Colombia - Highway Sector Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 9355 PROJECT COMPLETION REPORT COLOMBIA HIGHWAY SECTOR PROJECT (LOAN 2121-CO) February 19, 1991 Infrastructure and Energy Operations Division Country Department III Latin Amercea and Caribbean Regional Office This doounent has a resuiced disrbution and my be used by recipientB only in the performanc of their officialduties. Its contents may not otherwise be disclosed without World Bank auhoriabon.  CURRENCY EQUIVALENTS Currency Unit - Peso (Col$) USS1 = ColS640 (1982) US$1 - Col$383 (1989) WEIGHTS AND MEASURES (Metric system in use throughout report) ABBREVIATIONS AND ACRONYMS CNR - Colombian National Railways COLPUERTOS - Colombian Port Authority CONPES - Social and Economic Policy Committee of the Cabinet DNP - Department of National Planning ECOPETROL - Colombian Petroleum Agency INTRA - National Transport Institute MOPT - Ministry of Public Works and Transport OED - Operations Evaluation Department (World Bank) PCR - Project Completion Report SAR - Staff Appraisal Report SENA - Colombian National Training Center FISCAL YEAR January 1 - December 31  FOR OMCIAL USE ONLY THE WORLD BANK Washington, D C 20433 USA Offie of Directot-.Gfwa owvtf,i Ivauigr nf February 19, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report - Colombia Highway Sector Proiect (Loan 2121-CO) Attached, for information, is a copy of a report entitled "Project Completion Report - Colombia Highway Sector Project (Loan 2121-CO)", prepared by the Latin America and Caribbean Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has s restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosz without World Bank authorization.  FOR OFFICIAL USE ONLY COLOMBIA PROJECT COMPLETION REPORT HIGHWAY SECTOR PROJECT (Loan 2121-CO) Table of Contents Page No. PREFACE .................................................... i EVALUATION SUMMARY .........................................iii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE ............. Project Identity .......................................1 Background .............................................1 Project Objectives and Description .....................1 Project Design and Organization ........................ 3 Project Implementation ................................. 4 Project Results ........................................ 6 Project Sustainability ................................. 8 Bank Performance ....................................... 9 Borrower Performance ................................... 9 Project Relationship ................................... 11 Consulting Services .................................... 12 Project Documentation and Data ........................ 12 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE ....... 13 PART III: STATISTICAL INFORMATION ......................... 14 Related Bank Loans ..................................... 14 Project Timetable ...................................... 15 Loan Disbursements ..................................... 15 Project Implementatiom ................................. 16 Project Cost and Financing ............................. 18 Project Results ........................................ 20 Status of Loan Covenants ............................... 23 Use of Bank Resources .................................. 25 ANNEX 1: COST OF COMPONENTS FINANCED BY THE PROJECT ....... 26 MAP: IBRD Map No. 12553R1 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.  PROJECT COMPLETION REPORT COLOMBIA HIGHWAY SECTOR PROJECT (LOAN 2121-CO) PREFACE This is the Project Completion Report (PCR) for the Highway Sector Project in Colombia for which Loan 2121-CO in the amount of US$152.3 million was approved on April 1, 1982. An amount of US$$2.7 million was cancelled on May 5, 1984. The loan was closed on December 31, 1988, two years behind schedule. The last disbursement was made on October 23, 1989. The PCR was prepared by the Infrastructure and Energy Operations Division of Country Department III of the Latin America and Caribbean Regional Office (Preface, Evaluation Summary, Parts I and 1II). On July 6, 1990, the Bank sent Parts I and II to the Borrower with the request to prepare Part II but no reply was received. Preparation of this PCR was based on the Staff Appraisal Report, the Loan Agreement, the Project Agreement, supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda.  - iii - COLOMBIA PROJECT COMPLETION REPORT HIGHWAY SECTOR PROJECT (Loan 2121-CO) EVALUATION SUMMARY Objectives 1. The Highway Sector Project shared with the preceding Sixth and Seventh Highway Projects, Loans 680-CO and 1471-CO, the same sector devel- opment objectives of upgrading the transport system and correcting institu- tional deficiencies within a broad plan of fostering economic growth and development of public investment (para. 2.01 of the PCR). In particular, the project objectives were to strengthen the highway management capabilities of the Ministry of Public Works and Transport (MOPT), adjust sector policies, and strengthen the construction industry (para. 3.01). Implementation Experience 2. Implementation of the project was delayed from the beginning by; (a) changes in Government and in the procurement law during the first two years of project implementation; (b) lack of sustained Government commit- ment to the objectives of the project; (c) split between administrative and technical branches in MOPT; (d) frequent changes of MOPT's executive staff; (e) defective engineering and slow contracting; (f) lack of counterpart funding and of adequate coordination between budgetary and works execution programming; and (g) MOPT weakness in carrying out the comprehensive road rehabilitation and paving program, and failure to carry out the well prepared road maintenance program. The combination of all these factors delayed execution of the project by two years, and prevented attainment of some of the project's objectives and of most of the implementation targets (paras. 5.01 through 5.03). Results 3. Under the project MOPT: (a) carried out and partially implemented several studies on policies in the transport sector, and on upgrading road specifications and technologies; (b) procured a main frame computer and initiated implementation of a computarized information system; (c) carried out partially a program of institutional reform and training; (d) carried out partially a road rehabilitation and paving program, and a road safety program; and (e) implemented a cost-effective program for contracting routine road maintenance. However, overall the project was not fully successful in meeting its objectives: (a) MOPT's 1982-1986 five-year program experienced a 142 reduction in real terms, affecting mainly such project-related components as training (-63Z), paving (-55Z), road safety (-41Z) and maintenance (-20Z); (b) MOPT failed to achieve many of its institutional strengthening objectives, mainly: (i) efficient budget planning and administration; (ii) effective maintenance administration; (iii) adequate vehicle weight control; and (iv) upgrading of personnel  - iv - training programs; (c) the sectoral policy objectives (para. 2.02) were not fully achieved; and (d) the project failed to strengthen the construction industry (para. 6.01). Sustainability 4. The benefits obtained through actual rehabilitation and paving of a limited number of roads may not be sustainable in the future because of weak engineering, defective construction of drainage systems, extreme de- lays of the construction period inflicting traffic damage to unfinished road sections, and inadequate maintenance. Sustainability of the modest achievements in MOPT's institutional development and on adjustment of sec- toral policies depends to a great extent on MOPT's political will and decisiveness to continue consistently with the actions initiated under this project (para. 7.01). Findings and Lessons Learned 5. The careful preparation of the project was not sufficient to ensure its satisfactory implementation. In retrospect, the Bank overesti- mated MOPT's absorptive capacity to carry out this ambitious sectoral pro- ject. underestimated the impact of the change in government on the critical steps for initiation of project execution, and weakened during negotiations (because of macroeconomic considerations) the covenants needed to ensure decisive actions by MOPT. During implementation, the Bank should have been willing to take the remedial actions provided in the Loan Agreement. At operational level, we believe that future investment projects in Colombia should be designed in tranches, and that particular attention should be given to ensuring the required institutional strengthening, including Ire- cise policy conditionality linked to the standard disbursement suspension provisions (paras. 