China - Fujian Provincial Highway Project

Document of The World Bank Report No: 29288 IMPLEMENTATION COMPLETION REPORT (TF-22534 CPL-36810 SCL-3681A SCPD-3681S) ON An IBRD LOAN IN THE AMOUNT OF US$121.89 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A FUJIAN PROVINCIAL HIGHWAY PROJECT June 9, 2004  CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2003) Currency Unit = RMB RMB 1.00 = US$ 0.12082 US$ 1.00 = RMB 8.2769 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS BMS - Bridge Management System CAS - Country Assistance Strategy EDB - Expressway Data Base EAP - Environmental Action Plan E&M - Electrical and Mechanical FEDC - Fujian Expressway Development Company FEPC - Fujian Provincial Transport Department FPECD - Fujian Provincial Expressway Construction Directoration FPEPB - Fujian Provincial Environmental Protection Bureau FPHAB - Fujian Provincail Highway Administration Bureau FQE - Fuzhou-Quanzhou Expressway MIEO - Machinery Import and Export Office MOC - Ministry of Communication PAP - Project Affected People PMS - Pavement Management System QXE - Quangzhou-Xiamen Expressway RAP - Resettlement Action Plan RDB - Road Data Bank RNIP - Road Network Improvement Program SEPA - State Environmental Protection Administration SPC - State Planning Commission Vice President: Jemal-ud-din Kassum, EAPVP Country Director Yukon Huang, EACCF Sector Manager Jitendra N. Bajpai, EASTR Task Team Leader/Task Manager: Supee Teravaninthorn, EASTR  CHINA FUJIAN PROVINCIAL HIGHWAY PROJECT CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome 10 6. Sustainability 11 7. Bank and Borrower Performance 12 8. Lessons Learned 13 9. Partner Comments 14 10. Additional Information 22 Annex 1. Key Performance Indicators/Log Frame Matrix 23 Annex 2. Project Costs and Financing 24 Annex 3. Economic Costs and Benefits 27 Annex 4. Bank Inputs 36 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 38 Annex 6. Ratings of Bank and Borrower Performance 39 Annex 7. List of Supporting Documents 40  Project ID: P003626 Project Name: CN-FUJIAN PROV HWY Team Leader: Supee Teravaninthorn TL Unit: EASTR ICR Type: Core ICR Report Date: June 17, 2004 1. Project Data Name: CN-FUJIAN PROV HWY L/C/TF Number: TF-22534; CPL-36810; SCL-3681A; SCPD-3681S Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: Roads and highways (99%); Sub-national government administration (1%) Theme: Rural services and infrastructure (P); Municipal governance and institution building (P) KEY DATES Original Revised/Actual PCD: 01/05/1992 Effective: 07/21/1994 07/21/1994 Appraisal: 10/06/1993 MTR: 11/01/2004 Approval: 12/14/1993 Closing: 06/30/2000 12/31/2003 Borrower/Implementing Agency: GOC/FUJIAN PROVINCE Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautum Kaji Country Director: Yukon Huang Shahid Javed Burki Sector Manager: Jitendra N. Bajpai Paul Stott Team Leader at ICR: Supee Teravaninthorn Otto Raggambi ICR Primary Author: Jacques Yenny 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No  3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The project has been designed to (a) support the continued development of road infrastructure in Fujian Province to facilitate mobility and increase the efficiency of road transport in the interest of stimulating economic activity; (b) develop an action plan for the strengthening of the provincial road construction industry; (c) assist in the development of institutional capabilities for transport planning and investment prioritization; and (d) facilitate the transfer of highway construction and maintenance technology through staff training and the provision of equipment. The project objectives were clear and in line with the Country Assistance Strategy (CAS) presented to the Board in August 1993 and the sector assistance strategy. They were also consistent with the Government request for continuous assistance of the Bank in the highway sub-sector. In February-March 1990, the Bank undertook, jointly with the State Planning Commission (SPC) and the Ministry of Communications (MOC) a screening mission to make preliminary assessment of nine highways which had been proposed for Bank financing. From this pre-selection process, it was concluded that the construction of the Xiamen-Quangzhou expressway, as Phase 1 of the longer-term objective to build a coastal expressway from Fuzhou (the provincial capital) to Zhangzhou, (at the border with Guangdong province), warranted consideration for Bank financing. In terms of priority, it was agreed with the Government that processing the Fujian project would follow preparation of similar projects in Zhejiang, Guangdong, and Henan provinces. The Bank's identification mission visited Fujian in November 1991. 