12, 1985, additional funding of SDR 11.1 million (US $10 million equivalent) was approved through Credit A-1-GH of the African Facility. On January 29, 1987, a Japanese Grant Agreement (1601-1-GH) was signed between the Republic of Ghana and IDA for Yen 700,000,000. The last disbursement on Credit 1601-GH was made on November 7, 1991 and the undisbursed balance of SDR 182,410.53 was canceled as of January 30, 1992. The last transaction on Credit A-1-GH was processed on January 24, 1992; this credit was fully disbursed. ii) This PCR was prepared by the Infrastructure Operations Division of the Western Africa Department. It was based on the Staff Appraisal Report, the Credit and Project Agreements, the correspondence files, supervision reports and interviews with Bank staff. The Borrower provided useful material through its draft PCR written by the Project Management Uniit which was used extensively in preparing this repor.. Part II of the report was prepared by the Ministry of Roads and Highways. iii) Co-financiers included the African Development Fund, the Japanese Government and the United Nations Development Programme. The World Food Programme contributed food which was used as an incentive for road workers. IDA acted as administrator for both the African Facility and the Japanese Grant. The ILO made a substantial contribution to the labor-intensive component of the Project.  ii PROJECT COMPLETION REPORT GHANA ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1601-GH) AFRICAN FACILITY CREDIT A-1-GH JAPANESE GRANT 1601-1-GH EVALUATION SUMMARY Objectives i. The main objectives of the Project were: (i) to strengthen the road agencies in Ghana; (ii) to revitalize road maintenanc-, operations; (iii) to reduce t-ansport costs; (iv) to rehabilitate a section of the most important road in the country; (v) to introduce labor-intensive technology in feeder road rehabilitation; (vi) to improve feeder road maintenance; (vii) to improve transport planning; and (viii) to assist in the rationalization of transport policies (para 7.) ImDlementation Experience ii. The Project was slow in starting-up, but once underway, it progressed well. It was completed with only a one year delay; this was good performance, given the many problems which had to be overcome (para 19). iii. A shortage of local currency for the road maintenance component handicapped execution of the trunk road maintenance componcht ard the pilot feeder roads components during the Project's initial period. The latter component provided the basis for a feeder roads project which was presented to IDA's board in December 1991 (parr 20-29). Results iv. Overall, the Project was successfully executed; it was particularly successf&l in carrying out many institutional improvements on which earlier highway projects had had mixed results (para 34). v. Under the road maintenance component, accomplishments included 100% of the planned target for periodic maintenance works, but only 80% of the programmed routine maintenance work. The once overstaffed Ghana Highway Authority (GHA) reduced its manpower by about 2000 employees. Local road contractors were trained in contracting operations, equipped through sub-loans and contracting procedures were switched over from ad hoc awards to competitive bidding. The capacity of the local contracting industry including quarry operators was greatly increased. A comprehensive training program was carried out, and planning units set up in the executing agencies. The Central Workshop is now being efficiently managed, but its importance was gradually reduced by the increasing practice of contracting out road works rather than using departmental forces (paras 37-38).  iii vi. All of the bridge works were completed. The pilot feeder road program, which introduced labor-intensive methods, was highly successful and was one of the major accomplishments of the Project. The major rehabilitation of a key road link encountered some problems but it was satisfactorily completed (paras 39-43). vii. The economic reappraisal by the Project Consultants shows that performance under the trunk road maintenzalce component was slightly below the appraisal estimate. However, the reappraised ERRs et the bridge component and the rehabilitation of a section of the Accra-Kumasi Road wa; higher than the appraisal estimate. The feeder road component yielded high economic returns, and in addition made a major socio-economic impact (para 44). Sustainability viii. The Ministry of Roads and Highways (MRH) and its agencies are expected to obtain long term benefits from the Project, provided that adequate local funding is made available. This, in fact, is being done under the two follow-up transport projects now under execution (para 45). Findings and Lessons Learned ix. The channeling of African Facility and Japanese Grant funds through IDA contributed to the successful implementation of the Project (Para 46). X. The Project was well designed and comprehensive in scope so as to tackle the many problems of road maintenance in Ghana, and took into account the lessons learned from earlier road projects (para 46). xi. Credit for the success of the Project, is due in part to (i) time'y provision of scarce financial resources by the Government and the establishment of the Road Fund (para 51); (ii) the close working relationships between IDA, the Government, and MRH and its agencies (para 56); and (iii) the adequacy and continuity of IDA snpervision (para 47). xii. The Project was successful in implementing a number of important policies and institutional objectives, and it provided a sound basis for the design and execution of two follow-on projects now underway (para 48). xiii. The Government's bold ERP which started in about 1983, proved successful in reversing the economic mismanagement and neglect of infrastructure over the past two decades. The ERP provided a suitable environment which contributed to the success of the Project (para 50). xiv. The food aid provided by the WFP proved effective in increasing productivity and performance at GHA, DFR and MRH (para 51). xv. The change over to closer control by a strong ministry led to improved performance on the part of GHA (para 53). xvi. A major constraint during the Project was the shortage of maDagement staff at MRH and its agencies. Further strengthening of the MRH agencies is needed, particularly ensuring  iv an adequate supply of management personnel. This is being pursued under the ongoing road projects (para 54). xvii. The Project placed a heavy burden on BHC, a reliance that may have been over optimistic. A longer term goal is the consistent supplv of equipment and spare parts through the private sector. This is now being done since the Government has allowed a free market in foreign exchange, thus contractors can convert cedis to foreign currency in order to buy equipment and spare parts (para 55). xviii. The successful execution of the Project on schedule is also credited to the use of a project management unit in a coordinating and monitoring role, the close cooperation of MRH, GHA, DFR and BHC in implementing the Project, and the participation of UNDP and ILO in overseeing the feeder road component and of WFP in providing food aid to road workers, and of AfDB and Japanese Government in providing key cofinancing inputs (paras 29, 37, 57, and 58). xix. Given the problems encountered with the Central Workshop over the past decade and the reduction in GHA's force account work, the role of the shop has been reduced to routine maintenance of equipment and support to GHA's mobile maintenance units (para 59). xx. Domestic consulting firms are being used increasingly on road design and supervision work. The domestic contracting industry has been strengthened under the Project, and local quarries were assisted in expanding their output (paras 60 and 61).  PROJECT COMPLETION R4PORT GHANA ROAD REHAB3ILITATION AND MAINTENANCE PROJECT (CREDIT 1601-GH) t.FRICAN FACILI1Y CREDIT A-1-GH JAPANESE GRMNT 1601-1-GH PART I. PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identification Project Name: Road Rehabilitation and Maintenance Project (RRMP) Credit Nos.: 1501-GH, A-1-GH, 1601-1-GH RVP Unit: Infrastructure Operation Division, Western Africa Department Country: Republic of Ghana Sector: Transportation B. Project Backgrond l/ 1. At the time of project appraisal in 1984, Ghana had just begun to recover from a disastrous collapse of its economy. The Government, with IDA assistance, had started to initiate an Economy Recovery Program (ERP) in 1983 which was designed, in part, to help restore the transport sector, expand and improve sub-sector institution building goals, and focus attention and financing of the donor community towards Ghana's urgent needs. 2. The capacity of virtually all transport modes in Ghana was inadequate to meet even the reduced level of demand prevailing at that time, due to lack of regular maintenance and upkeep for the last decade or more. As a result, the transport system had nearly broken down during the early 1980's and remained a serious constraint to the country's economic recovery. Finally, in 1984, the economy began to respond to the efforts to restore its growth. 