Mexico - Third Road Project

RETURN TO RETUR DESKRESTRICTED REPORTS DESFILE Report No. TO-602a WITHIN FIE JOP ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing-their views. INTERNATIONAL BANK FOR RECONSTRUCTION -AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF A THIRD ROAD PROJECT MEXICO January 11, 1968 Projects Department  CURRENCY EQUIVALENTS 1 Peso = US$0. 08 12.5 Pesos = US$1. 00 1 Million Pesos = US$80, 000 FISCAL YEAR January 1 - December 31 UNITS OF WEIGHTS AND MEASURES: METRIC METRIC: BRITISH/US EQUIVALENTS 1 kilometer (km) = 0. 62 miles (mi) 1 meter (m) 3. 28 feet (ft) 1 hectare (ha) = 2. 47 acres (ac) 1 liter (1) = 0. 22 Imperial gallons (I gal) = 0. 26 US gallons (US gal) 1 metric ton (m ton) 2204 pounds (lb)  MEXICO AFPRAISAL OF A THWrt ROAID PROJECT TABLE OF CONTENTS Page SUMMARY i - ii 1. INTRODUCTION 1 A. Proposed Project 1 2. BACKGROUND 2 A. General 2 B. The Transport Sector 2 C. Transport Coordination 3 3. THE HIGHWAY SECTOR 5 A. Highmray Administration 5 B. Highway Planning 6 C. Highway Engineering 6 D. Highway Construction 7 E. Highway Maintenance 7 F. Previous Bank Highway Projects 8 4. THE PROJECT 10 A. General Description 10 B. Cost Estimates and Financing of the Project 12 C. Design Standards and Execution of the Project 14 5. ECONOMIC JUSTIFICATION 17 A. Summary 17 B. Traffic Forecasts 17 C. Calculation of Economic Benefits 17 6. CONCLUSIONS AND RECOMMEDATIONS 21 This appraisal report is based on the findings of a Bank mission to Mexico consisting of Messrs. D. Bickers, M. van Gent, F. M4endoza and R. Paraud.  TABLES 1. Railway Statistics 2. Length of Highways 1955-1966 3. Number of Motor Vehicles Registered 1955-1965 4. Highway Expenditures 1955-1967 5. Cost Estimates of the Project Highways 6. Analysis of Construction Cost Estimates by Items 7. Project Highways: Design Standards 8. Project Highways: Length, Type and Surface 9. Project Highways: Traffic Forecasts CHART Organization of the Secretariat of Public Works MAP Main Highway Network  MEXICO APPRAISAL OF A THIRD ROAD PROJECT SUMMARY i. The Government of Mexico has asked the Bank for a loan to assist in financing the expansion and improvement of its Federal highway network. A suitable project comprises: (a) the reconstruction and resurfacing of three primary roads totalling 1,231 km; (b) the improvement and bituminous surface treat- ment of four tertiary roads totalling 885 Iom, and (c) the construction, including asphaltic concrete surfacing, of one primary road, 66 km long, and the provision of right-of-way. ii. The total cost of the proposed project,including contingencies, is estimated at US$ 76.2 million equivalent, of which the Bank will finance US$ 27.5 million equivalent, representing the estimated foreign exchange com- ponent of cost. The remainder will be provided by the Government through annual appropriations in the Federal Budget. iii. The Bank has already made four loans to Mexico for financing the expansion and improvement of its highway network, two for Federal highways and two for toll facilities. The quality of the works executed is satisfac- tory but delays and cost increases have occurred, due mainly to the prelimi- nary status of engineering at commencement of the projects. The present status of engineering preparation and procedures for supervision proposed in connection with the present project are expected to avoid these problems in the future. iv. Traffic on the three primary roads to be reconstructed is already heavier than they were designed to accommodate, and their widening and re- surfacing would allow substantial savings in journey times and vehicle opera- ting costs. The four tertiary roads to be improved were originally designed to gravel standards, but traffic has grown on sections already open to an extent which now justifies provision of a light surfacing and associated improvements. The new road to be constructed is required primarily to shorten the journey distance for through traffic on an important trunk route, and to provide access for this traffic to a Bank-financed road recently completed. v. The project is technically sound and economically justified. The rates of economic return range from 12% to 23% on investment. It is expected that all the work will be completed by October 1971.  - ii - vi. The agency responsible for execution of the project will be the Secretariat of Public Works (SOP) acting through its Directorates, which have a sound organization with clear lines of authority. The staff is qualified and experienced, and consultants will not be required for the project. vii. Design standards adopted for the project roads are satisfactory. Detailed engineering has been completed for all the works included in the project. The cost estimates are considered to be reliable and adequate contingencies have been included. viii. The works to be financed by the Bank will be awarded through contracts placed after international competitive bidding, apart from minor or specialized works which would be awarded locally on a competitive basis. The Government has agreed to revise certain bidding procedures to encourage broader international competitive bidding and to improve the efficiency of civil works execution. ix. The project provides a suitable basis for a Bank loan of US$ 27.5 million equivalent. An appropriate term would be 20 years including a h-year grace period.  MEXICO APPRAISAL OF A THIRD ROAD PROJECT 1. INTROWCOTION A. Proposed Project 1.1 In September 1966 the Government of Mexico asked the Bank to assist in financing a Third Road project as rart of its program fAr the expansion and improvement of its Federal highway network. The Government originally submitted technical and economic information to the Bank on 20 highways, but in January 1967 the Government proposed Bank financing for only 14 of the roads. 1.2 A Bank mission comprising Messrs. D. Bickers, M. van Gent, F. Mendoza and R. Paraud visited Mexico in February/March 1967 to appraise the proposed project. The mission subsequently recommended that six of the roads should not be included in the project proposed for Bank financing because of insufficient engineering preparation or inadequate economic justification. The project recommended by the mission comprises the re- construction of three primary roads totalling 1,231 km, the improvement of four tertiary roads totalling 885 km and the construction of a new section of primary road 66 km long. The total cost of the proposed project is estimated at about US$ 76.2 million equivalent of which the Bank would finance the estimated foreign exchange cost of US$ 27.5 million equivalent. 1.3 Between 1960 and 1965 the Bank made four loans to MIexico for the development of its highway network. Loans 268-ME and 354-ME were for im- provement and expansion of the Federal highway system and for the purchase of maintenance and laboratory equipment; Loans 317-ME and 401-ME were for im- provement and expansion of toll facilities including highways, bridges and the purchase of a ferry boat. The total amount of the four loans was US$ 127.5 million equivalent (para 3.15).  -2- 2. BACKGROUND A. General 2.1 Mexico covers an area of nearly two million sq. km, which is more than three times the size of France. Much of the country is mountainous, and because of inadequate rainfall large areas are still sparsely populated, though extensive schemes for irrigation and agricultural development have recently brought about appreciable expansions in cultivated land. 2.2 More than half the total population of 44 million is concentrated in ten states in the middle of the country, covering only 14% of the total area, and centered on the capital, Mexico City. Although the population as a whole has been increasing by 3.3%p.a. oxer the past decade - one of the highest rates in the world - it has been growing three times faster in urban than in rural areas. This reflects the country's progress from a subsistence to an exchange economy, the increasing emphasis on industrial production, and the substantial impact of tourism on the urban service industries. One result has been a rapid expansion in the demand for transport facilities, particu- larly for movements between the urban and rural areas. 2.3 Since 1950, the growth rate of iMexico's gross national product has been about 6%p.a. one of the highest in Latin America. Per capita income now exceeds US$ 490 p.a. B. The Transport Sector 2.4 The railways have played a predominant role in meeting Mexico's transport needs during the past century. Over the past 20 years, however, as a result of improved highways, together with growing demands for more flexible and varied services than the railways can offer, there has been a rapid expansion in highway use. Except for passenger traffic, this has not been at the general expense of the railways. (i) Railways The length of the railway network - 23,670 km - has only increased by about 400 kms over the past 10 years (Table 1). While some kilometers of new main line have been opened they have been counter-balanced by the closing of some uneconomic branch lines. Over this period, the total freight traffic on the railway has increased at an average rate of 5.2% p.a. In 1966 the railways moved about 41 million tons of revenue-earning traffic for about 19 billion ton-km, Passenger traffic has remained steady for most of the past 10 years at around 30 million passengers, with very little change in the average length of passenger journey.  -3- (ii) Road System In contrast with the railways, the total length of the road system increased from 27,380 km to 63,700 kms between 1955-66 (Table 2). In addition there has been a significant improvement in the quality of the network, over half of which is now paved. While figures of road usage, on a basis comparable to that of the railways, are not available, it has been estimated that in terms of ton-km trucking is now more important than the railway. The number of trucks has been increasing at 5.8% p.a. (Table 3) and their average size is increasing. As a result freight carried by the trucking industry has probably increased at a rate substantially more than on the railways. The number of automobiles registered in the same period increased by about 9.6% p.a., and while the rate of increase in buses has been 3.3% p.a. their average size has been increasing and, with the improvement of roads, their degree of utilization has improved. (iii) Civil Aviation Movement by air is also steadily increasing. There are about 30 main airfields and some 500 landing strips. About 80% of the passenger flights using the country's airports were on domestic services by Mexican companies. A continued expansion of international and domestic air traffic seems assured. The rapid growth of tourism, the steady rise in personal incomes, low competitive fares, and the growth of widely-separated, important business centers are all generating increasing demands. A start has been made on a well conceived program of investment in civil aviation. (iv) Shipping While there are about 20 ports spread along the 6,300 km of coastline, 1Mexico is not a traditional maritime nation. Most of these ports are engaged in coastal shipping which is relatively unimportant in the total transport picture and is unlikely to be influenced by the propcsed road project. C. Transport Coordination 2.5 Where there is competition between road and rail, the division of traffic between the two modes broadly follows a pattern that reflects their relative technical and service advantages. Road transport predominates in the field of short and medium distance traffic, while the railways have largely concentrated on the longer distance movement of bulk commodities; the average length of rail haul for freight is more than 400 km. . The railways have in- curred serious financial deficits for many years, but this is essentially due  - 4- to factors other than the loss of traffic to road competitors; for example, to tariffs which are Government-controlled at artificially low levels, retention of many unprofitable branch lines, conveyance of mail at low rates, unduly high levels of wages, etc. The situation has been discussed in detail in previous Bank reports, the latest of which is "Current Economic Position and Prospects of Mexico; Volume III - Annex VI (Transport)", October 26, 1966. The Government has indicated its awareness of the prob- lems to the Bank, and is considering measures that mould provide a solution. 2.6 Federal control of rates and fares for truck and bus operators, as well as for railways, ports and civil aviation, is vested in the Secretaria de Communicaciones y Transportes, which also issues licenses to operators, specifying the routes to which they are limited. Similar powers are exercised within the states by individual state authorities. In principle the machinery exists for comprehensive control over all modes of inland transport, though in practice the effects appear to be quite limited. For example, a truck operator who is denied a license can still operate for up to two years while his appeal goes through the legal processes; and it is estimated that some 40% of the public service trucks at present operating are doing so under this dispensation. There is also apparently no stringent observation of the legal tariffs laid down for road freight traffic. Although the present regulatory system has not interfered with the development of a modern and efficient transport indus- try, the Government is well aware of loopholes in the system and of the need to review the justification of the existing regulations. 2.7 Road users in Mexico are contributing considerable revenues for the use of the roads; however, the situation is not precise because, as in many other countries, there is no earmarking of road user receipts for appropriation to road expenditures by the Federal and State Governments. The position is easier to assess for toll traffic since toll facilities are financed and operated by a governmental agency, which is expected to be self-supporting; its financial structure has been considered in detail in the Bank appraisal reports for Loans 317-ME and 401-ME. How- ever, considerable investment has been financed by the Toll Authority for the construction of access roads which are largely used by toll-free traffic. This results in toll road users paying for road expenditures which should be financed by the Federal Government. The Bank is currently discussing corrective measures with the Government. 2.8 The Ministry of Finance estimates that specific road user charges match highway expenditures quite closely year by year. For example, in 1965, total revenues from this source were calculated to be Ps 1.43 bil- lion while total Federal and State expenditures on road construction and maintenance (excluding toll roads) amounted to Ps 1.38 billion. However, this is not the result of deliberate policy, and, in any case, there are difficulties in defining which tax revenues can properly be included for this purpose. All that can be concluded, on the basis of present evidence, is that vehicle operators appear to be paying substantial amounts overall for their use of the roads, and there is no evidence to suggest they are receiving undue favorable treatment in this respect. The Government recognizes the need for a study on highway user charges and is collecting data as a basis for such a study.  - 5 - 3. THE HIGHWAY SECTOR A. Highway Administration 3.1 The federal structure of Mexico involves a division of responsi- bility for the highway system among various authorities as follows: (i) Federal Highways - The planning, construction and maintenance of Federal highways is under the responsibility of the Secretariat of Public Works (SOP). Federal highways are financed 100% from Federal funds. (ii) State Highways - The State Highway Boards prepare their own programs of road construction and im- provements. These, however, are presented annually to SOP for technical scrutiny and administrative action, because 50% of the costs is borne by the Federal Government. Construction and maintenance of these roads are carried out by the Boards, each of which has a SOP representative. (iii) Local Roads - SOP is responsible for the planning and construction of local roads which are financed equally from Federal, State and local (private) funds. On completion of a road it is transferred to the State Government and becomes a State road for all purposes (maintenance, administration, etc.) (iv) Toll Facilities - While the SOP plans and supervises the construction of toll roads and bridges, the operation and maintenance of these facilities is carried out by a semi-autonomous public agency, "Caminos y Puentes Federales de Ingresos y Servicios Conexos", which is also responsible for a number of the more important toll ferries. Funds for financing the toll facilities are provided partly from tolls levied on the users and partly from foreign and domestic borrowing. 3.2 In spite of the widespread division of responsibility, the system works smoothly with no major frictions. This is largely because of the over-riding authority of SOP for design standards and specifications and the financial participation of the Federal Government at all levels. The organization of SOP is satisfactory and it has clearly-established lines of authority (see Chart). It is staffed with experienced engineers and well qualified directorate heads.  - 6 - 3.3 The Secretaria de Coimmunicaciones y Transportes (SCT) is the responsible authority for control of traffic and road transport using the Federal network. There are established regulations on axle loadings and vehicle sizes which are properly enforced through SCT's Department of Traffic Engineering and Vehicle Control. For this purpose the country has been divided into 13 zones. Permanent weighing stations have been established so far in 4 zones; stations for the remaining 9 zones are expected to be in operation by 1970, and, in the meantime, portable scales are being used. The existing legislation for the traffic control is enforced by the SCT's Highway Police Department. B. Highway Planning 3.4 The Directorate of Planning and Programming, a branch of SOP, has a satisfactory system for collecting and processing traffic data and is responsible for planning highway investments. On the basis of targets determined by economic, social and political criteria, the SOP prepared an ambitious Highway Investment Plan for the period 1965-70. This envisaged expenditures totalling Ps 16 billion (US$ 1.28 billion equiva- lent) on federal, state, local and toll roads. Priorities for the various projects were screened on the basis of road user benefits, agricultural potentials in the areas concerned, and the general effects on local communities. 3.5 The Plan was intended, and has been used, only as a general guideline for the SOP's annual expenditure program and as a basis for seeking foreign financing. As a result of increasing costs for construc- tion and right-of-way, and delays in executing projects and securing foreign financing, the Plan has now become obsolete. The Directorate of Planning and Programming is preparing a new investment plan for 1968-73. The proposed Bank project comprises high priority roads which will be included in this Plan. 3.6 Although progress has been slower than expected, annual highway expenditures have been increasing appreciably and in 1965 and 1966 were nearly three times as high as in 1955 (see Table 4). As a result of the Ps 13.5 billion (US$ 1.08 billion) of highway expenditures between 1955 and 1966 the quality of the road system has improved considerably and its total length increased by about 36,000 km. Programmed expenditures for 1967 exceed those of any previous year, and although the plan for 1968 to 1970 is under review it is unlikely that the present trend will be reversed. C. Highway Engineering 3.7 Road and bridge works are designed by SOP's Directorate of Engineering using up-to-date techniques. SOP has its own specialized equipment for carrying out all stages of road design, from reconnaissance of possible routes to completing the detailed engineering. Geological surveys are made on the basis of aerial photographs; earthwork quantities are estimated with the aid of computers. SOP has prepared a set of design standards that take into account the type of terrain, design, speed, minimum radius of curvature, width of roadway and pavement, grades and sight distances. These standards, introduced in 1958, are revised from time to time and have proved to be satisfactory.  3.8 There are a few local consulting firms engaged in highway and bridge design work in Mexico, but SOP only employs them when its own staff is fully occupied, and then only for bridge design. There are no restric- tions on the use of foreign consultants, although for normal highway and bridge designs SOP has enough qualified technical personnel. SOP engineering is of high quality but the past practice of starting projects on the basis of only preliminary engineering has been a major cause of construction delays and cost increases (paras 3.15-17 below). D. Highway Construction 3.9 Federal highway construction is supervised satisfactorily by SOP staff. Works are carried out under unit price contracts awarded, except for externally financed projects, through domestic competitive bidding. 3.10 The National Chamber of the Construction Industry has a membership of about 3,000 contracting firms, some 500 of which are specialized in highway works. In general these enterprises are well organized and equipped. Some of the established procedures for bidding and contract execution have discouraged foreign highway contractors from submitting bids in Mexico. In connection with the proposed loan, the Government has agreed to take steps to improve this situation (see parsa 4.21). E. Highway Maintenance 3.11 Routine maintenance of the Federal highway system is carried out by force account through SOP's General Directorate for Maintenance of Federal Highways. Only major pavement reconstruction, widening of bridges, supply of crushed stone and provision of traffic signs are carried out by contract. For maintenance purposes the country is divided into 15 divisions, each headed by a chief engineer. The divisions have the necessary repair shops, stocks of spare parts, radio and telephone communications, housing and other facilities, as well as the appropriate maintenance equipment. The Directorate is properly organized and staffed and, in general, the Federal highway network is well maintained. 