Ghana - Priority Works Project

Doc9umnt of The World Bank FOR OMCIAL USE ONLY Report No. 12555 PROJECT COMPLETION REPORT REPUBLIC OF GHANA PRIORITY WORKS PROJECT (CREDIT 1874-GB) NOVEMBER 29, 1993 MICROGRAPHTCS Report No: 12555 Type: PCR Infrastructure Division Country Department IV Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Cedi (C) Exchange Rate (Cedi to USS) 1987 (SAR) 0.0061 1988 0.0049 1989 0.0037 1990 0.0031 1991 0.0028 1992 0.0025 ABBREVIATIONS AND ACRONYMS ADRP Accra District Rehabilitation Project BHC Bank for Housing and Construction DRUs District Roads Units DUR Department of Urban Roads GHA Ghana Highway Authority GOG Government of Ghana ICB International Competitive Bidding LCB Local Competitive Bidding LS Local Shopping iMFEP Ministry of Finance and Economic Planning MLG Ministry of Local Government MMA Metropolitan Municipal Authority Kw4 Ministry of Works and Housing NMR Ministry of Roads and Highways PWP Priority Works Project PAC Project Advisory Committee PAMSCAD Program of Action to Mitigate the Social Costs of Adjustment PPF Project Preparation Facility SA Special Account SAC Structural Adjustment Credit SHC State Housing Corporation SOE Statement of Expenditure SSNIT Social Security and National Insurance Trust TSC Technical Services Center WFP World Food Program FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 90433 U.SA Office of Director-Genural Operations Evaluation November 29, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT' SUBJECT: Project Completion Report on Republic of Ghana Priority Works Prolect (Credit 1874-GH) Attached is the "Project Completion Report on the Republic of Ghana - Priority Works Project (Credit 1874-GH),"? prepared by the Infrastructure Operations Division of the Western Africa Department. Part IT contains the Borrower's perspective. It highlights the drawbacks of proceeding on an emergency footing without adequate billing, accounting and disbursement arrangements. The project took more than twice as long as expected. But it achieved its main objectives viz the support of an emergency program of priority public works and the generation of employment needed to mitigate the adverse impacts of an adjustment program in Ghana. In particular, the project helped create a number of short-term jobs at reasonable cost. Problems arose in setting up a project management unit, administering labor intensive works and acquiring land needed for the implementation of the housing sub-component. Complex cofinancing arrangements and overly elaborate contractual procedures contributed to the delays. Lessons learnt in designing and implementing emergency operations highlight the importance of defining realistic objectives and opting for simple administrative arrangements, including streamlined procurement and disbursement procedures. Multiple objectives are difficult to achieve in an emergency situation. Therefore, it is not surprising that project attempts at demonstrating cost-effective construction techniques for housing and at divesting existing Government-owned housing units were not successful. On balance, the project outcome is rated as satisfactory, institutional development impact as partial, and sustainability as uncertain. The PCR is adequate. However, there is no economic analysis and no comment by cofinanciers. The project may be audi-ted along with the Accra District Rehabilitation Project (Credit 1564-GH). This document has a restrcted distribution and may be used by recipients onty in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OmCIuL USE ONLY PROJECT COMPLETION REPORT REPUBLIC OF GHANA PRIORITY WORKS PROJECT (CREDIT 1874GH) Table of Contents Page No Preface ........... .i Project Evaluation Summary ............................................... ii Part I Project Review from IDA's Perspective A. Project Identity .. B. Project Background ..................... I C. Project Objectives and Description ..I D. Project Design and Organization.. 2 E. Project Implementation ..................... 3 F. Project Results. 6 (. Project Sustainability.. 8 H. IDA Performance ..... .. 9 I. Borrower Performance .9 1. Consulting Services ...................................... 9 K. Project Documentation and Data ................. 9 Part 11 Project Review from Borrower's Perspective ....................... 11 Part III Statistical Tables Table 1 Related IDA Credits .................................. 16 Table 2 Project Timetable .................................... 17 Table 3 Credit Disbursements .................................. 18 Table 4 Project Costs Financing ................................ 19 Table 5 Project Financing by Donor ............................... 20 Table 6 Withdrawal of the Proceeds of the ......................... 21 Table 7 Project Results - Employment Performance ................................ 22 Table 8 Mission Data by Stage of Project Cycle ....................... 23 Table 9 Project Specific Covenants ................................. 24 ANNEXES 1. Record of Project Progress Reports Submitted to Bank ... ... ..........e.. 25 2. Procurement Arrangements. . 26 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.  