Liberia - Fourth Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY R e p o r t No.6106 PROJECT PERFORMANCE AUDIT REPORT L I B E R I A FOURTH HIGHWAY PROJECT (LOAN 1 5 7 3 f c ~ E D I T1311-LBR) M a r c h 14, 1986 O p e r a t i o n s E v a l u a t i o n D e p a r t m e n t 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.  THE WORLD BANK Wrshlngton.D C 20433 U.5A. March 14, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: P r o j e c t Performance Audit Report on L i b e r i a Fourth Highway P r o j e c t (Loan 1 5 7 3 l C r e d i t 1311-LBR) Attached, f o r i n f o r m a t i o n , is a copy of a r e p o r t e n t i t l e d " P r o j e c t Performance Audit Report on L i b e r i a Fourth Highway P r o j e c t (Loan 1573lCredit 1311-LBR)" prepared by t h e Operations Evaluation Department . Attachment - -- -- - - - - 1 Th~sdocument has a restricted distribution and may be urod by rutpicnu only in the performance of thcrr omcial dut~es.Its contenu may not othenwlse be d k W without World Bank authorization.  FOR OFFICIALUSEONLY PROJECT PERFORMANCE AUDIT REPORT LIBERIA FOURTH HIGHWAY PROJECT (LOAN 1573/CREDIT 1311-LBR) TABLE OF CONTENTS . Page No ............................................................. Preface .................................................... i Basic Data Sheet .................................................. ii Evaluation Summary i v PROJECT PERFORMANCE AUDIT MEMORANDUM ............................................ I . INTRODUCTION 1 . I1 THE FOURTH HIGHWAY PROJECT ............................... 2 (a) I d e n t i f i c a t i o n and Preparation ....................... ........................................... 2 ................. (b) Objectives 3 (c) Implementation of Project Components 3 ( d ) Implementation Schedule .............................. .................................. 10 ................................ (e) Costs and Financing 10 ( f ) Economic Reevaluation 11 . .......................... 111 CONCLUSIONS AND RECOMMENDATIONS 11 .......................................... (a) Conclusions ...................................... 11 (b) Recommendations 13 Table 1 Liberia Fourth Highway Project. Estimated and Actual Costs . 15 ANNEXES 1 17 2 .. Liberia: Recent Developments ........................ Fourth Highway Project: From Inception t o Board Approval ....................................... 23 3 . Fourth Highway Project: Project Implementation ...... 29 PROJECT COMPLETION REPORT I Introduction ............................................ ....... I1 .. Project I d e n t i f i c a t i o n . Preparation and Appraisal .................................. ... . .................................. I11 Project Implementation I0 Economic Reevaluation v I n s t i t u t i o n a l Performance .............................. ........................................ ................................ V I Bank Performance ............................................. V I I Consultants Performance V I I I.. Conclusions r 4 Tbis document h u a restricted distribution and may be used by recipients only in the performance of their omcia1 duties .Its contents may not otherwise be disclosed without World Bank authorization . - L  Table of Contents (cont. 'd) Pane No. Tables ......... ....... 1. Actual and Forecast Estimates of Project Costs 53 2. ............ .Economic Reevaluation of Paynesville-Kakata Road 54 3. Economic Reevaluation of Kakata-Totota Road 55 4. Economic Reevaluation of Paynesville-Robertsfield Road.. 56 Fourth Highway Project IBRW13313 (PCR)  PROJECT PERFORMANCE AUDIT REPORT LIBERIA FOURTH HIGHWAY PROJECT (Loan 1573/Qedit 1311-LBR) PREFACE This is the performance audit report on the Fourth Highway Project for which Loan 1573 and Qedit 1313 i n the amounts of USS13.8 million and SDR 1.7 million were respectively approved on May 18, 1978 and December 14, 1982. The Qedit was granted t o cover financing shortfalls resulting from cost overruns which exceeded the amounts available under the Loan. b a n 1573 has been f u l l y disbursed and SDR 0.228 million of the Qedit has been can- celled. Co-financing was provided by the Kuwait Fund for Arab Economic Development i n the amount of USS7.4 million. This document consists of a Project Performance Audit Memorandum (PPAM) prepared by the Operations Evaluation Department (OED), and of a Project Completion Report (PCR) prepared by the Western Africa Regional Off ice. OED studied the documentation preserved i n the Records Center and reviewed t h e project against the Staff Appraisal (SAR) and the President's Report (PR), a s well as against the legal documents and the transcripts of the Executive Directors' meetings which considered the project. Mscussions on project formulation, implementation and follow-up were held with Bank s t a f f and consultants. An OED mission v i s i t e d Liberia i n July 1985 t o secure Government views on the project and the assistance extended t o the mission is gratefully acknowledged. Ikafts of t h i s report have been sent t o the Govern- ment and t o the Kuwait Fund for their comments; however, none were received. The PCR provides an adequate summary of the project experience. The PPAM is focussed on the broader impact of Bank assistance, extended through t h i s and previous projects, t o the Liberian highway sector.  PROJECT PERFORMANCE AUDIT REPORT LIBERIA FOURTH HIGHWAY PROJECT (LOAN 1573/CREDIT 1311-LBR) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual/ Estimate Reestimate hi. 1573 CY. 1311 Zn. 1573 CY. 1311 - Item (US$ M) (SDR M) (US$ M) (SDR M) Total Project Cost 28.8/! - 47.9/! - b a n Amount 13.8 - 13.8 - & e d i t Amount - 1.w: - 1.8 b a n / & e d i t Status a t 12/3 1/84 Disbursed 13.8 1.8 13.8 1.6 Cancelled - - -- 0.2 - Repaid - - Outstanding - - - 1.6 Project Completion Date 06/82 11/83 01/86/$ 01/84 Percent of Project Completed a t Original Completion Date - - 50 90 Time Overrun (mos. ) - - 43 2 Economic Rate of Return (%) Paynesville-Rober t s f ield 22 - 16/e - Paynesvi lle-Tot ota 20 - 14/V - CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS* -- -- -- ---- $M SDR M $M SDR M $M SDR M $M SDR M $M SDR M - - - Estimated 7.7 - 11.8 - 13.8 - 13.8 - - Actual 4.5 - 11.3 - 13.5 - - 13.8 0.6 - -- 1.5 - -- 1.6 - Actual/Eet. ( X ) 59 - 96 - 99 100 OTHER PROJECT DATA Original Plan Actual or Est. Actual - Item Ln.1573 Cr.1311 Ln. 1573 CT. 1311 F i r s t Mention i n Files 1974/f 04/82 Appraisal 06/22-07/07/77 Negotiations 04/19-24/78 Board Approval 05/18/78 12/12/82 b a n / Q e d i t Agreement Date 06/02/78 01/03/83 Effectiveness Date 09/ 11/78 01/31/83 Closing Date 12/31/82 12/31/83 12/31/82 12/31/83 Borrover Republic of Liberia Executing Agency Yinistry of Public Works Fiscal Year of Borrower July 1 - June 30 Follow-on Project Name Fifth Highvay Project Q edit Number Credit 1449-LBR of March 20. 1984 Credit Amount (US$ million) 11.4 - NOTES: /a Including the Paynesville-Robertsfield Road financed by the Kuwait Fund for Arab Economic Development. /; Estimated t o t a l cost a s of July 1985 (see PPAM. Table 1). /c Supplemental financing for reconstruction of Nyaforla Bridge, updating of engineering and contract documents for t h e Kakata-Totota road section and bid evaluation f o r t h e road work. /A Estimated completion date for the Kakata-Totota reconstruction under AfDB financing. /: Assuming that. s t a r t i n g i n 1985. t r a f f i c will increase by 5%per annum. an optimistic assumption given t h e current s t a t e of t h e economy. Project components were developed v i t h i n context of 2nd 6 3rd Highway /f Projects.  - iii - MISSION DATA No. Month/ No. of No. of of man- Date of -Item Sent by Year weeks Persons weeks Report R e p a r a t i o n WAPHW 02/22/77 1.0 Appraisal WAPHW 06/22-07/07/77 3.0 Supervision I WAPHW 12/78 1.5 Supervision I1 WAPHW 03/79 2.0 Supervision II1 WAPHW 11/79 2.5 Supervision I V WAPHW 03/80 3.0 Supervision V WAPRW 12/80 3.0 Supervision V I WAPHW/RMWA 03/81 1.0 Supervision V I I WAPTlIRMWA 11181 2.0 Supervision V I I I WAPTl/RMWA 03/82, 3.0 Supervision I X WAPTIIRMWA 07/82 1.0 Supervision X WAPTl/RMWA 09/82 3.0 Supervision X I WAPTl/RMWA 12/82 1.0 Supervision XII* WAPTl 12/82 1.0 Supervision X I I I * WAPTl 04/83 1.0 Supervision XIV* WAPTl 11/83 1.0 NB - Missions V I I through I X a l s o concerned with preparation of F i f t h Highway Project. * Supervision of CR 1311.  PROJECT PERFORMANCE AUDIT REPORT LIBERIA FOURTH HIGHWAY PROJECT (Loan 1573/Credit 1311-LBR) EVALUATION SUMMARY Introduction For twenty years, s t a r t i n g with t h e F i r s t Project of 1964, World Bank a s s i s t a n c e t o t h e Liberian highway s e c t o r was aimed a t strengthening t h e country's capacity t o plan, construct and maintain its t r a n s p o r t i n f r a s t r u c - t u r e (PPAM, paras. 1-3). Results have been mediocre enough t o raise t h e question whether t h e Bank should persevere with i n s t i t u t i o n building e f f o r t s i n a p a r t i c u l a r l y d i f f i c u l t socio-political environment (PPAM, paras. 23- 26). Auditing t h e Fourth Project (which flowed out of t h e Second and Third, and was approved i n December 1978) offered t h e opportunity t o consider t h e highway s e c t o r within t h e context of r e c e n t problems '(PPAM, Annex 1) and t o s e e whether any u s e f u l changes might be made i n t h e Bank's a s s i s t a n c e strat- egy (PPAM, paras. 29-32). Project Objectives (PCR, para. 2.06) ( a ) continue t o develop t h e main highway system; (b) continue t o develop l o c a l capacity t o plan and execute highway maintenance ; and ( c ) improve t h e Government's capacity f o r highway planning. Neither t h e President's Report, nor t h e Staff Appraisal Report suggest any q u a n t i t a t i v e milestones on t h e b a s i s of which attainment of objectives could b e evaluated (PPAM, para. 5). Implementation Exper ience The o r i g i n a l p r o j e c t composition envisaged e i g h t p r o j e c t components but shortage of funds d i c t a t e d t h a t two of them be switched t o t h e Feeder Roads Project (Loan 1664-LBR). A l l e i g h t items were supervised by t h e same Bank s t a f f (PPAM, para. 6). Items Financed under t h e Fourth Highway Proie c t : ( a ) Improvement of t h e Paynesville-Totota Road ( 71 m i l e s ) (PPAM, paras. 7-8; PCR, paras. 3.05-3.08). 40 miles completed. Remainder financed by t h e Afr ican Development Bank. Work underway and expected t o be completed i n e a r l y 1986. (b) Improvement of t h e Paynesville-Robertsf i e l d Road (28 miles ) (PPAM, para. 9; PCR, paras 3.01-3.04). Financed by t h e Kuwait Fund. Substantial completion achieved by August 1980.  ( c ) Detailed engineering of two roads ( t o t a l l i n g 90 miles) (PPAM, para. 10; PCR, para. 3.18). S a t i s f a c t o r i l y completed. ( d ) F e a s i b i l i t y study of a 152-mile road (PPAM, para. 11; PCR, para. 3.19). Study was t o be carried out with bil-ateral aid financing. Funds reallocated t o a f e a s i b i l i t y study of a d i f f e r e n t road but t h e study was not done because of c o s t overruns i n other project components. ( e ) Consulting services t o improve road maintenance (PPAM, paras. 12- 14; PCR,. paras. - 3.20-3.23). Main focus of institution-building e f i o r t s . Disappointing r e s u l t s . Limited e f f e c t of technicai a s s i s t a n c e , few qualified s t a f f a v a i l a b l e f o r t h e counterpart posi- t i o n s , maintenance funding reduced a f t e r 1980. Maintenance opera- t i o n s a t a v i r t u a l s t a n d s t i l l s i n c e 1982. ( f ) Technical assistance t o t h e Planning and Programming Bureau (PPB) i n t h e Ministry of Public Works (MPW) (PPAM, para 16; PCR, paras. 3.24-3.25). Satisfactory performance of techncal a s s i s t a n c e s t a f f . Mixed r e s u l t s of overseas t r a i n i n g element. Items Financed under the Feeder Roads Project (a) Technical assistance for the domestic construction industry [PPAM para. 17(i)]. The f i r s t attempt a t implementing t h i s component was a f a i l u r e . Further attempts a r e underway. (b) Reorganization of transport planning and coordination [PPAM, para. 1 7 ( i i ) 1. After lengthy delays, technical a s s i s t a n c e s t a f f was assigned t o the Ministry of Planning and Economic Affairs where they prepare f e a s i b i l i t y s t u d i e s but prospects a r e n o t encouraging. Results Overall, project execution r e g i s t e r e d a time overrun of over 80%. This was due t o t h e Paynesville-Totota road which had been scheduled f o r com- p l e t i o n i n 1981 but w i l l n o t be fininshed before e a r l y 1986 (PPAM, para. 18; PCR, par as. 3.26-3.27). A t a p p r a i s a l , t o t a l estimated project c o s t was USS30.7 million. The most r e c e n t estimates (PPAM, Table 1) show t h a t t h e t o t a l a c t u a l cost is l i k e l y t o be US$48 million, o r 56%more than t h e estimates. Chce again, t h e overrun i s l a r g e l y due t o the Paynesville-Totota Road whose construction and supervision a r e l i k e l y t o c o s t respectively about 110% and 185%more than anticipated (PPAM, para. 20; PCR, paras. 3.09-3.15). A t a p p r a i s a l , economic j u s t i f i c a t i o n was based on benefits expected from the improvement of t h e Paynesville-To t o t a and of t h e Paynesville- Rober t s f i e l d Roads (estimated r a t e s of r e t u r n , 20% and 22% respectively). The rates recalculated i n t h e PCR (14% and 16% respectively) r e f l e c t in- creased construction c o s t s and s u b s t a n t i a l l y lower t r a f f i c . The PCR assumes  a 5% annual r a t e of t r a f f i c growth increase starting in 1985. This seems optimistic but cannot be challenged since the July 1985 OED mission could not mission could not secure recent t r a f f i c d a t a f o r an independent check (PCR, paras. 4.01-4.05; PPAM, paras. 21-22). Conclusions (a) The Bank t h e s i s t h a t maintenance ought t o be given preference over new construction was sound and the proposed assistance t o MPW for improved maintenance operations was j u s t i f i e d . MPW agreed with both the diagnosis and t h e presciption (PPAM, paras. 23-24). (b) I n s t i t u t i o n building r e s u l t s were unsatisfactory because t h e poli- t i c a l l e a d e r ~ h i pnever believed t h a t maintenance should be given p r i o r i t y over new products (PPAM, para. 24). (c) Cumbersome and of ten questionable Government procedures have d i s - couraged a number of donors but the Bank (whose presence was instrumental i n t h e survival of MPW during a d i f f i c u l t period (PPAM, para. 30) ought t o con- tinue a s s i s t i n g the highway s e c t o r , although under a modified operational strategy (PPAM, paras. 26-27). (d) Important adjustments have already been made i n the Bank's stance: t h e F i f t h Project is b e t t e r supervised than the Fourth; past emphasis on cen- tralized planning and coordination has been reduced ; attempts to strengthen t h e domestic construction industry continue i n a more r a t i o n a l manner (PPAM, para. 28). Findings and Lessons (a) The Bank may reconsider t h e force account formula it has been advo- cating f o r strengthening maintenance operations s i n c e Government commitment continues t o be lacking. Instead, t h e MPW and the Bank may consider adopting the de f a c t o r o l l i n g plan of r e h a b i l i t a t i o n or strengthening of principal roads with a view t o provide them with a surface l a s t i n g between seven t o t e n years. A t the end of the pavement's l i f e , a new pavement could be applied, together with any improvement works j u s t i f i e d by increased t r a f f i c (PPAM, para. 29). (b) The Bank ought t o a s s i s t MPW with the l a t t e r ' s three main problems: f i n a n c i a l accountability: improvement of middle management s t a f f ; and a r e - ward system for superior performance (PPAM, para. 31). (C) Assistance t o MPW ought t o be extended i n tranches, under s p e c i f i c conditions, and t i e d t o a detailed list of milestones which, once accomplish- ed, would r e l e a s e further aid (PPAM, para. 32). ( d l Formal a i d coordination with other donor agencies ought t o be re- activated ( i n the form of a five-year indicative plan of assistance), both t o prevent uneconomic investments and t o actively d i r e c t foreign assistance s o t h a t i t achieves an appropriate balance between new investments and preserva- t i o n of e x i s t i n g a s s e t s (PPAM, para. 32).  PROJECT PERFORMANCE AUDIT MEMORANDUM LIBERIA FOURTH HIGHWAY PROJECT (Loan 1573lCredit 1311-LBR) I. INTRODUCTION 1. World Bank assistance t o the Liberian transport sector was i n i t i a l - l y extended through the F i r s t Highway Project of 19641/ and continued - through the Monrovia Port Project of 1969.L/ - 2. In October 1972, the Government convened a meeting t o coordinate aid t o the highway sector. Potential donors were briefed on a five-year highway development and maintenance program and financial assistance was - - soiicited for different components. The Second Highway Project of 197331 was an outcome of that meeting. Its emphasis was on highway maintepance and on upgrading selected roads.4/ 'Ihe Third Highway Project of 197551 was t o continue assisting the GovernGent i n the implementation of its 1972Tive-year Loan 368-LBR f o r USS4.25 million. It involved construction of 62 miles of new roads, and procurement of road maintenance equipment, spare parts and workshop f a c i l i t i e s . The Project was completed i n June 1969. Loan 917-LBR for USS3.6 million. It involved dredging of the port of Monrovia and management assistance t o the port administration and t o the National Port Authority. The project was completed i n 1973. Loan 907lCredit 395-LBR for USS5.6 million. It consisted of reorganization and improvement of road maintenance operations over four years; upgrading of the Monrovia by-pass; and pre-investment studies and a study of the contracting industry. OED has issued a Project Performance Audit Report (No. 2557 of June 22, 1979) which can be summarized as follows: (a) it was too optimistic t o expect that maintenance operations could be effectively reorganized within four years; (b) the project registered a 16lnonth time overrun and a 33%cost overrun; (c) the Ministry of Public Works (MPW) performed w e l l a s executing agency but needs assistance t o maintain bituminous roads ; (d) Government increased considerably its appropriations for road maintenance; (e) the consultants who prepared the f e a s i b i l i t y and engineering studies for the Paynesville-Rober t s f ield and the Paynesville-Totota Roads did not do satisfactory work. Even so, Government proposed that the same consultants undertake supervision of the rehabilitation works. Loan 1156-LBR for USS27.5 million consisted of four major components : (a) c i v i l works by contract; (b) feeder roads by force account; ( c ) technical assistance and fellowships; and (d) consultants' services for construction supervision, f e a s i b i l i t y and engineering studies.  