China - Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY ReportNo. 10749 PROJECT COMPLETION REPORT CHINA HIGHWAY PROJECT (LOAN 2359-CHA/CREDIT 1594-CHA) JUNE 29, 1992 Transport Operations Division Country Department II East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit - Renminbi (RMB) or Yuan (Y) US$1 = Y5.30 (at completion - June 30, 1991) US$1 = Y2.84 (at appraisal) WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 square meter (sq m) = 10.76 square feet (sq ft) 1 square kilometer (sq km) = 0.4 square miles (sq mi) 1 hectare (ha) = 2.47 acres (ac) 1 kilogram (kg) = 2.2046 pounds (Ibs) 1 metric ton (m ton) = 2,204 pounds (Ibs) ABBREVIATIONS AND ACRONYMS CADE - Computer-aided Design and Engineering ERR - Economic Rate of Return HB - Highway Bureau HPDI - Highway Planning and Design Institute HSRI - Highway Scientific Research Institute ICB - International Competitive Bidding IDA - International Development Association LCB - Local Competitive Bidding MOC - Ministry of Communications PTTS - Provincial Transportation Technical School PHB - Provincial Highway Bureau SAR - Staff Appraisal Report FISCAL YEAR January 1 to December 31  FOR OFFCIAL USE ONLY THE WORLD BANK Washington, D.C 20433 U.S.A. Office of Diretor-Genefal Opeations Evaluation June 19, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on China Highway Project (Loan 2359- CHA/Credit 1594-CHA) Attached, for information, is a copy of a report entitled "Project Completion Report on China Highway Project (Loan 2359-CHA/Credit 1594-CHA)" prepared by the East Asia and Pacific Regional Office with Part II contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY ?-5.JECQT COMPLETION REPORT PEOPLES' REPUBLIC OE' CHINA HIGHWA'Y PROJECT (CREDIT 1594-CHA/LOAN 2539-CHA) TABLE OF CONTENTS Page No. Preface .... . . ..i Evaluation Summary. iii I. Part I - Project Review from Bank's Perspective 1. Project Identity .1 2. Background .1 3. Project Objectives and Description .1 4. Project Design and Organization .2 5. Project Implementation .3 6. Project Results .4 7. Projc Sustainability .5 8. IDA Performance .6 9. Borrower Performance .7 10. Project Relationship .7 11. Consulting Services and Contractors .7 12. Project Documentation and Data .7 II. Part II - The Borrower's Project Completion Report . 8 III. Part HI - Sumnmary of Statistical Data Table 1: Related Bank Loans and/or Credits 12 Table 2: Project Timetable .13 Table 3: Credit/Loan Disbursements A. Cumulative Disbursements .14 B. Disbursements by Category .14 Table 4: Project Implementation A. Project Summary . .15 B. National and Rural Roads . . Table 5: Project Costs and Financing A. Project Costs. . 18 B. Project Financing . .18 Table 6: Project Results A. Economic Impact I. Project Sumary .19 II. National and Rural Roads .19 B. Studies . .22 C. Overseas Training . .22 Table 7: Status of Covenants . .23 Table 8: Use of IDA Resources A. Staff Inputs . .24 B. Missions . .24 r 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.  MAPS China Transport System - IBRD 18708R Anhui Province - IBRD 18345R Yunnan Province - IBRD 18347R Guangxi Province - IBRD 18349R Zhejiang Province - IBRD 18350R Sichuan Province - IBRD 18351R Jiangxi Province - IBRD 18352 Shandong Province - IBRD 18353R Shaanxi Province - IBRD18554R  PROJECT COMPLETION REPORT PEOPLES' REPUBLIC OF CHINA HIGHWAY PROJECT (CREDIT 1594-CHA/LOAN 2539-CHA) PREFACE This is the Project Completion Report (PCR) for the Highway Project in China, for which Credit 1594-CHA in the amount of SDR 30.3 million (Equivalent to approximately US$30.0 million at appraisal) and Loan 2539-CHA in the amount of SDR42.6 million were approved on May 14, 1985. The credit and loan were closed on schedule on June 30, 1991. Disbursements under the credit amounted to SDR 30.3 million (equivalent to US$37.6 million) and under the loan to US$29.6 million. US$13 million was canceled from the loan, effective March 28, 1989. The final disbursement from the credit was made on April 28, 1989 and from the loan on July 31, 1991. The PCR was jointly prepared by the Transport Operations Division, Country Department II of the East Asia and Pacific Regional Office (Preface, Evaluation Summary and Parts I and III) and the Borrower (Part II) and is based, inter alia, on the Staff Appraisal Report; the Credit and Loan Agreements; supervision reports; the Borrower's own records and monthly reports; correspondence between the Bank and the Borrower; and internal memoranda.  - iii - PROJECT COMPLETION REPORT PEOPLES' REPUBLIC OF CHINA HIGHWAY PROJECT (CREDIT 1594 C!4/LOAN 2539-CHA) EVALUATION SUMMARY Objectives The objective of the Highway Project was to assist the Government's major development program of national and rural road construction, by supporting the I-ighway Bureau of the Ministry of Communications (MOC) and, through it, the Provincial and County Highway Bureaus and MOC's highway technical institutes, in order to facilitate both industrial and agricultural growth (Part I para 3.01). This was to be achieved by ntroducing measures which would be instrumental in improving the quality of future construction works, ncreasing the cost-effectiveness of highway investments, supporting a highway research program and strengthening the capabilities of staff. The major components of the project were (Part I para 3.02): (a) construction or improvement of about 230 km of "missing links" on National roads; (b) construction or improvement of about 1,400 km of rural roads; (c) provision of computer-aided design and engineering (CADE) equipment and site investigation and related laboratory equipment for the Highway Planning and Design Institute (HPDI) in order to modernize future highway designs; (d) provision of laboratory testing and other research-related equipment for the Highway Scientific Research Institute (HSRI) in support of their research program, including studies on the strengthening of the paved national road network, road congestion and road safety; (e) training of staff from MOC's Highway Bureau (HB), the Provincial Highway Bureaus (PHB), the HPDI and HSRI; (f) consultants' services and technical assistance to help MOC, the PHBs, HPDI and HSRI in the supervision and quality control of road construction, for studies to be done under the research program and for seminars and workshops as needed; and (g) purchase of basic road maintenance equipment for selected provinces. Implementation Experienc The Highway Project was appraised in October/November 1984, the Credit and Loan were approved on lay 14, 1985 and became effective on December 4, 1985. The IDA Credit (1594-CHA) for the project amounted to DR30.3 million (equivalent to approximately US$30.0 rnillion at appraisal) and the IBRD Loan (2539-CHA) amounted to US$42.6 million. Both the Credit and Loan were fully disbursed, although US$13 million was cancelled from the Loan effective March 28,1989 As this project was the first involvement of the Bank Group in the highway subsector, it was by way of being a pioneer for future projects and was therefore designed to involve several PHBs and was spread out over a wide geographical area (Part I paras 4.01 and 4.02). The Staff Appraisal Report (SAR) identified the major risk as possible delays to start-up caused by unfamiliarity with ICB and LCB procedures in the case of the national roads and with the required contract management and supervision procedures used on the rural roads. Construction by force account was envisaged for the rural roads at appraisal, but in the event a limited form of competitive bidding was introduced in some  - iv - cases. Measures to mitigate delay in commencement of works were taken by providing foreign technical assistance to help in project preparation for national roads, and by providing well defined guidelines to provincial and municipal units for the rural roads. While most of the components of the project started shortly after the signing of the Loan and Credit Agreements in September 1985, several contracts did mot start promptly for a variety of reasons that included land acquisition problems, the necessity for redesign ar d the unavailability of equipment and materials on time. About 86% of civil works contracts overran their implementation peric ds as envisaged during project appraisal. However, the nominal implementation periods of 27 and 24 months, given in the SAR for the national and rural roads respectively, did not necessarily take into consideration the full complexity of the work on each road, because, at the time, only preliminary engineering was available, so imp;ementation periods were revised as detailed design work was completed. Therefore, by and large, the delays in completion were not excessive, and the project as a whole was completed on schedule except for two roads, for which further work within the original scope was approved, which will be completed by the end of 1992. Apart from scheduling, there were very few variances between the planned and actual implementation of the various project components from a quantitative or qualitative point of view. Some road s-ctions finished up slightly longer or shorter than foreseen at appraisal and in a few cases road standards were upgraded as a result of unforeseen increases in traffic volumes or because of upward revision of estimates of future traffic. At an early stage of the project, MOC initiated the setting up of a supervision system that operated at county, provincial and national levels, with the purpose of ensuring the quality of the works. Engineers and technicians from each of the participating provinces attended training courses in supervision duties as few had the necessary experience. The concept of external supervision was not an easy one for the local construction industry tc absorb as there was little tradition of supervision of this type in the