3. Tke Government's transport strategy under ERP emphasized maintenance and rehabilitation of the existing infrastructure rather than new construction. This strategy was the basis of the Road Rehabilitation and Maintenance Project (RRMP), better known in Ghana as the Fourth Hig'vaiy Project. It was also the basis of the three earlier highway projects (see Part III, Annex A). The First and Second Projects achieved only mixed results. The Bank's combined audit r;-- t for these two projects noted that while the physical investments yielded acceptable economic retorns, the projects did not meet their institution- building objectives. 4. The Third Highway Project was devised to help the Ghana Highway Authority (GHA), which is responsible for trunk roads, improve its performance. GHA is a semi- autonomous agency with its own board of directors and originally came under the Ministry of 1/ Staff Appraisal Report (SAR), Report No. 5479-GH dated May 14, 19GS, Chapters I and II.  2 Public Works. Following the change of government in 1981, GHA's boaru was dissolved and GHA came under the newly established Ministry of Roads and Highways (MRH). Firstly, GHA employed consultantr to reorganLe the workshops which were virtually at a standstill. Secondly, GHA carried out a manpower study of its organization with a view to reducing surplus staff. Thirdly, GHA set up a Mobile Maintenance Unit (MMU) with Japanese aid. Fourthly, GHA started to contract out routine road maintenance to single man contractors (SMCs) and periodic maintenance to domestic contractors. The domestic construction industry was supported under the project through the Bank for Housing and Construction (BHC), one of whose objectives was to develop and finance the industry with loans for equipment, tools, spare parts and supplies. A serious problem under the Third Highway Project was that sub-borrowers were required to assume the foreign exchange risk, a situation which greatly added to their debt in the light of the rapid devaluation of the local currency. The PCR for the Third Highway Project fouind that IDA had over-estimated the capacity of GHA, particularly its Mechanical Division which was responsible for the workshops. It concluded that "in retrospect, the project might be regarded as a holding operation to keep GHA and BHC operating until the economy improver and another project. -ould be prope ed to meet the need for a sustainable road maintenance program."21 5. The SAR for the RRMP noted that while the main objective of the Third Highway Project was to support maintenance, its execution faced major problems related to the operation of both GHA and BHC. Both agencies had suffered acutely from the political and economic instability which had faced Ghana over the past decade. In preparing the RRMP, IDA concentrated on remedial measures to ease the problems of GHA and BHC. At about the same time, other IDA lending operations were addressing the problems of ports and railways, and the economic and financial woes of Ghar.a in an effort to revive the economy by restoring its once prosperous export trade. 6. The GHA and BHC had been the main beneficiaries of IDA lending under the first three highway projects. Under the RRMP, it was intended to also assist the Department of Feeder Roads (DFR) which was responsible for feeder roads, and the MRH which along with GHA and DFR also had responsibility for the Deparunent of Urban Roads (DUR). The DUR was set up in 1983 to look after urban roads, but at the time of appraisal its role and function had yet to be defined. C. Project Objectives and Description 7. oiect Objectiv 3/ The objectives of the project were: (a) to strengthen the road agencies under MRH and revitalize road maintenance operations through support of increased private sector participation, and the introduction of improved management in GHA and DFR coupled with staff incentives and systematic training programs; (b) to reduce transport costs and protect Ghana's la , past and future investments in the road sub-sector through improved maintenance; (c) to rehauilitate a part of the Accra-Kumasi highway, the most important trunk road in the country; (d) to foster the rehabilitation and recovery of the agricultural sector mainly through improved feeder road maintenance; (e) to improve transport planning and to reorient transport investment through careful selection of high priority investments and ZI PCR for Third Highway (Emergency Maintenance) Project dated March 17, 1987. a/ SAR, para 3.01.  3 increased emphasis on rehabilitation and maintenance; and (f) to assist in the rationalization of transport policies, includ.ng adjustment of road user charges, thus ensuring better mobilization and utilization of resources. 8. Prolect Description QI The Project provided finzaicial assistance for the following components: (a) three year (1986-88) requirements for rehabilitation and maintenance of Ghana's trunk road network comprising: a three-year time slice of GHA's road maintenance program, including regravelling, paved road resurfacing and minor improvements, as well as road and equip.nent maintenance; management and support to domestic road contractors through sub-loans with BHC: (ii) a technical assistance program, benefitting MRH, GHA, DFR, BHC, and domestic road maintenance contractors; (iii) a training program for staff of GHA and DFR; (iv) food aid as an incentive to reduce absenteeism and to increase productivity of MRH and its agencies; and (v) project supervision and coordination. (b) a bridge rehabilitation program; (c) a three year pilot feeder roads program with DFR, comprising road and drainage improvements and maintenance, using appropriate technology; and (d) rehabilitation of about 105 km of the Accra-Kumasi Road. D. Ptoiect Design and Organization 9. The goal of the RRMP was to contribute to the Government's economic recovery program by removing road transport obstacles to the vital export/impo,t trade, and the movement of domestic farm outputs and inputs. The RRMP was designed to take advantage of the lessons learned over the past three road projects and incorporated a number of new .eatures. It laid particular stress on: (a) an increased level of maintenance by contract rather than by force account as in the past; (b) an increased level of technical assistance to MRH, GHA, DFR, BHC and the domestic road construction industry; (c) intensified training for GHA and DFR personnel; (d) use of food aid as an incentive to workers; (e) the establishment of a Project Management Unit (PMU) to supernise, expedite and coordinate the Project; and (f) a pilot feeder roads program to assist DFR deve!op labor based technology for the maintenance of feeder roads. 4/ SAR, para 3.02.  4 10. Despite previous efforts under earlier highway projects, road conditions had further deteriorated to such an extent that some important road sections had become practically impassable, and road transport costs were high all over the country. The factors responsible for GHA's poor performance were: ') insufficient foreign and local inputs and shortages of fuel, materials and spare parts due to the critical finances of the Government; (b) delays in payments to contractors; (c) inefficient management of GHA, particularly of its workshops and stores; and (d) less than living wages for road workers. 11. To combat these problems, (in the same order as para 10), IDA proposed and the Gc -ernmerc agreed to: (a) establish a Road Fund financed by a new fuel tax; (b) implement policies designed to speed up payments to contractors; (c) initiate an agreed action program to reorganize GHA's equipment management, improve personnel management and adopt a plan to transfer an increasing proportion of road maintenance works to contractors; and (d) seek food from the World Food Programme (WFP) to be used as an incentive to increase productivity. To assist GHA in carrying out its greatly expanded workload, the RRMP provided tie PMU to assist with procurement, execution and monitoring of the Project. 12. As regards BHC, the Government and BHC prepared a detailed action program which incluued measures designed to: (a) strengthen the financial condition of BHC including a restructuring of its capital; (b) transfer of foreign exchange risks from BHC to the Government; (c) reorganize and strengthen BHC's staff through training; (d) improve BHC's project appraisal and supervision acLivities; (e) strengthen BHC's accounting and management information systems and internal controls; (f) improve BHC's loan recovery performance; and (g) strengthen BHC5s commercial banking operation. 13. Finally, to provide sector wide planning support for Ghana's transport sector, the Government, the United Nations Development Programme (UNDP) and IDA prepared a coordinated program which wag largely financed by the UNDP and the RRMP. The program provided for technical assistance and other support to strengthen planning units in GHA, DFR and the Ministry of Transport and Comm.unications (MTC). The planning units were, in coordination with one another, to prepare with expatriate assistance investment plans for the sub-sector concerned, conduct project evaluation, improve collection and analysis of statistics, and conduc. studies and analysis of transport problems. The UNDP was also to assist in setting up a Planning and Programming Departnent in MRH to monitor and coordinate planning work done by GHA and DFR. MRH was to coordinate with the MTC and the Ministry of Finance and Economic Planning. 