Road Maintenance and Development Program. 61 The Fourth Highway R o j e c t flowed out of the Second and Third, was appr&ed i n December 1978, and i s t h e subject of t h i s audit. 3. From the outset, Bank assistance t o the road subsector was extended with a view t o strengthening Liberia's a b i l i t y t o plan, construct and main- t a i n its transport infrastructure. After twenty years, various road sections have been improved but Government is not better equipped t o plan, construct and maintain the network. The MPW is not a mpre e f f i c i e n t department and local contractors have not matured t o the point where they can undertake an expanding volume of work. The reasons for these discouraging r e s u l t s must go deeper than any conceivable shortcomings of any particular sector, government department or professional class. Auditing the Fourth Highway R o j e c t of- fered the opportunity for a review of broader problems and PPAM Annex 1 (Liberia: Recent Developments), which summarizes t h i s review, shows how Liberia arrived a t its present situation, and highlights the d i f f i c u l t i e s which plaqued not only the Fourth Highway and other-projects i n the past, but continue t o plaque development e f f o r t s today. (a) Identification and Reparation 4. The project was implemented during a period (1976-1984) of p o l i t i - c a l violence and a declining economy. Early i n the project identification phase it was evident t h a t the transport sector i n general, and the highway + subsector i n particular, were confronted by three problems: absence of even rudimentary plannin ; almost t o t a l neglect of road maintenance and imperfect - arrangements or project financing. Planning and maintenance were hampered -61 OED issued a Project Performance Audit Report on the Third Highway Reject (No. 4903, dated January 23, 1984) which can be summarized a s follows: (a) the project suffered a 2.5 year delay, primarily because the three-year contract f o r the Totota-Ganta Road took f i v e and a half years t o complete; (b) delays were caused by poor s i t e organization of the contractor; l a t e payment of the local share of invoices; and disruptions following the coup d ' e t a t of April 1980; (c) Government could not meet i n a timely fashion its financial commitments under t h i s and other c i v i l works contracts and issued promissory notes instead. In view of what were regarded t o be exceptional circumstances, the Bank raised no objections but urged the Government t o eliminate the payment arrears by postponing new highway investments; (d) the most successful element i n the project was s t a f f training overseas; (e) i n s t i t u t i o n a l development was impaired a f t e r 1980 when many senior MPW s t a f f resigned. -71 The Project Completion Report (PCR) prepared by the Western Africa Regional Office is a comprehensive document. Ibis section of the R o je c t Performance Audit Memorandum (PPAM) summarizes points discussed i n greater d e t a i l i n the PCR, findings of the July 1985 OED mission t o Liberia, and h i s t o r i c a l material contained i n the project f i l e .  by lack of Government commitment and by a shortage of qualified s t a f f . R o j - ect financing was e r r a t i c because, although Government depended almost entirely on external assistance, its procedures for resource allocation were always cumbersome and often arbitrary. These were economy wide problems re- quiring economy wide solutions. The Government and the Bank proceeded with the preparation of the Fourth Project on the assumption t h a t problems could be successfully managed on a sectoral basis.81 This was not possible and, upon completion of the project, the road s e c t s is facing the same difficul- t i e s a s before. (b) Objectives 5. The President's Report (PR) s t a t e s (para. 31) that the Fourth Project had three objectives: t o continue t o develop the main highway sys- tem; t o continue t o develop local capacity t o plan and execute highway main- tenance with increasing emphasis on management; and t o improve the Government 's capacity f o r highway planning. These are broad formulations of intent rather than specific objectives that could be pursued during the limited duration of a Bank-assisted project. Non-achievement of the similar- l y broad intentions behind the Second and Third Projects ought t o have cautioned against generalizations or, a t l e a s t , t o have added t o the general- izations some specific r e s u l t s expected t o be achieved by the end of t h e project. In f a c t , neither the PR nor the Staff Appraisal Report (SAR) offer any quantitative milestones on the basis of which attainment of targets could be evaluated. ( c ) Implementation of Project Components -91 6. The SAR s t a t e s (para. 3.02) that the project would consist of s i x components :101- (a) improvement of the Paynesville-Totota Road (71 miles); (b) improvement of the Paynesville-Robertsfield Road (28 miles); -81 PPAM Annex 2 ("Fourth Highway Project: Etom Inception t o Board Approval") is a summary of key documents from the various stages of project preparation. -9/ PPAM Annex 3 ("Fourth Highway Project: Implementation") is a summary of supervision reports and other documents i n the f i l e . It shows that implementation problems encountered during the Second and Third projects had not been resolved and, on the contrary, had become aggravated. 101 Two more components were originally included i n the project but lack of funds dictated t h a t they be switched t o the Feeder Roads Project (Loan 1664-LBR). These were ( I ) Technical assistance for the domestic construction industry, and ( i i ) Reorganization of transport planning and coordination. Bank s t a f f supervising the Fourth Project a l s o supervised these components which a r e discussed i n para. 17 below.  (c) d e t a i l e d engineering of t h e Ganta-Sanniquellie road (2 5 miles) and of t h e Ganta-Tapita road (65 miles); (d) f e a s i b i l i t y study for t h e Gbarnga-Voinjama-Kolahum road (152 miles) ; (e) consulting s e r v i c e s f o r t h e organization and execution of road maintenance (continued from t h e Second Highway Project with extend- ed objectives); and ( f ) technical a s s i s t a n c e t o t h e Planning and Programming Bureau (PPB) i n t h e Ministry of Public Works (MPW). Implementation r e s u l t s a r e summarized below. 7. The Paynesville-Totota Road is t h e f i r s t l i n k of t h e road t h a t l i n k s Monrovia with the northeastern p a r t of t h e country. It was originally constructed i n t h e e a r l y 1960s and long before t h e preperation of t h e - ~ o u r t h Project s t a r t e d , t h e road began t o show s i g n s of f a i l u r e . A consultant was r e t a i n e d under t h e Second Highway Project and produced a study which c a l l e d for complete repaving over the e n t i r e length, together with r e l o c a t i o n s t o improve alignment, and strengthening of bridges. The consultant worked under terms of reference approved 'by the Bank and Bank supervision missions were kept informed of h i s conclusions. 8. There was l i t t l e continuity i n t h e assignment of Bank s t a f f working on Liberia. In t h e Fourth Project, e i g h t engineers and f i v e economists participated a t various stages. Different individuals have d i f f e r e n t percep- t i o n s and a Bank engineer d i d not agree t h a t the Paynesville-Totota Road should b e repaved from end t o end. Instead, he suggested t h a t a d e f l e c t i o n survey be c a r r i e d out t o determine which s e c t i o n s needed a complete recon- s t r u c t i o n and t o plan a strengthening program f o r t h e remainder. The survey was done between December 1977 and February 1978 (PR, para. 33) and subse- quent developments were a s follows: (a) The consultants had prepared documents for f u l l reconstruction of t h e e n t i r e road. (b) The deflection survey indicated t h a t 25% of the road length be reconstructed and t h a t t h e remaining 75% be improved with s e l e c t i v e patching and over lay. (c) The revised bidding documents were approved i n December 1978. Ten contractors prequalified and bids were received i n February 1979.  (d) The low bid was found t o be US$935,000 over t h e appraisal estimate of USS13.05 million. 11/ - ( e ) A negotiated contract, priced a t USS13.6 million, was signed i n J u l y 1979. 12/ ( f ) The contractor mobilized i n October, and began work o f f i c i a l l y on November 1, 1979. This was almost two years a f t e r t h e deflection survey had been completed. (g) Project design based on t h e r e s u l t s of t h e o r i g i n a l deflection sur- vey was no longer v a l i d a f t e r two r a i n y seasons whose e f f e c t neces- s i t a t e d e x t r a work t o cater f o r the increased deterioration. In addition, t h e f i r s t construction season revealed t h a t the b i l l of q u a n t i t i e s on which t h e contract price was based d i d not include major contract q u a n t i t i e s f o r asphalt, shoulder widening and s i d e drains.13/ F ~ r t h e r m o ~ eduring the f i r s t year , of construction there w z e major p r i c e increases f o r f u e l , bitumen and labor, a l l of them subject t o price v a r i a t i o n under t h e contract. Finally, the May 1980 coup disrupted completely t h e operations of the con- t r a c t o r who had t o c l o s e down and send p a r t of h i s s t a f f home. (h) In December 1980, a Bank mission estimated t h a t the f i n a l contract cost would be over US$18 million o r US$5 million more than the - 111 Cost estimates increased dramatically and the difference between the negotiated contract p r i c e and f i n a l estimated c o s t is enormous: Original estimate ( f u l l reconstruction) USS7.9 million Cost estimate ( a f t e r deflection survey) USS10.7 million Appraisal estimate USS13.1 million Lowest bid USS14.5 million Negotiated contract USS13.6 million Estimated f i n a l cost USS28.6 million - 121 An October 18, 1985 i n t e r n a l Bank note (Liberia: Country Procurement Assessment Report) notes (p. v i i ) t h a t "the public procurement practices i n Liberia often have little or no r e l a t i o n s h i p t o the written guidelines and regulations described i n t h i s report. The s t a t e d controls appear t o be i n e f f e c t i v e at most s t a g e s of the procurement process " . - 131 The contract drawings and instructions t o bidders prepared by the consultant f o r t h e o r i g i n a l , f u l l reconstruction scope, did provide f o r these q u a n t i t i e s but i n adjusting the b i l l of q u a n t i t i e s from t h a t required f o r f u l l reconstruction t o t h e one f o r s e l e c t i v e r e h a b i l i t a t i o n , these items were overlooked. Responsibility rests with the consultant who made t h e mistake, with the MPW who did not notice it, and with t h e Bank who did not notice it either.  appraisal estimate.14/ A February 1981 Bank mission noted t h a t unless additional f G d s could be made available, works should be quickly terminated t o avoid contractor standby charges for which there were no funds either i n the loan or i n the Government's cof- fers.151- (1) A t the time of termination, there were outstanding payments for claims settlement and for the retention money. Since the Government had not cash, the contractor agreed t o accept promissory notes. 161 ( j ) The c o ~ t r u c t i o ncontract was terminated i n June 1982. Including claims, the t o t a l contract cost was ~ ~ $ 1 ' 6 .million but out of the 5 - 141 In f a c t , the f i n a l cost appears t o be: Cost of the F i r s t Section (financed by the Bank) : $16.5 million Cost of Nyaf l o r l a Bridge (financed by the Bank): $1.2 million Cost of the Second Section (financed by AfDB) : $10.9 million Total $28.6 million As against the appraisal estimate of $13.05 million. - 151 The Government was already faced with a funding gap of $10-15 million on other MPW projects (MFW Report dated August 21, 1981), - 161 Four notes (each for $375,550) were issued for the claims and four (each for $288,315) for the retention money. The due dates ran from August 15, 1983 through May 1984. As of August 1984, the Government had not honored the l a s t three notes and about $1.1 million was still owed t o the contractor. The July 1984 OED mission attempted t o secure from the Ministry of Finance updated information on t h i s and other items but no o f f i c i a l s were available for discussions.  71 miles only about 40 had been improved. This l e f t 31 miles and the Nyaforla bridge. l7/ - 9. The Paynesville-Robertsfield Road, originally financed under the F i r s t Highway Project, connects Monrovia with the country's international airport. Work was completed i n 1969 but, according t o the PR (para. 29), pavement f a i l u r e s , "attributable t o weakening of the road base by the entry of surface water, rapidly became evident". The Bank arranged for t h i s com- ponent t o be financed by the Kuwait Fund and, a t Government's request, p r i o r i t y was given t o the f i r s t half of the road so that t h i s section would be ready i n time for the OAU Conference i n July 1979. Work proceeded without delay, and substantial completion was achieved by August 1980. After modifi- cations i n the work program and settlement of claims, the t o t a l cost amounted t o USS10.9 million, a s against the original contract amount of uSS8.4 million. 10. The project provided for detailed engineering studies of the Ganta-Sanniquellie Road (25 miles) and of the Ganta-Tappita Road (65 miles). Consultants began work i n November 1979 and completed their task satisfacto- r i l y i n October 1981. Construction of the two roads had been envisaged t o take place under the F i f t h Highway Project but funding constraints precluded t h i s . 11. The project provided for a f e a s i b i l i t y study for the improvement of the Gbarnga-Voinjama-Kolahun Road (152 miles) which connects Lofa Country with the main road from Sanniquellie t o Monrovia. Subsequently, the Government arranged t h a t the Japanese International Cooperation Agency would carry out the study and project funds were reallocated t o a f e a s i b i l i t y study of the Tappita-Zwedru Road. However, t h i s study was dropped because of cost overruns i n other project components. - 17/ The Nyaforla Bridge is on the Paynesville-Totota road and a new structure was required. The contractor began demolishing the old bridge i n October 1980. Delays ensued a s the contractor proposed alternative construction methods and s i t i n g s and these were reviewed by the consultant and the MPW. By the time MPW approved the f i n a l construction plans, there were no funds l e f t i n the original loan. After lengthy discussions, IDA agreed i n May 1982 t o provide additional funds for the reconstruction of the bridge and for updating of the engineering study for the r e s t of the road. There were further delays while Government prepared formal documentation i n support of its request for supplementary financing and, eventually, Credit 1311 became effective i n January 1984. The reconstruction began i n February 1983 on a lump sum contract with the original contractor, and was substantially completed i n August 1983 within the original contract price of $1.2 million. The updating of the engineering study was completed i n January 1984 and work is underway, with AfDB financing, for the completion of the remaining 31 miles. Completion of the work is estimated t o take place early i n 1986.  12. Improved road maintenance had been urged by the Bank since the . F i r s t Highway Project of 1964 and various forms of assistance had been ex- tended through every highway proj e c t thereafter The principal institution- building element of the Fourth Highway Project was a l s o focussed on main- tenance and technical assistance was provided t o a s s i s t the MPW. The Second Project had already financed four years of consulting services t o a s s i s t i n planning and executing road maintenance. Although good progress was made i n training s t a f f in the physical aspects of maintaining e a r t h and gravel roads, r e s u l t s were less satisfying i n building up expertise within MPW on planning and organization a t the d i s t r i c t level and on financial controls. The Fourth Proiect provided for a three-year extension of the consultant's services for (i)- c i v i l engineering assistance ( t o cover the preparation and implementation of the road maintenance program), and ( i i ) mechanical engineering assistance ( t o build and operate the central and f i e l d workshops, t o operate the road maintenance machinery, and t o t r a i n operators and mechanics). In addition, an administrative expert would be attached t o the Bureau of Operations i n MPW t o implement work programming and control, budgeting and cost accounting, and a warehousing expert would be provided t o implement an effective scheme f o r the procurement and issue of spare parts and equipment i n central and f i e l d warehouses. 181 MFW under took to provide qualif led counterpart s t a f f (SAR, para. 3.10). 