8.01 and 8.02). 6. MOPT's main weaknesses during project implementation were: (a) lack of continuity in commitment co the project's objectives and frequent changes of executive staff; (b) defective civil works engineering, cost estimates and programming; (c) inadequate procurement, contracting and supervising procedures; and (d) ineffective maintenance administration. To attain greater effectiveness in the implementation of investment p:ojects, the Government would have to ensure firm commitment to their objectives and timely provision of funds, strengthen sector policies and procedures, streamline its administrative procedures and ensure greater permanency of executive staff. In addition, MOPT would have to correct its ingrained weaknesses described above by: (a) strengthening its institutional efficiency in the sphere of internal coordination, computerized information systems, personnel management, sub-sactor and budget planniing, accounting and auditing; (b) improving contract administration by upgrading the quality of civil works engineering and execution, improving and expediting bidding and contract administration procedures, correlating adequately budgeting and works execution programming, increasing the efficiency and reducing the cost of works supervision, and strengthening the managerial and technical capacity of contractors; and (c) upgrading maintenance planning, financing, execution and monitoring (para. 9.04).  COLOMBIA PROJECT COMPLETION REPORT HIGHWAY SECTOR PROJECT (Loan 2121-CO) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Project Name: Highway Sector Project Loan Number: 2121-CO RVP Unit: Latin America and Caribbean Region Country Department III Country: Colombia Sector: Transport Subsector: Highway 2. Background 2.01 The Highway Sector Project shared with the preceding Sixth and Seventh Highway Projects 'Loan 680-CO and Loan 1471-CO) the same sector development objectives of upgrading the transport system and correcting institutional deficiencies within a broad plan of fostering economic growth and development of public investment. This project continued the trend initiated with the Seventh Highway Project to move away from lending for tight and clearly defined projects to a sectoral approach tackling subsec- toral and institutional issues. 2.02 The policy context of this project was to strengthen the capacity of the Ministry of Public Works and Transport (MOPT) to upgrade the national road system, to carry out adequate road maintenance programs and to improve road transportation. It was closely linked with the macro policy objectives of fostering economic development in all parts of the country, including rural areas, and expanding the export capacity of the country. 3. Project Objective and Description 3.01 Project Objectives. The main objectives of the project were to: (a) strengthen MOPT's highway management capabilities; including planning, design and execution of civil works, road safety, personnel training vehicle weight control and road maintenance through the countrywide imple- mentation of pavement and equipment management systems; (b) adjust sector  - 2 - policies covering general sector planning, road user charges and regulation of the trucking industry; and (c) strengthening of the construction industry. 3.02 Project Description. The project financed partially MOPT's five year Highway Program for 1982-1986, which included: (a) Engineering, construction and supervision of: (a) 3,700 km of road rehabilitation; (b) 2,800 km of road paving; (c) 2,500 km of resealing; and (d) 500 km of new construction. (b) Implementation of the Pavement Management System developed under the Seventh Highway Project, Loan 1471-CO, comprising: (a) collection of road user and maintenance cost data for different types of roads; (b) assessment of total road user costs for different investment strategies and levels; (c) determination of economically most advantageous maintenance strategies; and (d) consequent design and execution of road maintenance programs. (c) Implementation of the Equipment Management System developed under Loan 1471-CO comprising: (a) preventive maintenance program for equipment; (b) planning and streamlining of spare parts acquisi- tion and management; and (c) monitoring equipment availability and utilization. (d) Execution of a Road Safety Program, comprising: (a) provision of traffic signs, road markings and guardrails for 5,400 km of main roads; (b) construction of four experimental rest areas for truck- ers, ten vehicle diagnostic centers and a safety trai.ing facili- ty; (r) technical assistance and scholarship programs for safety engineering and institutional strengthening; and (d) coordination of road safety policies and actions with other public and private agencies, and promotion of public awareness on road safety related matters. (e) Strengthening of MOPT's personnel trainirg program to improve the skills of about 3,000 employees. (f) A study of trucking regulations and services. (g) Support for the construction industry, comprising: (a) training in professional management; (b) financing of the industry; and (c) technical training. (h) Execution of special studies for: (a) continuous upgrading of the National Transport Plan including port development policies, con- tainerization and development of intermodal services and analyses of freight transport; and (b) upgrading of road construction technolog!y and highway administration, including introduction of alternative construction materials and asphalt emulsion technolo- gy, creation of a highway data bank, and development of road design and evaluation techniques.  -3- 3.03 Loan funds were disbursed against selected components of this program, particularly rehabilitation and paving of roads (Annex 1). 4. Project Design and Organization 4.01 Conceptual Foundation. The project was designed as an institu- tional strengthening and infrastructure execution project to be prepared a implemented by MOPT within its five-year (1982-1986) Highway Program. Moreover, the project was designed to consolidate efforts under the Seventh Highway Project to strengthen MOPT's capacity to plan, finance, and imple- ment road works and road maintenance, and to improve administration of the transport sector. This conceptual foundation was developed jointly by MOPT and the Bank and clearly spelled out in the Memorandum of Understanding dated August 13, 1981 and a subsequent Aide Memoire dated January 21, 1982. 