Nepal - Road Flood Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15859 IMPLEMENTATION COMPLETION REPORT NEPAL ROAD FLOOD REHABILITATION PROJECT (IDA CREDIT 1922-NEP) June 7, 1996 Energy and Infrastructure Operations Division Country Department II South Asia Region This document has a restricted distrbution 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 - Nepalese Rupee (NR) $1 = NR 50.70 (at completion - 30 June 1995) $1 NR21.90 (at appraisal - May 1988) WEIGHTS AND MEASURES I meter (m) = i 8 feet (ft) I kilometer (kini) 0.62 miles (nmi) GOVLRNMENT FISCAL YEAR July' 16 to.July 15 ABBREVIATIONS AND ACRONYMS DOR - Department of Roads HMGN - I-lis Majesty's Governmnent of Nepal ICR - Implemenitationi C'ompletion Report MOF - Ministry of Finanice MOWT - Ministry of Works and T ransport RFRP - Road Flood Rehabilitation Project PEM - Programme Enginieering Manager PM - Project Manager IDA - Internationial Development Association SDC - Swiss Development Cooperation ODA - Overseas Development Administrationl (U.K.) ADB - Asian Development Bank LINDP - Unjited Nations Development Program  FOR OFFICIAL USE ONLY IMIPLEMENTATION COMPLETION REPORT KINGDOM OF NEPAL ROAD FLOOD REHABILITATION PROJECT - CREDIT 1922-NEP Table of Contents Page No. Prefac. Evaluation Summarym. Part I Project Implementation Assessment A. Statement/Evaluation of Objectives ..................................................1 B. Achievement of Objectives .................................................2 C. Major Factors Affecting the Project ..................................................3 D. Project Sustainability ..................................................4 E. Bank Performance .................................................S5 F. Borrower Performance ..........6.......................................6 G. Assessment of Outcome ..................................................6 H. Future Operation .................................................7 I. Key Lessons Learned ..................................................7 Part II. Statistical Tables Table 1: Summary of Assessments .............................................9 Table 2: Related Bank Loans and Credits ............................................ 10 Table 3: Project Timetable ............................................. 11 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual ...... 11 Table 5: Key Indicators for Project Implementation ........................................ 12 Table 6: Key Indicators for Project Operation ............................................ 13 Table 7: Studies Included in Project ............................................ 13 Table 8A: Project Costs .13 Table 8B: Project Financing .13 Table 9: Economic Costs and Benefits .14 Table 10: Status of Legal Covenants .14 Table 11: Compliance with Operational Manual Statements .14 Table 12: Bank Resources: Staff Inputs .14 Table 13: Bank Resources: Missions .15 Appendices Appendix A: Mission's Aide-Memoire .16 Appendix B: Summary of Borrower's Implementation Completion Report - Junel995 ....... 19 This document has a restricted distribution and may be used by recipients only in the performance of their | oficial duties. Its contents may not otherwise be disclosed wiihout World Bank authorization.   IMPLEMENTATION COMPLETION REPORT KINGDOM OF NEPAL ROAD FLOOD REHABILITATION PROJECT - CREDIT 1922-NEP Preface This is the Implementation Completion Report (ICR) for the Road Flood Rehabilitation Project in the Kingdom of Nepal, for which IDA Credit 1922-NEP in the amount of SDR 11.2 million ($15.5 million equivalent) was approved on 14 June 1988 and made effective on 19 January 1989. The credit was closed on 30 June 1995, compared with the original closing date of 30 June 1992. The Final Disbursement took place on 20 December 1995, at which time a balance of SDR 2.4 million ($3.6 million equivalent) was canceled. Cofinancing for the project was provided by United Nations Development Program (UNDP) in the amount of $0.77 million. The ICR was prepared by Richard Leonard, EA2TP and Chris Hoban, Task Manager, SA2EI, of the South Asia Region and, and reviewed by Jean-Francois Bauer, Chief, SA2EI and Kazuko Uchimura, Project Adviser, SA2DR. Preparation of this ICR was begun during the Bank's completion mission in June 1994, and is based on material in the project file. The borrower actively contributed to the preparation of the ICR by preparing its own Completion Report, a summary of which is attached as Appendix B, and providing comments on the draft ICR. The full Borrower's Completion Report and also a Completion Report written for UNDP are available on the project file.   IMPLEMENTATION COMPLETION REPORT KINGDOM OF NEPAL ROAD FLOOD REHABILITATION PROJECT - CREDIT 1922-NEP Evaluation Summary Introduction 1. Nepal had a very limited road network up to the early 1970s, and its construction and maintenance have been difficult because of unstable mountain terrain and high rainfall. IDA has supported this sector with three previous projects. Credit 223-NEP ($2.5 million), satisfactorily completed in June 1977 after some delays, dealt the replacement of substandard bridges, construction of suspension bridges for porter traffic, preparation of a road maintenance program and technical assistance. Credit 730-NEP ($17.0 million) provided for the upgrading of about 18 km of the main road link from Kathmandu to India, equipment for feeder road construction, feasibility studies on potential future road investments and a training program for mechanics. The Third Highway Project, Credit 1515-NEP (SDR 11.2 million), effective in January 1996 and completed in June 1995, was in progress throughout the whole of this project and assisted with improvements to the Kathmandu-Birganj Road and the East-West Highway in the Far West of Nepal. The ongoing Road Maintenance and Rehabilitation Project, Credit 2578-NEP (SDR 36.6 million), which became effective in September 1994, is dealing with the maintenance and rehabilitation of important road links and substantial institutional strengthening. 2. A severe flood in 1987 caused extensive damage to roads in the Central and Eastern Regions and the Kathmandu Valley. Land communications came to a halt along the East-West Highway in the Terai and from Kathmandu to China (Tibet) along the Arniko Highway. In January 1988, HMGN requested emergency assistance from IDA for reconstruction and rehabilitation of damaged structures. Project Objectives 3. The project aimed to deliver immediate assistance to HMGN to carry out its program to rehabilitate, rebuild or replace priority elements of flood-damaged roads and ancillary structures in the Eastern and Central Development Regions and the Kathmandu Valley. It would also accelerate the start of selected top priority works designed to protect investments in road infrastructure that survived the 1987 flood. 4. The scope of the works originally planned for the project were realistic in the light of the factors and expectations pertaining at the time. The project design could have paid greater attention to potential implementation delay problems already evident under Cr. 1515 and the need to strengthen preventative maintenance measures to mitigate flood damage.  ii Implementation Experience and Results 5. The physical objectives of the project were substantially achieved, though in seven years rather than four. Physical targets were modified to some extent at a mid-term review in 1990, to take account of the revised scope of initial works, implementation delays and overlapping activities included in other externally-financed projects. Project savings were partially used to finance some additional works to mitigate further flood damage in 1993. 6. The project cost was $15.5 million, compared with the estimated cost of $18.5 million. IDA provided $12.3 million compared with the SAR estimate of $15.5 million. The IDA undisbursed balance represents 21 percent of the Credit. In Nepalese currency, however, total expenditure was NR 630 million compared with NR 405 million at appraisal because of changes in exchange rates. Expenditure of UNDP was $0.8 million compared with $0.5 million at appraisal, and HMGN $2.4 million compared with $2.5 million. 7. The project was extended 3 years from 30 June 1992 to 30 June 1995 because of slow decision making processes in HMGN, slow procurement procedures and delays in construction. Delays occurred in the design and bid invitation for the Arniko Highway and Thankot-Naubise Road components because of overlap between this project and proposed projects financed by SDC and ADB respectively, which necessitated changes to the scope of both contracts. In addition, a Trade and Transit dispute with India during 1989 retarded all development activities for many months, and was followed, during 1990, by the Democracy movement and the associated civil unrest, which affected the East-West Highway component in particular. Adverse weather affected all the contracts during implementation, but had a serious effect upon the Thankot-Naubise Road and the East-West Highway river training works contract near Hetauda. The lack of experience of contractors and consultants in international contract management procedures also caused some delays. 8. The lack of progress early in the project can be partly attributed to frequent changes in the position of DOR Project Coordinator and the lack of authority afforded to him. The situation improved following a Tripartite Review Meeting in 1990 when the position was upgraded to Project Manager and greater powers vested in the position together with a continuity that greatly benefited the overall implementation. 