R=IORITY WORKS PROJECr (CREDrr 1874G-}) PREFACE This is the Project Completion Report (fPCR) for the Priority Works Proaej in Ghana for which Credit 1874-OH, in the amount of SDR 7.8 million (US$10.6 million equivalent) was approved on January 26, 1988. The credit was closed on December 31, 1992, two years and a half behind schedule. Disbursements against commitments were made through April 30, 1993. An undisbursed balance of US$9,835.52 remains in the Special Account. It is very likely that this amount will be canceled once the Special Account is fully recovered. The PCR (Preface, Evaluation Summary, Parts I and m) has been based on a review of the Staff Appraisal Report, President's Report, the Development Credit and Project Agreements, supervision reports, correspondence between the Bank and the Borrower, and internal Bank memoranda. Part H was prepared by the Borrower. The Task Manager for this PCR is Eleanor Warner. The Division Chief and Director for this operation are Messrs. James Wright and Edwin Lim.  - ii - PROJECr CQQlEfl QEEEQRI REPUBLIC OF GHAKA PRIOQR WORKS PROJECT (CREDIT 1874-GM EYALUhATIN SUMMARY i. Tne project objectives were to: (i) support a special program of priority public works which would generate productive jobs over a two-year period; (ii) rehabilitate and maintain essential urban infrastructure; (iii) relieve the acute shortage of housing; begin the process of completing and divesting existing Government-owned housing units; and (iv) demonstrat.- more appropriate and cost-effective approaches to the provision of shelter for the urban poor. rae v roject was successful in generating employment, but it was less successful in demonstrating cost-effective house construction techniques. Implementation Exnerince ii. Implementation of the project took over twice as long as anticipated, four and a half years instead of two. One major reason for implementation delay was due to a change in leadership shortly before credit effectiveness. The project was initially intended to be cleared as a package, but the concept had to be changed. Instability at the top meant that authority to drive the project and procedural arrangements for procurement was lacking (para 36). iii. Another major cause was the delay in signing the cofinancing agreemens, which took effect in 1990, about two years after the start of the project (para 8, a). Further delays occurred in the procurement procedures due to lack of familiarity of the MMAs with Bank procurement guidelines (this was mitigated to some extent by experienced staff of the PMU, para 8, c), and with the joint cofinancing arrangements, which were cumbersome to administer. Results iv. Most of the physical works were accomplished as anticipated, though with delays. By the close of the project a total of 271 subprojects had been developed in the four project cities, Accra, Kumasi, Sekondi-Takoradi and Tema. The IDA credit of SDR 7.8 miSlion (US$10.6 million equivalent) was almost entirely drawn down, as were the loans of $5.9 million and $4.8 million from KfW and OPEC, respectively. v. Employment generation, a major objective of the project, amounted to 8,472 person years at an average cost of US$2,122 per job. This was a significant achievement given the volume of startup administrative difficulties, and the limited technical and fmancial capacity of the local contractors. The actual mber of jobs created fell short of the SAR target by 21% while the average cost per job increased by 32% (para 24). vi. The major focus of the project was fast employment generation during project implementation (paras 24 to 26). The emergency aspect tended to override the longer term issue of sustainability. This is evidenced by the absence of a housing policy or detailed preparatory work on which to base components such as site development and housing consolidation. Without prior policy agreements the  - lit - project fell short of the fbllowing objecdves which relae to sustinability: (a) beginning the process of divesting Government-owned housing units; and (b) demonstrating the effectiveness and appropriateness of the sites and services concept. vii. On the institutonal side, the project helped to strengthen capacity in Ghana's urban institutions, namely Deparment of Urban Roads (DUR) of the Ministry of Roads and Highways (MRH) and Technical Services Center (TSC) of MWH, which now continue their involvement in follow-on projects. -ne infrastructure rehabilitation could be sustained with adequate budgetary allocation for maintenance which the GO has committed itself to (see SAR for the Ghana Urban Transport, Report No 11674-GH). Similarly, sustainability could be ensured for the urban upgrading component (Urban n Project, SAR No. 8331-OH) with the possibility of increased municipal revenues from higher property rates (para. 34). Findings and Lessons viii, Labor intensive works are complex to administer and should be avoided on an emergency basis. This type of work should form part of a longer structured program with due consideration to the practicality of the construction methods and economic efficiency (para 8, f). ix. Land required for the project should be acquired before project effxtiveness to help avoid lengthy startup delays (para 10, I 1). X. Joint cofmancing should be avoided for emergency projects, particularly where there is a large number of relatively small contracts; parallel cofinancing in which discrete procurement packages are financed by separate donors would have worked more effectively. Future emergency projects should opt for a simplified method of project delivery (para 18). xi. Timely payments to small contractors are critical for the development of the local contracting industry (para 8, b).  