3.12 The maintenance and operation of SOP equipment is in the charge of the General Directorate for Equipment. The Directorate is well organized and operates in close cooperation with the General Directorate for Mainte- nance. Each Maintenance Division has equipment worth about US$ 1 million and the mechanical facilities for its maintenance, although major repairs are usually carried out by the equipment dealers' shops. The establishment of equipment pools is under study, with a view to providing more flexibility in the use of equipment by the divisions. 3.13 The replacement of over-age equipment is made through budgetary appropriations or external financing. In 1959 SOP used a loan from the Export-Import Bank to purchase maintenance equipment worth US$ 6 million; and in 1963 the Bank, under Loan 35h-ME, financed additional equipment worth about US$ 8 million. The General Directorate for Equipment is now studying a rental system that would allow for continuous replacement of worn-out units.  - 8 - 3.14 The Bank has already participated in financing the reconstruc- tion, completion or construction of about 9,200 km of Federal highways and of about US$ 8 million worth of maintenance equipment. The Govern- ment gave assurances during loan negotiations that it will continue to provide adequate funds for maintenance of the Federal highway network. F. Previous Bank Highway Projects 3.15 The four previous Bank projects for the expansion and improvement of the Mexican highway network are as follows: (i) Loan No. 268-ME (October 1960). This provided US$ 25 million for construction or reconstruction of about 3,150 km of the Federal Highway System; some 10% of the work has still to be finished, with completion expected by late 1968, about three and a half years behind schedule; loan funds have been fully disbursed; (ii) Loan No. 317-ME (June 1962). This provided US$ 30.5 million for construction or completion of three toll roads (384-km), four access roads, five toll bridges and for purchase of a ferry boat. This project was completed about two and a half years behind schedule; loan funds have been fully disbursed; (iii) Loan No. 354-ME (September 1963). This provided US$ 40 million for construction, reconstruction or completion of about 6,000 km of Federal high- ways, and for provision of maintenance and other equipment. About 60% of the work has been finished, and the project is now expected to be completed by late 1968, two years behind schedule; and (iv) Loan No. 401-ME (February 1965). This provided US$ 32 million for improving about 320 km of toll roads, and for construction of about 140 km of new toll roads and three toll bridges. Some 60% of the work is now finished and completion is expected on schedule by late 1968. 3.16 The quality of all the above work is satisfactory, but cost increases and construction delays have been encountered, due principally to the increases in quantities of earthworks, revisions of design, the inclusion of works not originally contemplated, problems of right-of-way acquisition and unexpected heavy rains and cyclones that destroyed sections of roads or bridges after construction. In addition, in 1965 and 1966 the funds allotted for the financing of items under Loans 268-ME and 354-ME proved insufficient, since transfers within the SOP's budget were not made in time. Corrective measures to cope with future technical and financial  - 9 - problems have been agreed upon and are summarized in para 4.15. Increased costs and delays in project 317-ME also resulted in a deterioration of the financial position of the Mexican Toll Authority (Caminos y Puentes Federales de Ingresos y Servicios Conexos), which is responsible for the financing of projects 317-ME (now completed) and 4O1-NE (para 3.1(iv)). Satisfactory arrangements have recently been made by the Government to provide Caminos y Puentes with funds needed to complete project 401-ME. In addition the Bank is currently discussing with the Government further measures which would provide a sound financial framework for Caminos y Puentes'future development. 3.17 Spot checks made on some of the highways improved or constructed with the Bank's assistance have indicated that these are still justified in spite of the cost increases. This is due partly to the fact that high- way traffic has been increasing rapidly and expected benefits to road users have increased commensurately.  - 10 - 4. THE PROJECT A. General Description 4.1 The project (see Map) provides for: (i) the reconstruction and resurfacing of primary roads between Culiacan-Empalme.-Nogales, Tulancingo-Tuxpan and Puebla-Izucar de Matamoros, totalling 1,231 km (Nos. 1, 2 and 3); (ii) the improvement and bituminous surface treatment of tertiary roads between Cuatro Caminos-Playa Azul, Ciudad Aleman-Oaxaca, Iguala-Ciudad Altamirano and Escarcega-Chetumal totalling 885 km (Nos. 4, 5, 6 and 7); and (iii) the construction, including asphaltic concrete surfacing, of the San Martin Piramides-Tulancingo primary road 66 km in length (No. 8), and the provision of the necessary right-of-way. 4.2 The project roads, which are located in several parts of the country, have been selected by the Government as having high priority. Some of the roads in the project are closely related to works financed under previous Bank loans. 4.3 Improvement of two of the highways (Iguala-Ciudad Altamirano and Escarcega-Chetumal) up to a sub-base wearing course was partially financed under Loan 354-ME. The present project provides for additional drainage works, a gravel base and a light bituminous surfacing that were not included in the previous project. 4.4 SOP has carried out the engineering for the proposed highways and wtill supervise the works. Acquisition of right-of-way will be needed for the highway to be constructed (No. 8); 20% of the land is already available and no difficulties are foreseen in acquiring the remainder since SOP has already reached preliminary agreements with land owners. None of the proposed works is yet underway, and no retroactive financing is required. Highways to be Reconstructed Culiacsn-LEpalme-ilogales (No. 1) 4.5 The reconstruction of this highway, 956 km long, is the most important item in the project. It accounts for about half the total cost of the project. The project highway is part of the 2,300 km trunk route along the western seaboard from Nogales, on the Mexican/United States border, to Mexico City, passing through Guadalajara, the country's second largest city and many other important towns. The Bank is financing improvement of sub- stantial sections of the highway between Guadalajara and Mexico City under previous projects.  - 11 - 4.6 The highway runs parallel to the Pacifico Railway, passing through flat or rolling country and crossing numerous rivers. It is a two-lane highway ori- ginally constructed between 1950 and 1955 when the area was still undeveloped, and the structure and design standards of the road were suited for the traffic conditions prevailing at that time. As a result of increasing traffic volumes and vehicle weights, the highway has deteriorated and now needs to be reconstructed and improved. The works to be carried out provide for the reconstruction of the base over part of the road, and the provision of an asphaltic concrete surfacing over the whole length (956 km) of the road. For about 120 km, where the present traffic volume ranges from 1200-2400 vpd, the earthworks and drainage structures would be widened from 9.0 to 13.0 m. For a length of about 80 km, where the traffic volume is particularly high (3100-4000 vpd) it is proposed to widen the road from two to four lanes. The works would also include the construction of four overpasses and a bypass around the city of Guamuchil. Tulancingo-Tuxpan (No.2) 4.7 From Tulancingo, the first section of this 206 km two-lane highway crosses the eastern mountain range and reaches altitudes of 2,700 m before descend- ing towards Tuxpan on the Gulf of Mexico. The last 60 km are located on flat terrain. The highway was built between 1940 and 1945 and present traffic require- ments now make its improvement necessary. It is proposed to widen the earthworks, culverts and bridges, to reconstruct the base, to provide a 7.20 m wide asphaltic concrete surfacing, to bypass three cities and to realign certain sections. Puebla-Izucar de Matamoros (No.3) 4.8 This is a two-lane highway, 69 km long. It was built between 1940 and 1942 and is now deteriorating rapidly owing to the heavy traffic demands. The highway crosses flat and rolling terrain, serving important industrial and agr-- cultural areas, and the cities of Puebla, Atlixco and Izucar de Matamoros with a total population of about 430,000. The proposed works include the realignment of four sections totalling about 5 km to eliminate sharp curves, the widening of the earthworks, culverts and bridges, the reconstruction of the base and the provision of a 7.20 m wide asphaltic concrete surfacing. Three bridges, with a total length of about 120 m, are also to be constructed. Highways to be Improved and Surfaced Cuatro Caminos-Playa Azul (No.4 - 202 km long) and Ciudad Aleman-Oaxaca (No.5 - 239 km long) 4.9 These two highways have been under construction since about 1956 but progress has been delayed by the failure to make available adequate funds and resources for their completion. The earthworks and some drainage structures have been completed, but the base and surfacing have not been constructed. It is now proposed to widen the earthworks, culverts and bridges, to construct certain minor bridges, and to provide the base and a single bituminous surface treatment 7.00 m wide. Iguala-Ciudad Altamirano (No.6 - 189 km long) and Escarcega-Chetumal (No.7 - 255 km long) 4.10 These two roads were designed with a light gravel surface suitable for low traffic volumes, but rapid development in the localities  - 12 - has meant that traffic has grown faster than expected, and now justifies provision of a light pavement. Earthworks, drainage and construction of the sub-base were included in Loan 354-ME; this work, which is sche- duled for completion by late 1968, will have advanced to a stage early in 1968 where the proposed project works can commence. The proposed project provides for additional drainage works, the construction of the base and a single bituminous surface treatment 7.00 m wide. Highway to be Constructed San Martin Piramides-Tulancingo (No. 8) 4.11 This 66 km highway represents an extension of the Mexico.City-San Martin Piramides (Teotihuacan) highway financed under Loan 317-ME. It is also linked with the Tulancingo-Tuxpan highway (item No. 2 above), to be reconstructed under the proposed project. It will provide a short cut for through traffic moving to and from an area north-east of Mexico City, and will reduce the journey distance by about 25 km. The proposed works comprise construction of earthworks, 11 bridges with a total length of about 220 m, drainage structures, 4 overpasses, and provision of the base and asphaltic concrete surfacing 7.20 m wide. B. Cost Estimates and Financing of the Project 4.12 The total cost of the project is estimated at US$ 76.2 million equivalent, including contingency allowances. This estimate is based on unit prices drawn from contracts recently awarded for similar works, and is considered reasonable. Quantities have been estimated by SOP on the basis of detailed engineering for all project works. A summary of the project cost and its foreign exchange component follows: Cost Estimates Foreign Exchange Total Component 7Us$ million equiv.) Highways: a) To be Reconstructed (3) 41.5 b) To be Improved (4) 18.2 c) To be Constructed (1) 3.8 63.5 22.9 Contingencies: 20% (Physical 10% Escalation 10%) 12.7 4.6 76.2 27.5  - 13 - 4.13 As in the four previous Bank loans to Mexico, 10% has been included in the cost of highway works to cover SOP's expenditures for engineering and supervision of the project works. An allowance of 10% for physical contingencies and 10% for price increases during the period of execution has been included. Table No. 5 shows the total cost esti- mates for each highway in the project and Table No. 6 the breakdown of the construction cost by items (earthworks, drainage, etc.); right-of- way costs are excluded from Bank financing but are included in project costs for purposes of economic evaluation. 4.14 The tentative annual breakdown between the estimated local currency requirements, and foreign currency expenditures to be covered by the Bank loan, is as follows: Foreign Local Exchange Total Currency Expenditures Expenditures Expenditures (Bank Participation) Ps US$ Equiv. Ps US$ Equiv. Ps US$ Equiv. --------- ____ _ _____COOO~(00 ,000) -- - _ _ _ _ _ _ -- - -_ -- - - - - - 1968 63 5.0 40 3.2 23 1.8 1969 300 24.0 192 15.4 108 8.6 1970 325 26.0 208 16.6 117 9.4 1971 265 21.2 170 13.5 95 7.7 953 76.2 610 48.7 343 27.5 4.15 The local currency costs of the project will be financed by the Federal budget. Assurances were obtained during loan negotiations that adequate funds will be made available for executing the project. In view of the cost increases and delays encountered in the previous Bank loans, the Government has recently established a special office within the Under Secretariat of Public Works. The function of this office is to check that the current Bank projects are carried out according to the detailed engineering as approved by SOP. In order to exercise a tighter control on the works under the new project, the Government has agreed that no changes in any contract which, individually or in aggregate, will increase the amount of such contract by 10% or more will be made unless the changes are satisfactory to SOP and the Bank. In addition, the Bank will be informed in the SOP quarterly report of any proposed changes of smaller magnitudelikely to affect the amount of any contract. 4.16 The foreign exchange component has been estimated on the basis of the weighted average of likely foreign and domestic contractor partic- ipation in the proposed project. Experience with the current bidding and contract award procedures on Bank-financed highway projects in Mexico has evidenced little interest by foreign contractors. Whereas 15-20 foreign  firms have been pre-qualified to bid, only two foreign firms actually presented bids when invited. Only one foreign firm (French) has been awarded a contract. The value of that contract amounted to about 5% of the estimated cost of the individual project construction. With greater encouragement to foreign firms from the incentives proposed in para 4.21 below, it is probable that more such firms will submit bids and be succes- ful in obtaining contracts. 