4.02 Innovative Aspects. The project contained several innovative components. The Road Safety component aimed at improving: safety con- sciousness in road design, driver licensing and vehicle registration, vehicle inspection, enforcement of traffic regulations and statistical information on vehicle fleet and traffic accidents, all of which were weak or nonexistent. The studies related to the deregulation of the trucking industry, containerization and development of intermodal services were designed to innovate substantially on existing transport concepts. 4.03 Preparation of the Project. The project was carefully prepared with the help of technical assistance under Loan 1471-CO. Agreements reached during preparation encompassed: (a) the scope and structure of an economically justified and financially feasible highway program covering the period 1982-1986 and agreement on annual updating of such program; (b) criteria and procedures, and related organizational arrangements for selec- tion, engineering, and implementation of civil works subprojects included in MOPT's program; (c) advanced tendering for about 40Z of the civil works to be financed under the project; (d) appropriate measures to address selected sectoral issues concerning sectoral planning, road transport services, road safety and highway administration; and (e) adequate proce- dures for monitoring project implementation and disbursements. The timing of the project turned out to be premature; it should have been postponed by about a year because of protracted implementation of the Seventh Highway Loan showing MOPT's weak absorptive capacity. Moreover, the change of government shortly after negotiations delayed project effectiveness and weakened the conceptual agreements reached with the outgoing government on project objectives and scope. 4.04 Roles and Responsibilities. The roles in project implementation of MOPT, the National Transport Institute (INTRA) and the National Planning Department (DNP) had been well defined and understood during project prepa- ration. However, during project implementation differences of opinion among these agencies often surfaced and caused delays and inconsistencies in project implementation. 4.05 Contribution to Success/Failure. The reliance on MOPT's absorp- tive capacity to implement simultaneously the Seventh Highway Project and the Road Sector Project proved in retrospect the main obstacle to attaining a smooth and complete implementation of the project.  -4- 5. Project Implementation 5.01 Variances in the Implementation. The change in government that took place one month before effectiveness of the loan, seriously affected the carefully prepared timely start-up of project implementation. The new authorities delayed by several months the start of the civil works con- tracts that had been awarded by their predecessors and suispended further bidding until after enacting a new procurement law, which introduced addi- tional complications into the tendering and contracting procedures, and proved to be partly in conflict with Bank's procurement guidelines. These consecutive difficulties delayed by a year the start-up of pru.ject execu- tion and led to the cancellation, in May 1984, of US$2,685,000 from the loan proceeds, because MOPT did not award a contract to the lowest evaluat- ed bidder. The difficulties in the procurement procedures were finally solvet in June 1984, and project implementation got under way with about two years delay. In October 1983, the Bank had agreed to transfer from Loan 1471-CO the completion of execution of 202 km of road rehabilitation. 5.02 Although in mid 1984 it was agreed to expedite disbursements by opening a special account, execution of civil works suffered new delays because of: delays in contracting, lack of counterpart funding, poor per- formance by contractors, and weak supervision. Following a Special Action Program with the Government, the Bank increased disbursements for civil works from 50% to 65% starting January 1, 1985 until December 31, 1986. An extension of the loan closing date from December 1986 to December 31, 1987 was agreed on May 26, 1985 and, on June 19, 1986, the Bank agreed to apply 65% financing to the execution of emergency civil works for the reconstruction of about 210 km of secondary roads that had been destroyed November 13, 1985 by the eruption of the volcano Nevado del Ruiz. On Dece,nber 1987, the loan closing date was extended by an additional year to December 31, 1988. Finally, to overcome further inefficiencies in counterpart funding, the Bank agreed July 15, 1988, to increase financing of the outstanding works from 65% to 70?. 5.03 Executicn of all other project components also underwent major variances: (a) MOPT was unable to extend the Pavement Management and the Equi?- ment Management Systems from the four districts in which they had been established under Loan 1471-CO to any other of the 23 dis- tricts, Moreover implementation of the systems was discontinued in one of the districts and carried out only haphazardly in the other three. Maintenance expenditures increased consistently in real terms until 1983, when they amounted to 30? of MOPT's budget, but decreased again in later years, averaging 26.4Z over the five- year period 1982-1986. MOPT's maintenance expenditures per km of road are the highest in the LAC region, but operational efficiency remains low because of weak planning, diversion of maintenance funds to major emergency works, lo: labor and equipment productivity and lack of adequate informative and costing systems. The agreed increase in periodic maintenance execution by contract was accomplishxed only partially: the system to contract out periodic mainLenance of specific road sectors over a three-year  period introduced in 1982 failed because of the tendency of contractors to execute only high-unit-cost work items and neglect others, and inadequate supervision. Of particular interest has been MOPT's innovative initiative to contract routine maintenance with labor absorbing small cooperatives of 12 to 15 workers covering about 50 km of road each. By 1986, this program included 126 cooperatives covering over 6.000 km of primary roads and was further expanded in later years. This program has demonstrated to be a cost effective alternative to the force account operations originally envisaged under the project. (b) The Road Safety component was also carried out only partially, with a substantial success in the execution of civil works related to vertical and horizontal signalization of roads and installation of guardrails, but with little progress in the provision of infra- structure needed for implementation of driver training and vehicle control, and in the preparation and implementation of programs for institutional strengthening, coordination of road safety policies and actions with other public and private agencies, as well as promotion of public awareness on road safety matters. (c) The institutional strengthening component including a personnel training program produced mixed results. The Bank-guided effort to strengthen MOPT's administrative and financial procedures through a participatory diagnosis process started successfully in November 1983 and by late 1984 had produced substantial results in: (i) MOPT's self evaluation, determination of critical areas, recommendation of adequate solutions, and plan of action for implementation; (ii) improved communication among road units and among individuals creating a friendlier environment; (iii) acquaintance with each other's functions and better co';rdination among the different MOPT departments; and (iv) enhanced realiza- tion of MOPT's objectives by its personnel. This so successfully initiated program was carried out with decreasing intensity during the following two years, but lessons learned were not fully applied and did not adequately incorporate the MOPT organization in the provinces. The concurrent personnel training program was initiated with two years delay, achieved only about 602 of the overall targets and neglected the oritical training of road and equipment maintenance personnel; (d) Financing of equipment procurement under the loan experienced an increase of 242. While maintenance equipment increased by 67Z, road safety equipment decreased by 50? and no training equipment was procured. Although not initially programmed, the procurement of a mainframe computer with 50 terminals was a substantial contribution to the systematization of all MOPT's administrative, financial and accounting procedures started under this project. (e) Three attempts to implement the intended support to the domestic construction industry failed because of lack of political will of successive MOPT administrations.  - 6 - (f) There were also sub)stantial variances in the different studies carried out under the project: (i) the National Transport Plan was submittedt in December 1984 and updated in 1986; (ii) the studies ot Road User Charges and of the Transport Industry were successfully carried out, with major delays, and their implementa- tion was mostly p)ostponed to be carried out under the Second Road Sector Project (Loan 2829-CO); and (iii) of the four studies to upgrade road technology and highway administration only the one referring to asphalt emulsions was completed, but its practical application has not been adequately implemented. The other three studies on slopes stability, use of alternative road materials and upgrading technical specifications and guidelines, were to be continued under Loan 2829-CO. 5.04 Possible Avoidance of Variances and Risks. The main variance between planned and actual project implementation was MOPT's inability to follow the clear and well-balanced implementation program agreed during preparation and confirmed at negotiations. This variance could have been avoided if the Bank had recognized that MOPT was not institutionally strong enough to implement such a demanding Sector Project and had devised a simpler project with discrete targets strongly linked to loan conditionali- ty. Timing of the project should also have been postponed allowing for delayed execution of the preceding Seventh Highway Project and for the dangers of a change of administration during the crucial start-up period. A negative factor not foreseen at appraisal was the reduced availability of counterpart funding because of: (a) the impact of the 1983-1984 collapse of the international coffee price on the Colombian economy; and (b) the disastrous effects of the November 1985 eruption of the Nevado del Ruiz Volcano. The risks of insufficient financial resources, of MOPT's weak absorptive capacity and of inappropriate timing were not realistically assessed at appraisal. 5.05 Actions Affecting Implementation. The Bank's decision in the last stages of project preparation to go ahead with the sectoral approach and with the proposed timing, despite divergent internal opinions, was the one that most seriously affected project implementation. The close and firm supervision carried out by the Bank contributed decisively to preventing further deviations from the project objectives and targets. In view of MOPT's failure to improve many aspects of project implementation, despite constant Bank recommendations for actions submitted by successive missions, and action plans agreed with them and confirmed by stern Bank communications, it is apparent that the Bank should have taken timely decisive action to suspend disbursements as a means to stimulate effective remedial action by MOPT. The main reason given by the Bank for not suspending was the need to support the Government's generally sound macro- economic policies at a time of fiscal stringency. In retrospect however, one may question whether this stance was not counter-productive in the long run. remedial actions were not taken because of macro-economic considerations. 6.0 Project Results 6.01 Project Objectives. The project met its objectives only partially:  (a) MOPT's Five-Year Program agreed at negotiations experienced a 14% reduction in real terms, affecting mainly such project-related components as training (-63Z), paving (-55Z), road safety (-41%) and maintenance (-20%), whereas construction expenditures increased by 11Z, equipment procurement by 21% and studies by 48%, showing clearly MOPT's reluctance to modify its traditional budgetary programming. The shortfall in financing from earmarked fuel taxes (-21%), external financing (-13Z), and tolls (-112) was partially compensated by an increase in Government contributions (19%) and other MOPT revenues (1652), and by new financing through domestic credit. The disappointing experience with the Road Fund tends to undermine the argument that such funds are more reliable sources of financing than general revenues. (b) The strengthening of MOPT's highway management capabilities was not fully achieved. The Bank-guided participatory diagnosis process led to better internal communications among MOPT's units and substantially improved institutional coordination. MOPT strengthened its in-house capability to prepare economic-based highway programs and introduced computarized systems for financial management, personnel administration and contract monitoring. However, computarization was not adequately developed under the project to provide effective information and administration systems for road maintenance and equipment management. The technical studies for upgrading road technology and highway administration initiated under this project may contribute greatly to the strengthening of MOPT's highway administration capability. The road safety and the training components fell short from reaching their objectives. Most discouraging were MOPT's failure to attain the project objectives on: (i) budget administration - the exis-.ing wide gap between budget programming and project fund- ing requirements that in the past had reached dramatic propor- tions, was bridged only to a minimum extent; (ii) effective maintenance administration - the countrywide implementation of pavement and equipment management systems were not carried out and the efficiency of road maintenance execution in the districts was not substantially improved; and (iii) vehicle weight control - after failing to implement this program under the Seventh Highway Project, MOPT was also unable to advance its implementation under the Road Sector Project, except for procurement of a few portable weighing scales. (c) Although no substantial progress was achieved in the definition of the responsibilities of national, departmental and municipal authorities in the administration of the road network, other com- ponents contributed considerably to attaining desirable adjust- ments to sector policies. Firstly, the study on trucking regula- tions and services presented recommendations on needed reformula- tion of laws and regulations, on reorganization of MOPT's transport authority, strengthening of intermodal transport, provision of transport terminals and others. Secondly, the study on road user charges developed a computer model to analyze the distribution of road user charges and recommendations to increase  MOPT revenues. Implementation of these recommendations started under the project and is continuing under the Second National Highways Sector Project. (d) No progress was achieved in the strengthening of the construction industry. On the contrary, the extreme delays in payments by MOP deteriorated even further the financial capacity of the industry and, coupled with poor supervision and lack of motivation, weakened its technical capacity. 