9. IDA acted swiftly during the identification and preparation stages, it was flexible and preparation and appraisal were achieved relatively quickly through close cooperation between the Bank and DOR. The appraisal was deficient in ensuring appropriate up-front implementation and procurement procedures for an emergency project. During implementation, IDA showed flexibility and maintained a good working relationship with the implementing agency. IDA's overall performance is rated as satisfactory. DOR's performance was very good during the preparation phase of the project, when it rapidly carried out the assessment of the damaged areas and the likely costs of rehabilitation, but it dropped off after the credit was approved by IDA because of the slow decision making processes within HMGN. DOR eventually resolved its project management problems and complied with all the major covenants. Borrower  iii performance is rated as satisfactory during preparation but deficient during the implementation phase because of this failure to respond to the emergency repair needs of the project. 10. The outcome of the project is rated as satisfactory based on the substantial achievement of its physical objectives after some delay. However the project did not provide the prompt emergency response envisaged at the time of preparation. Sustainability is rated as uncertain, due to the need for more robust maintenance management. Because this was an emergency project, no economic evaluation was carried out at appraisal and because of the nature of the costs and benefits of flood repair measures, no economic assessment was possible at completion. Summary of Findings, Future Operations and Key Lessons Learned 11. Maintenance effectiveness needs to be dramatically improved to ensure sustainability of road improvements. This requires strong government commitment to improved management and results orientation for maintenance spending. 12. Measures should be put in place for the control of land use within the road right-of-way and on slopes above and below the road where indiscriminate farming, quarrying and irrigation could destabilize the slope and the road structure. This may require new legislation, education and land acquisition, along with sensitivity to local situations. Particular attention to road repairs and off-road maintenance (e.g. drain clearing, erosion control and river training works) before and during the monsoon season will reduce susceptibility to flood damage. 13. There is a need to improve procurement processing, customs clearance and inter- ministerial coordination in DOR and HMGN, to permit timely and effective response to road improvement needs and reduce the costs of works implementation. This will be enhanced by increased delegation to project managers and staff continuity in these positions. 14. The introduction of bio-engineering works on a large scale to assist in the stabilization of hillsides was an important factor in the successful outcome of the rehabilitation works.   PART I. PROJECT IMPLEMENTATION ASSESSMENT A. Statement and Evaluation of Objectives Objectives 1. A severe flood in 1987 caused extensive damage to roads in the Central and Eastem Regions and the Kathmandu Valley. Land communications came to a halt along the East-West Highway in the Terai and from Kathmandu to China (Tibet) along the Arniko Highway. In January 1998, His Majesty's Government of Nepal (HMGN) requested emergency assistance from IDA for reconstruction and rehabilitation of damaged structures. The project objectives were: (a) to deliver immediate assistance to HMGN to carry out its program to rehabilitate, rebuild or replace priority elements of flood-damaged roads and ancillary structures in the Eastern and Central Development Regions and the Kathmandu Valley; and (b) to accelerate the start of selected top priority works designed to protect investments in road infrastructure that survived the 1987 floods. 2. To achieve these objectives, the Credit was to finance the first three years of HMGN's emergency rehabilitation program, and was to include: (a) flood protection works ($2.4 million), bridges, culverts and causeways ($3.8 million) and roads ($11.0 million); and (b) technical assistance for consulting services by local and foreign consultants and equipment ($1.3 million). Planned works comprised repair, reconstruction, strengthening and upgrading and limited new construction of flood protection schemes, bridges, culverts, causeways and roads damaged during the 1987 floods. Sub-projects were selected on the basis of criteria discussed and agreed with HMGN. Initially, four areas of activity were identified as works sub-projects. These were: (a) Replacement of four damaged bridges in the Kathmandu Valley; (b) Riverbank protection works, landslide stabilization measures and road pavement reconstruction on a 25 km section of the Arniko Highway; (c) Landslide and gully stabilization, watercourse improvements and road improvement and rehabilitation works on a section of the Tribhuvan Highway between Thankot and Naubise; and (d) Riverbank protection works and river training and diversion structures in Terai rivers at widely separated locations spread out over nearly 500 km of the East-West Highway between 30 km west of Hetauda and the eastern border with India. 3. In addition, UNDP financed a Programme Engineering Manager who, in addition to his role as advisor to the DOR Project Manager, was tasked to develop an effective flood damage assessment system and to carry out on-the-job training in damage mitigation and rehabilitation.  2 Evaluation of Objectives 4. The design of the project and original scope of the works were generally appropriate and realistic for achieving the objectives of this emergency project. However the project design could have paid greater attention to potential implementation delay problems already evident under Cr. 1515 and the need to strengthen preventative maintenance measures to mitigate future flood damage. B. Achievement of Objectives 5. The physical objectives of the project were substantially achieved after considerable delays. These included: (a) Four two-lane bridges were constructed in the Kathmandu Valley to replace old narrow bridges which had been closed because they had been damaged in the floods, and this was causing considerable congestion on the temporary bypasses and alternative routes in the city, particularly in the rainy season. (b) Ten critical sites spread out over 18 km of the Arniko Highway were rehabilitated. The works were a mixture of slope stabilization works to deal with massive landslides triggered by the 1987 flood surge down the Sun Kosi river, and of river training works, groynes and bank protection to reduce the incidence of road damage from river erosion during peak flood periods. A 2.5 km length of new road, which had been constructed by the Army in 1988, was surfaced. (c) Sixteen sites on the Thankot-Naubise Road were improved to address the worst problems of inadequate surface drainage, slope degradation, gully erosion, landslides and damaged causeways over a 15 km length of this road with its dozens of hairpin bends, which serves as the only access to Kathmandu from the rest of the country. Slopes and gullies were stabilized and the road realigned in one place to improve cross-drainage. (d) Nine sites spread over about 500 km of the East-West Highway works were improved through river training, groynes and bank protection works aimed at protecting road embankments. 6. However, as the project was far behind schedule at the time of the annual Tripartite Project Review Meeting in July 1990, its scope was substantially revised to focus on works which could be completed before the Credit closing date of June 1992. The main changes were: (a) the undefined second stage works on the Arniko Highway were deleted, with a view that they might be included in a future project; (b) the Thankot-Naubise Road component was restricted to landslide stabilization and drainage works, the road improvement works being taken up by forthcoming projects; and  3 (c) the East-West Highway component was limited to major sites only and works restricted to the general vicinity of the road. 7. The reallocation of project funds represented a change in the number of sites to be improved under the project, but no substantial reduction in the overall scope of works to be undertaken. The revised targets were all met, though after a delay of three years. 8. The technical assistance financed by UNDP provided engineering assistance and specialist advice to the Project Manager, consultants and contractors and supported the development of a monsoon damage monitoring system. The work on this system identified the importance of off-road land uses such as irrigation and quarrying on road instability, and was reported at a seminar on Disaster Prevention on National Highways in 1993. However this system has not been implemented by HMGN. C. Major Factors Affecting the Project Factors Not Generally Subject to Government Control 9. During the course of this project various political events occurred which affected implementation. The first was the Trade and transit dispute with India during 1989. This resulted in fuel shortages which limited travel throughout the country and generally retarded all development activities for many months. During 1990, the Democracy movement and the associated civil unrest affected all HMGN activities and the East-West Highway component in particular as it was not possible to travel to those sites. 