14. Past experience had shown that better coordination between BHC, GHA, DFR and private contractors was essential for efficient road maintenance. To provide such coordination, and to assist BHC and MRH in the supervision of the various project elements, the PMU was to continue for the duration of the project. The PMU was to be staffed with an experienced team of consultants, and was to be attached to the new Monitoring and Evaluation Department with MRH. Eventually PMU was to be absorbed by this Department. 15. The difference between the earlier road projects and the RRMP, was that the latter represented a more c,mprehensive and coordinated attack on the problems facing the road sub-sector and the overall transport sector. The approach was innovative in that food aid was used, which represented a powerful incentive to Ghanian road workers, given their low wages and the parlous state of the economy. Also, the involvement of the UNDP with its technical assistance inputs to GHA, DFR and MRH, lent weight to the need for strong action in the  5 planning field. In 1984, the Bank prepared a Transport Sector Strategy Note (TSSN) which focused on the country's main transport problems and policy issues. The note provided a basis for formulating the RRMP, and the railways and ports projects then under preparation. 16. The Project was prepared with financing from a PPF advance of US$1.0 million. It was appraised in September 1984 by a ,Ax person mission which placed particular emphasis on training, and assistance to BHC. The feeder road component was appraised by a separate three man team during a follow-up mission. Agreement was reached at negotiations held in April 1985 on the matters discussed above, and particularly on the action plans for GHA and BHC. Furthermore, it was agreed that conditions of effectiveness of the credit would be to levy a road user tax, and the engagement of the PMU consultants. Annex B shows the planned and actual project timetables. 17. At the time the Project was submitted to the Loan Committee, a financing gap of about US $12 million existed, despite the efforts of IDA to interest the donor community. During negotiations, the Government repeatedly stated that it would give the highest priority to the Project, and agreed to make a foreign exchange contribution of US $11.4 million from its own resources.5/ A Japanese Grant of Yen 700 million (US $5.4 million equivalent) was used mainly for equipment and spare parts. Given the foreign exchange shortage Ghana was facing following approval of the Project, IDA subsequently made available an African Facility Credit of SDR 10.1 million (US $10 million equivalent) in August 1985. The total cost of the Project as estimated at appraisal was US $122.8 million, of which about 60% was in foreign exchange. 18. Credit Effectiveness The Credit was approved on June 4, 1985, signed on June 24, 1985 and became effective on November 1, 1985. The African Facility Credit for SDR 10.1 million was approved on August 12, 1985, signed on October 23, 1985 and became effective on March 20, 1986. The Japanese Grant for Yen 700 million (US $5,384,000 equivalent) was signed on January 29, 1987 and became effective on April 23, 1987. On June 5, 1987, IDA amended the Credit Agreements for the above three credits to reflect the additional fmancing available by adjusting the individual credit allocations appropriately. E. Project Implementation 19. The PMU consultants mobilized in October 1985 and started work on drafting procurement documents and assisting contractors. The workshop consultants under the previous project continued their work, thus there was no break in this operation except for a short delay caused by the need to relieve some of the earlier staff and replace them with new personnel. The Project was slow in starting up, but once underway, it progressed reasonably well given the many problems to be overcome. By May 1990, the Project was noted as almost completed, except for an uncommitted balance of SDR 5.44 million under Credits 1601-GH and A-1-GH. Processing of procurement to use the remaining funds was in an advanced stage. The Project was completed with only a one year delay, which was a very good performance given the nature of the problems encountered, especially the shortage of local funds. The following paragraphs summarize the highlights of project implementation for each major component. I/ Memorandum to SVPOP dated May 3, 1985.  6 20. Trunk Road Maintenance Program A special supervision of BHC in January 1986, 6/ shortly after project start-up, indicated that management had made substantial progress particularly in the areas of staffing procedures and financial restructuring. The arrival of a consultarnt team in mid 1986 was expected to significantly improve BHC's operational capabilities. Two major problem areas were noted: BHC's continued high level of arrears and the current inadequate level of provisions for arrears. The mission recommended that BHC urge the Government to pay contractors in a timely fashion so that they could repay their debts on a timely basis to BHC. This was eventually done as noted in para 22, thanks mainily to the Road FRnd. Later, with the assistance of consultants, BHCs performance improved steadily as the project progressed. 21. A supervision visit in January 1987 J indicated that work had started on all of the sub-components. The food program was in operation but, as yet it was not having much impact on improving work output. The PMU procurement ant; contractor assistance provided through seminars were proceeding well. Delivery of the bulk of the equipment was expected to be completed by mid year. Thus it is not surprising that the mission found that there had been no major improvement in road maintenance, because of the lack of equipment. However, the report went on to say the financial situation had improved somewhat with the creation of the Road Fund, but funding availability remained uneven and insufficient. 22. By mid 1988, a supervision mission reported that good progress was being made, and expected output for the rest of the year to far excel the levels reached in 1987.1/ The reason for less than the targeted progress to date, was the complete switch over from ad hoc contracting, to the more efficient competitive bidding which, however, required more time for processing. Release of funds from the Road Fund was on schedule, and for the first time in many years, GHA and DFR did not owe arrears to contractors. 23. In late 1988, an IDA supervision consultant found that the situation at the Central Workshops including the stores was highly unsatisfactory, despite five years of consultant assistance. He recommended that the adequately equipped private sector be used to assist in the repair and overhaul of equipment. He also suggested field operating and maintenance standards needed to be improved to reduce equipment abuse.2/ However, by the end of the Project, PMU noted that the consultants assistance to the shops had resulted in a efficient operation with appropriate inventory control.10/ 24. The Project provided for a comprehensive program to train and upgrade CHA and DFR road equipment personnel at all levels. The Project financed a tranche of a continuing program which included the training of some 1600 personnel from engineers to supervisors, operators, mechanics, warehousemen and cost clerks. To upgrade GHA's Training Division, 6/ Supervision Report dated April 19, 1986. 7/ Supervision Report dated March 20, 1987. 8/ Aide Memoire dated July 5, 1988. 2/ Supervision Report dated January 3, 1989. :I0 Draft PCR by PMU dated June, 1991, para 11.02.  7 some of its staff were sent abroad for training. The training program included: (a) the setting up of a Training Steering Committee under MRH leadership; (b) the strengthening of GHA's Training Division; (c) the establishment of a Road Training Production Unit (RTPU) in GHA for the training of road supervisors, and equipment operators and drivers; (d) the setting up of a Mechanical Training Production Unit (MTPU) under GHA for the training of mechanical personnel; (e) the purchase of training equipment and materials; (f) the recruitment of training specialists and instructors; (g) the organization of periodic seminars and other special courses; and (h) training abroad for selected staff. During project execution, the consultant services for the RTPU and MTPU were extended to provide for additional training. 25. Twenty domestic contractors received equipment through sub-loans passed on to them from the IDA credit through BHC. Though the contractors often complained about high interest rates and the foreign exchange risk passed on to them (see para 9 of Part II), this high cost was absorbed by higher contract prices which were adjusted upwards with domestic inflation resulting from cedi devaluation and other factors. Domestic contractors were also given seminars by PMU which covered bid bonds, performance bonds, bank guarantees for advance payments, how to prepare bids, etc. These measures, and the Road Fund which provided regular flow of funds to pay the contractors boosted capacity of domestic contractors. Eight selected quarry operators were assisted during the project with BHC financed equipment. This was a particularly important aspect of the Project as it enabled the quarries to greatly increase production of materials for road building, especially chips for resealing and paving. 26. Bridge Rehabilitation Program Under this component, eleven bridges were repaired and three additional bridges were reconstructed, as called for in the project description. A Bridge Maintenance Unit (BMU) was organized for the southern part of the country and was noted as performing well by early 1989. IDA agreed to a GHA request that a second BMU be organized and equipped under TRP-2 in the northern part of Ghana to assist in bridge repairs and maintenance. 