past. Inspectior.j were, however, carried out regularly and work that was clearly below standard was corrected or done again with stress being laid on compliance with the specifications. This was a major factor in the successful outcome of the project. Project Results The project achieved all its major objectives (Part I paras 6.01 to 6.05). It had a considerable impact on the quality of construction works by the introduction of systematic supervision and the adoption of more up-to-date specifications for materials and workmanship, though the results varied somewhat beiween provinces, which largely reflected variations in the quality of available materials and technical expertise of local engineering staff. The use of improved economic evaluation techniques for selecting road investments and the introduction of some measure of competition into the road construction industry has had a beneficial effect on the cost effectiveness of highway investments generally. The highway research program and the provision of some specialised equipment have resulted in improved designs and specifications and methods for improving and strengthening the existing road network. The training program was effective in improving the technical skills of highway staff at provincial and county level particularly in the fields of quality control, constructicn management, contract administration, documentation artd competitive bidding. Development objectives were also achieved to a degree that had been underestimated at appraisal. The opening up of all-weather access to areas that had previously relied on porters or rough tracks, has resulted in substantial increases in the standard of living of those within the influence zone of the new roads, the creation of new industries or the revitalising of existing ones and the exploitation of mineral deposits that were formerly uneconomic. The direct environmental impact of the project has been positive in that it has contributed to the reduction of dust pollution and traffic accidents by better road surfaces and alignments and to reducing the risk of local flooding and accumulation of water through improved road side drainage. In some respects there is a risk that the environment could be affected adversely by some project roads in an indirect manner, where improved access could facilitate mnineral exploitation, the establishment of pollution-prone industries or an increase in forestry operations. So far, however, no such effects have been identified.  - v - Despite its wide geographical scope, which made regular supervision difficult, this was a successful *oject. The Borrower showed much determination to overcome the difficulties that arose and to complete the oject. The civil works component of the project has already generated substantial tangible benefits, as reflected the levels of ERRs for the project roads. It is expected that the present trend of net benefit flow would be sustained through the traffic generated by increased production and industrial activity in the influence areas of the project roads. One obvious risk to this would be the inadequate maintenance of the roads leading to a reduction in vehicle operation cost savings. The relevant authorities are conscious of such risk and assurances have been given to the Bank that sufficient funding would be secured for the adequate maintenance of the project roads. Furthermore, the Bank's experience in China regarding road maintenance practices mitigates the risk of the deterioration of the project roads through neglect. Findings and Lessons Learned Bank missions, during both project preparation and implementation, were constrained by time and gistical difficulties to visiting but a portion of the project road sites, implyirg that a project extending over nine provinces might have been too ambitious On the other hand, since this was the f -qt involvement of the Bank in the highway sector in China, taking a risk in this respect seems to have been compensated for by spreading the benefits resulting from the project to a greater number of provinces. Furthermore, the Bank's initial involvement ith a larger number of provinces became an advantage during the preparation of subsequent provincial ghway projects i six out of the nine provinces which participated in this Highway Project because these provinces were already familiar with most of the Bank's policies and procedures. As a result of the project, there is now a general recognition in MOC and several provincial road administrations that the competitive bidding process and independent supervision are both beneficial and there has been a trend to follow these practices not only on externally financed projects but also on those which are ternaily financed. The Bank learned some valuable lessons (Part I para 8.03) on the necessity for carrying out detailed engineering early in the project preparation process in order to obtain accurate cost estimates, on weighing carefully the advantages and disadvantages of multi-provincial participation in a single highway project, particularly in terms of the problems created by the involvement of a number of executing agencies and the resulting geographical spread which could strain resources, and on the need to continue to assist the highway staff to achieve higher standards by training and technical assistance matched to the needs of the Borrower. The Borrower also learned some useful lessons (Pirt I para 9.03) that should be applied to future projects on the irofitability of investment in rural roads, the value of economic evaluation, supervision and compliance with specifications, and, through the experience of competitive bidding, on contract administration and preparation of icceptable documents for international bidding.  PROJECT COMPLETION REPORT PEOPLES' REPUBLIC OF CHTNA HIGHWAY PROJECT (CREDIT 1594-CHA/LOAN 2539-CHA) PART I: PROJECT REVIEW Ffl3M BANK'S PERSPECTIVE - Project Name ................. Highway Project - Loan/Credit Numbers ................. Credit 1594-CHA/Loan 2539-CHA - RVP Unit ................. East Asia and Pacific Country ................. Peoples' Republic of China - Sector ..................... Transport - Subsector ................. Highway 2. Background 2.01 Like other centrally planned economies, China's economy is very transport intensive. The transport system is heavily concentrated along the eastern seaboard and historically has been served mainly by rail, inland water transport and coastal shipping. During the period 1975-1985, however, highways started to take an increasing, but still relatively small, share of both freight and passenger traffic, largely relieving the railways. Transport facilities remained poor in remote and rural areas, where mountainous terrain and large rivers made nvestment costs relatively high. 2.02 In the early 1980's, investment in the highway subsector had levelled off at about 15% of all investment in transport and communications, having fallen from 25% in the early 1960's. During the same period, the Government prepared its Seventh Five-Year Development Plan (1986-1990), which recognized the need for much larger investment in all modes of transport if bottlenecks to economic development were to be avoided. ndividual modes were to be expanded and links established between them, together with the incorporation of new technology and the strengthening of institutions. 2.03 In 1982, the Bank Group became involved in the transport sector for the first time with the Three Ports Project (Loan 2207-CHA), followed, in 1984, by the First Railway Project (Loan 2394-CHA). In 1985, further port and railway subsector projects were under preparation. This project, the first in the highway subsector, aimed to assist the Government's major development program of national and rural road construction, by supporting the Highway Bureau of the Ministry of Communications (MOC) and, through it, the Provincial and County Highway Bureaus and MOC's highway technical institutes, in order to facilitate both industrial and agricultural growth. 2.04 Although China's road network was, in 1983, the sixth largest in the world, it was generally of low standard. Only about 19% of the roads had a bituminous surfacing, the rest having gravel or earth surfaces of varying quality. Traffic was increasing at an annual rate of 1'.: with trucks far outnumbering cars. Trucks, though relatively small at about 8 tons capacity, were increasing in size, which was causing consequent excessive damage to road pavements. Although substantial efforts had been made to maintain the network in a reasonable condition, it was recognised that greater investment was essential for systematic upgrading and strengthening of pavements, particularly in more heavily trafficked corridors. 3. Project Objectives and Description 3.01 Project Objectives. Against the prevailing background of the highway subsector, the objectives of the project were to: (a) improve the quality of future construction works by: (i) modernizing highway design; and (ii) updating and improving construction and material specifications;  -2- (b) increase the cost-effectiveness of highway investments by: (i) improving techniques for the economic evaluation and selection of road irvestments; and (ii) supporting the Government's intention of adopting competitive bidding for public works; (c) support a highway research program, with particular emphasis on improving and strengthening the existing paved national road network, improving road capacity in congested areas and improving road safety; and (d) strengthen the capabilities of staff working in the highway subsector by carrying out a training program. 