3.2 Revised Objective: The objectives were not revised 3.3 Original Components: The original components of the project were: - Construction of the 81.9 km Quanzhou-Xiamen expressway (QXE), including the electrical and mechanical (E & M) equipment for tolling, traffic monitoring, telecommunications and lighting; - Upgrading of three road sections (58.3 km) and paving of four road sections (200.7 km); - Construction supervision for the expressway and other roads; - Procurement of equipment for operation and maintenance of the QXE, road laboratories and the development and application of a Road Data Bank (RDB) and a Pavement Management System (PMS); - A study of the provincial road construction industry; and - Staff training. 3.4 Revised Components: COMPONENT; COST; RATING CONSTRUCTION OF QXE & FQE; $470,400,000.00; S ROAD NETWORK IMPROVEMENT PROGRAM; $40,300,000.00; S CONSTRUCTION SUPERVISION OF QXE & FQE; $12,100,000.00; S CONSTRUCTION INDUSTRY STUDY; $400,000.00; S PROCUREMENT OF EQUIPMENT; $3,900,000.00; S INST. STRENGTHENING & TRAINING; $1,000,000.00; S ROAD DATA BANK/PAVEMENT MANAGEMENT; $700,000.00; S Due mainly to the devaluation of the RMB in early 1994 and to some lower than expected bid prices - 2 -  for all four ICB contracts on QXE, savings of US$47.2 million appeared early during the project execution and were recorded already in 1995 supervision mission reports. After fairly lengthy discussions, the Bank agreed to the province's request, supported by MOC to include a new component in the project. The new component consisted of pavement construction, supply and installation of E & M equipment, and supervision for the Fuzhou-Quangzhou Expressway (FQE). FQE was a logical continuation of the Bank financed QXE. Once completed, the FQE and QXE would link Fuzhou, the provincial capital to Xiamen, the province's most important port. On July 27, 1998, after Board approval, the Loan and Project Agreements were amended to reflect the new components and extend the closing date from June 30, 2000 to December 31, 2003. 3.5 Quality at Entry: Quality at entry is rated satisfactory overall. The assessment is based on: a) the consistency of the project objectives with China's priorities for the sector and of the Bank's strategy for future highway lending in China; b) the importance given to improving the capabilities for transport planning and management of the road network in the province; c) the transfer of highway construction and maintenance technology through training of the local staff both in China and abroad; and d) the attention given to following Bank policy, in particular regarding environmental protection and resettlement. As with most Bank-financed projects at that time, no performance indicators were explicitly developed (no baseline and benchmark figures established). 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The project objectives were substantially met and the overall achievement of the project objectives is assessed as satisfactory. A. Supporting the development of road infrastructure in Fujian Province The two major highways, the Xiamen-Quangzhou Expressway (QXE) and the Fuzhou-Quangzhou Expressway (FQE) were opened to traffic as scheduled, in late 1997 and 1999 respectively. The objective of reducing congestion in the corridor has been met with long distance traffic being diverted to the expressway. However, diversion to the expressway, at about 40% of total traffic, is lower than forecast. This is due in part to the relatively high toll rates (0.55 Yuan/per car-km). The rapid urbanization in the corridor, promoted in part by the improved accessibility provided by the expressway, traffic in the corridor in 2003 matched the forecast after having been lower than it for a few years. On the other hand, the economic benefits are considered sustainable, without any predictable element of risk, as traffic has been growing rapidly since opening. The Road Network Improvement Program (RNIP) has had a very beneficial impact on the local communities served by the upgraded and paved roads. The seven roads in this component were opened to traffic between 1994 and 1997. The upgrading of three higher class roads (the A Group) has reduced congestion, despite the continued rapid traffic increases. On all three roads, the traffic increased faster than forecast immediately after opening. Recently, the traffic on two of the roads decreased somewhat because of the opening of a motorway in one case and of a shorter alternative in an other case. In the case of the four newly paved roads (the B group), improved access and easier transport of local produce have enhanced the living standards of the population served by the roads, according to evidence gathered by the borrower. For example, in one of the road service area, the annual average per capita income increased from 2,123 RMB at project completion (end 1995) to - 3 -  3,864 RMB in early 2001. The rate of school enrollment went from 93.5% to 98.2%, the illiteracy rate fell from 16.1% to 1.1% and the number of health service workers per 100 people increased from 0.16 to 1.2. Along another road, famous local products such as flower wise mushrooms can now be transported quickly and exported to