27. Pilot Feeder Roads Program This component was prepared by DFR with the assistance of consultants and IDA staff. The International Labor Organization (ILO) actively assisted in its implementation. It comprised rehabilitation of about 240 km of feeder roads in western Ghana, spot improvements of about 700 km and routine maintenance of about 2000 km in selected regions of the country. It was designed as a pilot program with the intention of gradually replicating it in other regions. The work was essentially labor-intensive. The Project provided training for engineers, contractors, and workers, and assisted contractors in procuring appropriate equipment. Road rehabilitation was carried out by local contractors, while spot improvements and maintenance was done by force account. Light equipment was made available to the contractors through BHC as sub-loans from IDA funds, with DFR guaranteeing initial contracts to the contractors after training, and also guaranteeing deductions from contractor bills to pay BHC. It was found that a contractor with about $100,000 worth of equipment can rehabilitate 2 km of roads every month, employing about 120 people daily, and that the cost is about 15% cheaper than equipment-intensive methods; this reflecas the fact that imports have become expensive with devaluation of the cedi; thus encouraging use of local resources. 28. In late 1988, an IDA supervision consultant reported that seven contractors had completed their training. Four of these had taken delivery of their equipment and had completed 8 km of trial roads. They were awarded 25 km long sections and after 4 months, three were averaging 2 km per month while the fourth only achieved 1.2 km. Procurement  8 was noted as slow because of "ponderous bureaucracy and lack of urgency at BHC". Ll/ The Third group of 6 contractors started training in mid Ju,,e 1988 and were to finish by the end of November when all 19 contractors in the program were to be deployed. The main problem, apart from slow delivery of equipment, was noted as erratic cash flow for payments to contractors. In 1988, the program was expanded to include about 600 km of cocoa roads. In April 1989 at the request of DFR, IDA approved funding for four containerized workshops and other equipment and tools to enable it to maintain its road maintenance equipment; the equipment was delivered in 1990. Under the PAMSCAD (Project for Amelioration of Social Costs of Adjustments), IDA and other cofinanciers have funded a second training center in labor based road works at Kofurdia, to help replicate the program. In view of the success of the feeder road program, the Government drew up a National Feeder Roads Rehabilitation and Maintenance Program which provided the basis for a Feeder Roads Project presented to IDA's board on December 17, 1991. 29. Rehabilitation of 105 km of the Accra-Kumasi Road This component of the project was financed by the AfDB. The contractor was selected under ICB and the work was supervised by the design consultants. During construction, deficiencies showed up in a portion of the road. An investigation by an independent consultant revealed that the contractor's workmanship, and quality control by the supervision consultant on some sections of the road were poor. The contractor was held responsible for replacing defective works and has agreed to do so.12/ These repairs are to be carried out shortly. However, in spite of these problems, most of the road has been rehabilitated, and has benefitted a growing volume of traffic through significant additions in vehicle operating costs. AfD3B's funding and supervision of this project have been critical in the success of this important component; IDA and AfDB have cooperated effectively in carrying out this project. 30. Procurement The PMU was closely involved in the substantial amount of procurement which was carried out under the Project. IDA guidelines for ICB and LCB were followed and the records indicate that procurement was generally carried out in a fully satisfactory manner. 31. Qisbursenment Despite the delays in starting the project, disbursements of Credit 1601-GH in US dollar terms proceeded somewhat ahead of the appraisal schedule until FY91- FY92, as shown in Annex C(i). Even in SDR terms, disbursements were more or less on schedule and the credit was closed without an extension of the closing date. The final disbursement was made on November 7, 1991 and on January 30, 1992 the undisbursed balance of SDR 182,410.53 was canceled. The last transaction on Credit A-1-GH was processed on January 24, 1992; this credit was fully disbursed. 32. Credit Allocations The original and actual allocations in SDR's for Credit 1601-GH are shown in Annex C(ii). The differences between the two are mainly accounted for by the amendment to the allocations following the availability of Credits A-1-GH and 1-GH. In April 1990, as the project was nearing completion, the remaining funds were again reallocated. The largest increase in allocation to a single category was made for additional consulting services, training and studies for GHA. This enabled GHA to develop standard 11/ Supervision Report dated January 3, 1989. 12/ Report attached to a letter from the Secretary O' MRH dated April 9, 1990.  9 contract documens, provide further training and strengthen institutional capacity. The largest reduction in allocation was for GHA equipment which was not needed because of the strategy adopted by GHA to have all periodic road maintenance, and a large percentage of routine maintenance works, executed by contract instead of by force account. 33. Prgiect Costs The appraised and actual project costs are shown in Annex D. They indicate that the project was completed at a cost somewhat above the appraisal estimate. However, as noted in para 35, not all the road works envisioned at appraisal were carried out. F. Major Results of the Project 34. Overall, the Project was successfully executed. It was particularly successful in carrying out many institutional improvements in which earlier highway projects had had mixed results (paras 3-5). These improvements included: (a) strengthening MRH, GHA and DFR through technical assistance in key areas and through training; (b) introducing a staff incentive scheme with support of food-aid from the WFP to supplement real wages; (c) reducing the share of force-account works carried out by direct departmental labor; (d) setting up a Road Fund to ensure regular flow of funds to the agencies and contractors; (e) starting pilot projects for introducing labor-intensive road rehabilitation methods based on appropriate technology consistent with the ERP which encourages use of domestic resources; and (f) improving contractor capacity through sub-loans for equipment and parts, training, enforcement of competitive bidding for all works, ensuring prompt and reasonable payments to contractors and automatic price-escalation mechanisms. These measures have considerably enhanced the institutional capacity of Govermment agencies, contractors and consultants in the road sector. _3/ 35. The most serious shortcoming encountered in executing the Project was that the Road Fund did not provide all the funding needed for project execution. Allocations to the Fund was slow during the initial period and the Government was not always able to top up the Fund, which it had expected to do. Thus, as noted in para 37, the amount of routine maintenance works had to be reduced. Financing needs were higher than estimated because of the large scope of the Project and rising costs. The latter was caused by the increasing deterioration of the roads that had not as yet been rehabilitated, and the rising costs of road works, especially resealing and regravelling. Costs in terms of local currency, which the Government mainly provided, rose also on account of the depreciation of the cedi. 36. Given the problems encountered on earlier projects, performance under the RRMP was a substantial improvement. This improvement is attributed to careful project preparation which took into account past problems and provided for detailed remedial measures to resolve them (para 9). Further improvements need to be made and they are being tackled under the ongoing TRP-1 and TRP-2 projects. 37. Trunk Road Maintenance Program Accomplishments include 100% of the planned target for periodic maintenance works, but only 80% of the programmed routine maintenance works. Under this component, local road contractors were trained in contracting operations and provided with equipment supplies and spare parts. One noteworthy accomplishment of I3/ SAR for TRP-2, para 2.12.  10 the Project was the preparation work carried out for switching local contractors over from ad hoc contract awards to competitive bidding, which actually started under TRP-1. A less successful feature of the Project was the over reliance on SMCs whose performance was not as high as expected, at least initially, although subsequent evaluation is that SMCs are effective (para 4). 14/ A comprehensive training program was carried out at all levels in GHA and DFR. Planning units were set up in the executing agencies. Two MMUs were established under the Project with financing under the Japanese Grant. The MMU concept evolved into a efficient operation which allowed flexibility in allocating GHA forces. 