3.02 Project Components. To accomplish these objectives the project included: (a) construction or improvement of about 230 km of "missing links" on national roa,As; (b) construction or improvement of about 1,400 km of rural roads; (c) provision of computer-aided design and engineering (CADE) equipment and site investigation and related laboratory equipment for the Highway Planning and Design Institute (HPDI) in order to modernize future highway designs; (d) provision of laboratory testing and other research-related equipment for the Highway Scientific Research Institute (HSRI) in support of their research program, including studies on the strengthening of road pavements, reducing road congestion and improving road safety; (e) training of staff from MOC's Highway Bureau (HB), the Provincial Highway Bureaus (PHB) HPDI, HSRI, and the Provincial Transportation Technical Schools (P1TS); (f) consultant services and technical assistance to help MOC, PHBs, HPDI and HSRI in the supervision and quality control of road construction, for studies to be done undet the research program and for seminars and workshops as needed; and (g) purchase of road maintenance, laboratory and road research equipment. 4. Project Design and Organization 4.01 This project was the first involvement of the Bank Group in the highway subsector. The concept of the project was proposed by MOC, and its scope was formulated following extensive discussions between the state and provincial administrations, which would be involved in the project, and the Bank. The timing of the project was appropriate, as pressure was building up to improve road infrastructure to cater for the road traffic demand generated by the accelerating development in the agricultural and industrial sectors resulting from the new economic reform-oriented policy of China. In the context of road construction and improvement practice in the country at that time, the project was iinovative in that it was designed to introduce basic principles of project selection through economtic evaluation, implementation tirough well defined contract management procedures and quality control through independent supervision. Also, there was a recognized need for the enhancement of road engineering pracdces at the different levels of the highway administrations. 4.02 Although the components of the project we well selected, it was not fully realized at the time that a geographically more concentrated road program would have been easier to adn.inister. As it happened, the civil works component, comprising 66 road sections, was spread over an area of about 3 million sq km in nine provinces. Such wide coverage meant that a fair number of institutions at various levels had to get involved, which made the preparation and subsequent supervision of the project implementation by MOC and the Bank a demanding undertaking. Most of the preparation work was assigned to the implementing provinces under the general guidance of Bank and MOC staff, including the selection and evaluation of the various road sections. To overcome the unfamiliarity of provincial personnel with the requirements and procedures entailed in projec preparation and implementation, PHBs set up oi'ices, within the respective provincial and municipal transpor bureaus, specially designated for project related tasks.  -3- 5.01 The Staff Appraisal Report (SAR) identified the major risk as possible delays to project start-up caused by unf..miliarity with ICB and LCB procedures, in the case of the national roads, and with the ag-ed contracting and supervision procedures used on the rural roads. Measures to mitigate delay in commencement of works were taken by providing foreign technical assistance to help in project preparation for national roads, and by providing well defined guidelines to provincial and municipal units (para 4.02) for the rural roads. 5.02 Nevertheless, some uncertainty remained about the requirements in the areas of procurement, conitract management, supervision and quality control at provincial and municipal levels, and it took s.ame time for the administrative units involved to become acquai;ited with the new set of procedures. Some of the implementation delays could be attributed to such difficulties. Also, there were several contracts that did not start promptly for a variety of reasons that included land acquisition problems, the necessity ;,- redesign and the unavailability of equipment and materials on time. 5.03 About 86% of civil works contracts overran their implementation periods as envisaged during project appraisal. However, the nominal implementation periods of 27 and 24 months, given in the SAR for the national and rural roads respectively, did not necessarily take into consideration the full complexity of the work on e.ch read, because, at the time, only preliminary engineering was available, so implementation periods were revised as detailed design work was completed. Therefore, by and large, the delays in completio'n were not excessive, (Wart 111, Table 4B) and the project as a whole was completed on schedule except for some training, which was completed in July 1991, and two roads (National Road #02 and Rural Road #01), for which further work within the original scope was approved, which will be completed by the end of 1992. 5.04 Apart from delays in completion, there were differences between the planned and actual implementation of some civil works components from quantitative or qualitative aspects. Some road sections finished up slightly longer or shorter than foreseen at appraisal and, in a few cases, road standards were upgraded as a result of unforeseen increases in traffic volumes or because of upward revision of estimates for future traffic. For example, national road #07 was constructed to Class 2 rather than Class 3 standard because of the greater than expected traffic growth on this shortcut route between Chengdu and Chongqing in Sichuan Province. In another case, modifications were made to a bridge design in Anhui Province based on updated soils data and in order to assure compatibility with a water conservation project. The required charges affected both construction time and the cost of construction. Rural roads #01 and #61, initially designed and built as gravel-surfaced roads, were upgraded to asphalt surfacing warranted by increased volume of traffic and excessive dust affecting crops. 5.05 At an early stage of the project, MOC initiated the setting up of a supervision system that operated at different levels, county, provincial and national, with the purpose of ensuring the quality of the works. Engineers and technicians from each of the participating provinces attended training courses in supervision duties, as few had the necessary experience. The concept of independent supervision was not an easy one for the local construction industry to absorb as there was little tradition of supervision of this type in the past. InspFctions were, however, carried out regularly and work that was clearly below standard was corrected or done again with stress being laid on compliance with the specifications. This was a major factor in the successful outcome of the project. 5.06 The cost overrun for the project as a whole, in local currency, has been Y179.6 million, or 38.2%. This comes predominantly from the cost overrun on the civil works, Y186.7 million or 41.8%, wl.ile there have been some savings in the staff training, consultant services and road maintenance equipment acquisition components. The crst overrun on civil works was caused by increased costs of labor and materials as a resutt of the overall inflationary trends in 1987 and 1988. In some cases, variation in design was also accompanied by '.4gier costs. The design changes, at times, could be traced back to less than adequate project preparation, but some were also necessitated by the recognized need for accommodating somewhat different requirements based on more up-to- date information or changed circumstances. Despite the overall cost increase, in local currency terms, the sum of $13 million was cancelled from the loan because the increase was more than offset by devaluationt of the Yuan a-ainst the US$, the increase iL. value of the SDR against the US$, and underexpenditure on some components. 5.07 In retrospect, it seems that the difficulties of administrative control by MOC and regular supervision by Bank staff of such a geographically scattered road improvement program may have been underestimated, but similarly the innate capabilities and tena:iiy of the Chinese at the different levels of responsibility were also underrated. These factors eventually largely outweighed and overcame the initial difficulties associated with  - 4 - readilv understanding and meeting the Bank's requiremroents, and were crucial to the successful outcome of the projt.ct 5.08 During implementatior., MOC had somc difficulty adjusting to the requirements of being a project exc-CLltinTg agency. Tlere was no regular reporting from the provir^c to MOC and from MOC to the Bank, and the combined effect of staff shortages and geographical spread madc it difficult for MOC to obtain regular progrcss reportiLlg from the provinces. To conmpeTnsate for the lack of written information on implementation, MOC would organize joint meetings with the provinces at about nine month intervals to assess the progress of lAoLks and discuss impl-mentation issues. MOC also provided technical guidance during periodic site visits in the interests of improving {he quality of works. 5.09 MO(: coordinat-.d the sta "trainin, programs, the procurement of equipment and the carrying out of the studies. These activities in' olved aisc HPDI and HSRI, and were carried out satisfactorily and without any major delays. 6. 