13. Results a r e disappointing. Only marginal improvements followed the departure of the technical assistance and MPW now alleges that the wrong t a l e n t was recruited for the training a c t i v i t i e s : f i e l d s t a f f training should have been done by former contractors and not by former supervisory engineers because consultants do not build roads and do not maintain equip- ment. It is also alleged that, a t MPW headquarters consultants acted only a s advisors which made it easy not t o l i s t e n t o themeS19/ - 14. MPW s t a f f a r e quick t o point out t h a t even i f the r i g h t t a l e n t had been recruited and even i f consultants had been given executive authority , r e s u l t s would still be mediocre. Despite the commitment it made during proj- e c t negotiations, MPW could not assign qualified counterparts t o work with the technical assistance team. Furthermore, a f t e r 1980, maintenance funding was reduced and the current system for financial allocations precludes the operation of a road maintenance mechanism such as t h a t envisaged when the - 181 In December 1980, the consultant's terms of reference were modified t o include preparation of a follow-up 5-year maintenance program t o be funded through the F i f t h Highway Project. - 191 This lesson has borne f r u i t . Consultants employed under the Fifth Highway Project have executing duties a s w e l l .  Fourth P r o j e c t w a s being prepared. Maintenance o p e r a t i o n s are, consequently, a t a v i r t u a l s t a n d s t i l l . 2 0 -/ 15. The c o n s u l t a n t s d i d prepare, as r e q u i r e d by t h e i r December 1980 modified terms of r e f e r e n c e , a Five-Year Maintenance Program which t h e PCR (para. 3.23) c h a r a c t e r i z e s as "somewhat u n r e a l i s t i c i n magnitude". MPW s t a f f claim t h a t they knew t h e program was overambitious, t h a t they pointed t h i s o u t t o t h e Bank missions preparing t h e F i f t h Highway P r o j e c t , t h a t they were urged by Bank s t a f f t o p u t together an "optimum maintenance program", and t h a t they were assured t h a t financing would n o t be a problem. I D A s t a f f reasonably maintain they never i n d i c a t e d t h a t IDA could o f f e r a blank check and t h a t by "optimum maintenance program" t h e y always understood one t h a t could be c a r r i e d o u t within t h e f i n a n c i a l and i n s t i t u t i o n a l c o n s t r a i n t s of MPW. 16. Assistance i n Highway Planning was focussed on t h e Planning and Programming Bureau of t h e MPW and was i n i t i a l l y extended under t h e Third Project which financed t h e s e r v i c e s of a t r a f f i c engineer and t h e c o s t of postgraduate education i n t r a n s p o r t a t i o n of t h r e e Liberian students. The Fourth P r o j e c t continued t h i s a s s i s t a n c e by financing t h e c o s t of two ex- p e r t s : one t r a n s p o r t economist and one t r a f f i c engineer, each f o r two years. In a d d i t i o n , t h e p r o j e c t provided financing f o r t r a i n i n g abroad of four Liberian s t u d e n t s . Technical a s s i s t a n c e s t a f i c a r r i e d o u t ;heir t a s k s s a t i s f a c t o r i l y u n t i l t h e end of t h e i r c o n t r a c t s i n December 1982. The over- s e a s t r a i n i n g component had mixed r e s u l t s . One of t h e s t u d e n t s is now t h e Chief Engineer of t h e MEW. Another r e t u r n e d t o t h e Ministry without complet- i n g h i s s t u d i e s . The remaining two have n o t gone back t o L i b e r i a , r e p o r t e d l y because t h e i r connections w i t h - t h e Tolbert regime were t o o close. 17. Two a d d i t i o n a l components, intended o r i g i n a l l y f o r financing under t h e Fourth P r o j e c t , were switched t o t h e Feeder Roads Project. They were supervised by t h e same Bank s t a f f who supervised t h e Fourth Project and re- s u l t s are as fcllows: ( a ) Technical Assistance f o r t h e Development of t h e Domestic Construction Industry. A s p e c i a l i s t was r e c r u i t e d a t t h e end of 1979, remained i n L i b e r i a u n t i l t h e middle of 1980, l e f t t h e country f o r a l l e g e d l y medical reasons and d i d n o t come back. The component was a f a i l u r e . However a f r e s h s t a r t was made i n 1984 w i t h a new consultant. Implementation of a comprehensive t r a i n i n g program f o r domestic c o n t r a c t o r s h a s now s t a r t e d with t h e s t r o n g support of MPW management and s u b s t a n t i a l complementary f i n a n c i a l and t e c h n i c a l a s s i s t a n c e i n p u t s from USAID. - 20/ The OED mission v i s i t e d a number of f i e l d workshops i n July 1985 and noted t h e absence of a c t i v i t y . Lack of f u e l and s p a r e p a r t s were t h e standard reasons given but t h e r e were a l s o i n d i c a t i o n s of disorganiza- t i o n and apathy. This was p a r t i c u l a r l y t r u e i n t h e Camp Mechlin Training Center which has been closed s i n c e l a t e 1984 and whose f a c i l i - ties a r e f a l l i n g apart .  (b) Technical Assistance for the Reorganization of 'It'anspor t Planning and Coordination. This reflected t h e conviction of some Bank s t a f f that Liberia needed, and could be persuaded t o want, centralization of transport planning and coordination functions i n the Ministry of Commerce, Industry and Transport (MCIT). The record shows211 t h a t the Government did not want these functions t o be c e n t r a l i G d and, a f t e r many delays, implementation of t h i s component was shifted, i n December 1983, from MCIT t o the Ministry of Planning and Economic Affairs. Although the technical assistance s t a f f a r e occasionally called upon by the Minister of Planning t o a s s i s t i n t h e prepara- tion of f e a s i b i l i t y studies, their main a c t i v i t i e s concentrate on. the strengthening of t h e transport planning and monitoring unit of the Ministry of Planning through the establishment with counterpart s t a f f of a consistent transport data base, planning methodology, medium term investment program and transport policy reform program. D. Implementation Schedule 18. With one exception, a l l project components were completed on time (PCR, paras. 3.26-3.2 7). The exception was the Paynesville-Totota Road which a t appraisal had been scheduled for completion by mid-1981. The contract was terminated i n 1982 a f t e r about 40 miles (out of the t o t a l 71) had been im- proved. The remaining 31 a r e expected t o be completed, with AfDB financing, i n e a r l y 1986. E. Costs and Financing 19. While the Fourth Project was being prepared, it was known that Government was experiencing financial d i f f i c u l t i e s with the Third. The March 1977 Project Brief specifically noted that project financing was a key issue (PPAM, Annex 2, para. A. 3). This was not f u l l y taken i n t o account during the calculation of financing requir ements which assmed that Government could absorb any cost overruns (PCR, para. 3.06). 20. Table 1 of the PCR (Actual and Forecast Estimates of Project Costs) shows that a l l components were expected t o be completed by December 1982 and t h a t their combined cost would amount t o USS30.7 million. PPAM Table 1 (Fourth Highway Project: Estimated and Actual Costs) shows t h a t the combined cost of a l l components is l i k e l y t o be US$48 million (i.e., more than 56% more than t h e estimates) and that completion w i l l probably take place e a r l y i n 1986 ( i .e. , more than four years l a t e r than expected). The largest por- tion of both the cost and the time overrun is due t o the Paynesville-Totota Road whose construction and supervision a r e l i k e l y t o cost respectively about 110%and 185%more than anticipated. Although most of the cost overruns have been covered by Credit 1311-LBR and by the AfDB loan of 1984, t h i s does not diminish the weakness of the original estimates. This case demonstrates that the significance of misestimates i n small countries with limited financial . resources is enormous and that misestimates lead t o major financial distor- tions, administrative complications and operational c r i s e s In large countries with large road programs overruns can be more readily absorbed - 211 See PPAM Annex 3, paras. A.l5(b), A.16(~), A.23(b), A.24(b)  through adjustments i n the general budget or the overall roads program. Con- sequently, i n small countries, it is highly desirable t o exercise the great- e s t care i n establishing cost estimates, t o design projects so t h a t they can more readily absorb overruns and t o implement them s o a s t o minimize the occurrence of such problems. F. Economic Reevaluation 21. The SAR s t a t e s (para. 4.02) that economic justification of the project was based on the benefits from the improvement of the Paynesville- Totota and the Paynesville-Rober tsf i e l d Roads. The Paynesville-Totota Road would yield 20% (SAR, par a. 4.11) and the Paynesville-Robertsfield 22% (SAR, para. 4.18). For both roads, the average growth of t r a f f i c over the f i r s t 10 years was assumed t o be 6.5% per annum. 22. The PCR s t a t e s (paras. 4.01-4.05) t h a t the recalculated r a t e of return for the Paynesville-Kakata section (where t r a f f i c declined by about 7.7% per annum between 1977 and 1981, instead of increasing by 6.5%), would be 15%. The corresponding r a t e for the Paynesville-Robertsfield Road (where t r a f f i c declined by 9%per annum between 1977 and 1981, instead of increasing by 6.5%) would be 16%. In both instances, the PCR assumes t r a f f i c t o remain constant between 1981 and 1985 and t o show an annual growth of 5% there- after. The July 1985 OED mission did not succeed i n securing recent t r a f f i c count data t o v e r i f y the reasonableness of the 5%growth r a t e assumption and therefore cannot challenge the PCR conclusions, even though recent economic performance r a i s e s doubts gs t o whether a 5%r a t e of t r a f f i c growth can be achieved any time soon. 111. CONCLUSIONS AND RECOMMENDATIONS A. Conclusions 23. When the F i r s t Highway project was approved i n 1964, Liberia had a t o t a l of 1,750 miles of public roads and when the Fourth Pro e c t became ef- 3 fective i n 1978, the t o t a l had reached about 3,400 miles.2 / The limited network reflected the low demand for road transport and the f a c t t h a t Liberia was not rich. kom the outset, the Bank had argued that maintenance ought t o be given preference over new construction and, since MFW lacked both quali- f i e d s t a f f and sufficient maintenance equipment, the Bank proposed t o help correct these weaknesses. Such was the sound rationale behind the f i r s t four highway projects but the mechanism f o r translating rationale i n t o action had one defect: it assumed that what had been agreed would be implemented. 24. Highway project preparation was carried out by Bank missions who discussed their findings and proposed recommendations with the technical ser- vices of MFW. The l a t t e r agreed with the Bank t h a t better maintenance proce- dures were needed and also agreed on the specific measures t o be taken. The - 221 In addition, Liberia had a network of private roads, forming part of enclave operations (iron ore, timber, rubber). Total lengths for 1964 and 1977 were 530 and 1,444 miles respectively.  agreed approach was recorded i n a i d e memoires submitted t o , and r o u t i n e l y approved by the p o l i t i c a l leadership. However, t h e p o l i t i c a l leadership never believed t h a t maintenance should be given preference over new p r o j e c t s and, s i n c e it controlled f i n a n c i a l and human resources, it often proceeded t o a l l o c a t e them i n ways d i f f e r e n t from those t h a t had been formally agreed. This created serious d i f f i c u l t i e s for Bank a s s i s t e d operations and although the Bank protested i n unusually strong terms, 23/- nothing s u b s t a n t i a l r e s u l t e d since, even when f i n a n c i a l c r i s e s were a t t h e i r most acute, construction of new buildings f o r t h e p o l i c e and purchase of executive j e t s went on. 25. Perhaps t h e Bank a l s o contributed t o some of t h e d i f f i c u l t i e s . In a period when t h e economy stagnated and shrunk and t h e l a c k of government funds became extremely c r i t i c a l (PPAM, Annex 1 -- Liber ia : Recent Developments), t h e Bank acquiesced t o t h e Government's wish t o include i n t h e p r o j e c t a road which Bank s t a f f had previously set a s i d e as lower p r i o r i t y (PPAM, Annex 2, para. A.6). When t h e Bank's own lending program could not accommodate t h e e x t r a c o s t , t h e Bank arranged f o r cofinancing and i n c o r r e c t l y described t h i s road as useful for a g r i c u l t u r a l development (PPAM, Annex 2, paras. A . 8 and A.lO). During such a time, t h e Bank advocated a maintenance program which t h e Government i t s e l f perceived a s "overambitious" (para. 15 above). Also, t h e Bank sought t o help develop a capacity f o r transport planning d e s p i t e r e s i s t a n c e by t h e Government (PPAM, Annex 3, paras. A.l4(c), A.l5(b), A.l6(c)) which demonstrated its p r o c l i v i t y t o disregard investment p r i o r i t i e s even when these were q u i t e apparent without d e t a i l e d analyses. Furthermore, t h e Bank endeavored, i n a small country with fewer than two million inhabitants and with a very limited GNP outside the enclave e n t e r p r i s e s ,t o develop an independent construction industry. This was done i n a period of stagnation or worse and without, i t would seem, any attempt t o take advantage of t h e technical c a p a c i t i e s a v a i l a b l e within t h e enclave e n t e r p r i s e s t h e r n s e l v e ~ . ~ 4 / Finally, t h e Bank did n o t i n s i s t t h a t a consultanr about whom s e x o u s reservations were expressed (par a. 2, footnote 4 , above) and who turned out t o be "not s a t i s f a c t o r y " (PPAM, Annex 3, paras. A. 13(a), A. 14(a), A. 17) be refused supervisory r e s p o n s i b i l i t y f o r major road works under the project. Thus, during a period of c r i s i s , t h e Bank continued t o emphasize long range issues and complex objectives r a t h e r than concentrate on a few fundamentals. A s a r e s u l t an administrative p a t t e r n was pursued which suffered from c o n f l i c t i n g advice and from a tendency t o acquiesce i n a c t i v i t i e s t h e Bank s t a f f did not r e a l l y support. - 23/ See, i n t h i s connection, t h e excerpts from a 1982 l e t t e r from t h e Bank t o t h e ?linister of Public Works i n PPAM Annex 3, para. A.20(e). - 24/ The July 1985 OED a u d i t mission saw a number of roads constructed and maintained by enclave e n t e r p r i s e s and was s t r u c k by t h e f i n e q u a l i t y of t h e work and the excellent s t a t e of maintenance. The question therefore a r i s e s : s i n c e t h e enclaves have a l o c a l l y established capacity f o r road construction and maintenance, should they n o t have been asked t o under- take road maintenance operations on behalf of t h e MFW, a t l e a s t i n t h e a r eas surrounding t h e i r holdings?  26. Unpredictable, and frequently questionable Liberian behavior with respect t o resource allocations, together with long delays, or even outright f a i l u r e t o f u l f i l l agreed commitments, led a number of aid agencies t o scale down, or eliminate completely, their programs of development assistance a t the very time when the country needed assistance a s never before.25/ Between October 1984 and October 1985, the Bank was forced t o suspend d s - bursements on two separate occasions, the second l a s t i n g for more than seven months. Recent (June 1985) supervision reports on the Fifth Highway Project do not indicate that administrative practices have been visibly improved and the question cannot be evaded: should the Bank continue its assistance t o the highway sector and i f so, a r e there any changes t h a t could usefully be incorporated i n t o its assistance strategy? 27. The answer t o the f i r s t part of the question is yes. The 1978 President's Report on the Fourth Highway Project says t h a t a principal objec- t i v e of Bank Group operations is t o help Liberians play a larger r o l e i n developing their own resources for the benefit of t h e i r own people. This statement, made seven years ago, applies with even greater force today when the country is i n a much more d i f f i c u l t situation. Different country condi- tions require different Bank responses and it is encouraging t o note t h a t f l e x i b i l i t y has prevailed s o f a r . 28. A number of important adjustments have already been made. Largely because of too frequent changes i n Bank s t a f f , the Fourth Project was not w e l l supervised. 'It~isis no 'longer the case: the Fifth Project has shown remarkable s t a f f continuity. Attempts t o strengthen the domestic construc- tion industry a r e laudable i n themselves and indispensable for national development. However, experience has shown that Bank e f f o r t s i n t h i s direc- t i o n were ineptly conceived and imperfectly implemented. A t present, e f f o r t s continue i n the same direction but with a new consultant, a t a lower key and with somewhat better prospects for success. Nevertheless, the fundamental problem remains: the existing road network has t o be maintained and is not. ( B ) Recommendations 29. After four projects and twenty years of e f f o r t t o establish a force account operation, the assertion is permissible that the chances of success a r e microscopic a s long a s the p o l i t i c a l leadership remains unconvinced t h a t money spent on maintenance is money well spent. The Bank might therefore reconsider the formula it has been advocating and might explore alternative ways of a s s i s t i n g the MPW t o keep v i t a l roads open. It might be worthwhile Germany withdrew its support and t h i s led t o the closure of the Camp Mechlin Raining Center. Kuwaiti disappointment over the non-repayment of funds due led t o the cancellation of proposed financing for the Ganta-Tapita Road. Japanese dissatisfaction with the lack of r e s u l t s concerning the promised construction of workshops f a c i l i t i e s i n Camp Mechlin is reducing the chances of any major flows of assistance from that country. Such setbacks cannot be offset by the g i f t of the massive a t h l e t i c complex provided by the Chinese Government, or by t h e highly specialized technical assistance provided by Israel.  