Colombia - Preinvestment Studies Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4196 PROJECT COMPLETION REPORT COLOMBIA - LOAN 971-CO PRETNVESTMENT STUDIEiS PROJECT November 23, 1982 LAC Projects Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its conmtents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY PROJECT COMPLETION REPORT COLOMBIA - LOAN 971-CO PREINVESTMENT STUDIES PROJECT TABLE OF CONTENTS Page No. Preface i Basic Data Sheet ii Highlights iii I. Project Ident:Lfication, Preparatio-a and Appraisal 1 II. Project Execultion 3 III. Borrower Performance and Institution Building 6 IV. Bank Performance 8 V. Summary and Conclusions 10 Tables and Appendices Appendix I Table 1: List of Studies by Sector 12 Table 2: Comparative Summary of Actual and Proposed Prograims 13 Appendix II Sub-projects Summaries 14 Appendix III The Preinvestment Sector 20 This aocument has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT COMPLETION REPORT COLOMBIA - LOAN 971-CO PREINVESTMENT STUDIES PROJECI PREFACE Loan 971-CO for the Preinvestment Studies Project, in the amount of US$8 million, was signed in March 1974 and was fully dis- bursed in December 1979 with a delay of 12 months. The main objectives of the loan were to provide financing to public agencies and private industry for project preparation through FONADE, and to strengthen FONADE institutionally. During implementation, the project was expanded and the Bank participated in the financing of more studies than originally anticipated. This Project Completion Report (PCR) was prepared by the Latin America and the Caribbean Regional Office, based on the findings of a mission mounted in December 1980. No comments were received from the borrower. The project has not been subjected to OED audit.  - ii - BASIC DATA SHEET COLOMBIA - LOAN 971-CO PREINVESTMENT STUDIES PROJECT KEY PROJECT DATA (US$ million) As of 8/31/82 Original Disbursed Cancelled Repaid Outstanding Loan Amount 8.0 8.0 - 1.19 6.82 Cumulative Loan Disbursement FY1974 1975 1976 1977 1978 1979 1980 (i) Planned 1 2.10 4.35 6.55 7.75 8.00 8.00 (ii) Actual - - .09 1.40 3.48 7.22 8.00 (iii) (ii) as % of (i) 2 2 45 90 100 OTHER PROJECT DATA Original Actual Loan Data Re-estimated Board Approval 3/5/74 Loan Agreement Date 3/12/74 Effectiveness Date - 6/27/74 Closing Date 12/31/78 12/31/79 Physical Completion - 12/79 Total Project Cost (US$ million) 15.8 27.0 Overrun (%) 70 * Economic Rate of Return (%) Not Applicable - MISSION DATA No. of No. of Date of Month/Year Weeks Persons Manweeks Report Identification 7/73 ) 1 7/73 ) 1 3 3 7/19/73 Appraisal 8/73 1 1 1 10/12/73 Supervision 3/74 1-1/2 1 1-1/2 4/10/74 Supervision 7/74 1-1/2 1 1-1/2 8/19/74 Supervision 10/74 1 1 1/5 11/7/74 Supervision 11/74 1-1/2 2 2/5 11/27/74 Supervision 11/74 1-1/2 2 1 12/12/74 Supervision 5/75 3-1/2 1 3-1/2 5/14/75 Supervision 7/75 1 1 1/5 8/12/75 Supervision 3/76 1-1/2 2 1-1/2 4/22/76 Supervision 5/76 3 1 1/2 6/14/76 Supervision 11/76 1/2 1 1/2 12/2/76 Supervision 6/77 1/2 1 1/2 7/13/77 Supervision 1/78 1/2 1 1/2 2/8/78 Supervision 11/78 1 1 1 12/12/78 Supervision 9/79 1/2 1 1/2 10/17/79 Completion 12/80 1/2 1 1/2 9/30/81 OTHER DATA Borrower: Republic of Colombia Executing Agency: FONADE Fiscal Year of Borrower: January-December * Funds were used to support more studies but at a lower contribution per study.  - iii - PROJECT COMPLETION REPORT COLOMBIA - LOAN 971-CO PREINVESTMENT STUDIES PROJECT HIGHLIGHTS Loan 97L-CO, in the amount of US$8.0 million, was approved in March 1974 to help finance the preparation of project pipeline through the Government preinvestment agency, FONADE, including $300,000 for technical assistance to FONADE. While during appraisal there was a feeling that the pro- ceeds of the loan should be partially directed towards the non- traditional sectors, in the end complete freedom of sectoral allocation was aLlowed. Bank involvement followed very closely the distribution of the borrower's operations as a whole, in which the most significant change over the period was the increase in the power sector and the decrease in transportation. Unfortunately the organization of FONADE does not cover follow up of studies, so the usefulness of these studies them- selves cannot be gauged. However, most of the studies appeared to be executed efficiently and to cover priority projects. FONADE functioned satisfactorily as implementing agency, but efforts during supervision to increase its impact through the development of specific preinvestment expertise had only limited success. The Technical Assistance component to FONADE, covering a study inventory, a consultants register, and specific study evaluations were well executed, but there has been no follow up by FONADE. Aspects of this experience that may be of special interest are: - The need to pay attention to issues other than provis- ion of finance in designing preinvestment operations (paras. 4.1-3) - The complexity of administrating this type of project within the Bank (paras. 