1L IM-ls. 6.011 Tihe project achieved its set objectives. The use of economic evaluation iechniques for selecting the roads for inclusion in the project and the introa action of a measure of competition through ICB and local procurement processes have been convincing means of demonstrating ithe cost effectiveness of these methods. As regards enhancement of future road construction works, the project introduced improved technology in the participating provinces through the adoption of appropriately formulated technical specifications under the road construction and irnprovement comnponent of the project and demonstrated how the quality of works can be enhanced through systematic supervision. 6.02 The benefits from the technical assistance and training provided under the project have also been substantial even though expenditure on these items was less than was forecast at appraisal. The provision of some specialized equipment to HPDI and HSRI, such as that for computer aided highway design and laboratory and road research cquipment, have paved the way for putting into practice in China state of the art highway design methods and for improving information gathering for highway planning purposes. 6.03 The staff training program covered a broad spectrum of highway subsector topics, such as planning and finance, survey, design, procurement, construction management, contract administration, construction supervision and quality control and traffic safety, and was effective in enhanLing the technical skills of highway staff at provincial level as well as in the various specialized units of MOC. In addition, two courses provided training for the teaching staff of the Provincial Transportation Technical Schools in the provinces involved in the project (Part III, Table 6C). 6.04 By contrast, the outcomne of the three studies which were carried out on Pavement Strengthening, Road Congestion and Road Safety has been mixed. While the findings of the Pavement Strengthening study have been incorporated into the development, by HSRI, of a Pavement Management System for Chinese conditions, no substantive follow-up has been made on the findings and recommendations of the other two studies. The planned pilot study on traffic congestion is being delayed because of lack of funding, and the main recommendation of the Road Safety Study, to improve the accident reporting system as a first step towards the evolution of an effective road accident reduction program, is not being acted upon because of the administrative changes which have taken place with regard to the responsible authority for some aspects of road safety (Part lll, Table 6B). 6.C5 Development objectives were achieved beyond the extent expected at appraisal. After the opening up of all-wveallher motorized vehicle access roads, communities that had previously relied on porters or rough tracks, have recorded significant increases in their standards of living, the creation of new industries or the revitalizing of existing ones and the exploitation of mineral deposits that were formerly uneconomic. The following examples conveyed to the PCR mission by provincial and county officials well illustrate some of the social and economic impacts. (a) in the influence area of one of the roads in Zhejiang province, between 1984-1990, agricultural and related production increased by 30%-60% and per capita income rose from Y108 to Y1159 per annum; (b) in Sichuan province, visitors to a tourist area served by a project road increased from an annual figure of 50,000 to 250,000 and the income of the tourist area and nearby h-tels rose from Y60,000 to Y1,400,000 per annum;  -5. (c) in Guangxi province, one road contributed to the establishment of six new factories, the tripling of production of a cement factory and the conversion of a bankrupt fertilizer plant into a profitable producer of steel alloy additives with an increase in production value fer the area from Y2.2 million to Y11.0 million per annum; (d) Yunnan province reported a fourteen-fold increase in annual tea production along one road and a doubling of per capita income; (e) a road in Anhui province was rerouted along a valley to avoid winter snow problems in the mountains, resulting in the local match factory recording a large increase in production from YO3. million to Y4.2 million per year and the number of employees rose frora 85 to 325; (f) all areas reported marked increases in agricultural production because of ready access to mnarksts, increased outside investment due to favorable communications, improved specialist advisor services on agricultural and industrial matters anid a very enthusiastic response from area residents who are now benefitting from a bus service, easier access to medical and recreational facilities and wider employment opportunities. While it is probable that broad economic and social factors created a favorable environment for achieving these results, the improved road access to the areas concerned is being regarded as a decisive contributing element. 6.06 Almost without exception, the actual cost of road works exceeded the appraisal estimates for each of the project roads as a result of increased material prices, underestimates of construction costs and the unforeseen additional cost of physical variations necessitated in some instances by deficiencies in the original designs or changed circumstances. For 60% of the project roads the traffic volume at the time of completion of the road was higher than the appraisal forecast, and for 67% of them the post-construction economic rates of return (ERR) show an increase over those forecast at appraisal. It appears that the higher than expected traffic volumes and associated vehicle operating cost savings offset the effect of the cost increases and did not affect adversely the ERRs. Except in one case (rural road #60) the ERRs remained above the normally accepted level of economic viability for investment. 6.07 The project has also had a beneficial impact through: (a) providing employment opportunity to the local population, and, at the same time, enhancing the technical skills in road construction related activities of those involved; (b) generating valuable social benefits to remote communities by providing easier access to health, educational and recreational facilities; (c) promoting accelerated economic growth in the areas served by the roads; (d) increasing the professional competence and experience of road department staff at the different levels of administration through training; (e) enabling the expansion of agricultural output, establishment of industrial facilities, development of mineral deposits and growth of employment; and (f) accelerating the acceptance of more up-to-date construction methods and the improvement of highway design facilities and practices; 6.08 The direct environmental impact of the project has been positive in that it has contributed to the reduction of dust pollution and traffic accidents by better road surfaces and alignments and reducing the risk of local flooding and accumulation of water through improved road-side drainage. In some respects there is a risk that he environment could be affected adversely by some project roads in an indirect manner, where improved access could facilitate mineral exploitation, the establishment of pollution-prone industries or an increase in forestry operations. So far, however, no such effects have been identified. 7. Project Sustainability 7.01 The civil works component of the project has already generated substantial tangible benefits, as reflected in the levels of ERRs for the project roads. It is expected that the present trend of net benefit flow would be sustained through the traffic generated by increased production and industrial activity in the influence areas ot the project roads. One obvious risk to this would be the inadequate maintenance of the roads leading to a reduction in vehicle operation cost savings. The relevant authorities are conscious of such risk and assurances have been given to the Bank that sufficient funding would be secured for the adequate maintenance of the project  -6- roads. Furthermore, the Bank's experience in China regarding road maintenance practices mitigates the risk of the deterioration of the project roads through neglect. 7.02 The benefits accruing from the p.ovision of equipment should also be sustainable provided that units will be fully utilized and, in the case of road construction and testing equipment, properly maintained, and in the case of the computer equipment for highway and bridge design, upgraded to take full advantage of developing technology. 7.03 The impact of staff training is expected to have a longer tern effect through the interaction of trainees w ith other staff and in the case of the training of teachers of Provincial Transportation Technical Schools through teacher-student interactions and revised/updated curriculums. The recommendations of the two studies dealing respectively with road traffic congestion and road safety would require further assessments and more active follow-up actions, a matter the Bank would take up with MOC in the near future in the framework of a highway policy/strategy dialogue. 8. Bark Perfo.m ce 8.01 From the outset it was realized that if this project was to succeed on the civil works side, there was a need to introduce competitive bidding procedures, effective supervision and more up-to-date materials technology and construction methods to the Chinese road construction industry. During preparation of the project the Bank repeatedly stressed these points but there were some doubts among the Bank staff on the willingness of highway authorities, particularly at the lower levels, to adapt to a new system. In this respect it appears that the Bank underestimated the response of MOC and the PHBs (para 9.01). There is now a general recognition in MOC and several provincial road administrations that both the competitive bidding process and independent supervision are beneficial and there has been a trend to follow these practices not only on externally financed projects but also on those which are internally financed. A form of local competitive bidding practice has been gaining ground against direct force account operations, and several provincial transport departments have established a separate unit, within their departmental structure, for construction supervision. 