PRO=IE CQMPLZQN REOT REPUBLIC OF GAU& PART I. PROJECT REVIEW FROM W)A'S PERSPECTIVE A. oej Idgll1ity Name: Priority Works Project Credit No: 1874-GH RVP Unit: Afri_a Region Country: Republic of Ghana Sector: Infrastrucure B. Background 1. An economic recovery program embarked upon by the Government with Bank assistance succeeded in placing the Ghanaian economy once again on a growth path after a period of protracted decline. To redress some of the adverse social impacts resulting from the fiscal adjustment program, the Government, with Bank assistance, developed a Program of Actions and Measures to Address the Social Costs of Adjustment (PAMSCAD) which identified an action plan for quickly generating employment and dealing with issues confronting the poor. The priority works project formed an important component of the Bank-assisted initiatives under PAMSCAD. The project was conceived as a supplementary credit to the Accra District Rehabilitation Project (ADRP), building on and extending the works carried out by the institutions implementing the ADRP. The time frame for implementing all co^mponents of the Priority Works Project (PWP) was expected to be two years, in response to the need to generate new jobs in the short run. C. Project Objectives and Description 2. The primary objective of the PWP was to support a special program of priority public works which would generate about 10,000 productive jobs over a two-year period beginning April 1988. This objective was to be accomplished through the financing of labor-intensive priority urban subprojects with high economic and social rates of return. Other objectives included helping to rehabilitate and maintain essential urban infrastructure; helping to relieve the acute shortage of housing; beginning the process of completing and divesting existing Government-owned housing units; and demonstrating more appropriate and cost-effective approaches to the provision of shelter for the urban poor. 3. The project as described in the Staff Appraisal Report included: PAMSCAD Related Components (a) Infrastructure Rehabilitation and Maintenance in Accra, Tema, Kumasi and Sekondi- Takoradi: Extension of works being undertaken under ADRP, includiig: (i)-Drainage- desilting and excavation of earth channels, clearing of existing open-lined channels, construction of key lengths of new open drains and culverts; (ii) Roadworks-road cleansing, provision of curbs, key intersection improvements, bus bays, patching of areas of road deterioration, and sidewalks; (iii) Traffic Management-intersection and  -2 - lane marking, safety and road name signs, and pedestrian 'zebra' crossing; (iv) Sewerage (Tema only)-replacement of failed sewer lines; (v) Streetlighting-rehabilitation of columns and lanterns on important roads and intersections (Accra and Sekondi- Takoradi only); and (vi) Maarket (Kumasi only)-rehabilitation of drains and walkways. (b) Urban Upgrading (Accra): Extension of works being undertaken in the most extensive slum areas in Accra and Tema under ADRP including: (i) provision of roads, water supply, secondary and tertiary drainage, streetlightiLng, and public sanitary conveniences (KVIPS) in West Nima and Ashaiman; (ii) provision of tertiary drainage in East Maamobi; and (iii) lining the Odaw stream in West Nima. Pilot Components (c) Housing Consolidation (Accra and other cities): A pilot subproject to complete 200 of 5,000 uncompleted government units; 100 for rent to government employees, and 100 for sale through the Bank for Housing and Construction (BHC) to the private sector. (d) Sites and Services (Tlema): (i) site development-A pilot subproject, including the development of 400 serviced plots for sale to companies, organizations and individuals for low-income housing; (i) Credit for site consolidation-a line of credit to BHC to assist companies, organizations and individuals, to finance the construction of low- income housing units on the sites and services plots; and Institutional Support (e) TSC and GHLA/DUR Support 1/, Funding for TSC and DUR to assist in preparing, managing and monitoring the project, undertaking studies to improve employment generation under the project and undertaking studies to prepare future projects. D. Project Design and Organization 4. PWP was designed to assist with short-run employment generation through the financing of labor-intensive priority urban subprojects. Because of its focus on employment generation and quick implementation (2 years versus the typical 5-7 years), PWP did not attempt major institutional or financial reform. These objectives were being pursued under a parallel project Accra District Rehabilitation Project (Credit 1564-GH). 