for the Bank and MPW t o formulate a r o l l i n g plan of periodic reconstruction encompassing the country's main roads with a view t o provide them with a sur- face l a s t i n g between seven and ten years. The possibility that l i t t l e main- tenance would be done ought t o be faced and the plan could envisage t h a t a t the end of the pavement's l i f e a new pavement would be applied, together with any betterment or improvement works j u s t i f i e d by increased t r a f f i c . 30. According t o customary standards of efficiency and effectiveness , the Fourth Highway Project was not a success. This should not conceal the f a c t t h a t the Fourth Project, together with the Feeder Roads Project, did accomplish something more significant than the usual savings i n vehicle operating costs. The two projects were implemented during a traumatic period for the MPW which went through a phase of u t t e r disorganization and l o s t many of its experienced personnel. Bank assistance extended through these two projects provided the MPW with a minimum of resources which made possible the continuation of its operations, the preservation of some s o r t of structure and the development of new cadres. In l a t e 1985, the MPW had a more expe- rienced s t a f f and a clearer sense of direction than it did f i v e years ago and, by i t s e l f , t h i s contribution made by the Bank went a long way towards helping some Liberians help themselves. 31. This is not t o say that MFV has no problems. Its three most impor- t a n t weaknesses a r e t h a t it lacks a regular flow of adequate financing (which makes it v i r t u a l l y impossible t o plan ahead) ; a more competent middle manage- ment (which makes it hard t o i n s t i t u t e sounder administrative practices); and a system t h a t w i l l offer rewards for superior performance (which, unless cor- rected, w i l l contribute t o further discouragement of those officers who work above the c a l l of duty). These are the three areas i n which the MFV deserves assistance. 32. In view of the country's financial situation, any assistance t o the MPW w i l l have t o come from concessionary aid. As noted above, many donors have become discouraged but the following approach, which might be adopted with advantage i n future projects supported by the Bank, might also help t o entice them back. It is a matter of extreme urgency that reactivation takes place a t once of formal aid-coordination among a l l donor agencies. This could preferably take the form of a five-year indicative plan of assistance which might be instrumental both i n preventing uneconomic investments and i n directing foreign assistance so t h a t it achieves an appropriate balance be- tween new investments and preservation of existing assets. Arrangements ought t o be made s o that external assistance be extended under specific con- ditions and tied t o a detailed list of milestones which would release further resources a s targets a r e being met. For t h i s t o be possible, the Government would have t o overhaul some of its burdensome practices and although t h i s w i l l not be easy, there does not seem t o be any other alternative.  - 15 - Table 1 PROJECT PERFORMANCE AUDIT MEMORANDUM LIBERIA FOURTH HIGHWAY PROJECT (LOAN 1573/CREDIT 1311-LBR) Estimated and Actual Costs (US$ 000) ' Source of External Estimated Actual Financing CIVIL WORKS CONSTRUCTION Paynesville-To t ot a 13,050 Ln. 1573-LBR Paynesville-Kakata 16,550 Ln. 1573-LBR Kakata-Totota 10,90O(a) Af DB Nyaf orl a Br idge 1,265 1,181 Cr. 1311-LBR Paynesville-Rober t s f i e l d 9,570 10,937 Kuwait Fund CIVIL WORKS STUDIES Update engineer ing study CIVIL WORKS SUPERVISION Paynesville-Totota 830 Ln. 1573-LBR Paynesville-Kakata 1,203 Ln. 1573-LBR Kakata-Totota 1,166(b) Af DB Nyaf orl a bridge 265 202 Cr. 1311-LBR Paynesville-Rober t s f i e l d 610 833 Kuwait Fund TECHNICAL ASSISTANCE Road Maintenance 3,280 3,790 Ln. 1573-LBR PPB 310 235 Ln. 1573-LBr CONSULTANT SERVICES Detailed Engineering 530 651 Ln. 1573-LBR F e a s i b i l i t y Study 610 - (c) Ln. 1573-LBR TOTAL Source: PCR, Table 1 and OED Mission estimates Notes : (a) MPW estimate, July 1985 (b) Suervision cost t o AfDB estimated a s t h e same percentage of supervision cost/construction c o s t f o r t h e Bank-financed Paynesville- Kakata segment. ( c ) The f e a s i b i l i t y study was not done.  ANNEX 1 Page 1 PROJECT PERFORMANCE AUDIT MEMORANDUM LIBERIA FOURTH HIGHWAY PROJECT (LOAN 1573/CREDIT 1311-LBR) RECENT DEVELOPMENTS 26/ - Liberia, a small West African country with an area of 114 thousand square km and a 1980 estimated population of 1.9 million, has a unique polit- i c a l history and a checkered socio-economic record. In the 1950s and 1960s, it experienced an unprecedented rate of economic expansion. Annual r a t e s of national product increase were close t o 7%and stand i n sharp contrast t o the complete stagnation of the previous eighty years. However, the expansion was led by investments of foreign enclaves and, as a whole, Liberia remained far behind its neighbors both i n physical capital and i n trained manpower. In the mid-1970s, the economy depended on three elements, a l l of them tun by foreign-owned enclave concessions. F i r s t , iron ore; it accounted for 30% of the GDP and 3/4 of the t o t a l exports. Second, rubber; but its outlook was bleak and no more than 3% annual growth of exports could be reasonably foreseen. Third, forestry; i t had experienced a phenomenal growth which led t o fears of t o t a l depletion. Other sectors did not promise any significant potential. The choice faced by the Government was either t b continue collecting t r i b u t e from the enclaves while resources were being depleted, or t o diversify the economy and make i t strong enough t o survive when the exploitative phase would end. The l a t t e r required a basic reorientation of the country's productive mechanism and, participation of more Liberians i n the "modern", a s d i s t i n c t from the "traditional" economy and the p o l i t i c a l implications did not pass unnoticed. - 26/ The audit has studied the four major reports on Liberia prepared by the Bank between 1975 and 1982: Liberia : Growth with Development, A Basic Economic Report ( In seven volumes), Report No. 426a-LBR, March 1, 1975. Current Economic Position and Prospects of Liberia: Review of Major Sectors, Report No. 1642a-LBR, February 28, 1978. Liberia: Current Economic Situation and Prospects, Report No. 2662-LBR, December 28, 1979. Liberia: Recent Economic Developments and Medium-Term Prospects, Report No. 4178-LBR, December 30, 1982. The main findings and conclusions of these documents are summarized i n the following pages.  ANNEX 1 Since mid-1971, the country had a new ~ o v e r n m e n t . ~ ~ After the / 28-year 'hbman regime, the Tolber t administration proposed t o i n t r o d u c e re- forms and there were many problems requiring attention and action: Four iron ore concessions were i n operation. One would close a t the end of 1975 but the s h o r t f a l l could be made up by the others and the volume of exports maintained around 23 million tons a year up t o 1978. Prospects beyond 1978 were uncertain. 'Ihe rubber industry consisted of seven concessions and 5,300 Liber ian-owned farms. Tax concessions needed t o be renegotiated and Liberian farmers had t o g e t better prices for t h e i r produce. Forestry was a growing sector. Its contribution t o GDP was expect- ed t o increase from 2.2% i n 1972 t o 8%i n 1978 but the Government needed t o enforce its own regulations with regard t o cutting of trees, replanting, etc. The country lacked capital even for simple sawing operations. Capacity of the public service was limited. The f i s c a l system was undeveloped, passive, highly sensitive t o external' fluctuations and ill-equipped for development purposes. Maximization of revenues and minimization of expenditure was used by the Ministry of Finance t o demonstrate sound f i s c a l management. The surplus so generated was used t o reduce debt burden and t o accumulate bank balances. The funding and planning systems were not geared t o development re- quirements. Current and development expenditures, especially for agriculture, were inadequate r e l a t i v e t o the economic and social needs of Liberia. Greater participation of the r u r a l people was needed i n the econo- my. Traditionally, Government devoted l i t t l e attention t o the traditional sector which fed the 70% of the population whose per capita annual earnings did not exceed $100. The reorientation of agricultural policy had t o look i n t o marketing and pricing. Both discriminated against the small farmer. More competition was needed i n marketing of farm products. Measures had t o be taken t o extend credit and banking services t o r u r a l areas, and t o modify existing controls s o a s t o encourage small entrepre- neurs t o improve the land tenure system. Extension services, research, and infrastructure (feeder roads, storage f a c i l i t i e s ) were urgently needed. In the financial sector problems were related t o the lack of a national banking system and the lack of a national currency. - 27/ The following paragraphs summarize the major conclusions of the March 1975 Bank report, Liberia: Growth with Development, A Basic Economic R e ~ otr.  ANNEX 1 Eijrr In the social sectors (health, housing and education) the infra- s t r u c t u r e was small and almost e n t i r e l y d i r e c t e d towards Monrovia and t h e concessions. Education was i n desperate s t r a i t s . There were n o t enough teachers and t h e c u r r i c u l a were unsuitable. The s t a t i st i c a l system was inadequate. Economic planning was poor- l y organized and t h e r e was no capacity f o r project preparation. - .- This was a serious bottleneck i n the implementatibn a b i l i t y of the Government 28/ The Tolbert administration d i d n o t even begin t o confront these problems and was v i o l e n t l y overthrown. The Military Government which assumed power i n April 1980 took over an economy i n which annual GDP growth had averaged l e s s than 1%between 1974 and 1 9 7 9 . ~ 1 Explanations f o r the poor -~ performance include t h e following : The iron and rubber s e c t o r s were l a r g e l y responsible f o r t h e r a p i d . r a t e s of economic growth i n the 1960s (6%p.a.) and e a r l y 1970s (4% p .a. ) Fuel p r i c e increases and t h e subsequent recession brought growth r a t e s down t o 1%i n the l a t e 1970s. Weak external demand persisted and t h e economy s t a r t e d d e t e r i o r a t i n g rapidly: r e a l GDP declined by 4.7% i n 1980 and by 5%i n 1981. The economy suffered from a heavy commercial debt contracted t o finance t h e OAU Conference i n 1979. The coup d ' e t a t of April 1980 l e d t o a devastating l i g h t of c a p i t a l . A l a r g e import b i l l f o r o i l and r i c e , plus a doubling of public s e c t o r minimum wages, produced a f i s c a l c r i s i s . Domestic savings f e l l from 27% i n 1979 t o 17%i n 1981. The investment r a t i o f e l l from 30% i n 1979 t o 18%i n 1981. Public s e c t o r investment, financed l a r g e l y by borrowing, p a r t i a l l y o f f s e t t h e decline i n p r i v a t e investment s i n c e the mid-1970s. But, a s t h e Government's c a p i t a l budget was squeezed s i n c e 1980, and p r i v a t e c a p i t a l f l i g h t p e r s i s t e d , disinvestment became a prominent f e a t u r e of t h e Liberian economy. Investment performance i n t h e - 281 In view of the disquieting implications of the problems l i s t e d above, it is surprising t o read i n the March 1975 Report (Volume 1, page iii, para. 9) t h e following forecast: "The worst probable path is f o r a drop from t h e r e c e n t 5% growth r a t e per annum t o about 3.5% and then a gradual r i s e , reaching 5%by t h e end of t h e 19708, peaking i n t h e mid-1980s a t over 7% and then f a l l i n g back t o 52 t o t h e end of t h e century. Neither t h e balance of payments nor public sector finances a r e l i k e l y t o encounter serious problems and e x t e r n a l debt servicing burdens a r e l i k e l y t o f a l l q u i t e sharply, t o below 6%of exports and below 15%of public revenues." 291 The following is a summary of t h e p r i n c i p a l conclusions i n the December h 982 Bank r e p o r t , Liberia: Recent Economic Developments and Medium-Term osDects.  ANNEX 1 Page 4 early 1980s reflected a worsening resource mobilization e f f o r t i n t h e public sector, the spending l i m i t s imposed under the IMF Stand- by Arrangements ( i n e f f e c t since mid-1980). a persistence of the confidence c r i s i s , and the poor price prospects for Liberia's prin- cipal exports. In somewhat greater d e t a i l : Fiscal imbalance reached c r i t i c a l proportions. Current expenditure exploded since 1980 with the doubling of public sector minimum wages and high i n t e r e s t payments. In s p i t e of excessive personal income taxation, there was a persistent shortage of public sector resources for investment. Measures taken by t h e Government i n December 1982 t o contain the s i z e of the wage b i l l have somewhat contributed t o a curbing of the growth of recurrent expenditure but much more needs t o be done, especially i n connection with better collection of customs duties, corporation and partnership taxes, and forestry fees. The Government meets the performance c r i t e r i a imposed by the 1980 IMF Standby Arrangement sometimes by adopting extraordinary measures, such as withholding up t o two months pay for c i v i l servants. The external debt position reached c r i s i s levels since 1981 when t o t a l disbursed and outstanding debt reached US$592.3 million, or 82.8% of monetary GDP. The agricultural sector stagnated i n 1980 and declined i n 1981 by 7.8% (non-subsistence agriculture declined by 22%), due t o the con- tinuing poor performance i n rubber and the 46.5% decline i n log output. Iron ore dominates the mining sector, where production has been declining since 1974 due t o weak demand and low prices. Performance i n mining, forestry and plantation rubber depend on concession sector a c t i v i t i e s . These a r e i n a d i f f i c u l t situation because excessive wage grants by the Government i n 1980 led t o pressures on the concessions t o increase wage payments t o their own workers. The r e s u l t is t h a t concession wages have grown beyond productivity changes and trends i n competing countries. The open unemployment r a t e i n 1979 was 13.8% and although no reli- able figures a r e available for subsequent years, it is evident from t h e rapid decline of t h e economy t h a t the employment base has been deteriorating too. Performance of the small (less than 9.0% of GDP i n 1982) manufac- - . turing sector has been declining. Performance of the transport sector was poor. The public enterprise sector grew too f a s t i n the 1970s and has been a heavy drain on Government resources since 1980. Education and training a r e uncoordinated, with low enroll- ment r a t i o s , with serious regional d i s p a r i t i e s , inefficient i n s t i t u t i o n s and suffer from an acute shortage of financial re-  ANNEX 1 Page 5 sources. The health s t a t u s for the majority of the population remains poor: l i f e expectancy a t b i r t h is only 54 years, and morbidity and mortality a r e high. Malnutrition is rampant but, a t the same time, the population growth r a t e is high (3.4% p.a.) and creating major and s o c i a l and economic problems. The December 1982 Bank report concluded (page 42, para. 93) t h a t economic recovery i n Liberia would not be easy.  ANNEX 2 Page 1 PROJECT PERFORMANCE AUDIT MEMORANDUM LIBERIA: FOURTH HIGHWAY PROJECT (LOAN 1573/CREDIT 1311-LBR) FOURTH HIGHWAY PROJECT: FROM INCEPTION TO BOARD APPROVAL - Reject Inception A.1. The f i r s t document i n t h e f i l e (dated April 12, 1976) records t h a t Government suggested t h e following project composition: ( a ) road construction (Mt. Coffee Dam road, Ganta-Tapita and Saniquille road, and Paynesville- ~ o t o t aroad) and ( b ) road maintenance and r e h a b i l i t a t i o n . . In ~ecember1976, a Bank mission v i s i t e d Liberia and summarized its findings i n a l e t t e r t o the - Government, (dated January 11, 1977) which contains a much broader s e t of t e n t a t i v e p r o j e c t components ranked i n order of p r i o r i t y . 30/ - Reject Brief and Reappraisal A.2. The R o j e c t Brief (dated March 4, 1977) s t a t e s t h a t t o t a l invest- ments i n transport during the 1976-1980 Development Plan were estimated a t about US$153 million and t h a t foreign sources were expected t o contribute about US$110 million. The R o j e c t Brief notes t h a t the Plan appeared t o be ambitious. - 301 As follows: . (a) Construction Paynesville-Totota Road 71 m (Pr 1) ~ a h e s v i l l e - ~ o b tesrf i e l d Road 28 m (Pr .2) M t . Coffee Dam Road 15 m (R.3) . (b) Detailed Engineering Ganta-Sanniquellie Road 25 m (Pr 1) Ganta-Tapita Road 65 m ( R . 1 ) . ( c ) F e a s i b i l i t y Studies Gbanga-Kolahum Road 155 m (Pr 1) ~wediu-Grenville Road 110 ( R . 3) (d) Road ( R . 1) To consider f u r t h e r proposals i n t h e l i g h t of the Consultant's mid-proj e c t report (Highways 11) (e) Domestic Construction Industry (PI. 1) To consider further proposals i n t h e l i g h t of t h e r e p o r t of t h e consultants.  