8.02 Because of the widely scattered nature of the civil works, Bank mnissions, during both project preparation and implementation, were constrained by time and logistical difficulties to visiting but a portion of the project road sites. This implies that a project extending over nine provinces might have been too ambitious for more intensive Bank involvement. On the other hand, since this was the first involvement of the Bank in the highway sector in China, taking a risk in this respect seems to have been compensated for by spreading the benefits resulting from the Bank loan to a greater number of provinces, including the beneficial effects from the training courses and from the disciplines instilled through the Bank's rigorous requirements on project selection, evaluation, procurement and implementation. Furthermore, the Bank's initial involvement with a larger number of provinces became an advantage during the preparation of subsequent provincial highway projects in six out of the nine provinces which participated in this Highway Project because these provinces were already familiar with most of the Bank's policies and procedures. 8.03 Among the lessons arising out of the project, some of which have been applied to subsequent projects, are: (a) that it is important to carry out detailed engineer ng at an early stage in the project preparation process, in order to have a better estimate of costs; (b) to weigh carefully the advantages and disadvantages of multi-provincial participation in a single project for highways and roads, particularly in terms of the complexity created by the invol- ement of a number of executing agencies and the geographical spread which could strain resources during project preparation and implementation; (c) that investment in the construction and improvement of rural roaas has been shown to be highly profitable and that the Bank should continue to encourage Borrowers to include a rural road component in future projects wherever possible; and (d) to continue to include training and technical assistance components into future projects in order to improve overall standards, with the p:-oviso that technical assistance should be carefully selected and matched to the needs of the Borrower.  -7- 9. Borrower Performance ).01 Considering that this project was the first exposure of MOC and the provincial and county highway vureaus to the Bank's requirements and procedures, they performed well, except in the field of regular reporting. Fhere were inevitably initial difficulties over procurement procedures and in the execution of contracts, but these early problems were resolved and MOC and the provinces set in motion a supervision system that ensured general compliance with the specifications and a training scheme that carried the message of modern methods and technology to the county construction units involved. Some unfamiliar concepts were conveyed to those involved at the different levels of project preparation and execution and these, in general, found acceptance. 9.02 Quality of work varied between provinces, reflecting the underlying experience of the respective county personnel and the materials available in the area. Although surface dressing is widely used in China, results are often poor, usually because of a badly prepared road base or the use of unsuitable materials, but quite a number of the roads executed under the project demonstrated that this type of surfacing can be executed in China to a high quality. Also, some of the structural concrete and masonry works have been exemplary. .03 Among the lessons learnt by the Borrower arising out of the project are: (a) the usefulness of economic evaluation of roads to guide investment decisions; (b) advantages of the competitive bidding process, and well defined contract administration procedures; (c) the value of supervision and enforcement of compliance with specifications; and (d) the profitability of investment in the construction and improvement of rural roads, which have the effect of stimulating local economies. 10. Project Relationship 10.01 A feature of the project was the good relationships that were built up during preparation and implementation of the project. The Bank staff were always well received and their comments were respected and acted upon by their Chinese colleagues, both at MOC and in the provinces, who were very receptive to suggestions. 11. Consulting Services. Contractors and Suppliers 11.01 Foreign consultants contributed to the successful implementation of the project. They assisted in the eparation of bidding documents for the national roads and the subsequent supervision of them, and in the rrying out of studies. Staff training was carried out largely through the involvement of foreign consultants and ghway administration entities. 11.02 All contracts were carried out by Chinese construction units under ICB, LCB or force account. Performances varied but all were acceptable, while some were very good. 11.03 A number of suppliers were involved in the procurement of equipment for road maintenance, testing and research, survey and CADE. All performed satisfactorily. 12. Project Documentation and Data 12.01 The Loan and Credit Agreements were well prepared and served their purpose adequately. All the covenants were appropriate. 12.02 The SAR was clearly written and provided a useful framework for all parties during project implementation. 12.03 Information for the preparation of the PCR was provided by MOC and PHBs. Some additional formation was also obtained during the PCR mission in June/July 1991, through extensive discussions with OC personnel and representatives of Zhejiang, Sichuan, Guangxi, Yunnan and Anhui provinces.  PROJECT COMPLETION REPORT PEOPLES' REPUBLIC OF CHINA HIGHWAY PROJECT (CREDIT 1594-CHA/LOAN 2539-CHA) PART II: PROJECT REVIEW FROM BORROWR'S PERSPECTIVE 1. General 1.01 the construction of the first highway project in China started in 1985 and completed in 1990. During the period of the five years, all the items evaluated and determined by the World Bank have been completed, such as civil works, equipment procurement, training and consultant services and other technical assistance. The two years' practice after the completion of the project proves that it was the right decision to use the World Bank funding for the highway development; and the project scope and component were appropriate. The project are welcomed and supported by the local government in the project provinces and the numerous people concerned. The project achieved remarkable social and economic results, especially in improving the local traffic conditions and therefore stimulating the economic development- of the poor areas. In addition, it promoted China's highway engineering management, imported advanced equipment and trained a large number of professional staff. This project indeed made a good start in utilizing external financial resources, and furthering the reforms and opening to the outside world. 1.02 In accordance with the requirements by the World Bank in its "Project Completion Report", this report makes a retrospective analysis of the key issues, the major findings, and lessons, omitting the detailed accounts of the project implementation and results. It tries to make an objective evaluation on the World Bank 's performance. This will greatly help better implement other highway projects and further strengthen the cooperation between China and the World Bank. 2. Project Preparation 2.01 To ensure successful completion of this highway project, the loan offices have been set up in the Ministry of Communications (MOC) as well as in the provincial highway bureaus related to the project responsible for the project preparation and coordination. Special offices were also set ':p in the communications bureaus of the concerned prefectures, municipalities or counties, in charge of daily work. 2.02 With support and help from the State Planning Commission and the Ministry of Finance, MOC worked out the general scope of this highway project through wide survey , review and discussions with the relevant provinces (prefectures) and the World Bank, and new  -9- niethodologies of economic evaluation were used to appraise each gub-project, which ensured a-good basis for the project to realize the expected benefits. 3. Project Management 3.01 In line with the World Bank's requirements and the new situation of reform and opening to the outside in China, competitive system was introduced for this highway project.By competitive bidding, the best contractor was selected to ensured the project quality and cost control. Both international competitive bidding (ICB) and local competitive bidding (LCB) were introduced for the missing links on national highways included in this highway project and the performance was satisfactory. 3.02 The supervision system based on the contract management was widely adopted in the project implementation, which changed the past practice of direct administrative intervention. This was indeed an important reform measure in China's capital investment supervision system. Each province involved in the highway project set up special supervision offices responsible for the supervision work. The office delegated engineer's representative to supervise each sub- project's quality, progress, measurement and payment simultaneously, foreign experts were also invited for site consultation. 