15/ 38. The Central Workshop is now more efficiently managed, but their importance has been gradually reduced by the increasing practice of putting road works out to contract rather than using departmental forces. Now that a significant portion of routine maintenance work is being carried out by contract (mainly SMCs), GHA was able to reduce its manpower by about 2000 employees. Lastly, quarry operators were assisted with equipment to help raise their production. Studies were completed in 1989 of both the contracting industry and the quarries, and recommended further imprcvements in their performance. 39. Bridge Rehabilitation Program All of the bridges in the Project were completed and one BMU unit was set up. Use of the BMU by DFR, as well as GHA is a good indication of the cross-agency sharing within MRH. 16/ The improvement in the condition of both the trunk and feeder roads have greatly assisted the agriculture, mining and forestry sectors. Annex E (i) shows that the Project met its targets except for routine maintenance of trunk and feeder roads as a result of financial constraints. 40. Pilot Feeder Road Program The execution of the Pilot Feeder Road Program was highly successful and it is one of the major accomplishments of the Project; 150 km of roads were rehabilitated under the program. Under the guidance of IDA and ILO, the program provided DFR with the skills to manage a labor based program. Twenty-one local contractors were trained in labor based technology as well as 29 DFR engineers and 31 DFR foremen. 17/ The program has caught the attention of other countries as a practical method of improving their feeder roads with minimal use of foreign exchange, and as a means of providing employment. The program is now being replicated in other regions of Ghana under the ongoing First Transport Rehabilitation Project (TRP-1). 41. The objectives of the feeder road program were to: (i) provide the necessary requirements for the evaluation of agriculture produce; (ii) attract commercial transport operations into the area; (iii) provide easy access to available socio-economic facilities; (iv) stimulate local economies through income injections; and (v) effect community participation in road maintenance works. A final report on the socio-economic impact of the feeder road component concluded that the objectives were fully attained. For completely inaccessible routes or sections of routes, the transfer has been from headloading to cargo trucks and 14/ Supervision Report dated April 30, 1987. 1J/ Draft PCR by PMU, para 6.06. 16/ Draft PCR by PMU, para 6.07. 17/ Feeder Roads Improvement in Ghana, DFL, May 29, 1990.  11 articulated trucks. For seasonably accessible roads, the transfer has been from tractors and trucks to trucks and articulators respectively. 18/ 42. Although mammy trucks and cargo trucks have become more prevalent, the most competent newcomer on the scene are taxis which take a shorter time to fill and are faster than heavy trucks, particularly for traders with small parcel loads. The previous access to community facilities has been enhanced. The local economies have been improved as a result of the creation of 0.5 million man days of employment and the C 146.48 million paid to workers as wages. The component has been able to train a cadre of supervisors of construction firms and the DFR is the management and implementation of labor based controls. Lastly community participation in spot improvement has been commendable and communities in many road corridors have set up their own maintenance groups to maintain the roads. 43. Rehabilitation of Accra-Kumasi Road As a result of the completion of this component, weighted annual average traffic growth from 1986 to 1990 was 5%. Traffic volumes in 1990 ranged from 1340 vpd on the Nkawkaw-Konongo section to 3400 on the Ejisu-Kumasi section (see para 29). 44. Economic P ^ormanc The economic reappraisal by the PMU consultants shows that performance under the trunk road maintenance component was slightly below the ERR estimated at appraisal, though s.ill high. However, the reappraisal ERR of the bridge component and the rehabilitation of the Accra-Kumasi Road was higher than the appraisal estimate (see Annex E(ii). The feeder road component is believed to have yielded high economic returns, however, they have not been quantified. In addition this component made a major socio-economic impact in providing rural employment, and in developing road maintenance methods and skills which are affordable and sustainable by the rural community. G. Proiect Sustainability 45. The MRH and its agencies are expected to obtain the long term benefits of the Project. However, shortfalls in local financing capacity could delay these benefits. Government commitments to the Road Fund need to be expanded, if the ber.afits of the Project are to be sustained. The Government undertook to do this under the ongoing TRP-1 and TRP-2, and to date it has met its obligations in this regard. H. Association Performance 46. IDA did a thorough job of preparing the Project, which called for frequent visits as part of supervision missions for ongoing road projects. IDA took into account the problems encountered on past projects, the findings of the TSSN and the current state of the economy. The channeling of African Facility and Japanese Grant funds through IDA contributed to the successful implementation of the project by unifying control over much of the project funding. The use of a project management unit to oversee the project was a sound decision. The appraisal team included specialists in training, workshops and equipment, rural roads and a financial specialist to look into BHC's operations. The result was a comprehensive analysis of the problems facing the road sub-sector and the preparation of action plans to relieve them. .M/ Final Report - Socio-Economic Impact Study by UNDP/ILO dated August 1990.  12 47. IDA's divisional management followed the Project closely throughout the project cycle. They participated in the appraisal as well as one of the supervision missions. Supervision was frequent (see Annex F(ii)) and thorough, judging by the detailed supervision reports and aide memoires left with the Government. Specialists were frequently called in to supervise specific aspects such as training, procurement, the workshops and labor-intensive maintenance. The adequacy of supervision is attested by the good results achieved under difficult conditions. Continuity of the task manager, in spite of the Bank's reorganization proved useful. IDA was flexible in adjusting the project scope to meet changing needs, and in suitably altering the credit allocations (para 32). IDA's concurrent preparation and funding of other comprehensive road rehabilitation programs (under TRP-1 and TRP-2) helped to reinforce and enhance the RRMP impact and leverage. 48. The overall result was that the RRMP, with its four major components, was successfully carried out. Most policy and institutional objectives were achieved, including the strengthening of MRH and its agencies. The contracting system was reformed with full competitive bidding replacing the old ad hoc award practice, the contracting industry was built up, and medium and long term plans were prepared for the future. The project provided a sound basis for the design and execution of the two follow-up projects now underway. 49. IDA also made substantial efforts to identify additional funding from the donor community which were successful to a degree. It coordinated closely with the UNDP in establishing the planning units in GHA, DFR and MRH and setting up the production units with ILO participation. IDA also helped develop the use of food from the WFP as an incentive to workers and staff in GHA, DFR and MRH. This innovative step encouraged workers at a time when wages were low and food difficult to find, and was thus a major contributor to the Project's success. The establishment of revolving funds for GHA, DFR and BHC were particularly helpful to these agencies. I. Borrower's Performance 50. The Government's bold ERP which started in about 1983, proved successful in reversing the economic mismanagement and neglect of infrastructure over the past two decades. The ERP provides a suitable environment which contributed to the success of the Project. Under ERP, a liberal market economy free from the previous stringent controls was gradually brought back, Government spending on priority infrastructure maintenance was enhanced and by about the end of the Project period, foreign exchange markets were liberalized. 