4.17 SOP has prepared a satisfactory detailed analysis breaking down the cost of the various elements of construction (earthworks, drainage, base, surfacing, etc.) into local and foreign components. On the basis of this analysis and the assumption that foreign firms would be awarded about 25% of the value of contracts, the foreign exchange cost is estimated at 36% of the total cost of civil works and this percentage has been used as the basis for the proposed loan. This percentage is about the same as for works under the previous highway projects. Following the procedure established for previous loans the Bank would disburse 36% of civil works expenditures directly to the Government. Any savirgs in the funds provided in the loan would normally be cancelled. C. Design Standards and Execution of the Project 4.18 Design standards for works included in the project are shown in Table 7. They are similar to those used for the projects under Loans 268-ME and 354-ME and are considered satisfactory. Table 8 shows the length, types and surfacing of each of the project highways. 4.19 Contracts for the project works rillbe let on the basis of international competitive bidding after pre-qualification of contractors, and in accordance with the Bank's established bidding procedures, apart from bridges over 15 m span, traffic signs, lane markings, fencing, and minor or specialized works, which account for about 7% of the total construction cost (approximately Ps 48 million or US$ 3.8 million equiv- alent) and which may be awarded to local contractors after competitive bidding. 4.20 Pre-qualification of contractors is made on the basis of their past experience and performance, the technical capability of their staff, the availability of equipment and their financial capacity. Because of the great number of pre-qualified contractors in Mexico (about 150 at present), invitations to bid are issued to a limited number of selected pre-qualified firms. Selection of firms is presently based on their specialty (earthworks, or sub-base and base, surfacing, bridges, etc.), their financial capacity in relation to the amount of the works, and the amount of work they have in hand at the time of the bidding. Domestic firms are also selected on a geographical basis with regard to the proximity of the works to their headquarters. Foreign firms pre-qualified to bid on Bank-financed projects are invited on a rotational basis in order that each of them is given an equal opportunity to participate.  - 15 - 4.21 The local construction industry is well organized and competent (para 3.10). Although censtruction costs appear reasonable it is possible that improvements in both cost and efficiency of civil works execution could be obtained through broader international competition. There are certain established bidding procedures that experience has indicated may discourage the submission of international competitive bids; during loan negotiations, agreement wee reached with the Government on the following points, which should substantially increase the attractiveness of the project to foreign contractors: (i) Pre-qualification of Contractors - Under the present system, invitations to contractors for pre-qualification are issued only once, at the beginning of any Bank project, but any interested firm may ask to be pre-qualified at any time. The Government has agreed to invite pre-qualification annually until such time as all contracts have been awarded. (ii) Invitations to Bid - Invitations to bid are now issued to a limited number (about 12) of pre-qualified firms in the proportion of 1/3 foreign to 2/3 local under a previous agreement between the Government and the Bank. The Govern- ment has agreed to change this procedure so that the number of firms to be invited would be increased to a minimum of 16 and the proportions changed to 1/2 foreign and 1/2 local. Since the project works would include about 22 contracts to be awarded through international bidding, foreign firms,invited on a rotational basis, would thus have ample opportunity to participate in the bidding. (iii) Award of Contract by Type of Work - The current general practice is to award separate contracts on a "horizontal" basis for each type of work (e.g., earthworks, sub-base and base, surface, bridges, etc.) instead of for complete road sections on a "vertical" basis in which all the above works are included. The Mexican procedure splits the work into small specialized contracts; this is less efficient from an operational standpoint. It originated in the desire of the Government to avoid the risk of price fixing by the development of a few very large firms in the contract- ing industry. This risk has now largely been removed by the present structure of the industry. For the proposed project the Government has agreed to award contracts on a "vertical" basis for complete road sections in the interest of greater efficiency and lower costs; this would also be more likely to attract bids from foreign contractors. (iv) Minimum Size of Contracts - For previous projects, the Bank and the Government agreed on a minimum size of contracts for international bidding of US$ 2 million equivalent. This has not proved sufficiently attractive to foreign bidders,  - 16 - and during negotiations the Government has agreed to increase the minimum size of contracts. About 35% of the total value of contracts will be for amounts greater than US$ 3 million equivalent, about 20% will be for amounts varying between US$ 2.5 and US$ 2.9 million equivalent. Contracts for the remainder of the project works (except those referred to in para 4.19) will range from US$ 2 to US$ 2.4 million equivalent. (v) Contracts Signed in Annual Tranches - Under the present system contracts are not signed for the full amount of the bid, but only for the current annual budgetary appropriation earmarked for the work. The Government has agreed to have contracts signed for the full amount and duration of the contract works. 4.22 The SOP's Directorates which will supervise execution of the proposed project are adequately staffed with competent personnel. They operate efficiently and outside consultants will not be required. The project is expected to be completed by October 1971.  - 17 - 5. ECONOMIC JUSTIFICATION A. Summary 5.1 The economic benefits of the project accrue mainly in the form of reduced transport costs for traffic that would use the existing highways even if they were not improved, although for some of the roads other important benefits are expected from the generation of new traffic as a result of the improvements. The particular roads have estimated economic rates of return varying between 12% and 23%, with a weighted average of 19% for the project as a whole. It is concluded that the project, and each of its constituent parts, is amply justified. B. Traffic Forecasts 5.2 As prepared by SOP, traffic forecasts for the project roads i.e., 8% rate of increase in 1967 decreasing to 6% p.a. in 1971 and thereafter, were based primarily on expectations of average traffic growth for the country as a whole. These in turn were based on the increase in vehicle registrations over the last ten years, in the absence of reliable road user statistics over the period; SOP has recently set up a good system for traffic counting throughout the country, but historical data on traffic volumes are not sufficient, at present, to draw reliable trends. For purposes of appraising the Project the Bank has taken a rather more conservative view, bearing in mind the increasing uncertainty attaching to later years; overall traffic has been assumed to increase by 7% p.a. up to 1970, by 6% p.a. between 1971 and 1980 and by 3% p.a. thereafter. 