3.03 Given such a great number of sub-projects involved, each year MOC organized a coordination meeting to resolve the issues concerning construction quality, progress, supervision and financing, and held other meetings to exchange experience and lessons. All of these meetings helped ensure the success of the project implementation. 3.04 MOC also helped organize and coordinate staff training, equipment procurement and technical assistance with satisfactory results. 4. The World Bank's Performance 4.01 The World Bank did a lot of work during project implementation and acquired the experience with regard to cooperation with the governments at different levels and relevant agencies in China. The World Bank's involvement in this project laid a foundation for future cooperation. we are in general satisfied with the World Bank performance. 4.02 The World Bank made many careful investigations from the project identification to appraisal, in addition, it accepted suggestions from the Chinese agencies, and followed the World Bank's procedures in determining the project scope and components, aimed at improving China's highway network. It also made sound economic analysis on each sub-project and put forward many valuable suggestions, which were highly appreciated by their Chinese counterparts.  10 - 4.03 During the project implementation, the World Bank sent six missions consisting twelve person-times to China to supervise the implementation of the project. They usually went to the project sites to ensure the good work quality. They also helped coordinate the staff training, and kept frequent contacts and exchanged views with MOC and other government agencies and solved most problems in time. 4.04 At the stage of the project completion, the World Bank missions carefully listened to the briefing by MOC and the related provinces, made site visits on ten sub-projects in three provinces, and held informal discussions with the local governments and the residents along the highways, therefore, they have got experience in person concerning the social and economic benefits achievec. under the project.and acquiired a large amount of first-hand information which was indispensable for it to work out the objective and comprehensive completion report of the project. 4.05 by good cooperation with the World Bank staff. both before and during the project implementation, we were impressed with the scientific and thorough methodology and procedures used by the World Bank, many of them are worth our learning and using. However, our experience suggests that the period from the project identification to appraisal was too long, and some procedures were ioo complex, inconsistent with China's procedures for capital investment,thus resulting in the delay of some sub-project construction commencement; therefore, we suggest that in consideration of China's specific conditions, and provided no violation of the World Bank's guidelines, some procedures be simplified, and the project preparation period be shortened, in particular, for those small sub-projects such as rural roads, with more confidence in the borrower's capability in implementation, more work be delegated to the borrower in order to raise efficiency. 5. Major Findings and Lessons 5.01 Careful selection of projects is crucial. Among the first highway project, due to the lack of in-depth engineering feasibility study on some individual sub-projects, some improper choices was made, so the expected benefits were not fully achieved after the completion of the sub-projects. Therefore, the future sub-projects must be selected based on in-depth work and analysis and under the framework of national highway development plan in order to enhance the return of the investment. 5.02 Careful preparation of design documents is very importan' Site investigations must be improved, with design documents fully complying with specific situations. The depth of the design documents shall satisfy the needs for competitive bidding. The design variation should be reduced in order to minimize time delay. 5.03 More attention should be paid to prequalification and bid evaluation. Our experience shows that when the prequalification was  - 11 - not carefully done in the case of a ,ew sub-projects and the cgontracts were not properly awarded, these contractors were unable to fulfill their contracts, and eventually, gave up halfway, resulting in progress delay and additional costs. Therefore, great importance shall be attached to the technical capabilities, financial viability, reputation, equipment and administration capacity of the bidders. Bid evaluation shall be made on a fair and reasonable basis, subcontractors shall not be allowed to be introduced to the bidders and the negotiations after tendering shall not be accepted. 5.04 As regard staff training, the competence of staff has direct and great impact on quality and progress of projects. During implementation of this highway project, the employer, the supervisor, and the contractor were unclear about and unfamiliar with the way ot- project management based on the contract, as this resulted in many contradictions with the traditional practice, slow progress and some quality accidents eccfLed. Later on, as the staff were better trained, the engineering quality was improved. Therefore, our conclusion is that in accordance with the requirements of the project implementation, the staff must be trained in advance under appropriately arranged training courses, so as to ensure the trainees fully competent to do their work. 5.05 Regarding data collection and disbursement schedule, each sub-project entity shall submit its periodic report on project progress on time so as to keep relevant departments well informed. The employer and the supervisor shall help the contractor in payment application and pay all the costs in time to ensure the smooth implementation of the project. 5.06 During the implementation of the project, we learned a lot about the Bank's method as well as procedures, the advanced practice of engineering management in the world. All these are of good help to us as we integrated our learning into our work to improve our own management, so that to try to improve China's administration of engineering work and investment management to the international level.  - 12 - PROJECT COMPLETION REPORT PEOPLES' REPUBLIC OF CHINA HIGHWAY PROJECT (CREDIT 1594-CHA/LOAN 2539-CHA) PART III: SUMKARY OF STATISTICAL DA 1. Related World Bank Loans and/or IDA Credits Loan/Credit Year of Title Purpose ADproval Status Comments Cr. 1792-CHA/Ln. 2811-CqA Construction of 142 km expressway, equip- 1987 In Progress Closes 12/31/92 Second Highway Project - ment procurement, studies, road data bank (BEdjlng-Tanggu Expresy) Cr. 1917-CHA/Ln. 2951-CHA Construction of 340 km Chengdu-Chongqing 1988 In Progress Coses 12/31/94 Third Highway Project - highway and 105 km of rural roads, (Sichuan Province) improvement of road management, road safety program L n. 2952-CHA Construction of 67 km Sanyuan-Tongchuan 1988 In Progress Closes 12/31/94 Fourth Highway Project - highway, lmproving rural roads, equipment (Shaanxi Province) procurement, development of road planning, pavement evaluation and data bank Cr. 2025.CHA/Ln. 3073-CHA Construction of 319 km Jlnan-Qingdao 1989 In Progress Closes 6/30/95 Fifth Highway Project highway, equipment procurement, devel- (Shandong Province) opment of road planning, maintenance management, highway research, pave- ment evaluation and traffic monitoring Cr. 1984-CHA Construction of 113 km Nanchang-Jinjiang 1989 In Progress Closes 12/31/95 Sixth Highway Project highway and 1932 m Gun River bridge at (iangxl Province) Nanchang, equipment procurement, devel- opment of pavement evaluation and data bank 7?*2226-CHA/Ln. 3316-CHA Provincial road network rehabilitation 1991 In Progress Approved 4/91 - - Provincial Transport programm rehabilitation of Nanjing-Shang- Closes 6/30/96 rU)V" hai road and of Danyang section of Grand Canal construction of ship-lock and bridge at Nantang, development of pavement evaluation, strengthening and mainten- ance, planning and design of roads and waterways, read data bank and CAD Zbejiang Provincial Transport Construction of 138 km Hangzhou-Ningbo N/A Under Appraised 7/91 Project expressway, construction and improvement Preparation of about 970 km of provincial and county roads, equipment procurement for laboratories, envir- onmental protection research, and road maint- enance, and staff training. Henan Provincial Highway Construction of 120 km Zhengzhou-Luoyang N/A Under Appraisal Project highway, rehabilitation of 5 provindal Preparation scheduled for and 6 rural roads in northwest Henan , rehabil- 2/92 Itation of up to 3000 km of provincial roads, equipment procurement, institutional strength- ening and training, and trucking study. Guangdong Provincal Construction of 145 km of the highway between N/A Under Appraisal Transport Project Shenzhen and Shantou and an 80 km highway Preparation scheduled for between Foshan and Kaiping, improvement of 3/92 provincial and rural roads, equipment procuremnt, training, and study of highway financing. Source: Bank Staff  - 13 - 2. Project Timetble Date Item Planned Revised Actual First Mention in Files --- 03/07/83 Government's Application - - N/A Identification Mission - - 04/83 Project Brief - - 06/07/84 Preparation Mission I - - 07/83 " " II - - 05/84 " " III - - 07/84 Appraisal Mission 10/84 - 11/84 Credit Negotiations 04/01/85 - 04/01/85 Board Approval 05/14/85 -- 05/14/85 Credit Signature - 09/05/85 Credit Effectiveness 12/04/85 12/04/85 Credit Closing 06/30/91 06/30/91 Credit Completion 12/31/91 -- 12/31/91 Source: Bank Staff  - 14 - 3. CreditfLoan DinbuTsemonts A. Cumulative Estimated and Actual Disbursements (US$ millions) IBRD FY 1986 1987 1988 1989 1990 1991 1992 Appraisal Estimate 9.0 34.0 64.0 69.0 71.0 72.6 Revised Estimate 9.0 34.0 64.0 63.6 [11 65.6 67.2 67.2 Actual Credit SDR 9.9 23.8 