10. Delays to the design and hid invitation for the Arniko Highway and Thankot-Naubise Road components occurred becauise of overlap between this project and proposed projects financed by SDC and ADB respectively. This necessitated changes to the scope of both contracts once these other donors had decided what works they would be prepared to include in their projects. 11. Adverse weather, which is nearly always a major factor in civil works contracts in Nepal, affected all the contracts to a greater or lesser extent during implementation, but had a serious effect upon the Thankot-Naubise Road and some sites of the East-West Highway contracts. Exceptionally heavy rains in the hills to the south and west of Kathmandu in July 1993, as both contracts were nearing completion, caused considerable damage to slope protection works on the Thankot-Naubise Road and brought so much bedload down the Manahari River at the site of river training works near Hetauda that the bed level rose about 4 meters to the crest level of the newly constructed river training and protection works. The water level in the Rapti River equated to that of a 500 year flood. The Manahari works, which were the most extensive of any of the sites comprising the East-West Highway contract, had to be rebuilt at the new higher level. Further severe flooding in 1993 caused additional damage at some project sites, which was repaired under the project. 12. Lack of experience of contractors and consultants was a significant factor in project implementation. The inexperience of the local consultants who carried out the design and supervision of the works became evident early on. This was overcome with the advice and  4 assistance of the Program Engineering Manager and Project Manager who initiated revisions to designs and gave guidance on contractual matters and the standards to be adopted in the supervision of works. All contractors failed to provide adequate equipment in a timely manner for the works to be carried out and foreign contractors did not appear to appreciate the difficulties of obtaining spare parts and carrying out major repairs in Nepal. Generally, the planning of equipment, materials and Labour resources by both local and foreign contractors was weak. Shortages of cement, timber, steel reinforcement, gabion wire and unskilled Labour frequently held up progress. The local contractors were unused to working to international standards and took some time to remedy their shortcomings in contract management. Factors Generally Subject to Government Control 13. Weak government control over encroachments on the right-of-way was a source of delay. Legislation is also weak on land acquisition for slope protection works above and below the roadway which are necessary in mountainous terrain. 14. A proposal to appoint design consultants on a sole-source basis to speed up procurement for the East-West Highway component was endorsed by IDA and DOR, but turned down by HMGN. 15. HMGN were not always able to provide the counterpart funds necessary to ensure smooth implementation. This was particularly evident during the months after the start of the fiscal year in July, when virtually no funds were available until the long-drawn-out budget provisions had been debated and finalized. Factors Generally Subject to Implementing Agency Control 16. Delays in procurement and project implementation were largely due to an unwieldy and prolonged approval process within DOR and the Ministry of Works and Transport. The lack of progress early in the project can be partly attributed to frequent changes in the position of DOR Project Coordinator and the lack of resources and authority afforded to him. The situation improved after the Tripartite Project Review Meeting in 1990 when the position was upgraded to Project Manager and greater powers vested in the position together with a continuity that greatly benefited the overall implementation. Economic Analysis 17. Because this was an emergency project, and because the benefits and costs of flood repairs are difficult to quantify, no economic evaluation was carried out at appraisal. For similar reasons, and the lack of monitoring of traffic delays and transport costs associated with road closures, no economic assessment was possible at completion. D. Project Sustainability 18. Immediate sustainability of the Arniko Highway and Thankot-Naubise Road components will be supported by follow-up projects being carried out on these road links by SDC, ADB and  5 IDA (Credit 2578). However true sustainability of the physical works under the project depends primarily on the probability of timely and effective maintenance to preserve the value of road assets. At the closing date of the project, there is considerable evidence that such maintenance is not being systematically provided. Recent data on road network condition show a considerable proportion of the road system in poor condition, and when sections currently under rehabilitation are excluded, it appears that overall condition of the remaining highway network is deteriorating. On those sections programmed for rehabilitation and periodic maintenance, procurement delays and lack of preventative maintenance have frequently resulted in accelerated deterioration prior to works commencement, typically leading to more expensive emergency maintenance and/or additional works costs. While routine maintenance budgets have been increasing, the achievement of effective maintenance has been limited by a lack of management of work programming and results. 19. These issues were identified in the preparation of the ongoing Road Maintenance and Rehabilitation Project (Credit 2578-NEP), and an ambitious program of institutional strengthening was developed with support of ODA, SDC and UNDP. This includes a assistance for a Maintenance and Rehabilitation Coordination Unit, Strengthened Maintenance Divisions, Field Implementation Advisers, Plant Management, Bridge Management, a Priority Investment Plan and a Pilot District Labor-Based Rehabilitation and Maintenance component. The ongoing project also focused on increased budget allocations for maintenance and the establishment of a Road Maintenance Fund. Many of these initiatives are beginning to show very positive results in improved road rnaintenance planning, management and execution. In particular, DOR is beginning to identify changes in management practices which place more emphasis on setting and achieving maintenance targets. Continued pursuit of these programs over five to ten years is likely to lead to sustainable road maintenance for the strategic network, but that this will require considerable focus and commitment on the part of HMGN. In the meantime, sustainability of physical works under the project must be rated as uncertain. E. Bank Performance 20. IDA acted swiftly during the identification and preparation stages within the constraints of IDA procedures, which were somewhat relaxed for this emergency project. The initial mission arrived in Nepal in early 1988, soon after the damage caused by the 1987 floods had been fully assessed by DOR. There was little scope for innovation at this stage as it was clear that damage had to be repaired and protection measures put in hand to prevent future damage. Preparation was achieved relatively quickly through close cooperation between the Bank and DOR. 21. Appraisal involved mainly the identification of priority works and implementation timetable, and agreement on the scope of thc technical assistance to provided by UNDP. In retrospect, the project appraisal process could have done more to ensure implementation mechanisms and up-front commitment to rapid procurement arrangements appropriate for an emergency project. Given the elapsed time under the project, it also appears that some of the works incorporated in the project were not truly emergency in nature, and could have been incorporated into longer-term projects. For these reasons, IDA appraisal is rated deficient. During implementation, IDA showed flexibility in discussion of sole source consultant procurement and restructuring of the project targets after early delays. Supervision missions  6 visited twice per year on average and maintained a fair continuity of staff of appropriate disciplines. IDA performance is rated as satisfactory. F. Borrower Performance 22. During the preparation phase of the project, DOR performed very satisfactorily, rapidly carrying out the assessment of the damaged areas and the likely costs of rehabilitation. Technical and environmental aspects were well covered and DOR showed a commitment to quick opening of the more critical closed routes by bringing in the Army engineers to create new routes and open the roads to traffic as soon as possible. 23. Once the Credit had been approved by IDA, Borrower performance dropped off as slow decision making within HMGN hindered the procurement processes. The Credit was approved by the Board in June 1988, but was not made effective until January 1989. Following delays in project definition, the protracted process of selecting consultants was not completed until March 1991, almost three years after Board approval. This delay led to the consultants being given a very short time to complete their designs, which were later found to have deficiencies which had to be corrected after the works contracts had been let. The project was at times rated as a problem project on account of the slow progress with procurement of consultants and contractors, which threatened to compromise the development objectives of what was intended to be an emergency project. 