5.3 These forecasts of average growth have been adopted for four roads in the project (Nos. 1, 2, 3 and 8) where the improvements will not materially affect the future level of traffic. For the four roads to be upgraded (Nos. 4, 5, 6 and 7) however, the forecasts reflect the additional traffic expected to be generated by the road improvements or by other specific developments in the area. C. Calculation of Economic Benefits 5.4 Culiacan-Empalme-Nogales (No. 1 - 956 km): Much of the road between Culiacan and Nogales passes through rich and rapidly developing agricultural country. Large-scale irrigation schemes, in which the Bank has participated, and the introduction of numerous plants for crop proces- sing, have already generated substantial increases in traffic on the road; the execution of plans for further large-scale extensions of the irrigated areas will continue to do so in the future. Over the whole distance of 956 km there was a daily average of 1,750 vehicles in 1966, but owing to the local nature of much of the traffic the density varied between 910 and 4,000 vpd on different sections. 5.5 Although the primary purpose of the road is to serve local traffic needs, it is also important as a through route for freight and tourist traffic between Mexico and the United States. For the longer distance freight traffic  - 18 - there is some competition for higher value products such as fruit and tomatoes, with the Pacifico Railway, that runs parallel to the road through- out its length. This railway has been completely rehabilitated in recent years, largely with the aid of a Bank loan in 1954 (103-ME). In spite of -the rapid growth of freight traffic on the parallel highway, the Pacifico's freight tonnage doubled in the ten years up to 1965. Development in the area generally has been such as to support a vigorous growth of both road and rail traffic, and the programs for future economic expansion make it likely that this situation will continue. The improvements proposed for the project road are needed primarily to ensure that road transport can play its proper role in this expansion, particularly in the field of short and medium distance movements. There will also be benefits to road operators in the field of long-distance freight transport, where canpetition with t,he railway is strongest. However, there is no economic case for attempting to protect the railway by neglecting improvements to the highway. At the same time, justification for the high-way's reconstruction does not depend on the benefits to its users in the long-distance haulage field. To es- tablish this point, suchl benefits have been calculated separately in es- timating the economic rate of return for the project. 5.6 Benefits to road users will arise in three ways. First, repairs and improvements to the base and pavemen-t will reduce vehicle time and operating costs generally. Secondly, the improvements, together with the proposed widening, will increase the capacity of the road, and thus reduce the costs of congestion as traffic continues to increase. Thirdly, the wider pavement and improvement of shoulders should reduce the accident rate which is already very high. The benefits from accident reduction have not been included in the rate of return calculation, though they are likely to be substantial. 5.7 In view of the variations in traffic density, expected benefits and costs have been compared separately for different sections of the road. Each section shows a rate of return of 12% or more, with an average rate of 20% for the road as a whole, assuming an economic life of 20 years. Excluding the benefits to long-distance commercial traffic (see para. 5.5) the return ie estimated at 15%. 5.8 Tulancingo-Tuxpan (No. 2 - 206 km): This is part of the trunk route between Tuxpan, close to the Gulf of Mexico, and M4exico Ci-ty. It serves an important oil-producing and industrial area around the town of Poza Rica (population 87,000), and another industrial center at Tulancingo (population 33,000). 'The road crosses the mountain range of the W.zTestern Sierra. The numerous curves and narrow 6.2 meter wide pavement limit the speed of traffic even at the present density of between 1,100 and 1,800 vehicles per day on the different sections. The proposed reconstruction includes widening the pavement to 7.2 meters and improving the base. The benefits in terms of reduced vehicle operating costs are expected to yield a 21% rate of return over a 20-year life. 5.9 San Martin Piramides-Tulancingo (No.8 - 66 km): This new road will provide another section of the Tuxpan-Mlexico City route and is an extension to the Tuxpan-Tulancingo road described in the previous paragraph.  At the present time traffic between Tulancingo and the capital passes on the old road via Pachuca. The new road will follow a much more direct alignment to San Martin Piramides where it will provide access to a high standard toll road to Mexico City, financed by the Bank. An estimated 1,000 vehicles per day will be attracted to this route when it opens in 1970. The principal advantages will be, first, a saving of 25 kIm in the distance for through traffic, and second, reduced vehicle operating costs resulting from the im- proved alignment and road surface. These benefits are estimated to yield a 23% rate of return over a 20-year life, after taking account of the road's future maintenance costs. There are also likely to be other benefits; for example, from the relief of potential congestion on the old road via Pachuca, and from economic developments induced in the area the new road will pass through. The amount of these benefits is difficult to estimate and they are not included in the above return. They are not the main purpose of the new route nor essential to its justification. 5.10 Puebla-Izucar de Yatamoros (No. 3 - 69 km ): This road connects Puebla, the country's fourth largest city, with the Pan American Highway, which serves as the main trunk route to the south-east. It also carries substantial local traffic through the outlying areas of Puebla, as well as agricultural produce from the surrounding irrigated farming country, and from the market town of Atlixco (population 70,000), midway along the road. At present there are some 2,300 vehicles passing daily between Puebla and Atlixco, and 1,h00 between Atlixco and Izucar de Matamoros. The present width of the pavement is 6.5 meters on the first of these sections, and only 6.0 meters on the second. The proposed improvements include widening the pavement to 7.2 meters, which is amply justified by the traffic level ex- pected on the road. The overall savings in vehicle operating costs are estimated to yield a 214 return over a 20-year life. 5.11 Cuatro Caminos-Playa Azul (No. 4 - 202 km. ): Construction of this road was originally started ten years ago as part of an overall plan for the development of this sparsely populated area. In spite of the lack of funds to complete its construction, the stimulus provided by extensive irrigation works in the area has induced a flow of about 220 vehicles a day on the road. The improvements now proposed include provision of light paving with a single surface treatment. This will substantially reduce journey times and vehicle operating costs and, by offering better protection from the tropical storms experienced along the Pacific Coast, will appreciably reduce the road's maintenance costs. In addition the improvements are expected to encourage