30.3 30.3 [21 US$ equiv 11.2 29.0 37.5 37.6 37.6 37.6 37.6 [3] Loan US$ 0.0 0.0 10.3 (4] 20.2 29.6 29.6 29.6 (51 Total US$ 11.2 29.0 47.8 57.8 67.2 67.2 67.2 Actual as % of Rev. Estimate 124 85 75 91 102 100 100 Note: [1] US$13.0 million was cancelled from the Loan effective 03/28/89. The Loan total became US$29.6 million, but the value of the Credit had risen to US$37.6 million. [2] The Credit was fully disbursed by 4/28/89. [31 At Appraisal the Credit was equivalent to US$30.L million. [4] Loan disbursements started after the Credit had been fully commnitted. [51 The final disbursement was made on 7/31/91 and the Loan balance became zero. curce: Bank Staff B. Disbursements by Categoru (millions) Allocation at Appraisal Actual Amount Disbursed Category Credit Loan Credit Loan (SDR) (US$) (SDR) (US$) National Roads 10.49 15.60 9.09 18.79 Rural Roads 12.10 16.00 18.52 7.14 Equipment 2.02 3.00 1.03 2.89 Training and Consultants' Services 2.02 0.00 0.11 0.77 nallocated 3.67 8.00 0.00 0.00 Fund - 1.54 [11 0.02 [2] Total [31 30.30 42.60 30.30 29.60 [4] ote: [1] This amount represents exchange rate losses resulting from the difference between the SDR equivalent of the sum paid into the Special Account and that recovered. [21 This sum represents exchange rate losses resulting from purchasing US$ for payment into the Special Account from the Bank's currency pool. [31 Totals may not add because of rounding. [41 US$13.00 million cancelled effective 03/28/89. urce: Bank Staff  - 15 - 4. rzn.etImmiennlatia A. fto,OCt Su Project Component Appraisal Estimate Actual or PCR Estimate National Road Construction and Improvement Paving completed (km) 225 222.9 Earthworks comp!eted (cu m !000) 8,400 9,290 Bridges (No.) 91 88 Culverts (No.) 5,589 6,148 Construction Completed 06/30/88 02/90 (1l Rural Road Construction and Improvement Paving completed (km) 1373 1357.4 Earthworks completed (cu m '000) 35,860 9290 Bridb_ (No.) 237 261 Culverts (No.) 1291 1352 Construction Completed 11/15/87 02/90 (21 CADE and Other Computer and Laboratory Equipment for HPDI and HSRI and Road Maintenance Equipment Delivery Date 09/30/86 02/89 Cost (US$ '000) 4,313 3,430 Research Program Completed 12/31/87 12/31/87 Training Program Completed 09/30/86 08/91 Note: [11 Some supplementary works continuing; due to be completed in Dec 1992. (21 Some supplementary works continuing; due to be completed in May 1992. Source: MOC and Bank Staff B. NationAl and Rual Roads Road Start Date Completion Date Province Length Class & Sec.No. From-To (kn) Standard Forecast Actual Forecast Actual NATIONAL ROADS Shandong 01 Huihe-Mapadian 21.00 2 3/86 6/86 6/88 11/88 02 Yancheng-Caotang 53.00 2 3/86 2/87 6/88 12/89 (Supplementary) [21 - - 5/91 12/92 - Shaanxi 03 Xian-Sanyuan 34.00 1 3/86 12/86 6/88 12/89 Anhui 04 Laibang-Baojiahe 33.00 3 3/86 11/85 6/88 8/89 Fujian 06 Gaotien-Huashanjie 32.45 3 3/86 11/85 6/88 12/86 Sichuan 07 Longtal-Tangba I1] 28.06 3 3/86 10/85 6/88 11/88 Yun-'an 08 Yangwu-Honglongchang 21.40 3 3/86 10/85 6/88 6/87 TOTAL (National Rds) 222.91  - 16 - B. National and Rural Roads (Contd) Road Start Date Completion Date Province Length Class & Sec.No. From-To (km) Standard Forecast Actual Forecast Actual RURALRQAQI Zhejiang 01 Deqing-Zhouquan 36.00 3 11/85 12/84 11/87 5/88 - " (Supple ientary) [21 3 - 5/91 05/92 02 Tangqi-Deqing 17.34 3 11/85 6/86 11/87 4/89 03 Tuankou-Xiazhong 28.00 4 11/85 9/86 11/87 12/88 04 Majian-ZhuJi 4.60 4 11/85 12/85 11/87 12/87 05 Fanqian-Hua-iang 8.82 3 11/85 1/86 11/87 10/88 06 Xiasheng-Nanxi 30.97 4 11/85 8/85 11/87 12/89 07 Yaozhuang-Hangling 10.00 4 11/85 12/85 11/87 3/87 08 Tanqiang-Shilong 49.40 3 11/85 10/86 11/87 12/89 09 Shanxi-Xiahong 40.80 4 11/85 7/84 11/87 12/87 10 Dajun-Shawan 21.80 4 11/85 4/85 11/87 11/87 11 Jianggen-Kengdi 14.00 4 11/85 9/85 11/87 11/87 Total 261.73 Anhui 12 Jiapeng-Jingzhou 30.00 4 11/85 9/85 11/87 11/88 13 Nanyuankou-Shendu 30.02 4 11/85 9/85 11/87 7/89 14 Huangbei-Xiaochuan 20.35 4 11/85 9/85 11/87 11/88 15 Tangpohe-Yuexi 60.10 3 11/85 9/85 11/87 12/89 16 Huanggang-Bailitun 48.55 4 11/85 9/85 11/87 9/89 Total 189.02 Jliangxd 17 Linjia-Fanzhen 10.40 4 11/85 6/86 11/87 12/87 18 Wuning-Xinji 25.31 3 11/85 1/86 11/87 2/90 19 Huangshageng-Xbda 12.67 4 11/85 9/85 11/87 9/88 20 Yushan-Tongfang 55.15 4 11/85 10/85 11/87 12/88 21 Yaoli-Mifengjie 10.57 4 11/85 10/85 11/87 11/88 22 Jiaokang-Lean 38.94 4 11/85 10/85 11/87 10/88 23 Yutan-Lujiang 14.40 4 11/85 12/85 11/87 6/89 24 Xincheng4Qiusha 16.10 4 11/85 6/86 11/87 9/89 25 Wanhe-Potou 11.90 4 11/85 5/86 11/87 8/88 26 Hanxia-Nanltn 553 4 11/85 2/86 11/87 4/88 27 Juncun-Huangtang 23.71 4 11/85 10/85 11/87 7/88 28 Ruikeng-Shatianshui 5.40 4 11/85 6/86 11/87 9/88 29 Lintan-Cuting 14.15 4 11/85 11/85 11/87 9/88 30 Zhuangkuo-Huangling 29.92 4 11/85 10/S5 11/87 12/88 31 Longbu-Tianxin 9.00 4 11/85 12/85 11/87 12/88 Total 283.15  - 17 - B. National and Rural Roads (Contd) Road Start Date Completion Date Province Length Class & Sec.No. From-To (kin) Standard Forecast Actual Forecast Actual Guangxi 32 Xindu-Huaiji 31.53 3 11/85 9/86 11/87 10/87 33 Yunbiao-Nayang 19.83 3 11/85 8/86 11/87 5/88 34 Tiandong-Zurong 13.55 3 11/85 ;1/85 11/87 11/87 35 Dishui-Luoxiang 32.00 4 11/85 7/85 11/87 10/88 36 Baizhupu-Nioutangjie 39.21 4 11/85 12/85 11/87 1/89 37 Antai-Dongtou 13.00 4 11/85 1/86 11/87 1/88 38 Chuanshan-Xiangzhou 37.69 3 11/85 11/85 11/87 1/88 Total 186.81 Sichuan 42 Linkou-Miaoxi 25.74 4 11/85 10/85 11/87 4/88 43 Lujiao-Gongtan 15.00 4 11/85 10/85 11/87 3/88 44 Yushan-Lianhe 19.25 4 11/85 10/85 11/87 4/C3 45 Xiangkou-Baima 23.43 4 11/85 4/86 1-l/87 10/88 46 Fucheng-Yuquan 16.00 4 11/85 10/85 11/87 4/88 47 Zhouhe-Wangyu 5.56 4 11/85 10/85 11/87 12/87 48 Sijing-Yuquan 11.05 4 11/83 10/85 11/87 12/87 49 Kuile-Nanbaoshan 16.21 4 11/85 10/I5 11/87 5/88 S0 Minzhi-Minhe 16.31 4 11/85 10/85 11/87 1/88 51 Wudu-Tuanshan 9.70 4 11/85 10/85 11/87 5/88 52 Jinshan-Zhuyuan 6.16 4 11/85 10/85 11/87 5/88 53 Mingjing-Sanhekou 25.00 4 11/85 10/85 11/87 5/88 54 Yaojia-Jinshan 17.20 4 11/85 10/85 11/87 5/89 55 Fenshuiling-Sanhekou 15.13 4 11/85 10/85 11/87 5/89 56 Puguang-Fenshulling 10.27 4 11/85 10/85 11/87 5/89 57 Dayuan4Qifo 25.78 4 11/85 10/85 11/87 4/88 58 Yanjing-Tianhuaban 11.00 4 11/85 10/85 11/87 4/88 Total 268.79 Yunnan 59 Mongzi-Bada 51.47 4 11/85 11/85 11/87 4/88 60 Kunluoxian-Nannuoshan 11.60 4 11/85 11/85 11/87 12/87 61 Jinghong-Monglun 69.85 4 11/85 11/86 11/87 3/89 62 Mengla-Yaoqu 34.93 4 11/85 12/85 11/87 4/88 Total 167.85 TOTAL (Rural Roads) 1,357.35 Note: [1] Constrtcted to Class 2 standard except for width. [21 Some necessary additional work was carried out on National Road #02 and Rural Road #01 within the scope of the project, with Bank's concurrence. Source: MOC, PHBs and Bank Staff.  - 18 5. Project Costs and Financing A. Project Cc sts (Y'OO0) Appraisal Estimate Actual Local Foreign Total Local Foreign Total National Roads - Yancheng-Gaotang 16,657 16,657 33,314 36,940 21,050 57,990 Xia-Sanyuan 34,073 34,073 68,146 103,410 44,070 147,480 Other Roads 30,233 20,155 50,388 49,309 27,101 76,490 Rural Roads 139,751 75,251 215,002 238,490 113,210 351,700 Equipment - HPDI 311 3,149 3,460 1,309 2,418 3,727 HSRI - 3,900 3,900 - 4,900 4,900 Training - 6,049 6,049 ( - 3,218 3,218 Consultant Services - 1,778 1,778 I Road Maintenance Eqpt - 5,200 5,200 - 4,984 4,984 Total Base Costs[2] 221,026 166,212 387,238 429,538 220,721 650,259 Physical Contingencies 22,103 16,621 38,724 - - -[1] Price Contingencies 14,156 10,265 24,421 - - -[11 Total[2] 257,284 193,098 450,382 429,538 220,721 650,259 Right-of-way 20,269 - 20,269 - - -- [1] Total Project Costs[2] 277,553 193,098 470,651 429,538 220,721 650,259 Note: [11 Costs are included in other items. [21 Totals may not add due to rounding. Source: MOC, PHBs and Bank Staff B. Project Financing Appraisal Actual Government Bank Government Bank (Y m) (US$ m) (Yim) (US$ m) National Roads 81.0 26.0 189.7 29.6 Rural Roads 139.8 28.0 238.5 32.1 Equipment for HPDI and HSRI 0.3 2.5 1.3 2.3 Road Maintenance Eqpt - 2.5 -- 1.3 Training and Consultant Services - 2.0 -- 0.9 Right-of way, Contingencies and Other Costs 74.4 11.6 - [1] - [1] TOTAL 295.5 72.6 429.5 67.2 Note: [11 Costs are included in other items. Source: Bank Staff  - 19 - 6. Prc Resu A. EcononlJc fmyclA I. Pro jeSumlQ y Appraisal Estimate Actual Detail Base 1 [1] 2 [21 '3l Range Average Economic Rate of Return - % Whole Project 20 17 n/a n/a - 24 National Roads 21 18 20 n/a - 22 Rural Roads 21 18 n/a 17 - 26 Provinces Shaanxi 18 - - - - 24 Shandong 17-19 - - - 11-21 13 Fujian 37 - - - - 28 Sichuan 16-27 - - - 10-29 18 Yunnan 14-19 - - - 3-33 24 Anhui 18-34 - - - 23-40 28 Jiangxi 17-27 - - - 16-47 32 Zhejiang 15-31 - - - 23-33 29 Guangxi 16-32 - - - 19-46 29 Notes: [1] 20% increase in costs. [21 10% reduction in traffic growth. [31 2.5% slower increase in value added. Source: MOC and PHBs II. National and Rural Roads Traffic (AADT) Investment Cost Road (Y million) 1984 Opening Year 1991 ERR (%) Province Length class & Sec.No. From-To (km) standard Forecast Actual Actual Forecast Actual Actual Forecast Actual NAllONAL ROADS Shandong 01 Huihe.