6.02 Physical Results. The main objectives of the project were not changed during project implementation. As described in Section 5.0 of this report, most of the expected physical results were not attained. At appraisal, the weighted average rate of return of ten road rehabilitation and eight road paving subprojects (representing about 16Z of the total program) had been estimated at 752. The economic confirmation study could only be carried out on three rehabilitation and seven paving subprojects, which were the only ones fully completed under the project (representing 32 of the original program). Their weighted average rate of return of 57Z does not allow comparison with the rate estimated at appraisal, because it corresponds to a different set of roads. Comparing the actual rate of return of each one of the ten completed roads with the ones established in the respective initial evaluation, it can be determined that five experienced an increase and five a decrease. The increases were due mainly to higher traffic, in some cases also to lower costs; the decreases were due mainly to lower traffic, but also to higher costs. However, there remains little doubt that the works were highly justified. 6.03 Project Impact. Although the project did not fully achieve its physical targets nor the expected impact on the strengthening of MOPT's capacity and on the improvement of road transportation, the 434 km of roads (202 km transferred from Loan 1471-CO and 232 constructed fully under this project) as well as the 740 km of road sections completed under this project benefitted the economy by reducing vehicle operating costs, extending the useful life of past capital expenditures, and providing better levels of service to users. The project also had an impact on fostering MOPT's institutional development and strengthening the rapport between the Bank and MOPT on sectorwide issues. 7. Project Sustainability 7.01 The benefits obtained through actual rehabilitation and paving of a limited number of roads may not be sustainable in the future because of defective construction derived from partially unsatisfactory engineering, poor execution of drainage systems, and extended exposure of unprotected black bases to traffic wear due to extreme delays in, and poor planning of, execution of works. Inadequate maintenance by the contractors during the excessively extended execution periods and by the MOPT districts after takeover of the completed works may also affect the sustainability of the benefits expected from the completed roads. The sustainability of the modest achievements in MOPT's institutional development and in adjustment of sectoral policies will depend to a great extent on MOPT's political will and decisiveness to continue consistently with the actions begun under this  - 9 - project. The sustainability of the achievements of this project would be greatly enhanced by MOPT's conscientious compliance with the detailed action plan agreed to under Loan 2829-CO covering numerous actions on: (a) institutional issues, such as: managerial and budgetary aspects, road maintenance management, civil works contract administration, and personnel training; and (b) sector policies, such as: road user charges, transport regulation and trade facilitation, and public investment. 8. Bank Performance 8.01 Preparation and Appraisal. During project identification, prepa- ration and appraisal the Bank carefully assessed tne Borrower's need to strengthen MOPT administration and its sectoral policies, and successfully recommended and monitored all actions needed to put together a promising project. However, the Bank overestimated MOPT's absorptive capacity to carry out this ambitious project, underestimated the possible impact of the change in government on the critical steps for initiation of project execu- tion and, during negotiations, yielded to the Borrower's pressure weakening some of the stern covenants that would have compelled MOPT to more decisive action. In the years 1981-1983, Bank management did not want to jeopardize its lending relations to Colombia because of its relatively satisfactory macro-economic management at a time when the rest of Latin America was in crisis. 8.02 Supervision. Supervision of this projpct was carried out efficiently, closely linked with supervision of the Seventh Highway Project, the Second National Highway Sector Project and two ongoing rural road projects. The Bank followed closely the difficulties progressively arising in project implementation, and presented timely and repeated recom- mendations to prevent deterioration and improve project implementation. The Bank gave MOPT the benefit of the doubt in rating the project as a 2 more often than as a 3, whioch in retrospect was probably too lenient. Given MOPT's persistent weaknesses in complying with agreed actions or commitments, the Bank should have been willing to apply the remedies foreseen in the loan conditions, particularly suspension of disbursements. These remedies were not applied because the successive MOPT administrations constantly promised to take appropriate action. Based on the discouraging experience with highway loans in Colombia, the loan agreements of future investment projects should include precise policy conditionality, establish all arrangements needed to ensure the institutional strengthening required for implementation of the project, and attach greater weight to the periodic reviews as a basis for considering suspension of disbursement. The Bank should also consider linking the timing of projects to the election cycle, to avoid preparing a project with an outgoing government and start implementation with another. 9.0 Borrower Performance 9.01 Strength and Weaknesses. Under the project, MOPT accomplished the following: (a) initial formulation and later updating of the National Transport Plan; (b) execution of studies on Road User Charges and Transport  - 10 - Regulation and Trade Facilitation and partial implementation of their recommendations; (c) partial execution of studies to upgrade road specifications and technologies; (d) procurement of a mainframe computer; (e) initiation of implementation of a computarized information system; (f) partial success in institutional strengthening; (g) setting up pluriannual expenditure programs; (h) initiation of training programs; (i) partial execution of the road rehabilitation and paving component; (j) execution of physical components of the road safety program; and (k) implementation of a cost-effective program for contracting out execution of routine road maintenance. 9.02 Full implementation of the project was hampered by: (a) lack of sustained commitment of the government to the objectives of the project; (b) frequent changes in high- and mid-level staff assignment, newcoming inexperienced administrators and technicians slowed down the process, took wrong decisions and often insisted on repeating the same errors that had been previously corrected; (c) defective engineering and inadequate cost estimates; (d) cumbersome bidding and contracting procedures; (e) lack of consistency between budgetary and civil works execution programming resulting in a chronic shortage of funds to finance the civil works program, in extreme delays in processing of payments, and finally in up to three-fold extensions of the programmed execution of civil works; (f) weak performance of most contractors and extremely costly and ineffective supervision by consultants; (g) MOPT's failure to implement maintenance and equipment management systems introduced by consultants under Loan 1471-CO, to establish adequate maintenance information and cost-accounting systems, and to strengthen maintenance planning execution and monitoring. 