ANNEX 2 A.3. In addition t o comments on project focus, composition and cost31/, the Project Brief discusses the three key issues: road maintenance; transport planning; and project financing. A.4. The Pre-appraisal Mission Report (dated March 18, 1977) expressed reservations a s t o whether Government would have enough resources t o sustain the e f f o r t f o r improved road maintenance operations. Doubts were a l s o ex- pressed on Liberian a b i l i t y t o continue on its own with a school f o r mechanics put together with German assistance a t Camp Mechlin. Issues Paper and Decision Memorandurn A. 5. The Issues Paper (dated July 29, 1977) notes that: (a) Appraisal was hampered because MPW had not been ready t o discuss pro- posals. (b) Detailed engineering completed i n June 1977 for the two roads proposed for inclusion i n the project showed cost increases i n the foreign com- - 311 These can be summarized a s follows: Focus of Bank operations for next f i v e years : (a) Upgrade primary syst e m ; (b) Improve feeder road network; (c) Improve road maintenance ; (d) Expand and improve ports; (e) Improve overall transport planning and coordination; ( f ) Improve domestic construction industry. Highways I V flows out of Highways I1 and I11 with three trends emphasized: (a) Expand the main network t o penetrate i n t o r u r a l areas; (b) Support Government i n s t i t u t i o n s t o become self-sufficient i n high- way planning and management; (c) Improve highway maintenance operations. Project composition: (a) Civil works ; (b) Detailed engineer ing ; (c) Feasibility studies ; (d) Highway maintenance; (e) Development of domestic contractors ; ( f ) Technical assistance t o the Planning and Programming Bureau (PPB) of the MPW. Cost Estimates (Net of taxes, early 1977 prices): Foreign: US$M 15.50; Local: US$M 9.70; Total: US$M 25.20.  ANNEX 2 Page3 ponent of over 40%. The foreign component previously estimated a t USS15.5 million (Project Brief, March 1977) was now increased t o USS23.95 million. Total estimated cost became $33.05 million. With Bank financing limited a t $10 million, the f i r s t issue was the financing gap (c) The second issue was that Government had not been able t o produce s t a f f t o be trained for planning and management of highway maintenance. Hence, MPW would continue t o r e l y on consultants. (d) The Study of the Domestic Construction Industry, prepared by consul- t a n t s , was not found t o be very penetrating. Although the Government declared i n t e r e s t i n building up the domestic construction industry, the Mission f e l t t h a t t h e consequences had not been f u l l y appreciated. (e) The Mission emphasized the importance of the Reorganization of Transport Sector Planning and Management ( Issues Paper, Annex 11, par a 3.01). A.6. The Decision Memorandum records the following: (a) Rehabilitation of the Paynesville-Rober t s f ield Road would be excluded. Despite its estimated 20% ERR, the road was not a high-priority invest- ment and, besides, i t had been b u i l t under the F i r s t Project. (b) The project would include the Paynesville-Totota Road which, despite i t s estimated 15%ERR displayed more developmental potential. (c) Project cost and financing would be as follows: Total: USS12.7 million; Foreign: US$10 million; Local: USS2.7 million; Bank: US$10 million; Government: USS2.7 million. (d) Domestic construction industry would be assisted through the provision of technical assistance. (e) Technical assistance for maintenance would be continued. The focus of the consultancy services would be shifted from engineering t o improving . MPW capacity for planning and organizing highway maintenance. Also, MPW would under take a training program t o provide more s t a f f ( f ) Technical assistance would be extended t o the Ministry of Commerce, Industry and Transportation t o strengthen its transport planning capac- i t y . A 2/3 month organizational study would be carried out by a UNDP- financed consultant and Government would be urged t o take appropriate steps. P o s t - a ~ ~ r a i s aProject Processins! l A. 7. The substance of the Decision Memorandum was communicated t o Government i n a l e t t e r from the Bank, (August 29, 1977). The l e t t e r was accompanied by a note on the need f o r a deflection survey which would help determine the  ANNEX 2 T G j g r e x t e n t of s e l e c t i v e r e c o n s t r u c t i o n needed and by a t a b l e showing t h e l a t e s t p r o j e c t scope and t e n t a t i v e c o s t s . This t a b l e was q u i c k l y superseded by e v e n t s because, according t o a n i n t e r n a l Bank n o t e of October 6 , 1977, t h e p r o j e c t scope was d r a s t i c a l l y changed and t h e Paynesville-Rober t s f i e l d road was r e i n s t a t e d , t h e r e b n e c e s s i t a t i n g c o f i n a n c i n g , s i n c e t h e Bank c r e d i t would n o t be increased.J2/ - A . 8 . A Post-appraisal Mission Report (dated October 25, 1977), r e c o r d s t h a t t h e two r o a d s had been r e i n s t a t e d ; t h a t c o f i n a n c i n g would be sought f o r t h e Paynesville-Robertsfield Road; and that: t h e following components would be s h i f t e d t o t h e Feeder Roads P r o j e c t : ( a ) d e t a i l e d engineering f o r t h e Ganta-Sanniquellie and t h e Ganta-Tapita roads ; (b) f e a s i b i l i t y s t u d y f o r t h e Gbargna-Voinjama r o a d ; ( c ) consultancy s e r v i c e s f o r t h e domes t i c c o n t r a c t i n g i n d u s t r y ; and, . (d) t e c h n i c a l a s s i s t a n c e t o t h e Bureau of T r a n s p o r t a t i o n of t h e M i n i s t r y of Commerce, I n d u s t r y and Trade (MCIT) By January 1978, arrangements were underway between t h e Bank and t h e Kuwait Fund which under took t o f i n a n c e t h e r e c o n s t r u c t i o n of t h e Paynesville- Robertsf i e l d Road. A.9. A second Post-appraisal Mission Report (dated March 8, 1978) n o t e s t h a t d e f l e c t i o n surveys had been completed b u t although c o s t e s t i m a t e s were n o t y e t r e a d y , they were expected t o be s u b s t a n t i a l l y less on both roads than t h o s e o r i g i n a l l y estimated by t h e c o n s u l t a n t s who had worked under t h e assumption of complete r e c o n s t r u c t i o n . On March 24, 1978 p r o j e c t documents were forwarded t o t h e Sank's Loan Committee. - 32/ During t h e Bank-Fund Annual Meeting, t h e Liberian Minister of Finance asked t h a t t h e Paynesville-Robertsfield Road be r e i n s t a t e d , t h a t r e - alignment of t h e Paynesville-Totota Road be a l s o included i n t h e p r o j - e c t , and t h a t t h e Bank i n c r e a s e i t s c o n t r i b u t i o n from about $10 t o about $16 m i l l i o n . The Bank reviewed t h e r e q u e s t and decided t h a t , c o n t r a r y t o t h e conclusions recorded In t h e Decision Memorandum (para A . 6 , above), it would be d i f f i c u l t t o exclude e i t h e r t h e Paynesville- R o b e r t s f i e l d road o r t h e p o s s i b i l i t y f o r a t l e a s t some realignemnt work on t h e Paynesville-Totota Road. However, t h e Bank's l e n d i n g program had no s l a c k . The n o t e concluded t h a t Government should be t o l d t h a t , following t h e review, t h e Bank n o longer i n s i s t e d on t h e e x c l u s i o n s (which had j u s t been communicated t o t h e Minister of Works i n t h e l e t t e r of August 29, 1977) but s i n c e chere were n o s p a r e funds a v a i l a b l e , two s o l u t i o n s presented themselves. F i r s t , t o s h i f t some of t h e t e c h n i c a l a s s i s t a n c e and p r o j e c t p r e p a r a t i o n components from t h e Fourth P r o j e c t t o t h e proposed Feeder Roads P r o j e c t . Second, t o o f f e r t h e Bank's good s e r v i c e s i n f i n d i n g co-f inancing f o r t h e Paynesville-Rober t s f i e l d Road.  ANNEX 2 Page 5 N e g o t i a t i o n s and P r o j e c t Approval A. 10. P r o j e c t n e g o t i a t i o n s t o o k p l a c e i n A p r i l 1978 and r e s u l t e d i n t h e f o l l o w i n g m o d i f i c a t i o n s : ( a ) Add t o t h e p r o j e c t a f e a s i b i l i t y s t u d y o f t h e Gbarnga t o Kolahun Road ; ( b ) Delete from t h e p r o j e c t t e c h n i c a l a s s i s t a n c e f o r t r a n s p o r t p l a n - n i n g ; ( c ) The c o n s u l t a n t I s f i n a l e s t i m a t e f o r r e c o n s t r u c t i o n works, based on t h e d e f l e c t i o n s u r v e y , showed a s u b s t a n t i a l i n c r e a s e i n t h e c i v i l works c o s t 3 3 / . The c o s t of t h e Paynesville-To t o t a Road i n c r e a s e d from $7.9 F i l l i o n ( w i t h $5.7 m i l l i o n i n f o r e i g h exchange c o s t s ) t o $10.7 m i l l i o n ( w i t h $7.7 f o r e i g n exchange c o s t s ) . Government a s k e d , and Bank management approved, t h a t t h e Bank loar: b e i n - c r e a s e d t o make up t h e d i f f e r e n c e . The p r o j e c t was approved by t h e Bank's E x e c u t i v e D i r e c t o r s i n May 1978. The s u b s e q u e n t news r e l - e a s e ( d a t e d May 22, 1978) a s s e r t s t h a t "most of t h e r o a d s are f o r opening up a r e a s o f r i c h a g r i c u l t u r a l potentl.al .34/ " - - 331 This c o n t r a d i c t s t h e s t a t e m e n t made o n e month earlier i n t h e Post- a p p r a i s a l Y i s s i o n Report t h a t c o s t s would be s u b s t a ~ l t i a l l y l e s s t h a n t h o s e o r i g i n a l l y e s t i m a t e d . - 341 The a s s e r t i o n is questionable because t h e primary f u n c t i o n of t h e Paynesville-Robertsfield Road was t o connect Monrovia t o t h e a i r p o r t , and because i t s r e c o n s t r u c t i o n was u r g e n t l y d e s i r e d by t h e Government which was p r e p a r i n g t o h o s t t h e 1979 CAU Conference.  ANNEX 3 Page 1 PROJECT PERFORMANCE AUDIT MEMORANDUM LIBERIA: FOURTH HIGHWAY PROJECT (LOAN 1573lCREDIT 1311-LBR) FOURTH HIGHWAY PROJECT: IMPLEMENTATION A . l l . This annex contains an a b s t r a c t of key documents i n t h e p r o j e c t f i l e and shows t h a t t h e p r o j e c t s t a r t e d slowly and was fraught with problems from t h e o u t s e t . A. 12. The f i r s t supervision r e p o r t (dated January 29, 1979) n o t e s t h a t p r o j e c t implementation was slower than a n t i c i p a t e d and t h a t no disbursements had s o f a r been made. - The mission r e p o r t states: "The d r a f t paper on t h e reorganization of t r a n s p o r t planning is expected t o b e f i n a l i z e d by March 1979, ." a f t e r t h e r e c e i p t of comments from t h e Government, UNDP and t h e Bank A. 13. Another Bank mission v i s i t e d Liberia from March 10-16, 1979, t o s u p e r v i s e t h e Third and Fourth P r o j e c t s and, a t t h e same t i m e , t o i d e n t i f y t h e F i f t h . Below a r e t h e main p o i n t s of t h e mission r e p o r t (dated May 7, 1979): (a) Highways I V - Implementation not s a t i s f a c t o r y . - Increase i n road construction c o s t s . A $1.7 m. overrun foreseen ( 6 %of t o t a l p r o j e c t c o s t s ) . - Technical a s s i s t a n c e f o r road maintenance n o t achieving t h e expect- ed r e s u l t s f o r more e f f i c i e n t operations. Annex 5 (para. 6) s t a t e s t h a t consultant personnel had n o t been deployed i n t h e d i s t r i c t o f f i c e s . Consultants complained of a r r e a r s i n l o c a l c o s t payments (over $300,000). - Disbursement estimates s l i p p i n g again. - Consultant charged with road supervision not performing well. (b) Feeder Roads Project - Government is t a k i n g s t e p s t o r e c r u i t two experts t o assist t h e development of t h e domestic construction industry. - UNDP-f inanced study f o r reorganization of t r a n s p o r t planning has been completed.  ANNEX 3 Page 2 A. 14. A Bank mission v i s i t e d Liberia from October 22-November 3, 1979 to. supervise t h e Third and Fourth Projects. Below a r e t h e main points of t h e supervision r e p o r t (dated December 21, 1979) : ( a ) Highways I V - Implementation of a l l components has s t a r t e d . - The contractor f o r Paynesville-Totota s t a r t e d t o mobilize i n mid- October . - The supervision contract was awarded t o t h e consultants whose performance had been judged unsatisfactory during t h e preparation phase . - Project c o s t s have increased by about $1.1 million (about 4% of t o t a l c o s t ) . - Government continuing t o have d i f f i c u l t i e s with t h e technical a s s i s t a n c e f o r road maintenance. Expected r e s u l t s i n terms of improved f i e l d operations a r e not forthcoming. - Local c o s t payments f o r consultants a r e still i n a r r e a r s f o r sev- e r a l months. - Revised schedule of disbursements shows f u r t h e r slippage. (b) Feeder Roads Project - Government has r e c r u i t e d a technical s p e c i a l i s t t o a s s i s t t h e domestic construction industry. Recruitment of t h e f i n a n c i a l adviser has been postponed. - The UNDP-financed study on t h e reorganization of transport planning and coordination has been completed. Arrangements for recruitment of technical assistance w i l l be made a f t e r t h e Government formally approves t h e reorganization plans. (C ) S u ~ e r v i s i o nR ~ Dto: ~Annex "There were some indications t h a t t h e Government may n o t wish t o proceed with t h e proposed reorganization because an expanded Bureau of Transport would r e q u i r e an additional outlay of funds t h a t t h e Government can ill afford under its present f i n a n c i a l d i f f i c u l t i e s . The Mission however suggested t h a t the Bank could consider additional f i n a n c i a l and technical a s s i s t a n c e for MCIT including incremental c o s t s (other than l o c a l s a l a r i e s ) a s p a r t of t h e proposed F i f t h Highways Project." A.15. A f u r t h e r Bank mission v i s i t e d Liberia from February 24-March 23, 1980 t o s u e r v i s e t h e Third and Fourth Projects and t o continue preparing t h e Fifth. ~ e y o va r e t h e main points of t h e mission r e p o r t (dated May 23, 1980) :  ANNEX 3 ( a ) Highways I V - A c o s t overrun of about $3.8 million (13% of t o t a l p r o j e c t c o s t ) which is expected t o increase f u r t h e r . - Annex 5 (para. 8): "There i s a c o s t overrun on v i r t u a l l y every component of t h e project." - S i g n i f i c a n t improvements i n road maintenance operations s i n c e November 1979. - Local c o s t payments s t i l l i n a r r e a r s . - Invoicing procedures slow. (b) Feeder Roads Project - Government rel-uctant t o implement recommendations of t h e UNDP- financed study on t h e reorganization of t r a n s p o r t planning. The stratagem of c r e a t i n g an ad-hoc committee i s no more than a delay- ing t a c t i c . - Construction Industry expert had not been paid and had t o r e s o r t t o s e l l i n g h i s personal a s s e t s f o r subsistence. Questionable a s t o whether he w i l l s t a y i n t h e course. A. 16. The next Bank mission v i s i t e d Liberia from December 2-18, 1980 t o supervise t h e t h r e e ongoing p r o j e c t s and t o continue preparing the Fifth. Below a r e t h e main points of t h e mission r e p o r t (dated January 6 , 1981) : ( a ) Highways I V- - Except f o r the f e a s i b i l i t y study of t h e Tapita-Zwedru road, a l l components a r e being implemented. - Reconstruction of the Paynesville road (Kuwait) completed within t h e a p p r a i s a l cost estimates. - Project c o s t overrun estimated a t $6.8 m i l l i o n (about 18% of t o t a l p r o j e c t c o s t ) - Mission requested MPW t o prepare proposals f o r reducing t h e scope of works on t h e Paynesville-Totota road. A mission ought t o v i s i t Liberia i n March 1981 t o d i s c u s s a reduced project scope and t h e p o s s i b i l i t y of supplementary cost financing t o complete the proj- e c t .  ANNEX 3 Page 4 Supervision Repor t - The Paynesville-Robertsfield road s u b s t a n t i a l l y completed within a p p r a i s a l estimates but t h e contractor submitted claims f o r about $ 2 million and a time extension of f i v e months. The consultants maintain t h a t t h e claims have no merit. - The Paynesville-Totota road is underway but plagued with technical and f i n a n c i a l problems. Staggering cost overrun. Therefore a r e - a p p r a i s a l of t h e p r o j e c t is warranted f o r supplementary financing. - The coup disrupted t h e improvement of maintenance e f f o r t s . MPW awash with p l a n t and vehicles but has no money t o operte them. MPW has asked t h e consultants t o c u t out four s t a f f . - MEW asked German t o withdraw its support of t h e Camp Mechlin ~raining Center. 3$/ - - MPW proposes t o reorganize t h e PPB and add coordination and t r a i n - ing functions t o its planning and programming r e s p o n s i b i l i t i e s . ( c ) Feeder Roads Project - The Construction Industry expert l e f t t h e country and did not come back. The coup did not help matters when s o l d i e r s commandeered h i s o f f i c i a l car. - MPW renewing e f f o r t s t o r e c r u i t both t h e f i n a n c i a l and t h e techni- c a l advisers . - Government taking no action t o implement t h e UNDP-financed study on t h e reorganization of transport planning and coordination. A. 17. A Bank mission v i s i t e d Liberia from February 11-17, 1981 f o r a limited supervision of the Third and Fourth Projects. Below a r e t h e main points of t h e mission r e p o r t (dated February 23, 1981): - "The current deteriorated s t a t e of Liberia's economy is adversely a f f e c t i n g a l l government and p r i v a t e operations, including t h e on- going Bank p r o j e c t s , and little improvement can be hoped f o r p r i o r t o the beginning of t h e next f i s c a l year i n July." - "The mission w i l l recommend t h e e f f i c i e n t curtailment of works on the Paynesville-Totota Road s o a s t o leave a usable highway t h a t hopefully w i l l l a s t u n t i l t h e a v a i l a b i l i t y of a d d i t i o n a l funds can allow completion of t h e p r o j e c t a s designed." - 35/ MPW made a l l e g a t i o n s of i r r e g u l a r i t i e s on t h e p a r t of t h e German techni- c a l a s s i s t a n c e s t a f f . The German a u t h o r i t i e s denied t h e a l l e g a t i o n s and withdrew a l l support t o t h e Camp Mechlin Training Center.  