-Majiadian 21.00 2 9.39 11.45 726 1127 2285 n/a 14 21 02 Yancheng-Gaotang [1] 53.00 2 33.31 57.94 1100 1340 1363 1363 11 11 Shaanxd 03 Xian-Sanyuan 34.00 1 80.30 147.38 3064 4758 5702 6204 18 24 Anhui 04 Laibang-Baojiahe 33.00 3 7.59 11.94 264 429 190 226 34 30 Fujian 06 Caotien-Huashanjie [21 32.45 3 13.41 13.41 469 668 672 1211 37 n/a Sichuan 07 Longtai-Tangba ,3l 28.06 3 17.50 23.96 507 875 732 1858 36 26 Yunnan 08 Yangwu-Honglongchang 21.40 3 9.34 15.88 774 1137 1132 1273 19 38 TOTAL (National Rds) 222.91 170.84(41281.96 22  - 20 - H. National and Rural Roads (Contd) Traffic (AADT) Investment Cost Road (Y million) Opening Year 1991 ERR (%) Province Length class & Sec.No. From-To (kxn) standard Forecast Actual Forecast Actual Actual Forecast Actual RURALRQAD Zhejiang 01 Deqing-Zhouquan (1J 36.00 3 6.61 10.60 1044 1465 2093 18 30 02 Tangqi-Deqing 17.34 3 3.20 3.89 753 1086 1811 14 33 03 Tuankou-Xiazhong 28.00 4 3.11 4.57 294 396 345 16 25 04 Majian-Zhuji 4.60 4 0.61 0.62 336 642 1070 26 30 05 Fanqian-Huaqiang 8.82 3 1.37 2.36 1089 1106 1366 26 33 06 Xiasheng-Nanxi 30.97 4 3.23 5.20 282 429 715 17 26 07 Yaozhuang-Hangling 10.00 4 1.36 1.55 607 493 580 19 29 08 Tanqiang-Shilong 49.40 3 9.27 16.62 1720 1036 720 16 27 09 Shanxi-Xiahong 40.80 4 5.47 6.95 439 384 452 20 27 10 Dajun-Shawan 21.80 4 3.86 4.42 485 491 607 11 24 11 Jianggen-Kengdi 14.00 4 1.96 2.11 184 195 271 L7 23 Total 261.73 40.05 58.89 28 Anhui 12 Jiapeng-Jingzhou 30.00 4 2.67 4.38 174 182 24 34 13 Nanyuankou-Shendu 30.02 4 3.06 4.41 194 254 19 32 14 Huangbei-Xiaochuan 20.35 4 1.72 2.45 215 224 36 40 15 Tangpohe-Yuexi 60.10 3 9.44 16.12 448 431 34 26 16 Huanggang-Bailitun 48.55 4 6.47 9.60 180 187 29 23 Total 189.02 23.36 36.96 28 Jiangxi 17 Linjia-Fanzhen 10.40 4 1.25 1.73 41 90 41 47 18 Wuning-Xinji 25.31 3 5.46 8.27 127 150 25 27 19 Huangshagerig-Xixia 12.67 4 2.32 3.40 85 100 61 37 20 Yushan-Tongfang 55.15 4 4.45 6.98 160 110 25 28 21 Yaoli-Mifengjie 10.57 4 1.57 0.09 69 50 48 21 22 Jiaokang-Lean 38.94 4 5.33 8.10 82 116 45 43 23 Yutan-Lujiang 14.40 4 1.41 2.07 232 275 53 30 24 Xincheng-Qiusha 16.10 4 3.87 6.23 332 300 34 21 25 Wanhe-Potou 11.90 4 1.78 2.45 110 133 25 20 26 Hanxia-Nanhn 5-53 4 0.73 1.09 54 53 41 43 27 Juncun-Huangtang 23.71 4 3.39 4.82 135 244 30 39 28 Ruikeng-Shatianshui 5.40 4 0.72 1.02 65 200 65 42 29 Lintan-Guting 14.15 4 2.18 3.14 56 80 16 16 30 Zhuangkuo-Huangling 29.92 4 6.01 9.02 108 222 21 38 31 Longbu-Tianxin 9.00 4 1.37 103 60 43 27 33 Total 283.15 41.84 60.44 32  - 21 - H. National and Rural Roads (Contd) Traffic (AADT) Investment Cost Road (Y miUion) Opening Year 1991 ERR (%) Province Length class & Sec.No. From-To (km) standard Forecast Actual Forecast Actual Actual Forecast Actual Guangxi 32 Xindu-Huaiji 3153 3 6.85 12.12 380 388 415 26 30 33 Yunbiao-Nayang 19.83 3 3.08 4.50 520 574 630 32 46 34 Tiandong-Zurong 1355 3 6.24 9.44 230 378 430 18 19 35 Dishui-Luoxiang [5] 32.00 4 4.66 6.56 60 n/a n/a 25 n/a 36 Baizhupu-Nioutangjie 39.21 4 4.00 6.08 250 231 266 34 29 37 Antai-Dongtou [5] 13.00 4 2.49 3.69 30 n/a n/a 30 n/a 38 Chuanshan-Xiangzhou 37.69 3 7.28 1050 450 365 486 20 29 Total 186.81 34.60 52.89 29 Sichuan 42 Unkou-Miaoxi 25.74 4 4.24 6.89 45 50 70 26 29 43 Lujiao-Gongtan 15.00 4 1.50 2.35 48 54 72 21 22 44 Yushan-Lianhe 19.25 4 3.54 5.06 36 83 100 17 18 45 Xiangkou-Baima 23.43 4 6.91 7.93 187 140 170 27 19 46 Fucheng-Yuquan 16.00 4 4.40 6.66 56 48 109 13 10 47 Zhouhe-Wangyu 5.56 4 1.84 2Z71 66 56 64 17 16 48 Sijing-Yuquan 11.05 4 2.20 3.33 57 36 47 13 20 49 Kuile-Nanbaoshan 16.21 4 4.60 7.54 55 33 42 24 19 50 Minzhi-Minhe 16.31 4 3.78 5.76 80 78 90 14 14 51 Wudu-Tuanshan 9.70 4 4.27 5.63 210 230 258 22 19 52 Jinshan-Zhuyuan 6.16 4 2.46 3.87 58 72 100 16 23 53 Minging-Sanhekou 25.00 4 5.37 8.68 180 152 172 18 10 54 Yaojia-Jinshan 17.20 4 2.17 3.75 49 56 77 16 19 55 Fenshuiling-Sanhekou 15.13 4 1.68 2.69 39 38 47 18 18 56 Puguang-Fenshuiling 10.27 4 1.42 2.32 39 34 51 18 20 57 Dayuan-Qifo 25.78 4 5.67 9.09 7S 75 105 16 18 58 Yanjing-Tianhuaban 11.00 4 3.40 5.39 43 50 67 13 14 Total 268.79 59.45 89.65 18 Yunnan 59 Mongzi-Bada 51.47 4 6.61 11.82 120 70 11 12 60 Kunluoxian-Nannuoshan 11.60 4 2.07 3.37 100 25 12 3 61 Jinghong-Monglun 69.85 4 12.04 28.61 160 440 440 16 33 62 Mengla-Yaoqu 34.93 4 5.84 9.07 140 124 14 19 Total 167.85 26.56 52.87 24 TOTAL (Rural Roads) 1357.35 225.86 351.70 26 Notes: [1l Includes additional work. [21 Evaluation of Ftnal ERR to be done when connecting roads are completed. [31 Constructed to Class 2 standard except for width. [4] Total of Y158.69 million in SAR is incorrect. [51 Connecting roads not yet complete. Source: MOC and PHBs  - 22 - B. Studies Purpose as Defined Impact of Studies at Appraisal Status Study Pavement Strengthening Assess methodology for pavement Completed Results being incorporated strength evaluation to identify 1987 into evaluation and design of improvement and strengthening needs new national roads of existing paved national roads Road Congestion Identify possible solutions for improv- Completed Results are to be used in a ing road capacity in congested areas 1987 pilot study on traffic congest- near cities ion, but this has been delayed for lack of funding Road Safety To study road safety aspects in one Completed Study carried out in Sichuan province ard recommend measures to 1987 Province. Its main recommend- be taken to improve safety ation to improve the accident reporting system as a first step towards an effective accident reduction program has not been implemented because of changes in which authorities are responsible for the various aspects of road safety Source: MOC, Bank Staff C. Overseas Training Start No. of No. of Man-months Subject Location Date Days Persons (approx) ce Australia 3/88 28 12 11 ing and Statistics England 4/88 60 9 18 c Simulation Australia 5/88 .50 7 12 " Safety Australia 9/88 50 7 12 vey and Design England 3/88 60 9 18 ject Management Germany 5/88 60 11 22 * and Construction Germany 9/88 60 9 18 -rade and Pavement Construction Germany 9/88 60 10 20 ..truction Supervision Denmark 9/86 40 29 39 mputer Aided Design USA, Hong Kong 8/88 varied 12 9 ransport Schools Staff Australia 3/91 60 14 28 ransport Schools Staff Australia 6/91 45 9 15 Source: MOC  - 23 - 7. Status of Coyenants Deadline for Covenant Subject Compllance Status Credit Agreement 3.03 Enter into a project implementation agreement with the project Complied with provinces, including items specified in Part R of Schedule 4 4.01(a) Maintain records and accounts, in accordance with sound account- - Complied with ing practices, to reflect the operations, resources and expenditures in respect of the Project of the agencies responsible for carrying out the Project 4.01(b) In respect of the accounts: (i) have thern, including the Special Account, audited each Annually Complied with, flscal year by independent auditors using appropriate auditing commencing except first report principles consistently applied 1986 was in 1987 (ii) furnish, not later than six months after the end of each fiscal 6/1/86 and Comptied with year, a certified copy of the audit report annually except first report thereafter was by 6/1/87 (iii) furnish other information concerning the accounts as shall be - Complied with from time to time requested 4.01(c) For all expenditures made on the basis of statements of expenditure: ({) maintain separate records and accounts Complied with (iO) retain all records until one year after the Closing Date 6/30/92 Not yet due (iii) enable the Association's representatives to examine such - Complied with records (iv) include these separate accounts in the annual audit and submit - Complied with a separate opinion by the auditors as to whether the proceeds of the Credit have been used for the purpose for which they were provided Schedule 4 A.1 National and rural road segments to be included in the Project and - Complied with the design standards for them shall be agreed between the Boorower and the Association A.2 The studies under the Project shall be carried out in accordance with - Complied with termns of reference acceptable to the Association. The Borrower shall provide copies of the studies to the Association upon completion in order for them to exchange views on the findings A.3 The training under the Project shall be carried out in accordance with a - Complied with program agreed between the Borrower and the Association A.4 Reports on Project progress shall be fumrished to the Association for each - Not well complied with calendar year quarter, within 45 days of the end of each quarter, in a form acceptable to the Association Source Bank Staff  - 24 - 8. Use gf rDA Resources A. Staff Inp2uts Stage of Number of Project Cycle Staff-weeks Remarks Through Appraisal 104.6 Estimate - MIS divides up lending operation in different way Appraisal through Board Approval 66.5 Estimate - MIS divides up lending operation in different way Board Approval through Effectiveness 25.6 Estimate - MIt divides up lending operation in different way Supervision 72.8 Includes preparation of PCR TOTAL 269.5 _urce: Bank Staff B. Missions Stage of Month/ Number of Days Specialization Performance Types of Project Cycle Year Persons in Field Represented Ill Rating Status [21 Problems [31 Through Appraisal - Identification 04/83 2 21 EGR/ECN - Preparation I 07/83 3 16 EGR/ECN/FNA - Preappraisal 05/84 4 19 EGR/ECNx2/CHF - Preparation II 07/84 1 28 TRS Appraisal 11/84 8 21 EGRx3/ECNx2/TRS/PSP/LWR - ppraisal through aard Approval - Post-appraisal 03/85 4 9 EGRx2/ECN/PSP - - Board Approval thru Effectiveness - Supervision 1 07/85 1 21 EGR I Supervision 11 08/85 6 19 EGRx2/ECN/CHF/CSPx2 1 ipervision - Supervision m 06/86 2 28 EGRx2 2 M Supervision IV 02/87 2 28 EGRx2 I Supervision V 07/87 2 31 EGRx2 1 Supervision VI 10/88 2 8 EGR/TSP 1 Supervision VI 08/89 1 10 EGR 1 Supervision VI 11/89 3 3 EGRx2/TSP 1 Supervision (PCR) 06/91 1 28 EGR Notes: III EGR = Engineer, ECN . Economist, FNA = Financial Analyst, CHF = Division Chief, TSP = Transport Spedialist, TRS = Training Specialist, CSP = Computer Specialist, PSP = Prourement Specialist, LWR = Lawyer [21 1 . Problem-free or Minor Problems, 2 = Moderate Problems. [31 T = Technical, M = Managment, F = Fmancial, 0 = Other. Source: Bank Staff  \ ~~~~~~~~~R U S S I A 5 R U S S I A KAZAKHSTAN~ ~~~~~I > ~ ~ 0NG0 KYRGHYZSIAN ' 'a5- - Sa- .~- D = OEMOCREATIC TX ",a-a PEOPLES JAPAN'\ tolo v g ,, . MF EA IA'KCSIAN OFaKORE x5:J;eFr5S;>i$i554<~ ~ ~ ~ ~~ ~ ~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~BMBt E tasa ha i' C HI N AC. TRANSPORT SYSTEM < M .r6 >S = M6IOR TDWF15 2\ ! X b- 7