9.03 Lessons and Experience. These limited achievements and the positive and cost-effective experience on contracting out routine maintenance with small cooperatives should be further supported and expanded. Substantial strengthening in Government sector policies and procedures and in MOPT's performance is needed to attain greater effectiveness in the preparation and implementation of any future road project. The Government would have to: (a) streamline further its administrative and budgetary procedures; (b) ensure greater permanency of managerial and technical staff; and (c) carry out the recommendations of the transport sector studies performed under this project by: (i) improving the equity and adequacy of road user charges; (ii) improving the efficiency of road freight transport; and (iii) promoting multimodal transport. 9.04 MOPT would have to correct the ingrained weaknesses described above by: (a) Strengthening institutional efficiency through: (i) further improving internal coordination and administration procedures; (ii) improving computarized information and control systems; (iii) aiming the technical capacity of its staff to more effective practical activities; (iv) strengthening its Sector Planning Office; (v) increasing the responsiveness of investment planning and the flexibility of funding to current priorities; (vi) updating and consolidating accounting and auditing procedures;  - 11 - (b) improving contract administration through: (i) upgrading the quality of civil works engineering and execution by completing and implementing the technical studies initiated under the project; (ii) improving and expediting bidding and contract administration procedures; and (iii) making the works execution programming conditional on the availability of funds and coordinating it with budget programming; (c) increasing the effectiveness and reducing cost of works supervision through: (i) improving the quality and accountability of supervision consultants by more stringent selection based on past performance; (ii) reducing the proliferation of inefficient supervision contracts by regional grouping of contracts; (iii) adjusting the scope of supervision contracts and the number of supervisors deployed to the actual requirements of civil works execution according to budgetary and other constraints; and (iv) strengthening MOPT's monitoring of the efficiency and cost- effectiveness of supervision contracts; (d) strengthening the managerial and technical capacity of contractors to secure greater competitiveness and improved execution of works through: (i) promoting the organization of courses in business administration, programming of works, specific technical subjects, work safety, cost-accounting and quality control; (ii) improving MOPT's monitoring of contractors' performance and accountability; and (iii) expediting contract award and expenditure payment procedures. 9.05 The follow-up Second Road Sector Project was specifically designed (including a comprehensive action plan) to assist the Government and MOPT in addressing these issues. It has succeeded in the following: (a) liberalizing overall transport sector policies; (b) increasing the technical capacity of the staff; (c) strengthening the Sector Planning Department; (d) increasing toll-road revenues; (e) streamlining internal and procurement procedures; and (f) improving contract administration. The remaining problems should be delt with in the upcoming third sector project. 10.0 Project Relationships 10.01 Bank-Borrower Relations. The Bank's repeated efforts to improve project preparation and implementation did not succeed because of MOPT weak performance. Repeated assurances by MOPT's authorities that they would take adequate corrective actions induced the Bank not to apply sterner measures, such as suspension of disbursements. In preparing future investment project in Colombia, the Bank should ensure that all potential unfavorable aspects have been taken into account. 10.02 Internal Relations of the Borrower. MOPT's relations with its own National Transport Institute and with the National Planning Department were not close and efficient enough to ensure smooth implementation of the sectoral components of the project. The internal frictions and lack of coordination resulting from the division of MOPT's central administration  - 12 - into two main branches, the General Secretariat carrying out administrative and financial functions and the Technical Secretariat in charge of design, programming and execution, caused misunderstandings, contradictions, wasted efforts and continued delays, and contributed substantially to MOPT's weak project im-Lementation. Inefficiencies in the coordination between MOPT's central and district organizations harmed the execution of road maintenance. Bridging over these internal difficulties is crucial for successful implementation of future projects. 11. Consulting Services 11.01 The technical assistance for the use of asphalt emulsions by Spanish consultants, the study on trucking regulations and services by a Swedish-Colombian joint venture, and the study of road user charges by a Colombian consultant, were satisfactorily carried out. The well prepared programs for practical application of the technical assistance on asphalt emulsions were not adequately implemented by MOPT. 11.02 Consultant services for all other studies were deployed too late to allow completion of their assignments under the project and were transferred to the Second Sector Project. 11.03 Supervision of civil works execution by local consultants was extremely expensive, averaging 102 of total costs in 18 rehabilitation contracts and 19% of total costs in 33 paving contracts. Despite this high cost, supervision in general was not satisfactory because of weak technical experience of many supervisors, diminished effectiveness of the supervision due to job interruptions caused by inadequate financing, and weak monitoring of supervision consultants by MOPT. 11.04 With few exceptions, the civil works contractors showed inadequate administrative and technical capacity and their performance was further hampered by insufficient financial capacity to confront the critical payment delays. 12. Project Documentation and Data 12.01 The legal agreements for this project should have spelled out much more clearly the covenants needed to ensure satisfactory implementation of the project and would have been greatly strengthened by the preparation of a detailed Action Plan spelling out all actions needed to ensure the institutional strengthening pursued under the project. Data on project execution provided by MOPT consisted mainly of information on expenditures and did not supply adequate information on physical performance. Data needed for the preparation of the PCR was readily available in Bank files. The supervision reports and the Aide Memoire agreed after each mission were particularly helpful in the preparation of this report.  - 13 - PART II PROJECT REVIEW FROM BORROWER'S PERSPECTIVE The Latin America and Caribbean Regional Office sent Parts I and III of this PCR to the Borrower on July 6, 1990 with the request to prepare Part 11, but none was received.  - 14 - PART III - STATISTICAL INFORMATION 1. Related Bank Loans Loan Number Title Year of Project Purpose Approval Status Comments 1471-CO Rehabilitation of 06/29177 Completed. US$90.0 Seventh 978 km. priority million. Highway roads, and Scope of civil Project improving road works reduced maintenance and to 776 km. transport Other two main management. components only partially carried out. 1996-CO Construction and 09/21/81 Completed. US$33.0 Rural Roads rehabilitation of million. Project 1,420 km. of 1,256 km. of rural roads, roads were strengthening of maintained or administration rehabilitated, and maintenance. strengthening programs were carried out. 2668-CO Rural roads 03/25/86 Ongoing. US$62.0 Rural investment and million. Transport maintenance To be Sector programs, completed improvement of 12/31/90. All minor waterways, projects institutional objectives strengthening. achieved. 