ANNEX 3 F i i g r - - "The mission querried the 'chattel mortage' advance made t o the contractor under the Third and Fourth Highway projects. In effect t h i s is a duplication of payment." "However, leaving principles aside, t h i s was the only way t o proceed." - "Performance of the'consultant has not been a l l t h a t is normally ." It expected from supervising consultants". would be hard "to rec- ommend t h e consultant for similar work - " A l l suppliers i n Liberia a r e reported t o be on a 'cash i n advance' position." - "Overall, the position with respect t o feeder road development is almost completely unsatisfactory but probably as good as can be expected given a rather demoralized MPW team and almost a t o t a l lack of l o c a l funds. Whether the situation w i l l improve with the new f i s c a l year is problematical. We can only continue t o be sup- por t i v e and give any reasonable proposal sympathetic consideration" A. 18. A Bank mission v i s i t e d Liberia from November 2-13, 1981 t o super- vise the Third and Fourth Projects. Below a r e the main points of the mission report (dated December 18, 1981): (a) Highways I V - Loan funds a r e practically exhausted while the main component (Paynesville-Totota) is only about 60%complete. - The revised t o t a l cost of USS23 million compares t o the $13.1 million appraisal estimate. - The Mission recommends the termination of the contract of t h e con- s u l t a n t s who have been supervising the road component because they have been less than satisfactory. A.19. A Bank mission v i s i t e d Liberia from 18-22 January 1982 t o supervise the three ongoing projects and t o review progress made on the preparation of the Fifth. Below a r e the main points of the mission report (dated February 18, 1982): - Some a c t i v i t y by Government on a l l project items. - Promissory notes have been or w i l l be issued t o cover contractor claims i n the Third Highway Project and for payment of outstanding contractor invoices for work of Highways IV as w e l l a s t o provide funds for completing the project. - Continued f r i c t i o n between Ministry of Planning and Ministry of Public Works. Planning considers that MPW has been less than dedi- cated i n maintaining proper financial control over its projects.  ANNEX 3 Page 6 A. 20. A Bank mission visited Liberia from March 15-April 2, 1982 t o supervise the three ongoing projects and t o preappraise the Fifth. Below a r e the main points of the mission report (dated April 26, 1982) which includes a copy of a l e t t e r sent by the Bank t o the Minister of Public Works: (a) Highways V: - A l e t t e r being prepared t o terminate the contact for the Paynesville-Totota road. - The supervising consultants have been asked t o prepare a termina- tion report. - Contractor claims not yet referred t o the consultant's review and recommendations. - The Loan w i l l be f u l l y disbursed shortly, ahead of the expected completion date. - Despite the November 1981 supervision mission's recommendation t o take immediate steps t o terminate or suspend the present contract for the Paynesville-Totota Road t o avoid further accumulation of contractor claims for standby time, the Government failed t o do so. Instead, the Government attempted, without success, t o arrange commercial financing t o complete outstanding works on the Kakata- Totota section under the existing contract. It is only now, after a l l e f f o r t s t o mobilize additional funding i n the short term have failed, t h a t the Government is preparing a contract termination l e t t e r . - A Kuwait Fund mission was scheduled t o arrive a t the end of March 1982 for the appraisal of the Ganta-Tapita road but was cancelled a t the last minute, reportedly because the Government had failed t o meet its debt service obligations. - Two of the four scholarship students have returned. The other two completed their studies i n January 1982 but have failed t o report back. (c) Feeder Roads Project: - Despite a long-standing agreement between the Government and the Bank on the need t o encourage and promote the development of the domestic construction industry, MPW has coneistently failed t o pur- sue the preparation of the Grand Bassa County road sections agreed t o be the subject of bidding by local contractors. - "Under normal circumstances the mission would not hesitate t o r e - commend that the Loan be cancelled i n view of the lack of support from MPW and the Government."  ANNEX 3 Page 7 (d) Supervision Report (paras. 9 f f ) - The mission was informed that the Head of S t a t e had signed a letter transferring a l l feeder road a c t i v i t y t o the MRD. MPW o f f i c i a l s acknowledged t h a t such a letter had been issued but said they had requested the Head of State t o reconsider. - "Nevertheless, it seems obvious t h a t unless MPW can show positive progress i n the very near future on the existing Feeder Roads Project, the various agricultural development projects w i l l seek other means of accomplishing t h e i r feeder road components. This would have serious implications f o r Liberia i n the proliferation of small equipment units, support f a c i l i t i e s , spare parts supply, and the e f f i c i e n t u t i l i z a t i o n of scarce operator and equipment main- tenance personnel. Furthermore, although the various agencies involved may be able t o construct the roads with r e l a t i v e efficien- cy the problem of future maintenance must still be addressed." ( e ) Excerpts from a letter to the Minister of Public Wroks Para 3(f) "The diversion of scarce financial, material and managerial resources t o non-programmed, mostly p o l i t i c a l l y oriented projects seriously d i s - r u p t s the e f f i c i e n t implementation of donor-assisted p r i o r i t y projects. Thie dramatically reduces the anticipated economic returns upon which the j u s t i f i c a t i o n of these development projects was based". Para 4: "The need for a well-planned and executed maintenance program is evident but until corrective action can be taken....any new project would only add t o the already large problems resulting from delayed exe- cution and cost overruns on existing projects." Para 12: "MPW1s current indebtedness for payments due primarily t o con- t r a c t o r s and consultants is reported t o be about $26 million equiva- lent. This amount is obviously beyond MPW1s capacity t o deal with and Government should i n i t i a t e a concerted e f f o r t to bring t h i s high- i n t e r e s t bearing debt under control." Para 13: "MPW should not be required under any circumstances t o divert manpower, equipment or funds t o projects for which no funds have been made available t o MPW through the usual budget channels. Furthermore, the diversion of resources from development projects should be stopped immediately and any diverted resources returned t o the appropriate proj- ect. The gwernment a s a whole should r e a l i z e t h a t such diversions a r e contrary t o the public i n t e r e s t as w e l l a s violations of the conditions under which aid money has been obtained." Paras 28-29: "The mission was q u i t e troubled on learning of a number of new capital investment proj e c t s under active consideration by the Government. The Bank has worked closely with the Government i n the pre- paration of the medium-term investment plan. h r i n g t h i s collaborative  ANNEX 3 Page 8 e f f o r t it was agreed by both p a r t i e s t h a t , given the extremely limited resources available for development purposes, these would be used for on-going projects and t h a t only the highest p r i o r i t y projects would be considered. In the roads sector, these p r i o r i t y projects were under- stood t o be the currently stagnant feeder roads program i n support of agricultural development and the proposed maintenance project with, l a t t e r l y , the addition of funding for completion of t h e Kakata-Totota road section. n u s , t h e discovery of new projects e i t h e r under active consideration or already agreed was of serious concern." A.21. On May 21, 1982, the Programs Department of the Western Africa Regional Office submitted t o the Bank's Senior Vice President a note e n t i t l e d Highways IV, Supplemental Financing r equesting Board approval for an extra USS2 million t o cover 95X of the costs of completing the engineerinn and con- - strutting the Nyaf o r l a Bridge, . with the understanding t h a t the African Development Bank would under take the financing of the remainder of the Paynesf ield-Totota Road. A. 22. A Bank mission v i s i t e d Liberia from July 26-30, 1982 t o supervise Highways I V and the Feeder Roads Project and t o prepare the Nyaforla bridge f o r supplementary financing and Highways V for appraisal. Below a r e the main points of the mission report (dated August ,l7, 1982): - Mission cleared w e l l i n advance with the MPW which gave assurances t h a t documentation previously promised i n connection with each of the above elements would be availabe on a r r i v a l of the mission. - None of the items were ready on a r r i v a l and substantial parts a r e still under preparation. - "MPEA and Finance have t o establish reasonable prospects for fund- ing MPW a c t i v i t i e s over t h e next 3-5 years. Planning basis a t present is obviously not i n keeping with the parlous s t a t e of the counrty's finances but without firm guidance on financial pros- ." pects, l i t t l e choice is l e f t t o the planners but t o play with inflated figures (a) Highways I V (Summary) : - Letters terminating the civil works and supervision contracts for the Paynesville' road works have been signed by the Minister of PW, the contractors and the consultant. However, f i n a l authentica- tion by the Ministry of Finance is still pending. (b) Feeder Roads Prod e c t (Summary) : - The Government feeder roads program is very much i n a s t a t e of dis- array. Except for the MPW feeder road work under the Feeder Roads Project, a l l other feeder road a c t i v i t i e s have recently been assigned t o the Ministry of Rural Development.  ANNEX 3 Page 9 A.23. A Bank mission v i s i t e d L i b e r i a from September 20-0ctober 7 , 1982 t o appraise Highways V and i n t h e course of its work noted t h e following ( i n i t s r e p o r t dated November 1, 1982) with r e s p e c t t o Highways I V and t h e Feeder Roads Project. (a) Highways I V - The primary condition f o r Board presentation of t h e Supplemental financing was submission t o t h e Bank of s a t i s f a c t o r y evidence t h a t agreement has been reached on t h e settlement of t h e claim on t h e Paynesville road, and on t h e schedule of r e l a t e d payments. The Government has agreed with t h e contractor on t h e amount of t h e claim and t h e settlement schedule is now under review by t h e Ministry of Finance. - Under t h e Third and Fourth Highway Projects, t h e Bank provided a s s i s t a n c e i n s e t t i n g up a Planning and Programming Bureau i n MPW t o f o s t e r a l o c a l road transport planning c a p a b i l i t y . However, due t o budgetary c o n s t r a i n t s ,t h e imminent departure of t h e e x p a t r i a t e c o n s u l t a n t , and t h e departure of two senior s t a f f members of t h e Bureau f o r extended s t u d i e s abroad, t h e Bureau's a c t i v i t i e s a r e about t o be s e r i o u s l y c u r t a i l e d . ( b ) Feeder Roads Projects - Under t h e Feeder Roads P r o j e c t , funds were provided f o r technical a s s i s t a n c e t o t h e MCIT t o begin implementation of recommendations f o r t r a n s p o r t coordination made i n a UNDP-f inanced study. Despite a number of discussions with MCIT, t h i s mission and previous ones have been unable t o reach any agreement on how t h e technical a s s i s t a n c e funds should be applied. The matter was discussed with t h e Minister of Planning and Economic Affairs who expressed consider a b l e i n t e r e s t i n having h i s Ministry made responsible f o r t h e assignment. The decision on whether r e s p o n s i b i l i t y f o r t h e work should be l e f t with MCIT or t r a n s f e r r e d t o MPEA would have t o . be resolved wlthin t h e Government before any f i n a l a c t i o n can be taken A. 24. A Bank mission v i s i t e d Liberia from December 6-10, 1982 t o supervise Highways I V and V and t h e Feeder Road Project. Below a r e t h e main points of t h e mission r e p o r t (dated December 20, 1982): (a) Highways I V - The Bank was advised e a r l i e r t h a t t h e c o n t r a c t o r ' s claims with r e s p e c t t o t h e Paynesville-Totota road construction c o n t r a c t had been agreed a s t o amount and a l s o t h a t a payment schedule had been agreed. The mission learned t h a t although t h e amount of t h e claim has been agreed, t h e settlement schedule is still under discussion.  ANNEX 3 --- Page 10 (b) Feeder Roads Project - No progress regarding transfer of responsibility from MCIT t o MPEA for strengthening transport planning. A. 25. Beginning i n November 1983, the Kuwait Fund and the Bank repeatedly requested t h a t Government makes loan repayments on time. h April 1984, the Kuwait Fund requested the Bank's assistance i n persuading the Government t o settle its overdue payments. A. 26. The l a s t i t e mi n the Project 'File (dated October 11, 1984) is a notification from the Bank t o the Government on suspension of disbursements.  REPUBLIC OF LIBERIA FOURTH HIGHWAY PROJECT (Ln. 1573-LBRlCr.1311-LBR) PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 The Bank's initial involvement in Liberia's highway sub- sector, the First Highway Project (Ln 368-LBR), provided financing for the reconstruction of two roads and equipment for road maintenance. The Second and Third Highway Projects (Ln 907/Cr 395-LBR and Ln 1156-LBR, respectively) while continuing to provide financial assistance for road construction, gave increasing emphasis to the need for improved maintenance. Beginning with the Second Highway Project, substantial funding was provided for technical assistance to MPW for the reorganization and improvement of MPW's maintenance capability. This technical assistance was continued through the Third and Fourth Highway Projects and the recently approved Fifth Highway Project concentrates almost exclusively on maintenance. 1.02 Although delays in execution were experienced in the first three highway projects assisted by the Bank group and the quality of paving on the ~a~nesville-~obertsfield road in the First Highway Project was not fully up to epecifiaations, all three projects were judged reasonably successful. The capacity of.theMinistry of Public Works to plan and manage highway construction and maintenance was enhanced through technical assistance and fellowships provided for key ministry personnel. This was the background to the Fourth Highway Project. 1.03 This report is based on information contained in the appraisal and President's reports for the Third and Fourth Highway Projects, supervision reports, a review of Bank files, draft PCR prepared by Government, discussions with Bank and Government staff concerned with the project, and a field review in May 1984. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 2.Ol Components of the project were identified and developed during the course of the Second and Third Highway Projects within the context of the Government's First Five-Year Road Maintenance and Development Program. Feasibility studies and odetailed engineering for the Paynesville-Totota and Paynesville-Robertsfield roads were carried out in the Second Highway Project. Pre-investment studies for the Ganta- ~ a ~ p i tand Ganta-Saniquelle roads were done under the Third Highway a Project. Technical assistance for highway maintenance, financed for a four-year period under the Second Highway Project, received additional financing under the Fourth Highway Project. The Fifth Highway Project  (Cr 1449-LBR, USS11.4 millidn, March 1984) is based in part on the technical assistance consultant's recommendations. 2.02 Appraisal of the Fourth Highway Project took place in June/July 1977. At the time it was estimated that implementation would begin in July 1978 and continue through June 1982. However, the Issues Memorandum noted that estimated foreign costs of the project had increased from USS15.5 million in the March 1977 Project Brief to USS23.95 million. The increase stemmed primarily from increased costs identified during preparation of detailed engineering (based on complete reconstruction of two roads) of the road reconstruction component. 2.03 During preparation, the Bank had suggested to Government that total reconstruction of the Paynesville-Robertsfield and Paynesville-Totota roads might not be necessary, but that the decision should be based on detailed pavement evaluation studies. Faced with major cost increases, the MPW agreed to consider a program of partial reconstruction, patching and overlay. Accordingly, MPW commissioned the original design consultant,to carry out a deflection survey. Administrative delays kept the consultant from initiating the work before October 1977 and the final results were not received in the Bank until April 1978. A post-appraisal mission in March 1978 reviewed the preliminary findings of the consultant. With the submission of the final construction cost estimates for the two roads, negotiations were held in April 1978. On the basis of the pavement evaluation studies, it was decided to fully reconstruct the Paynesville-Robertsfield road but carry out only selective rehabilitation of the Paynesville-Totota road. 2.04 Although the modified reconstruction program reduced the estimated project costs, there was still a substantial gap in financing requirements. The Bank assisted the Government in obtaining co-financing from the Kuwait Fund amounting to USS7.4 million and the Bank was able to adjust its lending program to provide for a loan of USS13.8 million (USS3.8 over the initial proposal). The total, USS21.2 million, was considered sufficient to cover the estimated off-shore cost requirements, including contingencies. 