24. Frequent changes in the position of Project Coordinator together with the lack of delegated authority given to him did not help this situation. When the position was upgraded to Project Manager and was given more authority and continuity of tenure, the project benefited greatly. A good project monitoring system was put in place and contracts rigorously supervised by the Project Manager and Program Engineering Manager. 25. After an uncertain start, when accounts and audits were well behind schedule, HMGN complied with all major covenants in a timely manner in the later stages of the project. Counterpart funding was a problem in the early stages because of the hiatus that occurred every year between the end of the fiscal year in July and the passing of the budget by the national assembly, which was often delayed until November. Because of the failure to respond effectively to the emergency nature of the project, overall Borrower implementation performance is rated as deficient. G. Assessment of Outcome 26. The majority of physical works envisaged under the project were completed in an effective manner, although after considerable delays which increased the implementation period from four to seven years. The four valley bridges were reconstructed to a good standard and are designed to withstand future severe floods. The more critical unstable slopes on the Thankot- Naubise Road have been stabilized and the drainage improved. The Arniko Highway has been restored and well protected against high water levels in the Sun Kosi River. The damaged areas of the East-West Highway have been restored and protected against future floods. The project provided training of DOR personnel and strengthening of the local engineering industry, and identified off-road land use as an important factor in slope stability problems. A monsoon damage assessment system was formulated, but HMGN decided not to implement the system.  7 As the project was prepared rapidly in response to major flood damage, it did not address institutional issues related to sustainable maintenance, flood damage prevention or improved project implementation. 27. However the project did not provide the prompt emergency response envisaged at the time of preparation. The project appraisal process could have been more rigorous in selecting works and implementation mechanisms and ensuring up-front commitment to rapid procurement procedures appropriate for an emergency project. The government could have acted more expeditiously to achieve timely implementation. With these reservations, the overall outcome of the project is assessed as satisfactory. H. Future Operation 28. All the civil works components should continue to operate successfully for the foreseeable future barring the intervention of exceptionally severe weather, earthquakes etc. The Thankot-Naubise Road and Arniko Highway are in mountainous areas where the geology is historically unstable and earthquakes and floods are frequent, so they are likely to be the first components to show signs of failure in the longer term. Fortunately, both these areas are to be the focus of follow-up projects by IDA, ADB and SDC, so an improvement in the road drainage systems and further slope protection works can be expected, which will enhance the future sustainability of the works already carried out. I. Key Lessons Learned 29. Maintenance management needs to be improved to ensure sustainability of road improvements. This requires substantial changes in procedures for planning and executing maintenance works, and for monitoring and reporting results achieved. While new procedures and capabilities are being developed under the ongoing Credit 2578-NEP, their success will depend on strong leadership and commitment from senior officials to improved management and results orientation for maintenance spending. 30. Measures should be put in place for the control of land use within the road right-of-way and on slopes above and below the road where indiscriminate farming, quarrying and irrigation could destabilize the slope and the road structure. This will require education and sensitivity for local situations. Particular attention to road repairs and off-road maintenance (e.g. drain clearing, erosion control and river training works) and before and during the monsoon season could reduce the susceptibility to flood damage. 31. While a number of project delays were outside the full control of either HMGN or IDA (e.g. bilateral negotiations, the Trade and Transit dispute), others could have been avoided, through decisive actions to expedite project execution. There is a need to improve procurement processing, customs clearance and contract management in DOR and HMGN, to permit timely and effective response to road improvement needs and reduce the costs of works implementation. 32. Efficient contract management may also be enhanced by (a) increased delegation of decision-making to the Project manager; (b) allowing sufficient time for design work and contractor mobilization; (c) using more detailed specifications for equipment and materials  8 schedules in tender documents; and (d) providing further training for consultants and contractors in the use of FIDIC based contract documents. 33. The introduction of bio-engineering works on a large scale to assist in the stabilization of hillsides was an important factor in the successful outcome of the rehabilitation works. While the bio-engineering work carried out by the contractors had great value and were effective, it is often appropriate to let separate bio-engineering contracts to experienced companies which can continue to maintain and replace plants over a longer period.  9 PART II - STATISTICAL TABLES Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Neglipible Not applicable Macro Policies 0 Sector Policies E Financial Objectives 0 Institutional Development 0 Physical Objectives 0 Poverty Reduction F Gender Issues 0 Other Social Objectives 0 Environmental Objectives 0 Public Sector Management 0 Private Sector Development 0 Other (specify') 0 B. Project Sustainability Likely Unlikely lJncertain Highly C. Bank Performance satisfactory Satisfactory Deficient Identification 0 Preparation Assistance 0 Appraisal Supervision E0 Highly D. Borrower Performance satisfactory Satisfactory Deficient Preparation E Implementation 02 Covenant Compliance 0 Operation (if applicable) 0 Highly Highly E. Assessment of Outcome satisfactory Satisfactory Unsatisfactory unsatisfactory The selection of works components and choice of implementation arrangements and up-front procurement actions could have been better defined to match the emergency requirements of the project. 2 This was prepared as an emergency response project, but implementation actions in the early years were very slow.  10 Table 2: Related Bank Loans/Credits Loan/Credit Purpose Year of Status Comments Title Approval Preceding Operations Credit 223-NEP Replacement of substandard bridges, 197- Complete Closed Jun 77 construction of suspension bridges for porter traffic, and preparation of a road maintenance. Credit 730-NEP Improvement of section of East- 1977 Completed Closed 31 Dec 84 Second Highway West Highway; construction of Project bridges; training Credit 1515-NEP Improvement of Naubise- 1984 Completed Closed 30 Jun 95 Third Highway Malekhu Road and western ICR under Project section of East-West Highway; preparation construction of bridges; training Following Operations Credit 2578-NEP Rehabilitation of several lengths 1994 In Progress Closes 30 Jun 99 Road Rehabilitation of trunk highway; Labour-based and Maintenance maintenance; training Project  I1 Table 3: Project Timetable Date Steps in Project Cycle Planned Revised Actual Identification 25 Jan 88 Preparation Jan/Feb 88 Appraisal Feb/Mar 88 Negotiations 2-6 May 88 Board Presentation 14 Jun 88 14 Jun 88 Signing 21 Sep 88 21 Sep 88 Effectiveness Oct 88 19 Jan 89 Project Completion 30 Jun 91 30 Jun 92 30 Jun 94 30 Jun 93 30 Jun 94 Credit Closing 30 Jun 92 30 Jun 93 30 Jun 95 30 Jun 94 30 Jun 95 Last Disbursement Date 20 Dec 95 Table 4: Disbursements: Cumulative Estimated and Actual ($ million) IBRD FY 1989 1990 1991 1992 1993 1994 1995 Estimated 2.50 7.20 13.10 15.50 Actual 2.10 2.10 2.58 3.79 6.31 10.21 12.27 Actual as % of Estimate 84 29 20 24 41 66 79 Date of Final Disbursement 20 Dec 95 After the final disbursement, SDR 2,409,285 ($3.58 million equivalent), or 21.5% of the Credit, was canceled.  