51. The Government recognized at the time of appraisal the difficulties facing the road sub-sector and the economy. It willingly committed itself to the strong remedial measures called for under the Project, the most important of which were to set up the Road Fund, and stimulate the growth of the domestic construction industry, assess road user taxes, and carry out a study of road user taxation. It endeavored to provide the additional funding needed, to the extent these funds were available. The Government also took appropriate steps to provide incentives and more attractive remuneration to engage the right calibre staff, and to retain those already in service. The PMU noted that the Borrower's performance could be best  13 described as consistently improving.12/ The food aid provided by the WFP proved effective in increasing productivity and performance at GHA, DFR, and MRH. 52. The new and stronger management at the MRH took a close interest in the Project and cooperated with IDA in ensuring that obstacles to progress were cleared away. Similarly, the managements of GHA, DFR, and BHC closely cooperated in accomplishing the objectives of the Project. Audits were performed on a timely basis, and they indicated that appropriate records were maintained and that the funds were properly utilized. The generally satisfactory performance of the Government and its agencies under the Credit ane Project Agreements is reflected in Annex G. 53. As noted in para 4, GHA is a semi -autonomous agency, but after the 1981 change in government, it came under the MRH. GHA's performances under a strong ministry considerably improved. Perhaps the most imnortant was that GHA gained a direct link to Government at a time when funding was short. A further advantage was that GHA came under the close control of ministers who insisted on accountability and performance, at a time when there was much room for improvement at GHA. 54. The major challenge for MRH and its agencies was the supply of sufficient management staff, including candidates for training and field engineering. This constraint, beyond their control, was and will continue to be a negative for the future.2Q/ The MRH cannot solve the problem immediately, and a patient long term internal development program is the only remedy._l/ The training programs under TRP-1 and TRP-2 are making a good beginning. But the long time solution will come only when Government salary levels can be raised above present levels. In future, as management of MRH and its agencies are strengthened, more attention should be given to carefully assessing the requirements of periodic maintenance, preparing specific design standards for future work, and strengthaning quality contro' of works under execution. Local consultants have had a tendency to underdesign. These technical matters are being corrected under the ongoing projects. 55. As noted in para 20, BHC's performance improved as the Project progressed. However, the PMU concluded that reliance placed on BHC may have been somewhat over optimistic. Making BHC responsible for t.. 'dit evaluation of contractors and for procurement of equipment, placed a heavy burden on that institution, especially as BHC had many responsibilities in other sectors. The use of other Ghanian banks may be a viable option as the economy expands. A longer term goal would be the consistent supply of equipment and parts through the private sector. This is now being done since the Government has allowed a free market in foreign exchange, thus contractors can convert cedis to foreign currency in order to buy equipment and spare parts. W2/ .1/ Draft PCR by PMU, para 9.01. 19/ Draft PCR by PMU, para 9.01. Z/ Draft PCR by PMU, para 9.04. 22/ Draft PCR by PMU, page iii of the Evaluation Summary.  14 1. Project Relationships 56. The relationships between IDA, and the Government and its agencies were close and cordial as confirmed by the Borrower's Part II (paras 20 and 22) contribution. Frequent meetings were held by the supervision missions with the Government, the MRH, and its agencies to discuss problems, and the action necessary to resolve them. Action orientated agreements reached among the parties were recorded in Aide Memoires and left by the missions with the agencies for their attention. K. Consultant and Contractor Services 57. The PMU consultant performed adequately in expediting procurement, training contractors and in coordinating the Project among MRH and the agencies. The contract of the PMU consultant was extended twice. Quarterly progress reports and periodic supervision missions incurred close adherence to the planned goals.2/ However, the consultant fell short in keeping track of expenditures with the result that near the end of the project funds were somewhat over committed. The PMU has not yet been merged with the Monitoring and Evaluation Department of the MRH as intended (para 14), but has been scaled down under TRP-2. 58. UNDP/ILO plaved a key role in supervising the highly successful feeder road component, and WFP's food aid to staff and workers in the road sector significantly boosted efficiency and productivity at a time when wage levels were almost below subsistence. AfDB participated substantially in the project through its financing of the important Accra-Kumasi Road. The Japanese Grant provided important inputs in equipment and spares to increase GHA's maintenance capacity. Cooperation between IDA, Government and these co-funding agencies was excellent. 59. The Central Workshop consultant continued under the Project with the upgrading of the shops which was initiated under earlier projects. The Central Workshop, including the stores, are efficiently operated by expatriate line managers. However, the workshops did suffer from departures of trained staff to the private sector as the economy improved. Given the long term problems experienced at the workshops over the past decade, the eventual return of control to GHA managers, and the reduction in GHA's force account work, the role of the shop has been reduced to maintenance of equipment and support, and the MMUs more complex work is turned over to the private sector. The workshop consultant was also responsible for implementing the bridge component which was successfully comp!eted. 60. A major benefit of.the- Project has been the continued development of the local consulting industry and the encouragement of Ghanian engineers abroad to return home. Local firms have been used increasingly by GHA on road design and supervision work. However, they need further logistical help, particularly as regards vehicles for transport of personnel, and testing equipment for quality control. Local firms should continue to make a strong contribution, and thus enable GHA and DFR to place more reliance on domestic consultants, while at the same time greatly cutting their consulting costs, particularly in foreign exchange, by reducing their dependance on foreign firms. 23/ Draft PCR by PMU, para 6.10.  15 61. Another major benefit of the project is the training of the domestic contracting industry to rehabilitate and maintain the country's trunk and rural road systems. Furthermore, equipment intensive contractors have been encouraged to improve and expand their operations, particularly on the repair of bridges, regravelling and resealing works. This has conserved foreign exchange and provided local employment and management development, all of which will contribute to Ghana's ability to maintain its road systems in future and to strengthen its economy. Through competitive bidding which was made mandatory under the credit, the increased share for contracting and the availability of regular payments through the Road Fund and the entire environment in which contractors worked changed and became more business-like, thus helping the domestic industry to grow. Similarly, the expansion of the domestic quarry industry was also a long term benefit to the economy. L. Project Documentation 62. According to the PMU, the SAR provided a well documented basis for the design and implementation of the Project. It was constantly used as an overall strategic guideline for allocating resources among the project components. The SAR was a key document in clarifying project goals among the MRH and its agencies, BHC and PMU. The Project and credit agreements were considered by the PMU to be generally well designed and provided sufficient operational flexibility.24/ 24/ Draft PCR by PMU, para 12.02 and 12.03.  16 PROJECT COMPLETION REPORT GHANA ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1601-OH) AFRICAN FACILITY CREDIT A-1-OH JAPANESE GRANT 1601-1-GH PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE A. Introduction 1. This section of the project completion report of the 4th Highway Project covers Borrower's point of view. In this respect the agencies of Roads and Highways (namely Ghana Highway Authority and Department of Feeder Roads) have represented the Government of Ghana in making the presentation. 2. The review starts with an evaluation of factual information contained in Part I of the PCR then evaluates the Bank's and the Borrower's performance. This is followed by an assessment of the relationship between the Bank and the Borrower during the preparation and implementation of the project and finally discusses the performance of co-financiers. B. Adeguacy of Factual Information in Part III 3. hiformation provided in Part III of PCR on Bank Loans and/or Credits, project timetable, cisbursement, road contractors classified and those invited, the project results and economic impact have been examined. The information is accurate and represent a true picture of the project from start to completion. C. Comments on Analysis Contained in Part I of PCR 4. Having devoted much effort to project preparation, both the Bank staff and staff of the Borrower kept the objectives of the project in view and closely followed the project description. Lessons learned were most helpful in preparing the Transport Rehabilitation Project which overlapped the 4th Highway Project. 