5. Main responsibility for project implementation resided with the Ministries of Roads and Highways (MRH) and Works and Housing (MWH), both of which were responsible for executing the ADRP. Responsibility for implementation of the infrastructure rehabilitation works in Accra, Tema, Kumasi and Sekondi-Takoradi resided with the Department of Urban Roads (DUR) in coordination widt the related metropolitan municipal authorities (MMAs). TSC was responsible for the implementation of the urban upgrading, housing consolidation and sites and services components. BHC was required to i/ The Department of Urban Roads (DUR) was created specifically to take up responsibility for urban roads from the Ghana Highway Authority (GHA).  -3 - assist MWH and TSC to implemnent the two latter components. This arrangement was expected to enable TSC to focus on technical issues within its competence, and draw upon BHC's considerable financial and commercial experience in sales and financing of houses and sites. 6. To coordinate the project while providing policy direction, an Interministerial Committee comprising the PNDC Secretaries for Roads and Highways, Works and Housing, and Local Government was established, which was expected to meet monthly. The committee was assisted by senior officials of the respective ministries, the Ministry of Finance and Economic Planning WEP), TSC and DUR. Project advisory committees (PACS) were also established in each project city to provide local policy guidance to the roads units, ensure coordination with work of the City or District Council and monitor project performance. The institutional arrangements fir the project worked well for the purposes intended. E. Project Implementation Credit Effectiveness and Project Start-up 7. The credit became effective in June 1988, but got off to a slow start due to a 7-month delay in setting up the project management unit within DUR and a further 3-month delay in hiring key professional staff for the unit. The change in leadership at the MWHI shortly before credit effectiveness contributed to this delay. Further start-up delays were caused by GOG's tardiness in finalizing cofinancing agreements with OPEC and ICFW which did not become effective until mid-1990. 'Me effects of these delays are reflected in significant lags in disbursement (See chart in Part M, Table 3). Implementation 8. The project was originally scheduled to be implemented between June 1988 and June 1990. Most of the project components did not end until December 1992, however. The main reasons for the delay were: Cofinancing (a) lengthy delays by GOG in finalizing and signing the cofinancing agreements; the result was that cofinancing funds came on board about two years later than MA funds; (b) complication with joint financing by 4 financiers where each cofinancier met a proportion of the costs of a component. This method turned out to be impracticable given the large number of relatively small contracts involved; the accounting became very complex as each financier had its own method of disbursement and unique project conditions. The resultant administrative bottleneck in processing contractors' payments led to delays in payments which, in turn, slowed progress, and in some cases, caused some of the small contractors to declare bankruptcy; Procurement (c) unfamiliarity of the MMAs in Kumasi, Sekondi-Takoradi and Tema with Bank procedures, especially the procurement guidelines. This was mitigated to some extent  -4- by the PMU, whose staff were familiar with the Bank's procedures, but the actual contracts had to be signed by the MMAs and they therefore dictated the pace of implementation; (d) the protracted GOG procurement approval process which affected the larger subprojects such as Nima Stream Channel and West Nima Upgrading; Loalstigs (e) underestimation of the number of separate contracts that tabor intensive works involve and the consequent administrative effort required to manage them; and (f) in some cases, the objective of creating employment was allowed to overrule issues of construction practicality and economic efficiency. Engineering works which are most appropriately carried out by equipment intensive construction were allowed to be done by labor intensive techniques. 9. What MA and the Borrower could have done to avoid project delays is discussed as lessons learned in paras via through xi of the Preface. Housing Consolidation 10. After a lengthy and problematic identification process a total of 16 contracts were let for the completion of 206 housing units. A total of 106 have been allocated as rental units for housing Goverunent staff, and are now occupied. The remaining 100 units are saleable by BHC at market rates. Of these latter units, 64 have already been sold while sale of the remaining 36 is delayed by flooding of the area (Teshie-Nungua). TSC identified the need for construction of an interceptor drain to the north side of the site to catch and divert surface run-off and commissioned the necessary designs; additional funds have been requested by TSC from the GOG to fund the required civil works. Site and Services 11. Site development eventually was completed after a lengthy land acquisition process. After the site located at Tema Community 3) was developed, a decision was taken by GOG not to proceed with the sites and services concept on that location. The developed site was instead sold to SSNIT for a total of