12 Table 5: Key Indicators for Project Implementation 1. Key implementation indicators in President's Report None It. Modified Indicators None III. Other Indicators Contract Planned Revised Actual 1. Appointment of PEM I Jun 88 11 Mar 89 2. Shortlist consulting firms 8 May 88 26 May 89 3. Submission of proposals VB 15 May 88 23 Nov 89 AH 15 May 88 16 Nov 89 TNR 15 May 88 21 Nov 90 EWH 15 May 88 21 Nov 90 4. Award consultant contract VB 28 Apr 90 30 Jun 90 5 Jul 90 AH 15 Feb 90 30 Jun 90 5 Jul 90 TNR 15 Jun 90 19 May 91 17 Mar 91 EWH 15Jun90 19May91 18Mar91 5. Design works and prepare tender documents VB 30 Jul 90 24 Mar 91 I Feb 91 AH 7 Jun 90 16 Sep 90 30 Jan 91 TNR 15 Nov 90 1 Sep 91 21 Aug 91 EWH 15 Nov 90 1 Dec 91 15 Aug 91 6. Prequalify contractors VB 31 Aug 90 3 Feb 91 26 Oct 90 AH 30 Jun 90 3 Feb 91 2 Dec 90 TNR 31 Dec 90 25 Aug 91 5 Mar 91 EWH 31 Dec 90 1 Jun 92 26 Dec 90 7. Submission of tenders VB 15 Dec 90 26 May 91 26 Apr 91 AH 15 Aug90 3 Mar 91 26 Apr 91 TNR 28 Feb 91 22 Dec 91 14 Nov 91 EWH 28 Feb 91 14 Apr 92 17 Nov 91 8. Award construction contracts VB 21 Mar 91 18 Aug 91 AH 30 Oct 90 3 Nov 91 TNR 30May91 16Jan92 EWH 30 May 91 13 Feb 92 9. Sign contracts VB 13 Oct 91 16 Sep 91 AH 23 Jun 91 2 Jan 92 TNR 19 May 92 9 Feb 92 EWH 8 Sep 92 13 Mar 92 10. Complete construction VB 21 Oct 91 10 Apr 93 31 Jul 93 AH lI Jul 91 7 Feb 92 31 Jul 93 TNR 30 Jul 91 30 Jun 92 31 Mar 94 EWH 30 Jul 91 3 Feb 94 30 Jun 94 11. Complete defects liability period VB 21 Nov 91 10 Apr 94 31 Jul 94 AH 15 Jul 91 7 Feb 93 31 Jul 94 TNR 30 Aug 92 30 Jun 92 31 Mar 95 EWH 30 Aug 92 3 Feb 95 30 Jun 95  13 Table 6: Key Indicators for Project Operation None Table 7: Studies Included in Project None Table 8A: Project Costs Appraisal Estimate Actual/Latest Estimate Item Description ($ m) ($ m) Local Foreign Total Local Foreign Total Costs Costs Costs Costs I Civil Works 9.78 7.38 17.16 5.23 7.94 13.18 2 Equipment 0.00 0.07 0.07 0.00 0.01 0.01 3 Consultants' Services 0.72 0.54 1.26 0.79 0.77 1.57 4 Land Acquisition & Operating Expenses 0.00 0.00 0.00 0.71 0.00 0.71 Total 10.50 7.99 18.49 6.74 8.79 15.47 Table 8B: Project Financing Appraisal Estimate Actual/Latest Estimate Item Source ($ m) ($ m) Local Foreign Total Local Foreign Total Costs Costs Costs Costs 1 IDA (Credit 1922-NEP) 8.4 7.1 15.5 4.34 7.95 12.29 2 UNDP (NEP/88/008) 0.1 0.4 0.5 0.000 0.77 0.77 3 Government 2.5 0.0 2.5 2.41 0.00 2.41 Total 11.0 7.5 18.5 6.74 8.72 15.47  14 Table 9: Economic Costs and Benefits No economic evaluation carried out Table 10: Status of Legal Covenants Covenant Present Original Revised Agreement Section Typenan t t Fulfillment Fulfillment Description of Covenant Comments Type Status ~~Date Date DCA 4.01 1 CD Maintain project records and accounts and submit audited and Complied unaLidited accounts to IDA with after delay DCA Schedule 4, 2 CD 15 Apr 1989 Provide adequiate annual budget for canying out the project, Complied para. I and annually including maintenance, and inform IDA annually of proposed with after thereafter budgetary allocations and take IDA's comments into account delay DCA Schedule 4, 10 C 30 Juin 1989 Carry out works in a manner satisfactory to IDA and fumish a Complied para. 2 list of subprojects with. Table 11: Compliance with Operational Manual Statements Not Applicable Table 12: Bank Resources: Staff Inputs Stage of Planned Actual Project Cycle Weeks S Weeks $ ('000) Preparation to N/A N/A 3.5 7.6 Appraisal Appraisal N/A N/A 7.4 15.9 Negotiations N/A N/A 4.0 8.6 through Board Approval Supervision N/A N/A 54.2 111.9 Completion N/A N/A 9.0 (Est.) 16.9 (Est.) TOTAL N/A N/A 78.1 160.9 Note: Totals for "Completion" are estimates. Actual totals up to 8 April 96 are 8.1 weeks and $15,700  15 Table 13: Bank Resources: Missions Performance Rating 121 Specialized Stage of Project Cycle Month/ No. of Days in Staff Skills 1 Types of Year Person_s Field Represented _11 Status Objectives Problems 131 Through Appraisal - Appraisal 02/88 3 14 EPL/ECN/EGR -- | | Appraisal through Board Approval - Post-appraisal 06/88 I 10 EPL | | | Supervision Supervision 1 10/88 1 5 EPL 1 1 I Supervision 11 03/89 1 4 EPL 2 1 M Supervision III 11/89 2 5 EPL/EGR 2 2 D M Supervision IV 06/90 1 3 EPL 2 2 D M Supervision V 11/90 2 7 EPL/EGR 3 3 D C M F Supervision VI 09/91 3 8 EPL/EGR/TSP 2 2 DCMF Supervision VII 01/92 1 7 TSP 2 2 DC M F Supervision VIII 05/92 2 5 TSP/EGR 2 2 D M F Supervision IX 11/92 2 5 TSP/EGR 2 2 D Supervision X 02/93 2 5 TSPIEGR 2 2 D Supervision Xi 05/93 1 3 TSP 2 2 D Supervision XII 11/93 1 4 TSP 2 2 D Supervision XIII 02/94 1 2 TSP 1 1 Supervision XIV 05/94 1 2 EGR I I Supervision XV 12/94 2 3 EGRx2 HS S Supervision XVI 04/95 2 3 EGRx2 HS S Completion Completion 06/94 I 14 EGR | | | Notes: [1] EGR = Engineer, ECN = Economist, TSP = Transport Specialist, EPL ~Engineer/Planner [2] 1 = Problem-free or Minor Problems, 2 = Moderate Problems, 3 = Severe Problems HS = Highly Satisfactory, S = Satisfactory [3] M = Project Management, C = Compliance with Covenants, D = Development Objectives, F = Availability of Funds  16 APPENDIX A Extract from Mission's Aide-Memoire, April 2 - 19,1995 1. The mission had detailed discussions with the Deputy Director General, the Project Manager for the Road Flood Rehabilitation Project and the two Project Managers for the Third Highway Project (one for the Kohalpur-Mahakali Road and Kamali Bridge components and one for the Naubise-Malekhu Road component) on the guidelines for the Borrower's Project Evaluation Reports/Summary. Copies of the guidelines for the preparation of the report were given to the Deputy Director General and to the Project Managers. 2. There was considerable discussion on the details to be included in the Report/Summary on the plan for the operational phase of the project. The mission pointed out that objective of such operational plan was to sustain the flow of economic benefits accruing from the investments made under the projects. Accordingly, for completed road projects the operational plan would include details of the preparation, funding and implementation of a routine and periodic maintenance program. 3. The mission was given the following documents: the Project Completion Report on the Road Flood Rehabilitation Project prepared by the Project Manager as well as updated Tables on Project Costs and Project Financing and an Implementation Schedule showing planned and actual dates for the project completion General 4. The objectives of the project, the restoration of the 1987 monsoon flood damage to the national roads, have been fully achieved with the completion of all civil works, including the additional works resulting from the July and August 1993 monsoon floods. Technical assistance to the DOR was provided through a UNDP component by Louis Berger International who provided a Program Engineering Manager (PEM) to oversee all aspects of sub-project selection, feasibility studies, design, contracting and construction supervision including the selection of local consultants for the design and supervision of the works. The PEM was also required give support and advice to DOR's Project Manager, develop an effective flood damage assessment system and organize the on-the-job training of DOR District Engineers. Assistant engineers were assigned by DOR to support the PEM and the DOR Project Manager throughout the construction phase of the project. The successful completion of the project is a considerable achievement considering the major geo- technical problems on the sites and the difficulties norrmally associated with relatively inexperienced local consultants supervising three foreign (Chinese), and one local contractor. 5. In overcoming these difficulties, the project has made a very significant contribution to the development and experience of the local consulting industry and DOR management and engineering staff. The experience gained with the very complicated engineering designs needed for the solution of the difficult geotechnical problems on the Arniko and Thankot-Naubise Highways and the flood protection works oIn the East-West Highway should now be used to review other consultants' proposals for similar problems. 6. The present DOR Project Manager, Mr. Durga Prasad K.C., has been in place since February 1991 and there have been three previous Project Coordinators/Managers since the start in March 1989. The components of the project are discussed briefly below.  17 Kathmandu Valley Bridges 7. The contractor, Sichuan International Economic-Technical Cooperation (SIETCO), has successfully completed the construction of the four bridges at Nakkhu, Shobha Bhagwati, Ratopul and Naikap in the Kathmandu valley. A Maintenance Certificate was issued on July 31, 1994 when the bridges were handed over to the DOR. SILT-NEPECO-BDA Joint Venture have done the design and supervision and have submitted a Completion Report to DOR. River Training and Protection Works along the East-West Highway 8. The works making up this contract are spread out over about 400 km of the East-West Highway, from 30 km west of Hetauda to Kakarvitta in the east. The supervising consultants are Multidisciplinary Consultants-GEOCE JV (MULTI), and the contractor is China Henan International Economic-Technical Cooperation (CHIETCO). The contract maintenance period expires on June 30, 1995 and since no major defects have been reported, it is expected that the Maintenance Certificate will be issued at that time. The floods of July 1993 affected some of the work sites necessitating redesigns and additional works. Arniko Highway 9. The highway was handed over to DOR when the Maintenance Certificate was issued on July 31, 1994. This contract was supervised by ITECO-CEMAT JV, and executed by China Road and Bridge Engineering CO (CRBEC). The land stabilization and bio-engineering measures developed under the project appear have been successful during the July 1993 floods. Thankot-Naubise Road 10. The Maintenance Certificate was issued on March 31, 1995 (?) and DOR are now responsible for maintaining the road. Such maintenance was not evident during the site visit and the mission stressed the urgent need to clean all side drains as well as the catch water basin including inlets and stilling ponds on the flumes before the monsoon rains. Despite many difficulties and delays the contractor, Arniko Nirman Co-Jayee Construction JV (ANJC), achieved good progress in recent months and has completed the works within the extended contract period. The work was supervised by the consultants, ITECO-CEMAT JV. Project Finances 11. The mission was given an updated status of the project costs and financing. Annex 2 shows details of the final Project Costs and the Project Financing. Project costs are estimated at NRs. 578.68 million, an increase of about 30% over the original estimate of NRs. 446.61 million. The cost increases are mainly related to exchange rate fluctuations and the redesign and additional works resulting from the 1993 floods. Annex 3 shows the status of Credit 1922 funds as of end March 1995. Annex 4 compares actual implementation with that planned in 1990. Summary of Agreements and Understandings Reached. 