a faster rate of traffic growth. On the assumption that traffic will be generated in direct proportion to the reduction in vehicle operating costs, the benefits to such traffic can be taken as equal to one-half of the savings in costs. These benefits, together with the savings in (i) operating costs of those vehicles which would, in any case, use the road, and (ii) in the savings in maintenance costs on the road itself, produce a 13% rate of return over an assumed 15-year life. 5.12 Ciudad Aleman-Oaxaca (No. 5 - 239 km ): Completion of this road has also been delayed by a shortage of funds, but here again traffic has already grown to about 200 vehicles a day. Its primary purpose is to promote development in the area, but it also links the coastal road along the Gulf  - 20 - of Mexico with the Pan American Highway, and provides a route between the port of Veracruz and the area around Oaxaca City (population 87,000). The proposed improvements to the road are similar to those described for the Cuatro Caminos-Playa Azul road. The nature of the benefits expected are also similar, and in this case are estimated to offer a 12% return over a 15-year life. 5.13 Iguala-Ciudad Altamirano (No. 6- 189 km ) and Escarcega-Chetumal (No. 7 - 255 km ): These two roads were included in the previous Bank Loan 354-ME (see paragraph 4.10). Their completion to the design standards accepted in the previous project, including a gravel sub-base, was originally scheduled by 1965/66, but is now expected to be delayed until the end of 1968. Even so, traffic passing over the incomplete roads in 1966 already amounted to about 200 vehicles a day in each case, which suggests that their selection as development roads, to open up areas previously accessible only by primitive trails, has been amply justified. The addi- tional works now proposed in this project, and the nature of benefits to be expected from these improvements are similar to those for the roads described in the two previous paragraphs. Rates of return of 20% and 18% over a 15-year life are estimated for the two roads respectively.  _ 21 - 6. CONCLUSIrONS AND RECOMMENDATIONS 6.1 The project as a whole is technically sound and economically justified and is important to the continuing process of improving and upgrading the Mexican highway system. The cost estimates are acceptable. 6.2 The responsible executing agency will be the Secretariat of Public Works. The various Directorates concerned with the project have a sound organization and clear lines of authority; their staff is com- petent and no outside consultants are required. 6.3 During loan negotiations the Government gave the following principal assurances: (i) the Under Secreteriat of Public Works through a specially established office will check that project works are carried out in accordance with the detailed eng.neering and cost estimates approved by SOP (para 4.15); (ii) no change in any contract that, individually or in aggregate will increase its amount by 10% or more will be made unless such change is satisfactory to SOP and the Bank (para 4.15); and (iii) the, international competitive bidding procedures will be improved as follows (para 4.21): (a) invitations to contractors for pre-qualification will be made annually until such time as all contracts have been awarded; (b) invitations to bid will be sent to at least 16 pre-qualified firms, of which one-half foreign and the other local firms; (c) contracts will be awarded for complete road sections; (d) the minimum size of contracts will be increased; about 55% of the value of project works will be undertaken through contracts greater than US$ 2.5 million equivalent; and (e) contracts will be awarded for the full amount of the bid proposal. 6.4 The proposed project provides a suitable basis for a Bank loan of US$ 27.5 million equivalent. An appropriate term would be 20 years including a 4-year period of grace. January 11, 1968  TABLE 1 MEXICO THIRD ROAP PROJECT Railway Statistics Total Length of Passenger Traffic Freight Traffic- Railway Routes Millions of Millions of Millions Millions (km) Passengers Passenger-km of tons of ton-km 1955 23,370 34.4 3,764 25.3 10,960 1956 23,424 34.7 3,861 26.9 12,014 1957 23,383 33.0 3,837 29.0 12,982 1958 23,456 29.3 3,491 28.2 12,809 1959 23,292 30.6 3,725 28.5 12,230 1960 23,368 32.6 4,127 32.2 14,004 1961 23,487 33.6 4,287 30.6 13,524 1962 23,501 34.5 3,769 30.6 13,521 1963 23,793 35.7 3,898 34.2 14,960 1964 23,618 37.5 4,097 37.4 16,330 1965 23,672 37.3 3,881 41.0 18,326 1966 23,672 37.0 4,900. 41.0 19,100(etf) Average annual growth rate: 0.6% 5.2% Average length of ,journey in 1966: 108 km 466 km Source: Estadistica de Ferrocarriles y Tranvias 1965 and SOP  TABLE 2 MEXICO THIRD ROAD FROJECT Length of Highways, 1955 to 1966 (Kilometers) Year Federal State and Local Toll Total 1955 15,235 12,042 108 27,385 1956 15,408 13,208 108 28,724 1957 16,876 13,351 108 30,335 1958 16,997 14L,782 296 32,075 1959 21,001 16 214 296 37, 511 1960 21,495 23,163 296 44,954 1961 23,647 25,663 296 49,606 1962 22,685 30,403 452 53,540 1963 23,723 32,863 452 57,038 1964 24,663 35,279 498 60,W40 1965 25,195 35,502 555 61,252 1966 25,773 37,187 741 63,701 Average annual growth rate 4.9% 10.8% 19.1% 8.O% Source: Secretaria de Obras Publicas  TABLE 3 MEXICO THIRD ROAD PROJECT Highway ExPenditures 1955-1967 1/ (Ps Million) Year Highways Federal Toll State and Local Total 1955 522 - .165 687 1956 472 223 695 1957 610 - 270 880 1958 554 65 261 880 1959 688 67 280 1035 1960 625 59 257 941 1961 484 161 259 90h 1962 647 105 262 1014 1963 711 141 323 1175 1964 953 300 463 1716 1965 844 320 540 17O4 1966 910 436 481 1827 1967 800 478 714 1992 2/ 1/ Construction, maintenance and administration 2/ Approved expenditures for 1967 Source: Secretaria de Obras Publicas  TABRIJ 4 MEXICO THIRD ROAD. PROJECT Number of Motor Vehicles Registered 1955 to 1965 (Thousands) Year Automobiles Buses Trucks Total 1955 308.1 22.3 220.2 550.6 1956 320.4 21.0 240.1 581.5 1957 365.8 22.4 272.5 660.7 1958 378.9 22.7 273.8 675.4 1959 437.7 25.9 300.9 764.5 1960 483.1 26.1 293.4 802.6 1961 520.7 33.4 300.2 854.3 1962 548.2 26.1 327.9 902.2 1963 618.0 27.6 352.7 998.3 1964 687.8 29.5 364.1 1,081.4 1965 771.1 30.7 388.1 1,189.9 Average annual growth rate 9.6% 3.3% 5.8% 8.0% Source: Anuario Estadistico de Los Estados Unidos Mexicanos  KX,ICO T,-.IRD ROAD PROJSCT Cost Estimates of Project Highways Enginreer ing and Contingencies Length) Construction Sui-ervision Sub- Physical Escalation Highways _-_ Cost 10% Total I10L) (10;) Total -Pesos 'willions - - - - - - - - - - - - - - (a) To be reconstructed 1. CuliacanT-hnpalme-_}ogales 956 341!.7 34.5 379.2 37.9 37.9 IL55.r) 2. Tulancingo-Tuxpan 206 92.2 9.2 101.4 10.1 10.1 121.6 3. Puebla-I?zmcar de ^ ataraoros 69 34.7 3.5 38.2 3.8 3.3 45.8 51.8 6282 . (b) To be irmpnroved 4. Cuatro Caiminos-Playa Azul 202 59.2 5.9 65.1 6.5 6.5 78.1 5. Ciudad Aleman-Oaxaca 239 690.7 7.0 76.7 7.7 7.7 92.1 6. Iguala-Ciudad Altanirano 189 32.5 3.3 35.8 3.6 3.6 43.0 7. Escarcega-Chetuinal 255 45.8 I.6 50.1 5.1 5.1 60.6 228.0 273.8 (c) To be constructed 8. San 'N,artin Piranides- Tulancingo 66 13.3 4.3 47.6 h.8 4.8 57.2 li7.7 5-7.2 Totals 2,2 722.1 72.3 794.4 79.5 72.5 953.4 (US&76.2 millim)n b equivalent)  -|,TXICO THIRD ROAD PROJECT Analysis of Construction Cost Estimates by Ite'-'s Length Traffic Total Const. Cost l/ Highways Km Earthworks Drainage Paverient Bridges Signs '.isc. (without contingencies) - - - - - - - - - - --esos IillIions