5. On project design and organization, stra:egies developed during the Third Highway Project were improved upon and followed with some innovations. The introduction of the Project Management Unit (PMU) to coordinate the project, revival of structures for competitive bidding and food incentive program and housing incentives were welcome improvements. However, the statement that "the continuation of the food incentive program under TRP-1 was not d: med necessary" is misleading. Since remuneration of GHA and DFR staff had not improved much, the need for the incentive was vital. It was excluded from TRP-1 mainly because arrangements were in progress with the World Food Programme to continue independently.  17 6. Inertia at the beginning of the project was overcome as the project progressed and institutions and agencies became more familiar with their roles. This project formed the transition between assigning road maintenance contracts to local contractors and the use of competitive bidding. Only the structures of competitive bidding were being established and full LCB did not take off until TRP-1 started in 1988. The ICB delay therefore holds true only for the Anyinamr-Kumasi project since ICB for road maintenance works started only under TRP-1. With training, delay was not only due to lack of facilities but with difficulty in selecting appropriate training experts under the Technical Assistance for Training. 7. Funding under this project flowed very smoothly. Timing of the four sources of funding (IDA Credits 1601-GH, African Facility A-1-GH, Japanese Grant and the Ghana Government) was perfect. As a result in 1989, we cleared our arrears of indebtedness to local contractors on road maintenance works and payments for new certificates took less than two weeks to make. The introduction of the revolving fund in London contributed to quick disbursement. Unfortunately as the project progressed, funding shortfalls were realized and in 1990 we started realizing delays with payment. 8. Generally the project could be referred to as successful. Achievements were close to project objectives. Under the road rehabilitation and maintenance program, targets for regravelling were easily met. Low output on paved roads could be related to the low managerial and technical ability of local contractors. Thus the introduction of ICB under TRP-1 to mainly execute works on paved roads. 9. The quarry component of the project was not as successful as one would expect. Most quarries seemed unable to take advantage of facilities provided and they continued to run down. As a result the availability of road stone chipping, dropped drastically. Ancther area which has been a problem, mostly to local contractors, was the high interest rate for on- lending to local contractors and the slapping of the full foreign exchange risk on them. While BHC was to pay an interest rate of 12%, the contractors were given the loans in foreign exchange with a rate of about 25% and the full foreign exchange risk. The net result is an interest rate of above 40%. This has had a detrimental effect on most of the local contractors. 1/ 10. The Mobile Maintenance Unit continued to excel in its performance. Equipment provided under the project made it possible to establish a second unit in the southern sector of the country. With the great demand on their services, one may be tempted to spread them thinly. However, the continued success hinges on resisting such a tendency. D. Bridge Development Program 11. The objective of the Bridge Development Program was to remove bottlenecks in the road network so as to ensure easy accessibility. These bottlenecks occurred at river crcssing points as a result of collapsed or weak bridges. Under the program, three new bridges were constructed and eleven were rehabilitated. 1/ Bank Note: Despite the onerous terms, it should be pointed out that the contract prices were raised to take into account the rapid inflation through price escalation clauses, which had an offsetting effect on their costs.  18 12. Before the construction of the bridges, vehicles had to make long detours to reach their destination. Some of the benefits of the program have been savings in travel time and enhancement of economic activities in these areas. 13. The setting up of the Bridge Maintenance Unit under the same program has improved routine and periodic maintenance works on bridges. 14. The projects under the program have been successful. E. Pilot Feeder Road Proeram 15. The achievements under this component far exceeded the original targets that were set. The use of contractors as opposed to in-house operation has earned the project a lot of support both internally (PAMSCAD) and extemally (IDA, USAID, DANIDA). These supports are largely responsible for the spread of the technology to the rest of the country. So far, seven regions of the country now have their own crop of Labor-Intensive Contractors. F. Accra-Kumasi Road Rehabilitation 16. The project was essentially for the asphaltic concrete overlay of the 136 km Anyinam- Kumasi section of the Accra-Kumasi Trunk Road. The project was to improve road communication between Accra, the capital, and Kumasi, the second largest city, and the areas beyond. It was financed under an African Development Bank as a component of the Fourth Highway Project. Before the project could be completed, failures were observed on completed sections. This led the Government of Ghana to invite Messrs. Alexander Gibbs and Partners of the U.K. to investigate the causes of the failure. Their report has been submitted and the Government of Ghana is negotiating with the contractors to find a solution to the problem. G. Contractor's Classification 17. Competitive Bidding which was introduced under this project has rationalized the award of contracts. Hitherto, contracts were not awarded on competitive basis. There was therefore a prolification of contractors in the contracting industry. Now contractors are classified into appropriate categories and financial classes. Only classified contractors can bid for government projects. H. The Road Fund 18. The Road Fund was set up to increase road user's contribution towards road maintenance cost and to ensure uninterrupted flow of funds for road maintenance works. The fund has achieved its objective. Regular monthly releases from the Road Fund to pay for work done on road maintenance contracts has solved the problem of payment delays arising from budget approval and release of budget allocation. 1. PMU Coordinating Role 19. The PMU's role in coordinating the project was most helpful, especially in procurement and accounting. Their assistance to local contractors, especially in equipment management and to the quarries did not measure up to expectation.  19 J. The Bank's Performance 20. Bank staff worked harmoniously with local staff in the preparation of the project. Lessons learned in the execution of the Third Highway Project helped in meeting more realistic projections, especially for road rehabilitation and maintenance works. The harmony and good relationship continued throughout the project. Normally, approvals and "no objections" were also received in reasonable time. K. The Borrower's Performance 21. One could see a determined effort to abide by objectives and preconditions set for the project. The Road Fund, for example, was established on time amid resistance from both external and internal resources. Intensive resistance from the Contractors' Association was overcome in reintroducing a systematic road contractors classification system. The quality of performance of staff in both GHA and DFR improved steadily. Where funding was a problem, it could be related to an overall difficulty in the economy, for the Government's commitment to improving the riding quality of roads seemed paramount. L. Relationship Between the Bank and the Borrower 22. The warm relationship between the Bank and the Ghana Government at the beginning of the project continued to improve. It was obvious throughout the project that both parties sought after and strived for success. Where errors were made, they were brought up openly for discussion with the view of making improvements. The meeting at Akuse was one such effort to improve our relationships and performance. M. Performance of Co-Financiers 23. This is one project where co-financing seemed perfect. After signing the IDA agreement in June 1985 (1601-GH), the African Facility Credit Agreement (A-l-GH) followed in October 1985 and the Japanese Grant Agreement in January 1987. The success may be due to the fact that co-financing was channelled through IDA, making it easy to manage. N. Conclusion 24. In spite of one of two difficulties, the project could be described as a good project. Achievements were quite close to objectives and lessons learned were most beneficial in preparing subsequent projects.  20 PROJECT COMPLETION REPORT GHANA ROAD REHABILITATION AND MAINTENANCE PROJECT (CREDIT 1601-GH) AFRICAN FACILITY CREDIT A-1-GH JAPANESE GRANT 1601-1-GH PART III: STATISTICAL INFORMATION A. Related Bank Loans and Credits Year of Loan/Credit Tite Purpose Approval Status Engineering Credit S-7-GH Preparation of road 1969 Completed projects Credit 438-GH Maintenance and 1974 Completed in 1981 First Highway Project rehabilitation Credit 594-GH and Maintenance, 1975 Completed in 1983 Loan 1182-GH, Second rehabilitation and Highway Project construction Credit 1029-OH Emergency road 1980 Completed in 1986 Third Highway Project maintenance works including provision of spare parts, equipment and technical assistance for GHA and domestic contractors.  21 B. Project Timetables Date Date Date Planned 1 Revised Actual ' Identification . 