1. DOR agreed to send to IDA by September 30, 1995, the Borrower's Evaluation Report on the Road Flood Rehabilitation Project (Credit 1922-NEP).  18 Extract from Mission's Aide-Memoire, October 31-Nov 8, 1995 Third Highway Project and Road Flood Rehabilitation Project: Preparation of Implementation Completion Reports (ICRs) 1. The remaining tasks for the preparation of these ICRs were discussed. For the Road Flood Rehabilitation Project, DOR provided detailed comments on IDA's draft completion report, and agreed to prepare a summary of not more than three pages from its borrower's completion report, for inclusion in the final ICR. DOR also agreed to prepare an action plan for the operational phase of the project. 2. The mission discussed the sustainability of road works undertaken in the course of these two projects. It is clear from a number of indicators that HMGN budgeting, programming and implementation of routine and periodic maintenance works are not currently adequate to preserve existing road assets, so that substantial premature deterioration is taking place on many sections even while other sections are being improved. This was evident at a number of sites observed in the field, and is reflected in the road condition data collected by MRCU. On the other hand, the Department of Roads has embarked on an ambitious program of reform of road maintenance planning, management and execution, which is showing excellent results in a number of areas such as the SMDs. It was agreed that the continued pursuit of these programs over five to ten years will lead to sustainable road maintenance for the strategic network, but that this will require considerable focus and commitment on the part of HMGN.  19 APPENDIX B NEPAL ROAD FLOOD REHABILITATION PROJECT (IDA CREDIT NO. 1922-NEP) BORROWER'S COMPLETION REPORT - SUMMARY Introduction 1. Road Flood Rehabilitation Project was established in 1988 to undertake restoration of damages caused by severe monsoon floods of 1987 to sections of East - West Highway, Arniko Highway and Tribhuvan Highway. Major funding was provided to His Majesty's Government (HMG) by the International Development Association (IDA) of the World Bank under Credit No. 1922 - NEP. Technical Assistance to the Department of Roads (DOR) was provided by UNDP under a contract for Consultant Services. 2. Four Separate areas of Project Activities were identified and developed as described below: (i) Replacement of four failed or damaged bridges in the Kathmandu Valley. (ii) Riverbank protection works, landslide stabilization measures, and roadway pavement reconstruction on a 25 Km section of the Arniko Highway. (iii) Landslide and gully stabilization, watercourse improvements, and other road rehabilitation works on a section of Tribhuvan Highway between Km 11 (Thankot) and Km 26 (Naubise). (iv) Riverbank protection works and river training and diversion structures in Terai rivers located at widely separated sites on the East-West Highway between 30 Km west of Hetauda and the eastern border with India. 3. The design of all components of the Project was completed in 1991 and four separate Contracts of Civil Works Construction were awarded and signed with the aim of completing all works before August 1993. 4. All the four components have been successfully completed and handed over to the Department of Roads for future maintenance. Project Background 5. Severe monsoon floods in 1987 caused large scale flooding which seriously damaged and caused prolonged suspension of road transport along parts of East-West Highway and Arniko Highway. This widespread devastation and damage to the physical infrastructure of the country necessitated a major relief effort. 6. In response to that devastating event HMG requested for assistance from the international donor community to restore and rehabilitate the flood damaged sections of the road network.  20 Consequently, responses were received from SDC, ODA, ADB and IDA. Following an appraisal mission in early 1988, IDA agreed to finance the first flood disaster relief project for road infrastructure in Nepal and this funding was intended to act as a catalyst for the participation of other donors to complete the programme. Project Objectives 7. The key objectives of the project were: (i) to deliver immediate assistance to DOR to repair, rebuild or replace priority components of flood damaged road infrastructure; (ii) to finance the first three years works of the programme, ensuring that priority is given to elements which would facilitate resumption of road transport activities; (iii) to help DOR accelerate implementation of urgently needed schemes to protect investments that survived the 1987 flood; and (iv) to develop and implement a post-monsoon damage monitoring system which would enable DOR to assess and respond quickly and effectively to urgent damage repair and rehabilitation needs in the future. Development of the Project IDA Credit Agreement and UNDP Technical Assistance 8. The basis of the project was largely finalized by the February 1988 IDA Mission, and was followed by the preparation of the Credit Agreement in May 1988. IDA Credit No. 1922-NEP was negotiated and signed on September 21, 1988. Some priority works were carried out prior to 1988 monsoon on the East-West Highway under Retroactive Financing arrangements of the Credit Agreement, but the main works were scheduled to follow the appointment of the design consultants. 9. The project document for the UNDP funded Technical Assistance NEP/88/088, under which the services of the Program Engineering Manager (PEM) were to be provided, was signed in September 1988, but the appointment of the Consultant was not finalized until February 1989. The PEM mobilized in March 1989. Project Phases and Activities 10. The main phases of the project were identified as being: 1) Confirmation of sub-projects (Work Sites) 2) Design 3) Contracting 4) Construction  21 11. In the original schedule prepared in May 1989, it was anticipated that the site selection for rehabilitation of the Arniko Highway and East-West Highway would be completed before July 1989. However, these estimations proved to be over optimistic. Initial delays also occurred due to overlap of activities with other donor agencies necessitating relocation of some project areas. Therefore, during the first year of the project, a number of events served to delay the commencement of any design work preventing finalization of site selection on most components. Serious delays were made in the appointment of the design Consultants. Consequently, by mid 1990 the project had not progressed beyond the initial phase, and was generally assessed to be about one year behind schedule. Reconstitution of the Project 12. By mid 1990 the project was far behind schedule. Thus, at the annual Tripartite Project Review Meeting on July 6, 1990, attended by representatives of IDA, UNDP, MOF, MOWT and DOR, direction was given to the DOR Project Coordinator and the PEM to completely restructure the project to eliminate all work which could not be completed by mid 1992, the expiry date of IDA loan. 13. The subsequent recommendations from the project which were accepted are summarized below: (i) Kathmandu Valley Bridges: Design work would proceed as planned, since the design consultant was appointed, but the construction duration would be reduced to 12 months from 18 months. (ii) Arniko Highway Construction: The stage one design works would proceed as planned, however, still undefined second stage works would be deleted from RFRP. It was noted that they could hopefully be included in a subsequent SDC Project. (iii) Kathmandu - Naubise Road: The scope of work in this component was restricted to landslide stability and drainage works possibly as an addition to the Arniko Highway Consultancy Design Contract. (iv) The Terai Area Works: The scope of work was limited to major sites, all located along the East-West Highway. 