2829-CO Main roads 07/23/85 Ongoing. US$180.3 Second investment and million. National maintenance Loan fully Highway programs. committed. Sector Implementation of Completion Project transport expected by planning and December 31, management 1991 without systems. achieving all objectives. 3157-CO Rural roads 01/16/90 Signed US255.0 Second Rural investment and March 7, 1990. million. Road Sector maintenance Implementation programs, is starting. strengthening of national and local user road agencies.  - 15 - 2. Pro7ect Timetable Date Date Date Items Planned Revised Actual Identification - - 08/26/80 Preparation mission I - - 09/15/80 Preparation mission II - - 03/02/81 Appraisal mission - - 07/20/81 Loan Negotiation - - 03/02/82 Board Approval - - 04/01/82 Loan Signature - - 05/13/82 Loan Effectiveness - - 09/22/82 Project Completion 12/31/86 12/31/87 12/31/88 Loan Closing 12/31/86 12/31/87 12/31/83 3. Loan Disbursements Cumulative Estimated and Actual Disbursements (US$ million) FY88 FY84 FY86 FY68 FY87 FY88 FY89 FY90 Appraisal Estimate 28.8 70.8 122.8 162.8 152.3 152.8 162.8 162.B Actual 2.8 29.1 66.4 98.2 127.8 187.0 147.7 149.8eJ Actual as I of Estimates 8.1 41.1 46.1 61.2 8a.9 90.0 97.0 98.2 Date of Final Disbursement: 10/28/89. The deadlin, for disbursemewts was informaily extended to almost eleven months after Loan Closing Date, which Is no longer acceptable. */ US2.7 million were cancelled 05/04/84.  - 16 - 4, Project Implem ntstion Appr liesI Indicators Estimate Actual Comments Reduce participation of new Despite overall budget construction from 30a of MOPT reduction, MOPT incressed new budget to 13% 17X construction oxpenditures above agreed tresholds. Rehabilitation of paved roads, km. 3,690 976 202 km. wore trensfered from Loan 1471-CO. 378 km. in execution were tranefered to Loan 2829-CO. Paving of gravel roods, km. 2,780 201 620 km. in execution were transfered to Loan 2829-CO. Resealing of paved roads, km. 2,600 Neplipible MOPT was not able to provide reliable information. Paved Road Condition Inventory, 12,000 1,600 Provinces never developed km. capacity to prepare reliable inventor ies. Maintenance Fleet availability 80% - MOPT did not implement system Annual equipment utilization established to provide this hours 1,200 - information countrywide. Installation of mini-computers in 25 25 districts Extension of pavement and 01/0/84 - Minicomputers wero installed, equipment management systems to but not used properly. all 28 districts Expenditures on maintenance < S0% > 60% Systems established under Loan personnel and administration to be 1471-CO in four districts, less then 60% of total maintenance were not extended to other expenditures districts. Equipment procurement - USSOOO. 8,000 10,700 Desired relation was attained only in 1986.  - 17- Vertical and horizontal Implementation of road safety signalization, km. 5,000 0,100 prooram concentrated In Installation of guardraiIs, km 100 a0 execution of safety works Rest aroos for truckers 4 - along roads, not much progress Vehicle diagnosis centers 10 - achievd In supplying Road Safsty Training Center 1 - infrsstructure and organization to facilitate road safety programs. Personnel to be trained 3,278 2,010 Initlition of the training Training expenditures US2000 1,808 1,160 program was delayed by two Mobile Road Training years and was not implemented Production Unit 1 - consistently. Mochanical Training Production Unite 4 - Study of transport industry 09/01/68 10/01/84 Implementation continued under Loan 2829-CO. Preparation of National Transport 12/31/88 12/81/84 Updated in 1986. Plan Adoption of uniform pavement - This commitment was design criteria and materials transferred to Loan 2829-CO specifications, by 09/80/88 Tosk force to define MOPT acted unilaterally responsibilities on administration - confirming existing of total network 08/01/82 arrangements. Support for the Domestic - Construction Industry - MOPT made three attempts to Training of 200 managers 03/81/88 start this program, but each Permanent training arrangements 07/31/83 - time, lack of couitmsnt Financing arrangements for prevented further construction industry 06/81/88 - lmplementation.  - 18 - 5. Project Costs and Financing A. Appraisal Estimate MOPT', Program 1982-1986 (US8 million equivalent at July 1981 prices) 1982 1983 1984 1986 1988 Total Percent APPLICATION OF FUNDS 440.8 498.7 476.0 494.2 462.9 2.885.1 100.0 Highways 412.8 442.1 402.2 484.2 88.8 2.074.9 87.7 Non-recurrent 262.2 282.4 238.0 286.4 210 0 1.268.0 68.2 New construction 79.7 76.0 88.8 66.0 87.2 311.2 18.1 Rehabilitation 67.4 98.6 82.7 87.6 47.0 388.8 18.2 Paving 66.8 82.8 81.6 109.9 109.9 480.0 18.2 Equipment a8.8 80.8 - - - 72.6 8.1 Road Safety 3.1 8.7 4.8 6.2 8.1 26.9 1.1 Training 0.6 0.8 0.6 0.7 0.6 3.2 0.1 Studies 8.9 4.9 6.0 6.0 7.0 31.8 1.4 Recurrent 160.6 169.7 184.2 168.8 178.6 816.9 34.6 Maintenance 122.8 180.9 184.8 188.8 148.0 689.8 28.8 Administration 20.3 28.8 29.4 80.0 80.6 147.1 6.2 Other Non-highways 88.6 45.6 58.2 27.6 26.4 186.8 7.8 Debt Service - 9.0 19.6 82.4 48.9 104.9 4.6 SOURCE OF FUNDS 448.8 498.7 47.60 494.2 452.9 2.865.1 100.0 Internal Financina 867.4 866.7 884.4 484.8 448.6 1.975.8 88.6 Fuol tax revenues 804.1 312.6 384.0 368.8 886.8 1,894.8 71.7 Oovernment appropriations 9.9 6.8 16.8 40.2 20.6 92.8 8.9 Road tolls 29.4 82.4 34.1 85.8 87.6 169.8 7.2 Other own revenues 14.0 4.9 - - - 18.9 0.8 External Financing 88.9 141.0 90.6 69.4 9.4 889.8 18.4 Proposed Sector Ln. 9.4 41.6 47.9 44.1 9.4 162.8 6.4 Other foreign cr. 79.5 99.6 42.7 16.3 - 287.0 10.0  - 19 - B. Actual MOPT's Proaram 1982-19986 (USS million equivalent at July 1981 prices) Variation 1982 1988 1984 1986 1988 Total Percentage Porcenta2. APPLICATION OF FUNDS 376.8 401.0 394.4 432.1 428.8 2,0al e 100.0 -14.1 Hichways 360.1 357.6 334.1 387.7 348.6 1.76S.9 86.4 -16.8 Non-recurrent 222.2 211.0 200.8 244.9 196.1 1073.7 62.8 -14.6 New construction 104.6 60.1 67.7 68.5 80.8 346.4 17.0 +11.3 Rehabilitation 67.2 88.3 78.1 103.7 56.0 381.3 18.8 -0.6 Paving 20.4 35.3 45.8 42.0 60.8 194.8 9.6 564.8 Equipment 30.8 22.9 6.7 20.0 7.6 87.9 4.3 +21.0 Road Safety - 1.3 2.6 8.9 2.8 16.4 0.8 -40.6 Training - - - 0.1 1.1 1.2 - -82.6 Studies 9.6 4.9 9.8 8.7 18.6 47.2 2.8 +48.4 Recurrent 127.7 148.6 133.8 122.8 161.4 682.2 83.6 -18.5 Maintenance 99.6 118.9 102.7 95.0 119.8 638.0 26.4 -20.0 Administration 28.1 27.8 31.1 27.8 31.8 148.2 7.2 -0.6 Other Non-hiahways 26.2 29.9 46.6 39.7 33.6 174.8 s.6 -6.6 Debt Service - 13.8 13.8 24.7 48.8 100.9 5.0 -a.8 SOURCE OF FUNDS 376.3 401.0 394.4 432.1 428.8 2.031.6 100.0 -14.1 Internal Financina 310.7 348.4 333.8 348.2 365.6 .5 s7.6 83.1 -14.6 Fuel tax revenues 256.0 265.8 277.7 272.4 275.2 1,337.1 86.8 -21.1 Government appropriations 23.4 68.1 12.1 10.9 5.8 110.3 6.4 .18.9 Road tolle 24.7 20.0 26.6 3'..9 44.3 160.4 Z.4 -11.1 Other own revenues 7.8 8.1 9.8 11.6 12.9 60.0 2.6 +164.0 Domestic credit - 0.4 7.7 13.4 18.3 39.8 2.0 - External Financina 84.8 57.8 60.8 88.9 72.3 344.0 18.9 -13.2 Proposed Sector Ln. 2.3 8.7 41.0 28.2 36.0 112.2 6.6 -26.8 Other foreign cr. 82.3 50.9 19.6 82.7 38.3 231.8 11.4 -2.2  - 20 - 6. Project Resu'ls A. Direct Benefits No direct benefits indicators were established at appraisal. B. Economic Impact 1. The only project components subjected to economic analysis were the road rehabilitation and the road paving programs. Both were analyzed using the Bank's Highway Design and Maintenance Model Version II (HDM II model). Of the ten road rehabilitation and eight road paving subprojects evaluated at appraisal (weighted average economic rate of return 75Z), only one rehabilitation and two paving