06/80 Preparation Mission 12/80-05/84 Pre-Appraisal Mission . 02/84 Appraisal Mission 9-10/84 L 09/84 Credit Negotiations 2/85 04/18-25/85 Board Approval 5/85 06/04/85 Credit Signature 06/24/85 Credit Effectiveness 11/01/85 Credit Closing 6/30/90 2' 06/30/91 ;Projec Completion 12/31/89 2 12/31/90 I/ Source: Project Brief dated August 6, 1984; an earlier brief was dated August, 1982. Z/ Source: Correspondence files. 3/ Source: Development Credit Agreement Note: On September 11, 1990, the Association extended the closing dates of both the Africa Facility Credit from December 31, 1990, and the Japanese Grant from September 30, 1990, to June 30, 1991 to coincide with IDA Credit closing date.  22 C. Credit 2ata (i) Credit Disbursements Bank Disbursements (in USS million) Fiscal Year Credit 1601-GH and Qwuutrs Estimated Actual Actual as % of Cumulative a/ Cumulative _/ Estimated 1986 1 0 0 2 1.5 2.9 19.3 3 3.5 2.9 82 4 4.5 3.6 80 1987 1 6.3 4.6 73 2 9.6 6.1 64 3 12.9 12.3 95 4 16.2 14.8 91 1988 1 19.0 20.7 109 2 21.8 22.1 101 3 24.6 23.0 93 4 27.4 28.2 103 1989 1 29.4 33.7 115 2 31.4 38.1 121 3 33.4 39.9 119 4 35.4 41.4 117 1990 1 36.4 42.4 116 2 37.4 43.0 115 3 38.4 45.0 117 4 40.0 46.0 115 1991 1 46.3 116 2 - 46.9 117 3 _ 47.8 119 4 - 50.2 125 199 1 51.5 129 2 51.9 L! Source: SAR, page 91. h/ Source: Statements of Credits Note: Differential betwee actual and estimated disbursements attributed to currency variations between US dollr, and SDR& in which the credit was denominated.  23 (ii) Allocation of Credit 1601-GH Proceeds (in SDRs) Original Revised Actual Category Allocation [/ Allocation 2/ Disbursements 3/ (1) Part A of the Project (OHA) (a) Equipment 6,050,000 6,050,000 2,989,165 (b) Civil Works (i) by force account 2,220,000 500,000 160,574 (ii) by contracts (A) bridge rehabilitation 5,040,000 6,760,000 4,153,607 (B) other 5,040,000 5,040,000 7,512,391 (c) Consultants' services, training 4,840,000 4,840,000 8,493,937 and studies (d) reinsurance 100,000 100,000 65,014 (2) Part B of the Project (MRH, DFR) (a) Equipment 1,310,000 1,310,000 3,384,183 (b) Civil works (i) by force account 310,000 310,000 771,713 (ii) by contract 2,020.000 2,020,000 841,619 (c) Consultants, tuining and 1,920,000 1,920,000 4,200,333 studies (d) reinsurance 100,000 100,000 7,029 (3) Part C of the Project (BHC) (a) Equipment 5,240,000 5,240,000 5,133,161 (b) Office equipment and rsults 510,000 510,000 631,840 (c) Consultants' services and 510,000 510,000 519,068 training (d) reinsuranec 100,000 71,204 (4) Refunding of PPI 1,020,000 1,020,000 887,366 (5) Unallocated 4,070,000 4,070,000 395,385!1/ TOTAL 40,400,000 40,400,00 40,217,589 1/ Source: Development Credit Agreement dated June 24, 1985, Schedule 1. V Source: Amendments per letter of March 6, 1987. 3/ Source: Disbursement records. _I Special Account. Note: SDR 182,410.53 canceled as of January 24, 1992. (ii) AUocation of Credit A-1-GH Orginal Revised Actual Category Alocation I/ Allocation Disbursements / Part 1, equipment 5,050,000 6,615,713 Part 2, equipment 5,050,000 3,215,187 Speci Account 269,100 TOTAL 10,100,000 10,100,000 J/ Source: African Facility Credit dated October 23, 1985, Schedule 1. Z/ Source: Disbursement records.  24 D. Proiect-Cgsts US $ Million AppRraisal 1V Actul Locad EQrign lQal Local Ein Total i) Rehabilitation of the 33.1 47.2 80.3 40.0 57.0 97.0 Road Network ii) Bridge Rehabilitation >.7 5.7 9.4 4.0 6.1 10.1 Program iii) Pilot Feeder Roads 3.1 4.9 8.0 3.1 4.9 8.0 Program iv) Rehabilitation of 6.9 16.2 23.1 4.9 11.6 16.5 Accra-Kumasi Road v) Repayment of PPF 0.0 1.0 1.0 QQ J1L2 Advance TOTAL 46.8 75.0 121.8 52.0 80.5 132.5 IL Source: SAR, Annex 3-8. I/ Source: PMU.  25 E. Project Results (i) Accomplishment S.A.R. P.C.R. Indicators Estimate Estimate A. GHA Periodic Maintenance 2,880 km 2,885 km B. GHA Routine Maintenance 53,500 km 43,160 km C. Technical Assistance 567 mm 560 mm D. Equipment, Spares (US$) 29.4 million (UJS$) 26.4 million E. Bridge Rehabilitation 14 No. 14 No. F. Pilot Feeder Roads - Rehabilitation 240 km 150 km Spot Improvements 700 km 700 km G. Rehabilitation Accra-Kumasi Road 105 km Completed mm - man months (ii) Economic Impac Appraisal Actual at Final Estimate Development (Est.) Project Component Economic Rate Economic Rate of Return (ERR)% of Return (ERR) % 1. Trunk Road Network 73 67 Maintenance Program (Periodic plus routine; including assistance to GHA and Contractors) 2. Bridge Rehabilitation 75 88 3. Rehabilitation of Accra- 26 30 Kumasi Road Sections Source: PCR prepared by PMU lated June, 1991, Tables A and B; GHA's "Economic Evaluation of Selected Roads' (February 1992), and review note by S.R. Lukehart (Ghana RRMP PCR: Reevaluation of Project ERRs), March 1992.  26 F. Use of Bank Resources (i) Staff Inputs by Stage of Project Cycle in Staff Weekl Stage of Project Cycle Planned Revised Final Through Appraisal 82.3 Appraisal through Board Approval 91.3 Supervision 123.4 Other 14.0 TOTAL 311.0 Source: CAM.  27 F. Use of Bank Resources (continued) (ii) Mission Data Stage No. Days Perfonnance Dates of Month/ of in Specialization Rating of Project Cycle Year Persons Field Represented a/ Stktus Reports Identification 06180 2 4 HE, EC _ 07/30/80 Preparazion I 10/80 3 4 2 HE, EC 12115/80 Prepartion 1 03/81 4 3 2 HE, ec, IS 05/21/81, ._______ ________ OS_____ _ ____ _________05/28/81 Prepaation m 06181 1 2 HE 07/27/81 Prepartion IV 07/81 1 3 EC 09/Ci/81 Prepartion V 12/81 1 3 HE 01/29/82 Prepartion VI 01/83 2 2 HE, EC 02/18/83 Prepartion Vll 04/83 1 4 HE 05/03/83 Prepartion VmI 08/83 2 3 HE, EC - 09/27/83 Prpaaion IX 11/83 2 2 HE, eC - 11/23/83, .________ __________ ______________02/03/84 Preappraisal 02/84 4 6 HE, EC, FA, ME - 05/14/84 opetional 07/84 1 2 DDC - 08/20/84 Apprisal (a) 09/84 6 20 HE, eC, FA, ME, - 12/26/84 b/ TS, SOO Apprisal 10/84 3 5 DDC, HE, EC - 10/29/84 Supervision 1 06/85 1 na HE - 07/02/85 Supervsion 2 10185 3 7 2 HE, ME 1,2,1,2 11/27/85 Supervision 3 01/86 1 11 SOO 2,2,2,2 04/19/86 Supevision 4 02/86 1 3 FA 04/28/86 Superision S 05/86 4 9 HE, eC, ME, C 2,2,2,2 06/20/86 Supevision 6 11/86 1 7 ME 112/2/86 Superision 7 01/87 1 5 HE, CIS 3,2,2,2 03/10/87, 03/20/87 Superision 8 03/87 1 3 PA 04/10/87 Supervision 9 03/88 3 10 DDC, HE, EC, TS 3,2,2,2 04/30/87 Supervision 10 01/88 1 6 HE 3,2,2,2 03/15/88  28 Stage No. Days Perfornnanc| Dates of Month/ of n Specialization Ratii.g of Project Cycle Year Persons Field Represented I/ Status Repors Supervision 11 10/88 2 5 HE, EC 2,2,2.2 V201/88 Supervision 12 10188 1 4 C 01/03/89 Supervision 13 02/89 1 4 TS 03/06189 Supervision 14 03/89 3 7 2 HE, eC 2,2,1,2 05/26/89 Supervision 15 10/89 3 na HE, EC, ME 1,1,1,1 12/28/89 Supervision 16 04/90 3 14 HE, EC, TRS 2,1,1,2,2 07/10/90 Supervision 17 10/90 3 7 HE, EC, TRS 2,1,2,2,2 01/02/91 Superviion 18 01/91 2 3 HE, TRS 2,1,2,2,2 03125/91 Supervision 19 04191 1 3 EC 2,1,2,2,2 06/22/91 Superision 20 06/91 3 7 HE, EC, TRS 1,1,1,2,2 07/17/91 E/ C = Consultant CIS = Construction Lndustry Specialist eC - Economist FA - Financial Analyst HE Highway engineer IS = Indu l Specialist ME = Mechanical Engineer PA = Procurement Advisor SOO = Senior Operations Officer TRS Transport Speciast TS = Training Specialist h/ Combined Issues Paper and Decison Memorandum.  29 G. Comvance with Credit Covenants Section Desoription of Covenant Status Deveoymen Crdit Aereemet Secdon 3.01 (a) Coordinate all pal of the Project through met PMU, and provide adequate funding Section 3.01 (b) Cause GHA and BHC to perform in substantially met ________________ accordance with the Project Ageemnents Sectdon 3.01 (c) Rolend funds to BHC under a subsidiary met loan agreement Section 3.02 Follow IDA procurement guidelines met Section 3.04 Established the PMU met Section 3.05 After Januay 1, 1988 oontract new road met rhabilition and periodic maintenanee work on the basis of LCB Section 3.06 Submit work progrm and estimate of met expenditure for each quarter Secdon 3.07 DFR to carry out the Pilot Feeder Road met Progrm as defined Section 3.08 Take out and maintain insurance or spare met puts Section 3.09 Make available funds for carrying out the met project Secdon 4.01 (a) Maintin separate accounts for each agency met Secdon 4.01 (b) Provide PMU with summary accounts met Section 4.01 (c) Have the accounts audited met Secdon 4.02 Reorganize MRH and its agencies met Section 4.03 Adjust contacts and raes met Secton 4.04 Carry out BHC Action Program met Section 4.05 Review with IDA, its annual invesament met ___ ___ __ ___ __ ____ prognm Section 4.06 Establsh road user tazet, establish a Road met User Fund, and study road user charges Proiect Acreement with GHA Section 3.01 Carry out its operations in accordance with met sound prctices Sadon 3.02 Opeate and maintain its equipment met in pant only Section 3.03 Take out insurance for spare parts met  30 Section Description of Covenant Status Section 3.04 Carry out an action program for the met reorganization of its equipment l ________________________ _ management Secdon 4.01 Carry out audits of its accounts met Section 4.02 Start a personnel action management met l _____________ _ l l program Project Agreement with BHC Section 3.01 Carry out its operations in accordance with eventuaUy met l ______________________ sound practices Section 3.02 Maintain its equipmeut met Section 3.03 Take out insuranee for spare pa L met Section 3.04 Carry out an action program met Section 4.01 Carry out audits of its accounts met Section 4.02 Carry out a personnel action program met