Japan. Other products which can now easily be transported include timber, block stone, bamboo, tea leaves and Chinese medicinal herbs. B. Developing institutional capabilities for transport planning and investment prioritization Institutional capabilities for investment planning prioritization were developed through the introduction of a road data bank (RDB) and pavement and bridge management system programs (PMS and BMS) for the core arterial road network of the province. The province adopted the Chinese RDB, PMS and BMS programs, developed for nationwide application. Both the CPMS99 and CBMS are now available. The CPMS contains data for 2-3,000 km of bituminous roads, although the data dates back to 1999, when MOC required the CPMS to be used by all provinces for a census. The CBMS has some data on about 2,500 of the 3,600 bridges on the main road network. Although available, the CPMS is presently not used for planning, primarily because of the lack of sufficient funding for periodic maintenance. With the current funding levels essentially sufficient only for routine maintenance, there is no incentive to use the CPMS and update its data base. C. Transferring technology of highway construction and maintenance through training and provision of modern equipment The impact of technology transfer through training is not easy to measure due to difficulties in defining baseline parameters. However, the eagerness shown by the leaders of the Fujian Provincial Transport Department (FPTD) to engage their staff in training activities under the project is evidence of the importance they attached to acquiring modern technology. The province requested the Bank to increase the amount of the loan affected to training twice during project execution. The total amount spent on training ended up to be 2.5 times the original allocation. Over 200 staff members from various branches of the FPTD were trained in 14 countries in North America, Europe and Australia. The topics of training included: construction management and supervision, financial control, planning and design, material tests, road data bank, financing activities, E&M works, operational management of roads and expressways, safety, quality control, tunneling, soft soil treatments, environmental protections, human resources development, etc. There was also numerous training courses organized locally, in which trainees returning from abroad lectured on what they had learned. Through overseas training and study tours and participation in studies and supervision during project implementation, the FPTD staff received satisfactory exposure to new concepts and practices in highway management and technology. There were also evident of the effective use of new skills by trained FPTD staff. D. Developing an action plan for the strengthening of the provincial construction industry The Provincial Road Construction Industry Study and Nation Wide Survey were carried out with a TA grant from Japan PHRD Funds. It was completed in 1997 by a team of foreign and Chinese consultants. The Bank reviewers deemed that the study report was well prepared and gave an excellent documentation of the construction industry in China. The Bank found the recommendations generally reasonable, although most of them would have required further detailed work to explore the range of solutions appropriate for Chinese conditions and make specific recommendations. The FPTD staff found that the recommendations were not suitable for China at the time. For instance, one of the recommendations was to establish a construction equipment leasing company. The FPTD had tried this in the early 1990s, but found no takers for the equipment and the company had to be disbanded. - 4 -  By the time the study was completed, the State policy of developing infrastructure was having a major impact on civil works construction companies. Fujian province was no exception and soon contractors from outside the province started winning contracts in Fujian. This combined with the policy of commercializing the industry, created pressure on the local construction companies to reform and restructure. New staff and new management were hired and some consolidation took place to create competitive modern companies. While at the time of appraisal, the largest contractor in the province had an average turnover of 6 million Yuan, last year, the turnover of one of the largest local contractor reached 100 million Yuan. With all these development unfolding, the FPTD did not see the necessity of developing any action plan for the industry and the Bank did not pursue the matter. 