14. Thus the tripartite meeting allowed for a major reallocation of project funds by deciding that future planning could deviate from the individual site wise budgets which appeared in the IDA Credit Agreement. Institutional and Implementation organization of the Project 15. Overall responsibility for project planning and implementation was assigned through the Ministry of Works and Transport (MOWT) to the Director General (DG) of the Department of Roads (DOR). However, in recognition of the emergency nature of the Project steps were included to assist the DOR in the implementation and monitoring of the project. This was intended to be achieved through the assignment of the PEM, together with a number of counterpart DOR  22 Engineers and by appointing Consultants for design, construction supervision and contract administration. The Project works would be varied in nature and would be spread over a wide area. It was therefore required that packages of sub-projects be developed area wise to achieve economy of scale during the design and construction phases. The intention was that several small scale works would be grouped under each contract rather than awarding separate Contracts for each damaged site. The Project Management 16. The progress of the Project clearly suffered from the absence of effective management during the first year or so. This led eventually to changes which upgraded the role of the DOR Project Coordinator to that of Project Manager with the enhanced authority needed to effectively manage the project. It is perhaps no coincidence that a significant and lasting improvement was subsequently achieved. 17. During the first two years of the project most matters were required to be referred to the Director General (DG)/DOR and/or a MOWT/DOR Committee for all major decisions or approvals. Consequently, prolonged periods frequently elapsed before decisions or approvals finally came. In realization of these problems the Tripartite Meeting of July 1990 reviewed the causes of slow progress of the project and inherent flaws in the Project Management. As a result agreement was reached to upgrade the position of the Project Coordinator to that of the Project Manager with additional responsibilities and enhanced authority. This was not only instrumental in maintaining the momentum of the design and initial contracting phases but also allowed for a smooth and effective execution of the project. The Programme Engineering Manager 18. The role of the PEM was deemed to be necessary to provide advice to the local Consultants in regard to their responsibilities under international FIDIC contracting procedures as well as to act as a technical adviser to DOR on all aspects of the design, tender and construction supervision. Consequently, under a separate contract for Technical Assistance for Consultant Services, a provision for the PEM was made. DOR Support Staff 19. Engineers and other supporting staff were assigned by the DOR to support the PEM and the Project Manager (PM) through out the Project period. Engineers assisted the PEM and the PM with the review of the consultant prepared designs and bidding documents. During the construction phases some DOR Engineers and Overseers were seconded to each of the construction supervision consultants work as integral members of the consultants' team. These arrangements proved to be satisfactory as the Engineers also performed as liaison between the Consulting Engineers and the PM/PEM and continued to assist them whenever required.  23 Local Consultants 20. The project was innovative in the decision to employ the services of the local consultants for the complete range of engineering activities from design, through the tender process and to construction supervision. By requiring the local consultant to take over all aspects of project implementation process including the role of the Engineer, the degree of responsibility was raised enormously. 21. Except for some inevitable weaknesses and inexperience in the technical and contractual qualification in general the local consultants have performed their duties satisfactorily although, as might be expected, there were times when some of the consultant's senior personnel lacked the necessary understanding of the role of the Engineer under FIDIC Contracts. Prequalification, Tendering apd Execution of Civil Works Contracts 22. Prequalification questionnaires were prepared in compliance with IDA guidelines and offered to International Contractors. Letters were also sent to all Commercial Attaches of all foreign Embassies and Consulates in Kathmandu. 23. However, although all prequalified contractors were invited to Tender, the general response was poor. In all cases though, the Tender Evaluations led to positive recommendations which were accepted by HMG and IDA. The successful bidders were: Component Contractor Valley Bridges SIETCO China Arniko Highway CRBC China Thankot-Naubise Arniko/Jayee Construction Nepal East-West Highway CHIETCO China 24. Three of the four components of the project were contracted to Chinese Companies with the fourth (Thankot-Naubise) to the Kathmandu based joint venture of two Nepali Contractors. Although the Chinese Contractors were very slow to mobilize, however, once a start was eventually made, exhibited a strong commitment to prosecute the works, usually through a large work force and willingness to work long hours. The quality of workmanship has usually been maintained at an acceptable level and in many cases has been consistently high. 25. The Nepali Contractor, though quick to mobilize, lacked adequate engineering and technical personnel and proper understanding of FIDIC contract during the earlier stages, resulting in poor and haphazard planning of the works. Their commitment however, greatly improved during the later stages of the contract execution and were able to successfully fulfill their contractual obligations with satisfactory standard of workmanship.  24 Other Project Activities Post-Monsoon Damage Monitoring and Assessment 26. The PEM carried out the Post Monsoon Damage Monitoring with assistance from the DOR Engineers ad the findings formed the basis of the recommendations which were contained in a RFRP produced paper on Disaster Prevention on National Highways presented at the UNDP/JICA seminar in March 1993. Essentially, it was noted that there appeared to be a direct correlation between irresponsible land use practices, such as irrigation and quarrying activities, and the occurrence of landslides, which could perhaps be avoided with improved land use practices. The need for a system of Post Monsoon Monitoring and Damage Assessment remains valid, although there is still little prospect of securing an effective response, except in the situation of catastrophic failures, such as have occurred in 1993 in the central region of Nepal. Training of DOR Personnel 27. In addition to continuous informal on-the-job training of the DOR Engineers and Consultant personnel formal training courses on River Training and Protection Works, Construction Supervision and Quality Control and Roadside Support Maintenance were organized. In each case manuals were developed and presented and active participation was introduced through workshop and discussion groups. 28. The training seminars were well attended, each by 20-30 full time participants, most of whom provided active involvement during workshop and discussion sessions. Project Implementation Milestones 29. The problems of initial site selection and the appointment of design consultants continued until mid 1990. The turning point in the project's fortunes was clearly the July 1990 Tripartite Meeting which led to the upgrading of the Project Coordinator and directed the reconstitution of the work within each of the Project components to achieve completion by July 1992. The subsequent prompt and positive finalization of preliminary selection of work-sites for the East-West Highway and Thankot-Naubise components and the commencement of the design stages of the Valley Bridges and Arniko Highway components served to establish an impetus which as maintained through the award of the construction contracts. 30. The construction duration of all components increased following the design phase, during which the work content at many of the selected work sites was reviewed significantly. Thus, the contractual construction completion dates were eventually set at about a year behind the Project Reconstitution Report targets, warranting an extension of the Credit Closing date to June 1993. Later on, due to damage inflicted by record level floods of July 1993, DOR with IDA approval decided to undertake additional rehabilitation works on the damaged sites, particularly in the East- West Highway and Thankot-Naubise works requiring a final time extension of the closing date of the Credit Agreement up to 30 June, 1995.  25 31. By 30 June 1995 all construction works including other project obligations had been completed satisfactorily, although time extensions of 3.5, 11.5 and 10 months were necessitated for Valley Bridges, East-West Highway and Thankot-Naubise component respectively with Arniko Highway being completed within the original contract period. It may thus be safely concluded that the majority of the project works were implemented and performed as intended verifying the designs and the construction quality. Activities of the Bank 32. The contribution of the World Bank in the project identification, appraisal, preparation, and supervision may be considered as being highly satisfactory. 33. The identified project components were consistent with the government development priorities and contributed greatly towards return to normalcy and resumption of passenger traffic on the affected highways following the devastating 1987 floods. The successful completion of the project would not have been possible without the close cooperation between the Bank, the project, and the consultants during all phases of project implementation. 