subprojects were completed under the project. All subprojects that were added to the program during implementation, 12 rehabilitation and 26 paving projects, were submitted to previous economic analysis using the HDM II model. Of these additional subprojects only two rehabilitation and five paving subprojects were completed under the project. The economic evaluation of the ten completed subprojects gave the following results: Avorano Daily Traffic Economic Rate of Roturn Length Initial Initial Subproloct Km Evalustion1/ Actual Evalustion1/ Actual Rehabilitation * Honda - Mesones 91.0 1,861 1,608 64 s8 Ventaquemada - Tunja 13.8 4,188 65,27 126 78 K219 - K284 It0 1,688 1,259 84 67 .3 Paving Santa Rosa - VIllanuove 1-113 877 840 48 48 * Lorica - Momil 1 ' 721 828 69 26 Son Oil- Barichers 1 881 690 50 67 * Aranzazu - Salamina 1S.t 482 419 a8 5 Pereira - Marsoll IA.S 498 1,267 60 84 Giateque - Las Junta, 18.a 858 907 18 48 Fortalecills - Barays 30.V. 441 463 48 60 109.6 Weigthed Average 67 1/ Figures indicated in these columns correspond to the values determined in the initial evaluation of each subproject, only three of the roads completed (indicated with o) had been included in the economic evaluation performed at appraisal.  - 21 - C. Studies Purposo as Defined Item at Appraisal Status ImDpct of Study 1. Administration of Define rooponsibilities Not carried MOPT acted unilaterally the road network. of national, departmental out, confirming existing and municipal outhorities arrangements. Lack of in tho administration of adequate definition still the road notwork, curtailing efficient administration. 2. Trucking Propose measures to Completed Recommendations on needed Regulations and increase efficioncy of 10/01/84. reformulation of laws and Services, road freight transport regulations, reorganization and develop intermodal of MOPT's transport serv ices. uthority, strengthening of lntermodol transport, provision of transport terminal, etc. Implemntation continued under Loan 2829-CO. S. Road User Charges. Recommend adjustment of Completed Development of a computer road user charges in line 12/81/85. model to analyze with the policies on dltribution of road user adequate pricing to be charges and recommendations e3stblished. to increase MOPT revenues. Model has beon applied and updated. 4. Upgrading of Road Various studies to be Ongoing. Studies carried out under Technology and defined later to the Road Sector Project are Highway strengthon MOPT's the following: Administration, technology and administration. (a) Study of Invontory of slides in Continued Geomophologic and Slopes, the road network to study under Loan g-omechanic studies of their causes and develop 2829-CO. slides in five distinct recommendations for their areas, and general prevention, recommendations on rood- alignmsnt selection and slope design were made. (b) Use of Develop recommendations Not The study was not carried Alternative on the use in road completed. out consistently and did Road construction and not produce conclusivo Materials, maintenance of results. alternotive naturally available materials.  - 22 - (c) Use of Develop technique for Comploted Produced excellent manuals asphaltic production and use of 12/81/87. on the subject, trained emulsions. asphaltic emulsions In about 200 enginoers and road conatruction and technician and initiated maintenance and foster practical applications. adequate application. Wide and eatisfactory use of this technology has not been Implemntod. (d) Updating of Dovelop now Continued Implementation was only technical specifications and under Loan started undor this project specifications guidellnes for road and 2829-CO. and has been continued and bridge materials, design under Loan 2829-CO. guidelines. and execution.  - 23 - 7. Status of Loan Covenants Section Covenant Status of Comaliance Loan Agreemene 3.01 (b) FVN to submit basic data sheets and All basic data sheets required were othor documentation for subproj3cts to received. be financed by the Bank. 8.01 (c) FVN to follow the implementation There wer. continuous delays In the schedule for each subproject. execution of the subprojects. 3.01 (d) FVN to evaluate subprojects In Part-A, Compiled with. according to agreed methodology and ensure economic return of at least 12X. 3.01 (e) FVN to give priority to maintenance, Adequate balance between forecasted rehabilitation and paving over neow road expenditures was not fully construction, achieved. 8.01 (f) FVN to carry out transport industry Report submitted in 1986; study by September 1, 1988. Government implemented Its recommendations under an action plan agreed with the Bank. 8.01 (g) (;) FVN to furnish Bank by July 1, 1988 the The Institutional strengthening program to implement Parts G and F (2). program was carried out with Bank assistance since early 1985. The other studies were implemented 1985 through 1988. 3.01 (g) (ii) FVN to furnish Bank by Dee mber 31, Was not submitted on time; several 1982 a plan of action to Implement Part draft plans of action were E (training), discussed; training program was satisfactorily started In 198. 8.06 (c) FVN to exchange viws with the Bank Revleos were carried out regularly. about the project by April 30 and October 81, every year. 6.02 FVN to furnish to the Bank financial Finoncial statements and auditing statements and audited accounts by were received more than a year late Independent auditors, and were not completely satisfactory. 6.04 FVN to maintain expenditures on Systematic accounting by maintenance personnel and expenditure item to control administration below 50% of total balance of expenditures was begun maintenance expenditures. in 1986. Ratio of 50% was barely achieved.  - 24 - Guarant. Aareement 3.01 (a) MOPT to establish and maintain Initially fulfilled, little effective advisory units for pavement effective, and later disbanded. and equipment managoment system and training. 3.01 (b) MOPT to apply the pavement and MOPT did not sueee d in extonding equipment management systems in all the pavement and equipment districts by January 1, 1984. management *yatwms beyond the four initial districts under Loan 1479-CO. 3.02 MOPT to establish policy for Equipment procurement policy, maintenance equipment procurement. initially established In 1988, was not updated. 3.03 MOPT to adopt uniform pavement dosign Studies were carried out, criteria and materials specifications Implementation of their by September 30, 1988. recowaendations to be carried out under the Second Road Sector Project, Loan 2829-CO. 3.04 (a) The Guarantor to establish a task force The task force was established In by March 1, 1988 to propare a plan for December 1988; however, It did not the administrativo distribution of the complete the task. Government took rood network. unilateral action. 8.06 The Guarantor to regularly update the Delivery was made in December 1984. National Transport Plan. The first A Transport Sector Strategy Note update by December 81, 1988 with draft was prepared in 1986, including version for Bank comments by September Bank comments. 30, 1988. 3.07 (b) MOPT to Increase maintenance work by MOPT developed an innovative system contractors and to reach 600 km. to contract routine maintnennce. resoeling by 1986. Execution of periodic maintenance by contract was not substantially increased. Resealing target was not achieved. 3.0OE The Guarantor to adjust road user Substantial adjustments took place charges to ensure cost coverage by each in 1986 and early 1987, ensuring user category. sdequats levels of cost-recovery for the majority of vehicle categories. Systematic monitoring of road-user charges is being carried out by MOPT. 3.09 The Guarantor to furnish to the Bank by Regulations needed for vehicle January 31,