4.2 Outputs by components: Civil Works. Both the construction of QXE (81.9 km) and the pavement of FQE (154 km) were successfully completed within schedule and works were of good quality. At the beginning, two of the four contracts on QXE fell behind schedule. This was pointed out by a Bank supervision mission in 1996. Following the Bank's mission, the FPTD and the Provincial Government took a variety of measures that greatly improved the situation by early 1997. In particular, the vice-governors of the province met with the contractors impressing them of the importance attached by the provincial government to opening the project on time. New time schedules were defined and more funds were made available to the contractors in the form of advance payments and domestic bank loans, guaranteed by the province. Quality of construction on both expressways was good. A Bank mission driving on the FQE in late 1999 remarked that the expressway appears to be of excellent quality, in fact one of the best the mission could see until then in China. The surface of pavement is very smooth, protection of slopes is well done, obstacles are well protected and the general appearance is very good. Electrical and Mechanical Works (E&M). The two supply and install contracts (QXE and FQE) for these works were delayed by lengthy procurement processes and progress, after contract signature was slower than expected in the case of the QXE, which was the first contract of that type in the province. E & M Works Expressway Bids invited Contract signed Work started Work completed opens QXE 1/1998 10/1996 12/1998 8/1999 7/2001 FQE 1/2000 10/2001 9/2002 10/2002 10/2003 The bidding process for QXE E&M works took two years. Bidding documents were prepared according to the relatively new two stage bidding procurement model established by the Bank for supply and install contracts. In addition, because the procurement involved imported equipment, the province needed the approval of the Machinery Import and Export Office (MIEO). Clearance from MIEO has affected numerous Bank projects, as it usually takes at least 6 months and some times up to one year. Given the rapid pace of technological innovations, such long procurement procedures often create difficulties in acquiring the latest technologies. Installation of the E&M equipment for QXE finally started only in August 1999, almost three years after the start of the bidding process. Completion was postponed by about six months due to delay in importing foreign equipment. Contracting for FQE E&M also took longer than expected despite the experience gained on the previous section QXE. The original plan, reported by the supervision mission of September 2000 was for the installation to be completed by March 2002. Although the procurement process was faster than for QXE, using prequalification rather than two stage bidding, work only started in October 2002 and the project closing date had to be postponed by one more year to December 31, 2003. Supervision. The construction supervision of the two expressways was satisfactory. It was carried out - 5 -  by a joint supervision team of local engineers and international consultants. The joint team approach, with the international engineers playing an advisory and training role proved effective in assuring work quality. It also helped the local counterparts to appreciate the importance of quality control. Supervision costs were substantially higher than estimated, in part because of the added project component. B. Road Network Improvement Program (RNIP) The component included the upgrading of three road sections (58.3 km) and the paving of four road sections totaling 200.7 km. The roads were widely dispersed in the northern and northeastern parts of the province and the works were not suitable for packaging. Therefore, the seven projects were divided into 16 contracts awarded under LCB procedures. All contracts were completed by the end of 1996. A detailed supervision mission carried out in the fall of 1996 inspected all seven projects, traveling almost 3000 km. It concluded that "overall implementation of the 16 contracts has gone rather smoothly, supervision was effective and the quality of construction is satisfactory" However, due to poor upfront design and insufficient planning, particularly of traffic growth expectations on the upgraded roads, extensive variation orders had to be issued. This led to an overall 65% increase over the original contract prices. After reviewing the variations orders, the Bank concluded that two, frequently issued, major changes were clearly outside the original contract size and scope. These were the change in pavement structure from bituminous to concrete and the large increases in width of the road base and pavement. Since the Bank had not been informed in time about these substantial changes and feasibility studies had not been prepared to justify the changes, the Bank could not reimburse the Borrower for works outside the scope of the original contracts. The Bank reimbursed other variations of a "normal and reasonable nature" C. Equipment Equipment to be purchased under the project was for the operation and maintenance of the QXE, for road laboratories and for the development and application of the RDB and PMS. The procurement of equipment went smoothly and was