2.05 Loan 1 5 7 4 - ~ ~ was~approved on May 18, 1978, in the amount of USS13.8 million. It was signed on June 2, 1978, and became effective on September 11, 1978. Project Objectives and Description 2.06 The three principal objectives of the Fourth Highway Project were: a) to continue the development of Liberia's main highway system; b) to continue the development of local capacity to plan and manage highway maintenance; and c) to improve the Government's capacity for highway planning. 2.07 As appraised the Project provided for: a) reconstruction and improvement of two sections of major highways (99 mi); b) detailed engineering of two road sections (90 mi); c) feasibility study of a  further road section (152 mi); d) consultancy services for planning a-d execution of road maintenance; and e) technical assistance to the Ministry of Public Works in highway planning and overseas fellowships in the same field. 111. PROJECT IMPLEMENTATION Civil Works 3.01 Paynesville-Robertsfield road (28 mi). This road was first reconstructed under the First Highway Project with work being completed in mid-1969. Poor soil conditions and lack of experience at the time in asphalt road construction in Liberia contributed to early pavement failures. 3.02 Under the Fourth Highway Project the Kuwait Fund provided co-financing for the reconstruction of the road. After reviewing the findings of the pavement evaluation the Fund agreed with MPW to proceed with full construction of the total length. The possibility of selective reconstruction was raised again during the construction period but on the consultant's recommendation, MPW authorized the continuance of the full reconstruction program. 3.03 The consultant had contract documents based on full reconstruction already prepared and it was possible to let the contract for this work in November 1978. The Government asked that priority be given to the first half of the road so that it would be in service in time for the 3AU conference being hosted by Liberia in July 1979. Work proceeded without undue delay and a substantial completion certificate was issued on August 29, 1980. Although the certificate accepted the work as satisfactory with only minor corrective action required, Bank supervision missions noted that some of the earlier (pre-OAU) work had developed signs of pavement distress which was attributed at least in part to inadequate quality control during construction. 3.04 The original contract price for the work was US$8,358,227. Minor work modifications and contract escalation clauses increased the contract value to US$9,824,058 and settlement of contractor claims made the final total US$10,937,726. 3.05 Paynesville-Totota road (71 mi). As with the Paynesville- Robertsfield road, the consultant had prepared con'ract documents for this section on the basis of reconstruction of the full length. As the pavement evaluation indicated that only about 25% of the length required this approach, MPW autho-ized the consultant to amend the contract documents so as to require patching and overlay of about 75% of the length and full reconstruction of the remainder. The revised draft ' bidding documents were approved in mid-December 1978. Ten contractors were prequalified and bids were received on February 8, 1979.  3.06 MPW accepted the consultant's recommendation of award to the low bidder and the Bank concurred on April 12, 1979 although the low bid was US$935,000 over the appraisal estimate of US$13.05 million (including contingencies). The Bank estimated that taking into account price escalation this would result in an eventual cost of between USS15.0 and USS16.0 million and suggested that the Government should make budgetary provisions to cover the overrun. The eventual negotiated contract price was USS13.6 million and the contract was signed in July 1979. Contractor mobilization began in October and work started officially on November 1, 1979, two years after the pavement evaluation survey was completed. 3.07 This two year time lapse was particularly unfortunate. A selective pavement rehabilitation program should start as soon after the evaluation study as possible if it is to be cost effective. In the case of the Paynesville-Totota road the effects of two rainy seasons between the evaluation and start of construction caused increased deterioration with resultant extra work not foreseen at the time the modified designs and contract documents were prepared. The consultant also failed to take into account the amount of asphalt that would be required as a levelling course prior to applying final surfacing over the patch and overlay sections. 3.08 Furthermore, it became clear during the initial construction season that the bill of quantities on which the engineer's estimate and the contract price were based did not include major contract quantities of asphalt, shoulder widening and side drains. The contract drawings and Instructions to Bidders provided for this work but, in adjusting the Bill of Quantities from that required for full reconstruction to selective rehabilitation, these items were overlooked. These factors were compounded during the first construction season by major increases in the costs of fuel, bitumen and labor, all of which were subject to Price Variation under the contract. By December 1980, a Bank supervision mission estimated that the final contract cost would be over US$18.0 million, a USS5.0 million increase over the appraisal estimate. Cost Estimates and Actual Costs 3.09 Table 1 gives details of the estimates and actual costs of the various components and identifies the executing entities responsible for each component. 3.10 The Government and the Bank undertook a series of reviews and discussions concerning alternate approaches to resolving the problem. A February 1981 mission noted that unless additional funds could be made available the works should be terminated as soon as possible to avoid incurring contractor stand-by charges for which funds were not available in the loan or from the Government. The Government was already faced with a funding gap of US$10 - 15 million on other MPW projects (MPW report 11 ~O~/GOL/FYRMAD/~~,August 28, 1981).  3.11 The construction contract was terminated on June 7, 1982. At this time some 40 mi of the original scope of work (over 71 mi) had been rehabilitated leaving about 31 mi and the reconstruction of the Nyaforla bridge without implementation. Total cost of the contract was US$16,550,010 including settlement of contractor's claim of US$1,502,200. Outstanding at the time of cancellation were payments in settlement of the claim and the retention money. As the Government was not in a position to meet these payments it agreed with the contractor to issue promissory notes'; four each in the amount of ~~$375,550.'05in settlement of the claim, and four each in the amount of US$288,315.02 to repay the retention money. Due dates of the promissory notes ran from 1 August 15, 1983 through May 15, 1984. However, because of severe budgetary constraints, Government has not been able to honor the last three notes and as a result about USS1.1 million is still owed to the contractor. 3.12 The Nyaforla bridge was a key element on the Paynesville- Totota road and due to abutment settlement of the old bridge a new structure was required. The contractor began demolishing the original bridge in October 1980 in preparation for reconstruction. Thereafter, delays ensued while contractor-proposed alternate construction methods and siting were reviewed by the consultant and MPW. By the time of MPW approval of the final construction plans, funds were no longer available under the original project. An existing low-level bridge was kept in service but the Government was seriously concerned that a failure of this bridge due to flooding would cut off the hinterland from the capital, Monrovia. The Government was unable to provide funds for the bridge work and approached IDA for supplemental financing. 3.13 After lengthy discussions IDA agreed, in May 1982, to provide additional funds to cover the reconstruction of the bridge and the updating of engineering on the remaining 32 mi of road. At the same time the Bank Group assisted the Government in its discussions with the AfDB leading to the AfDB's commitment to finance the remaining road reconstruction and supervision thereof. Some delays were experienced while the Government prepared formal documentation in support of the supplemental financing request but eventually USS1.8 million (SDR 1.7 million) in supplemental financing was approved under Cr 1311-LBR, which became effective on January 31, 1984. 3.14 While supplemental financing was being processed MPW agreed, with IDA'S concurrence, on a lump sum contract for the bridge reconstruction with the original contractor. Reconstruction began in February 1983 and a substantial completion certificate was issued on August 11, 1983. The work was completed within the original contract price of US$1,181,118. 3.15 AfDB and the Bank Group required the consultant for the engineering update of the remaining road section (Kakata-Totota) to be selected through normal short-listing procedures. The chosen consultant subcontracted the soils and survey work to a Liberian firm. The consulting assignment was completed in January 1984 with the submission  of the construction bid evaluation report. The recommended contractor's bid was ~SS10.9 million (Engineer's estimate -USS19.6 million). Construction Supervision 3.16 The construction supervision contract for the Paynesville- Robertsfield road was completed with the submission of the consultant's report of substantial completion of construction. The supervision contract for the Paynesville-Totota road was terminated at the time of cancellation of the construction contract. The consultant prepared a construction contract termination report and assisted MPW in the review of the contractor's claim. 3.17 Supervision of the Nyaforla bridge reconstruction financed under Cr 1311-LBR was done by a joint venture between the original supervision consultant and a second firm (primarily to ensure the presence of a well qualified bridge engineer). The joint venture consultants reviewed the bridge designs and the consultant's assignment was satisfactorily completed with the submission of the substantial completion report in August 1983. Supervision costs of US$202,406 came to about 17X of the bridge construction costs. Detailed Engineering 3.18 Ganta-Sanniquellie & Ganta-Tappita roads. The consultants began work in November 1979. A draft final report was submitted in November 1980 but final .materialon soil, materials and detailed bridge survey was not available until October 1981. Detailed engineering was based on feasibility studies carried out by consultants under the Third Highway Project. Construction of these roads was originally envisaged under the Fifth Highway Project but were subsequently dropped due to funding constraints. Feasibility Study 3.19 The original project included a feasibility study of the Gbarnga-Voinjama-Kolahun road. Subsequent to appraisal the Government entered into an agreement with the Japanese International Cooperation Agency (JICA) for this work. At the Government's request the project funds allotted for this study were assigned to a feasibility study of the Tappita-Zwedru road (71 mi). Although consultant proposals for this study were received, cost overruns in other project components caused the study to be dropped from the project. Technical Assistance for Road Maintenance 3.20 The Second Highway Project financed four years of technical assistance by a consultant team to assist MPW in reorganizing its maintenance activities. This technical assistance was extended for a further three years through July 1981 under the Fourth Highway Project.  In December 1980 the consultant's terms of reference were modified to include preparation of a follow-up five-year maintenance program to be funded under the Fifth Highway Project. 3.21 During the first four years the consultant fielded a substantial team of on-the-job road maintenance and equipment maintenance personnel, administrators and procurement/warehousing specialists. In the succeeding years the number of consultant staff was substantially reduced as a cost-saving measure. 3.22 Only marginal improvement in the maintenance of the highway system came about through the technical assistance. MPW was unable to assign sufficient qualified counterpart personnel to the consultant team so as to obtain maximum benefit from the team members' experience, and reduced maintenance funding following the severe fiscal crisis that developed in 1980 were the primary reasons for the lack of lasting improvement in MPW's maintenance competence. Nevertheless, much of the training material as well as the on-site guidance gave MPW personnel an insight into the need for, and the operational necessities of, adequate road maintenance. 3.23 The consultant's voluminous draft final report covering recommendations for the proposed Fifth Highway Project was a compilation of essential data and specific recommendations for improving maintenance operations. The recommendations were based on the experience of the consultant during the initial phases of its assignment and were therefore particularly applicable to Liberia's road maintenance requirements. The recommended program was somewhat unrealistic in magnitude but the supporting data proved helpful in the eventual preparation of the Fifth Highway Project. Technical Assistance to MPW's Planning and Programming Bureau (PPB) 3.24 Under the Third Highway Project two technical assistance positions were financed to provide a qualified Transport Economist and a Transport Engineer to work with PPB. Only the Transport Economist was engaged under the Third Highway Project but his services were extended under the Fourth Highway Project. Under this Project, the second position, the Transport Engineer, was filled from December 1979 through December 1982. The work by the two individuals was of great assistance in the development of MPW's Planning and Programming Bureau. 3.25 This component also provided for foreign study of four Liberian students. One completed his work on a Master's degree in Transportation Engineering (started under the Third Highway Project) and is now assigned as Chief Engineer. A second took advanced studies but did not complete the work for a degree and has returned to the Ministry. Two others, also pursuing advanced studies outside of Liberia, have not returned to Liberia.  Program Schedule 3.26 As explained above, of the two civil works items, one, the Paynesville-Robertsfield road, was finished in mid-1980 as foreseen in the appraisal report. Construction of 40 mi of the second road, Paynesville-Totota, was terminated in mid-1982; it is now estimated that, as an AfDB-financed project, the final 31 mi could be completed by the end of calendar 1985 (at appraisal it was estimated that this road would be completed by mid-1981). Meanwhile, with supplemental financing from IDA, the Nyaforla bridge, in the second section, has been reconstructed. 3.27 Of the other project components the substituted Tapitta- Zwedru road feasibility study was dropped for lack of funds; the technical assistance to the Planning and Programming Bureau was carried on beyond the time originally foreseen with beneficial results; of the four fellowships, only one was totally successful and two of the sponsored students have not returned to Liberia; and the technical assistance for maintenance completed its contract period on schedule although the Draft report for the proposed Fifth Highway Project was never issued in final form due to lack of funds and time. IV. ECONOMIC REEVALUATION 4.01 The economic return of the civil works components of the project were recalculated using the same methodology as at appraisal but with actual and reestimated costs, revised traffic data and updated vehicle operating costs. Costs and benefits were expressed in 1981 prices. The recalculated rates of return for the civil works items were much lower than expected at appraisal; increased construction costs and substantially lower traffic than anticipated were only partially offset by higher unit vehicle operating costs savings. The recalculated rate of return for the improvement of the Paynesville-Totota road was estimated at 14% (20% at appraisal)'"and for the Paynesville-Robertsfield road at 16% (22% at apprdisal), making the investments still justified. Paynesville-Totota Road 4.02 Due to delays in implementation, underestimation of original quantities, high price escalation and faster pavement deterioration of the existing road than anticipated, construction costs turned out to be about twice those at appraisal. Under the project only the first section of about 40 mi between Paynesville and Kakata and the reconstruction of the Nyaforla Bridge were completed. The remaining road works on the section between Kakata and Totota (31 mi) are currently ongoing under a separate project with AfDB financing and are expected to be completed by the end of 1985. The economic rate of return was recalculated for each section separately.  4.03 Traffic on the Paynesville-Kakata section declined by about 7.7% per annum between 1977 and 1981 as opposed t o a projected growth r a t e a t appraisal of 6.5% per annum. This development can be explained by the economic downturn i n Liberia, rapid increases i n f u e l costs, t r a v e l r e s t r i c t i o n s imposed a f t e r the change i n Government i n 1980 and periodic shortages of fuel. I n view of the continuing economic recession, t r a f f i c has been assumed t o remain a t its 1981 level u n t i l 1985 and t o resume growth a t 5% per annum thereafter. On the basis of the new t r a f f i c data and other revised inputs the economic return on the Paynesville-Kakata section was reestimated at 15% (Table 2). 