34. Advice and decisions of the regular supervision missions of the Bank were given due attention by the project and the flexibility and positive attitude shown by the Bank in suggesting improvements in the project management as well as timely approvals of the modifications to some of the unrealistic development activities played a vital role in easing the initial restraints and paving a way for smooth and successful implementation of the project. Project Costs and Financing 35. The total cost of the project was estimated to be US$ 18.5 million at the time of signing of Credit Agreement in September 1988. Financing would comprise of IDA Credit of US$ 15.5 million worth about 84% of total project cost. HMG would provide US$ 2.5 million worth about 13.5% of total project cost as counterpart funds and UNDP would provide Technical Assistance fund of US$ 0.5 million. 36. Actual latest estimates indicate that the Final Project cost would be about US$ 15.442 million, comprising of IDA Credit of US$ 12.268 million worth about 79.45% of total cost, contribution from HMG/Nepal being US$ 2.403 million worth about 15.56% of total cost and US$ 0.79 million from the UNDP Technical Assistance. 37. Although the actual project cost in terms of US $ has decreased in comparison to the original estimate by more than three million US dollars, the project expenditures in terms of Nepalese Rupees has increased considerably from estimated NRs 405.15 million to NRs 629,177 million, an increase by about 55%. This was caused primarily due to exchange rate fluctuations of the Nepalese Rupees against the US dollar from NRs. 21.90 at the time of Project Appraisal to NRs. 50.68 at the time of project completion as well as redesign and some additional construction works necessitated due to heavy monsoon floods of July 1993. 38. The details of Project Costs and Project Financing are attached.  26 Concluin 39. The overall objective of the project to rehabilitate damage from the 1987 monsoon floods has been successfully accomplished in all of the four components of the project. That may, in itself, be sufficient grounds for concluding that the method of implementation using local consultants and local or International Contractors with the support of an expatriate adviser to the DIR Project Manager was a success. This arrangement did work remarkably well and may be employed as a model for future development projects of the Department. 40. It should be recalled that this is the first such Road Project which has been undertaken without the full time services of an expatriate consultant for engineering design and construction supervision and that in 1988, this concept had not been established as being viable. However, the arrangement established that the shortcomings arising from the relative inexperience of the local consultants, both in practical application of design concepts and in the supervision of international FIDIC based Contracts and Contractors could be satisfactorily controlled by a DOR Project Manager with sufficient authority and the necessary support from an expatriate Project Advisor. 41. The local consultants demonstrated that they possessed the basic technical expertise to design the works and to supervise the construction phase. However, there were occasions when the designs proved to be unsuited to the actual site conditions. This was partly due to overly theoretical approach and partly to a failure to verify selected schemes against the site conditions. As a consequence many elements of the three highway components had to be redesigned. Contract administration was generally handled effectively, with many procedures being improved throughout the Contract period. 42. The contractors also exhibited considerable technical ability and a general commitment to the works which proved to be sufficient to substantially complete the works to a satisfactory standard within, or close to the Contract period. 43. The regular supervision missions of the World Bank played a useful role in successful completion of the project by providing timely suggestions and extending cooperation in easing some of the initial restraints in the Project Implementation.. Recommendations 44. The concept employed under RFRP to employ the services of an expatriate consultant as an Advisor to assist the DOR and local consultants in the development, design and implementation of road projects should be encouraged for future development works. Project Planning Related Issues (i) Project Management: The Project Manager must be given sufficient authority to enable him to control the progress of the various stages of the project, and should be committed to a prolonged period of tenure.  27 (ii) Interaction with Other Donor Funded Projects: There must be closer liaison between the donor agencies to avoid confusion duplication and consequent delay in the assignment of project elements. (iii) Inadequate Design and Tender Preparation Duration: Sufficient time must be assigned to each of these phases. If necessary, the outline design should be corroborated against the actual site locations including verification of the investigation and survey. (iv) Design Terms of Reference: The guidelines must be compatible and sufficiently detailed to correspond with the original concepts developed at the site selection stage. (v) Land Acquisition and Community Relations: Wherever the project works are expected to occupy private or community owned land or property, consultations and meetings should be held with landowners and community leaders at the outline design stage. (vi) Separate Contract for Bio-Engineering Works: Separate contracts be awarded to Bio- Engineering works and maintenance period of such works be extended to 2-3 years. This would ascertain proper execution of such works and enhance survival rate and make Bio- Engineering Works effective in landslide stabilization purposes. (vii) Inadequate Time Allowance for Contractor Mobilization: The mobilization period for international competitive contracts should be extended to three months. (viii) Effects of the Monsoon Season: The scheduling of all phases of the project should be made with due respect to the restrictions imposed by the monsoon season. (ix) Availability of Construction Equipment and Materials: Minimum equipment holdings should be set out in the bidding documents and required to be relatively new or newly reconditioned. Similarly, the Materials Schedule for all imported materials should be required to be included with the Tender. (x) The Local Road Construction Industry: The need for further training of both Consultant and Contractor personnel in the appropriate aspects of the administration and implementation of international FIDIC based Contracts should be recognized and developed further under future Projects. Efforts with HMG, to ease the restriction on local contractors working on International Contracts, need to be pursued.. (xi) Political Disturbances: Such situations are usually covered by the Contract Conditions and cannot easily be fiurther qualified. (xii) Unrealistic Development Objectives: The development objectives should be both practicable and achievable, and should not conflict with the ongoing Project Works. Regular reviews of the progress of development activities are recommended to enable alternative approaches or revised objectives to be considered.  28 Issues associated with the Control of Monsoon Flood Damage 45. Both the implementation of Project Works and the Development Activities to monitor and assess the monsoon season flood damage served to highlight relatively less importance given by the DOR to areas outside the roadway pavement. Since the long term objective should be directed to the reduction of monsoon flood damage by improving the stability of both road/river embankments and hillsides, the following recommendations are of prime importance. (i) Roadway Right of Way: The Right of Way has to be demarcated and controlled throughout the entire network of National Highways. This issue is sufficiently important to warrant the establishment of a separate section within DOR, possibly under a DDG. However, since enforcement of Right of Way involves cooperation with District Officials of the Civil Administration the policy would first need to be endorsed at the highest levels of Government. (ii) The Road Corridor: There is perceived to be lack of appreciation of the importance of the road corridor, particularly in hilly and mountainous terrain, to the overall stability and condition of the highways established by the fact that little or no funding is available for either routine or emergency maintenance of Off-Highway features. 46. The main long term objective to improve the stability of roadway embankments and hillsides can only be achieved through continued strengthening of riverbanks and the imposition of improved land use practices on hillsides adjacent to the Highway. Such measures would require the initiative from the HMG/N initially through the National Planning Commission, to formulate policy and responsive involvement of a number of HMG Departments including the Department of Roads, Land Management, Forests, Mines and Local Bodies. Regular annual budgets for elements such as land acquisition, further strengthening and stabilization measures and improved routine and emergency maintenance. Since HMG would have little funding available, it is anticipated that the involvement of foreign donors will be needed for the foreseeable future.   IMAGINGA Report No: 15859 Type: ICR