completed by 2000, very much in line with the SAR estimates. Equipment Purchase SAR Actual Maintenance equipment 2,050,400 2,180,000 Testing Equipment 428,395 315,130 PMS equipment 418,660 379,600 TOTAL 2,897,455 2,874,730 D. Road Data Bank, Pavement and Bridge Management Systems The Fujian Provincial Highway Administration Bureau (FPHAB) is in charge of the RDB/PMS for the province and the Fujian Provincial Expressway Construction Directorate (FPECD) for the expressways. By mid-2000 the Expressway Data Base (EDB) had been completed and was functioning well. Regarding regular roads, the FPHAB developed its own GIS based road data bank, with the support of a university in Nanjing. They have also assembled their own road centerline measurement vehicle to provide road alignment data for the RDB. Most equipment is of Chinese origin and the system appears well designed. Alignment data have been collected on about 7,300 km of the 14,171 km national and provincial highway network. The RDB is able to store numeric as well as image data - 6 -  (video and digital photographs). However, the FPHAB does not conduct any roughness surveys since they do not have the appropriate equipment. On the other hand, the FPECD imported a road data collection vehicle in 2001 to collect expressway data base including roughness survey. It is estimated by the operator that the vehicle has conducted only some 700 lane-km of surveys since it was commissioned 18 months earlier. Although there are some problems with the vehicle, which the manufacturer still has to correct, the overall system is operational and suitable for road surveys. Some arrangement should be made between FPECD and FPHAB so that the latter can use the vehicle to collect roughness and other data on the general road network to increase the utilization of this expensive equipment. E. Training FPTD gave great importance to the training program included in the project. This project was the first foreign financed road project in the province and unlike other provinces of China, Fujian highway staff had not had any opportunity to receive training abroad. By the end of 1997, some 75 trainees had been abroad to Australia, Britain, Canada, Italy and the USA, and the original allocation of US$600,000 for training had been fully used. The province, with the agreement of MOC, requested to increase the allocation by US$500,000 to continue the program. The new amount was used up again by 2000 and, in 2001, the Bank agreed to a further allocation of US$500,000 for training in 2001 to 2003. Other details on the training program were given in section 4.1.C F. Provincial Road Construction Industry Study As already mentioned the study was carried out satisfactorily and concluded in 1997. The status of the industry since completion of the study has been discussed in section 4.1.D G. Safeguard policy Environmental Protection. The environmental assessment (EA) report specified measures for monitoring and mitigating impact related to social disruption, air quality, control of noise and vibration, water management, cultural/historic locations, soil pollution. The project also included forestation of designated areas. For both the expressways and the RNIP, the routes were chosen among alternatives to avoid environmentally sensitive areas, minimize land acquisition and the negative impact on the local populations. The engineering design and technical specifications incorporated the mitigating measures required to be taken by the contractors during implementation. For the added expressway, the locally prepared EAP was reviewed and updated to Bank standards, to include mitigating measures similar to those applied to the QXE. In April 1997, FPECD with the provincial environmental protection bureau (FPEPB) held a training course in environmental protection with 60 participants from the employer, design institute, contractors and the supervision company. The FPTD submitted regular reports on environmental monitoring on the QXE and FQE. These reports show that the construction had not adversely impacted noise and water quality in the vicinity of the construction sites. The only reported problem was that of dust. Only two of the four contractors were using water sprayers and not that effectively, only one of the trucks transporting construction materials was covered. FPECD although aware of the problems was not enforcing the terms of contract by penalties and/or work stoppages. They did not have enough personnel. No monitoring reports had been prepared by FPHAB for the RNIP roads. An environmental supervision mission in late 1999 reported that: Along FQE the embankments have - 7 -  been well protected by stone paving, grass shrubs and plants. The ample vegetation was well cared for and aesthetically pleasing and the excavated and spoil areas were rehabilitated and replanted. Similarly, along the QXE, the grass shrub and plants were well established and tended. 63,300 trees and shrubs were planted.