4.04 For the Kakata-Totota section t r a f f i c counts carried out i n 1981 and 1983 also show that t r a f f i c development f e l l short of appraisal expectations; between 1977 and 1983 t r a f f i c grew only a t the r a t e of 0.8% per annum compared t o 6.5% anticipated a t appraisal. Revised t r a f f i c forecast assume zero growth between 1983-85 and 5% thereafter. For the purpose of recalculating the r a t e of return the cost estimate f o r the section was based on the recently awarded contracts f o r the c i v i l works and supervision, and the actual costs of the reconstruction of the Nyaforla Bridge located on t h i s section. The estimated r a t e of return is 13% (Table 3). This should be considered a conservative estimate a s the appraisal assumption that f u l l reconstruction of t h i s section would only be necessary by 1989 proved rather optimistic given the serious pavement f a i l u r e s that developed over the past few years. The reestimated r a t e of return f o r the Paynesville-Totota road calculated a s a weighted average of the Paynesville-Kakata and Kakata-Totota sections is 14%, compared with 20% a t appraisal. Paynesville-Robertsfield Road 4.05 The cost of reconstructing the Paynesville-Robertsfield road increased by about 14% r e l a t i v e t o the appraisal estimate. Traffic declined by 9% per annum between 1977 and 1981 a s opposed t o the forecast growth r a t e of 6.5% per annum a t appraisal. For the reevaluation t r a f f i c was assumed t o remain constant between 1981 and 1985, and grow by 5%per annum thereafter. The recalculated r a t e of return is 16% compared t o 22% a t appraisal (Table 4). . V INSTITUTIONAL PERFORMANCE 5-01 A t project appraisal, MPW's senior management had been s t a b l e over an extended period. Middle level managers were reasonably adequate and performance on Bank projects up t o that time was considered generally satisfactory. Unfortunately the p o l i t i c a l changes i n April 1980 brought about numerous changes i n MPW's management. During the project execution period four different ministers of diverse backgrounds were i n o f f i c e and there were similar turnovers i n the middle and lower management levels. Coming a t a time of deteriorating economic conditions f o r the country a s a whole, MPW's management problems were considerable.  5.02 Despite this, MPW's management team contrived to keep the project - and other ministry responsibilities - in motion. The team in place at the end of the pro ect had gained experience for a reasonable 1 period and although MPW continues to be weak in the middle levels it should, with competent technical assistance, be able to gradually increase its efficiency from this point onward barring further political or economic deterioration in the country. 5.03 MPW's internal problems were compounded during much of the project period by friction and poor communications between MPW and the Ministries of Finance and of Planning and Economic Affairs. The present Minister of Public Works has, however, moved to overcome this problem and over the past year has enjoyed better support from the two other ministries. VI. BANK PERFORMANCE 6.01 The Bank team responsible for the project suffered from similar problems as MPW in that there were a number of changes in staff responsible for the project. During preparation, appraisal and execution, eight different Bank engineers and six transport economists were involved. There were also two periods of up to nine months each without Bank field supervision. Given the problem situation recognized from appraisal onward, more intensive supervision by the Bank might have helped in identifying the problem source sooner and taking corrective action either to curtail the project or obtain additional funding. 6.02 On the other hand, the Bank's willingness to provide supplemental financing certainly salvaged a project situation which otherwise would have hampered Liberia's development and adversely affected country/Bank relations for some time to come. VII. CONSULTANTS PERFORMANCE 7.01 Road Component. The same consultant group was responsible for the detailed engineering, subsequent pavement evaluation and supervision of consiruction-bf the two road sections. The original detailed engineering, based on full reconstruction, was relatively straightforward but the initial economic analysis was considered somewhat inadequate and was reworked with Bank assistance. The pavement evaluation was efficiently carried out. Supervision of the Paynesville- Robertsfield road was subject to some criticism in the early stages but improved as the project progressed. 7.02 The specifications and contract documents for the Paynesville-Totota road, as revised by the consultants in the light of the pavement evaluation study, proved faulty. According to the consultant's Final Report for this road the specifications and contract  documents underwent several amendments as a result of the change from total reconstruction to the selective rehabilitation indicated by the pavement evaluation study. The report states that "Though these modifications were incorporated in the contract drawings and in the Instructions to Bidders, the figures for these items in the Bill of Quantities were inadvertently left out on the bases of the Benkelman Beam Recommendations. Thus, whereas the Scope of Works in the Instruction to Bidders was based on the modified recommendations of the Report, the accompanying Bill of Quantities was based on the limited scope of works in the initial recommendations of the Benkelman Beam Study." Although there were other contributing factors to the formidable cost overrun it is evident that the difference between actual work required and that shown in the Bill of Quantities was a major reason for the difference between the actual costs and the engineer's estimate as well as the initial construction contract price. 7.02 The consensus derived from supervision reports and discussion with Bank staff involved with the project is that the consultant's performance was below normal standards. 7.04 Road Maintenance. The consultant team for this component underwent a number of changes during the contract period. Overall, the team made substantial contributions to the improved organization and planning of road maintenance in Liberia. Unfortunately a substantial part of the consultant's direct technical assistance effort was ineffective because of MPW's inability to provide adequate numbers of qualified counterpart personnel to work with the consultants. Also, during much of the period there was a continuing decline in the funding of road maintenance. This combination caused.thelasting impact of the technical assistance to be rather small. 7.05 The consultant's draft report for the proposed Fifth Highway Project (although rather poorly organized) provided a wealth of data and manual-type instructions for road maintenance activities. The material was useful during the preparation period for the Fifth Highway Project and much of it should be adaptable to the work under the new Project. 7,.06 Technical Assistance - Planning and Programming (PPB). The Transport Economist and the Transportation Engineer provided under this component furnished excellent assistance to the Ministry in establishing a firm base for the Planning and Programming Bureau. Unfortunately, insufficient funding and a shortage of qualified counterpart personnel during the early part of the assistance period prevented the assistance from being as productive as had been hoped at appraisal. Nevertheless, the investment was well worthwhile.  VIII. CONCLUSIONS 8 .O1 The project,wasa logical step in the sequence of Bank assistance to Liberia's highway sector. The components were in keeping with Liberia's Five Year Road Maintenance and Development Program and were selected and justified during earlier Bank-assisted projects. 8.02 The MPW's past record on project execution shows consistent overruns in both costs and time. When major cost increases began to develop during and after appraisal, the Government and the Bank should have been more cautious,inproceeding with the construction components, particularly when implementation delays developed with the,,,Paynesville- Totota road. 8.03 With hindsight it is clear that the original terms of reference for the design consultant should have specifically required a pavement evaluation study. Where rehabilitation of an existing road section is contemplated with only minimum realignment, it is normally assumed that a pavement originally constructed to reasonable standards should be susceptible to selective rehabilitation which can be specified on the basis of pavement evaluation procedures such as the Benkelman Beam method used on the two project road sections. Had the pavement evaluation been carried out as part of the original design process prior to appraisal, the judgment factors concerning the extent of full reconstruction required could have been analyzed before or at appraisal and decisions taken without the pressure of impending negotiations. 8.04 The decision to proceed with full reconstruction on the Robertsfield road was probably correct as the pavement evaluation confirmed that 70% of the road required total reconstruction. The decision to carry out selective rehabilitation on the Paynesville-Totota section was in keeping with the evaluation survey which indicated that less than 25% of the road required reconstruction and that major savings should result from a selective operation. 8.05 Although the respective decisions were correct based on information available at the time, more attention should have been given to the ability of the consultant and MPW to expeditiously and competently manage the Paynesville-Totota rehabilitation work. The early appearance of major cost overruns should have triggered a detailed review by the Bank and MPW of the underlying causes. If the faulty Bill of Quantities (the major culprit) had been detected earlier, at least the subsequent demolition of the Nyaforla Bridge and the abandonment of uncompleted road works could have been avoided and the reconstruction work closed out earlier and in an orderly manner. It should be noted that no small part of the contractor's final claims was based on charges for stand-by time which could have been avoided by early termination of the work due to lack of funds. 8.06 Bank-assisted projects in Liberia have traditionally provided for overseas fellowships. The idea is commendable but results  have been less than desirable considering the cost involved and the need for well trained professionals in MPW. Better selection criteria should be established; more attention should be given to the preparation of detailed curricula and school selection after candidate selection but before departure; more thorough review should be provided by the Bank of the proposed curricula (preferably at appraisal) and the candidate's qualifications; better administration of the fellowships (payment of fees, allowances, etc.) is advisable; and more regular monitoring of student progress through reports (at least quarterly) from the student and the educational institution is required. 8.07 After a protracted period of frequent changes, with ensuing shortages of management and qualified technical personnel, and with internal conflict and friction between MPW and the other two ministries most concerned with MPW's operations -- the Ministry of Finance and the Ministry of Planning and Economic Affairs -- the MPW is now in a position to develop into a workable organization. The current senior management team appears stabilized and staffed with limited numbers of technically qualified personnel who are gradually gaining much needed experience on the job. The Bank should be pupportive of the effort the present team is making but both the Bank and MPW should recognize that the need for technical assistance in planning and programming, equipment management and road maintenance will continue for some time. The Bank should also use its good offices to encourage the continuance of the present generally cooperative attitude being developed between the three ministries. 8.08 Bank supervision missions totalled 14 over a period of five years with eight engineers and six economists involved at various times. During the first three years of the project these missions were also responsible for supervision of other ongoing projects such as the Feeder Roads and the Third Highway Project. More regularly scheduled missions and fewer changes of supervising personnel would have been advantageous, particularly when the Fourth Highway Project developed serious problems in its early stages. 8.09 Until MPW management is solidly on its feet again the Bank should make every effort to supervise the Fifth Highway Project at regular and more frequent intervals. For the project to be successful it would be imperative that Bank staff maintain an active and continuous dialogue with Government to ensure that road maintenance is accorded the highest priority in terms of manpower and financial resource allocations.  00 ".? n 0.r n " 0 :: n - ?as, on- i %  -------------------------- PROJECT COMPLETION REPORT LIBERIA - FOURTH HIGHWAY PROJECT (LN.1573/CR.1311-LB~) Economic Reevaluation of Pazesville-Kakata Road (40 miles) (US$'000, net of taxes at 1981 prices) VOC Net Benefits -------------- ------ Year Construction Costs Maintenance Savins - 5' Benefits 31 Stream Economic Return: 15% -11 Actual construction costs, including supervision; savings from deferred full reconstruction in 1985186 (28 mi.) and 1989 (12 mi.) at US$500,000/mile. - 2/ In "without project" case annual repairs estimated at 5% of road surface at US$12 per sq.yd. After rehabilitation routine maintenance expenditures estimated at US$l,OOO/miLe plus resurfacing every 7 years at US$25,000/mile. - 31 Savings from normal traffic only. Savings extend from 1981-86 for 28 mi. and from 1981-89 for 12 mi. Road surface condition expected to develop from 60% of length poor and 40% fair in 1981 to 100% poor in 1988 (see also Notes). Notes 1. Traffic Growth Rate Composition (%) ear ED (% p.a.) - Pass.~ar/Tag Pick-up/Minibus Truck 1977 2,560 60 1981 1,860 )-7'7 57 1981-85 0 57 after 1985 5 57 ---- Source: Planning and Programming Bureau, Ministry of Public Works. 2. Vehicle Operating Costs (USc/~ni.~net of taxes a-t 1981 prices) 1981 Road Condition--- Vehicle Type ------ -- Traffic Share G o d Fair Poor Passenger Car .2598 26.83 30.37 35.47 Taxi .3163 23.52 25.41 28.22 Pick-up/Minibus .2992 43.23 47.47 53.43 Truck (8 tons) .I247 71.l8 76.38 84.38 Weighted Average 36.22 39.65 44.65 Source: Planning and Programming Bureau, Ministry of Publtc Works  ------- TABLE 3 LIBERIA - FOURTH HIGHWAY PROJECT (~N.l573/C~.1311-~BR) Economic Reevaluation of Kakata Totota Road (31.6 miles) - (US$'000, net of taxes at 1981 prices) Net Benefits - Year Construction Costs l1 - -- Maintenance Savings 2f Benefits 31 Yo' -- Stream Economic Return: 13% -1/ Construction costs of road works based on recently awarded contract plus 10% contingencies and supervision; includes actual reconstruction costs of Nyaforla Bridge as well as actual costs of engineering update of road works. Savings from deferred full reconstruction in 1985 (LO mi.) and 1989 (21.6 mi.) at US$500,000/mile. - 2/ In "without project" case annual repairs estimated at 5% of road surface at US$12 per sq.yd. After rehabilitation routine maintenance expenditures estimated at U~$1,000/mileplus resurfacing every 7 years at US$25,000/mile. - 3/ Savings From normal traffic only. Savings extend from 1985189 depending on section. Road surface condition expected to develop from 90% of length poor and 10% fair In 1985 to 100% poor thereafter. (see also Notes). -- Notes 1. Traffic Growth Rate C -o m ~tion (%) i Year AiAD ( % p.a.) -----.Car/Taxi Pass --- Pick-up/klinibus ------ Truck 1977 1,051 60 1983 1,100 ) 0'8 41 1983-85 0 41 after 1985 5 41 Source: Planning and Programming Bureau, Ministry of Public Works and Consultants. 2. Vehiclz-operating Costs (USCfmi., net of taxes at 1981 prices) 1983 -- Road Condition Vehicle-- -- -------- Traffic Share Good --Fair --Poor Passenger Car .lo16 26.83 30.37 35.47 Taxi .3093 23.52 25.41 28.22 Pick-upfMinibus .5077 42.23 47.47 53.43 Truck (8 tons) .0816 71.18 76.38 84.38 Weighted Average 37.75 41.27 46.34 ~ o ~ - r cPlanning and Programming Bureau, Ministry of Public Works $ ~  --- TABLE 4 --- PROJECT COWLETION REPORT LIBERIA - FOURTH HIGHWAY PROJECT (L~.1573/CR.l311-~B~) Economic Reevaluation of Payneeville-Robertsfield Road (28 miles) (US$'000, net oE taxes at 1981 prices) VOC Net Benefits - Year Construction Costs - Maintenance Savings - Benefits 2/ 3' Stream 1978 79 80 81 82 83 84 85-86 87 88-90 91 92-93 94 95 Economic Return: 16% - 1/ Actual construction costs, including supervision; savings from deferred full reconstruction in 1983/84 (28 mi.) at US$500,000/mile. - In "without project" case annual repairs estimated at 5% of road surface -- 2/ at USS12 per sq.yd. After rehabilitation routine maintenance expenditures estimated at US$1,000/mile plus resurfacing every 7 years at US$25,000/mile. - 3/ Savings from normal traffic only, extending through 1983. Road condition rated as poor (see also Notes). Notes 1. Traffic -- - - Growth Rate Composition (%) -- Year (% p.a.1 pass .car/& Pick-up/Minibus Truck 1977 2,541 70.8 1981 1,739 )-9'0 69.3 1981-85 0 69.3 after 1985 5 69.3 Source: Planning and Programming Bureau, Ministry of Public Works. 2. Vehicle Operating Costs (USC/mi., net of taxes at 1981 prices) 1981 - Road Condition- Vehicle Typz - - - Traffic Share Good -- Fair Poor Passenger Car .3461 26.83 30.37 35.47 Taxi ,3472 23.52 25 -41 28.22 Pick-up/Minibus .2122 42.23 47.47 53.43 Truck (8 tons) .0945 71.18 76.38 84.38 Weighted Average 33.35 36.62 41.39 -- -- Source: Planning and Programming Bureau, Ministry of Public Works  JANUARY 1986