4.9-11). - The potential impact of Preinvestment Funds (Annex III).  I. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL Background 1.1 A sustained preinvestment studies effort designed to promote the growth of Colombia's investment program was considered important for the steady flow of well prepared projects susceptible to financing from the Bank, Consultative Group members -and other sources. Bank financing of such studies had been included in loans for specific projects and had been aimed at preparing further projects in the same sector. This system however lacked flexibility, as the project to be prepared had to be identified at the same time as the project on which it was to be "piggy-backed" was appraised, and had to be in the same sector. 1.2 The Government recognized this problem and in 1968 established a Fondo Nacional de Desarrollo (FONADE) as an autonomous Government agency, with the objective of providing finance for project preparation. 1.3 In that year, FONADE received a loan of $4.1 million from the Inter-American Development Bank (IDB) and a further $6 million in 1971. FONADE's organization includes a sub-director, a legal office, a loan division, and a financial-administrative division. It operates in close cooperation with the National Planning Directorate (NPD). The Chief of NPD and some of its senior officials are members of FONADE's Board. Its borrowers are Ministries, parastatal organizations, local government authorities and private industry. 1.4 FONADE approves terms of reference for the studies, the selection of consultants and the contracts between borrowers and consultants. It supervises ongoing studies through reviewing intermediate and final consultants reports, but leaves the bulk of detailed supervision to. the borrowers. Where external lenders for projects are identified in advance, FONADE obtains their participation in the studies at the outset or during the course of the study. 1.5 FONADE has three separate funds for its operations: the Ordinary Fund; the Special Fund; and the Fund for Non-Reimbursable (Grant) Studies. The Ordinary Fund is used for feasibility studies in all sectors. The Special Fund is designed primarily for the promotion of studies where agencies' financial resources are very limited and where they require encouragement to unclertake particular studies of high national priority. The Fund for Non-Reimbursable Studies is small and is used very sparingly for studies which can be financed only on a grant basis. 1.6 FONADE finances only consultants' costs and does not cover administrative cost; of the borrowers. It finances up to 80% of the consultants' costs and in exceptional cases, when the study is of high priority but the borrower has no possibility to raise funds in the short run, up to 100%.  -2- Preparation 1.7 In its economic mission in 1970 the Bank discussed the advantages of centralizing the preinvestment process with the NPD, and the possibility of the Bank's financing such studies was raised. The current portfolio and future plans of FONADE were discussed, and comments were made on the weakness of the program in agriculture, health, education and urban/regional development. 1.8 Three years later, at the time of appraisal, IDB funds had already been committed, but the weakness noted above remained. However, with an ambitious program of expansion FONADE needed to find alternative sources of finance, if possible without the restrictions attached to the bilateral sources which it was also utilizing. Appraisal 1.9 Preliminary discussions were held with FONADE in July 1973. There were five missions of identification and appraisal between July 2, 1973 and October 26, 1973. These missions, except for the first, were not entirely devoted to the appraisal of the project, most of them being limited to discussions with specific sectorial projects staff, in Colombia for other reasons, regarding the proposed list of projects to be studied. 1.10 The main issues remained the balance of the program, whether there should be mandatory proportionate sectorial assignments, whether projects should be prepared for Bank finance only, and the reporting requirements. In the end program control was left completely flexible, and project selection independent of the Bank's willingness to finance implementation. 1.11 Negotiations were held in December 1973 and the project was approved on March 5, 1974. Project Objectives 1.12 The objectives of the Loan were given in para. 18 of the President's Report. They were: a) to support FONADE's cash flow; b) to allow FONADE to benefit from Bank experience in project preparation in general; c) to transfer Bank experience in the urban, agricultural and social areas in particular; and d) to diversify FONADE's sources of foreign consultants (to escape from tied aid).  - 3 - 1.13 It should be noted here that, while there is frequent mention in internal Bank memoranda prior to ,he production of the President's Report of the desirability of using the loan for institution building as much as for specific project preparation, the areas of the corresponding involvement were never defined, and there was no provision in the legal documents on this matter. II. PROJECT EXECUTION Execution of Project 2.1 The first year disbursements were estimated during appraisal at $1.1 m. In fact, the first disbursement request was not received until two years after signature, in spite of the fact that several studies were under way by that time. FONADE tended to use its own local funds when available, and permission to disburse foreign exchange took a long time to obtain. However, the disbursements reached a total of $1.32 m within eight months thereafter. 2.2 Once disbursements were under way their rate exceeded that forecast due partly to the fact that once sub-projects actually started they departed very little from their individual schedules; partly to the fact that in the last year, the Bank supported a larger number of projects at a lower overall percentage, so that individual slippages where they occurred, had a reduced effect. 2.3 Not only was the adherence to schedules of the sub-projects good; the total difference between actual and estimated sub-project cost over the whole project was only 22% in spite of an inflation rate which averaged 25.5% p.a. Half of this increase occurred in the three electrical interconnection sub-projects which accounted for 31% of the total costs. The average rate for the rest was therefore 16%. Furthermore, most of the differences arose either through extensions of the study areas or through the reorganization of work resulting from the inability to use foreign consultants (see 2.16 below). In most cases, the additional costs were met by the sub-borrower. 2.4 Repayments from sub-borrowers were prompt, indicating that financial assessment and guarantees required were adequate. 2.5 Only one project (Bogota Hospital - No. FO 188) did not proceed beyond the study, the rest advancing to the next stage in the project cycle. This does not necessarily mean construction however. Most of the hydroelectric studies were undertaken to determine potential and the Government is in the course of determining the order of construction.  - 4 - 2.6 The total value of constructionlimplementation of projects studied is about $5,500 m. This is several times what would be expected from $27 m. worth of studies. General Bank experience, confirmed by consultants making the register of previous studies in Colombia, would indicate that the studies would normally result in projects valued at only about a fifth of that -around $1,000 m. The difference however is due to the fact that many of the studies, especially in the power sector, were only concerned with one aspect of the project and were not complete in themselves. All were, however, considered appropriate by the relevant sectoral division in the Bank. 2.7 The relationship for the non-power sector studies was nearer the normal -$12 m in studies leading to $1,222 m of works (instead of $500 m.). The difference here is partly due to the relatively low cost of local consultants, partly to the degree of definition, partly to the existence of earlier studies. 2.8 Two studies were included as a technical assistance component -an evaluation of some earlier studies, and a general inventory of studies. These were well executed and potentially useful. Their impact is discussed below (3.7-3.10 and Appendix 2, Section 3). Documentation 2.9 The Project Agreement required presentation to the Bank of the following documentation for the approval of sub-loans: i) a description of the sub-borrower; ii) a description of the sub-project (including its cost); iii) the terms and conditions of the sub-loan, including the schedule of amortization for the sub-loan; iv) full information on the consultants, including their terms of reference (TOR) or other terms and conditions of their employment; and v) such other information as the Bank shall reasonably request. 2.10 The timing for the above was not specified. All the documents were thus often presented after the consultants' contract had been signed, so that the Bank was faced with a "take it or leave it"' situation. However, especially in the Power and Transport sectors, the Bank had had advance indications from the sub-borrower, so that final approval, at least of the rORs, was generally a formality. 2.11 The high proportion of local consultants made helpful Bank intervention in the drawing of short lists unlikely. The Bank in some instances advised FONADE to limit the number of consultants included in the lists, but such  - 5 - advice was not followed. The final decision rested with the sub-borrower, so that in the absence of a contractual provision in the Bank's Loan Agreement, it was not enough to convince FONADE. 2.12 Final reports were only supplied on request. There was no regular reporting by FONADE on progress. Here again the deficiency was to some extent remedied by the sectoral division/sub-borrower relationship. 2.13 Audit reports of FONADE as a whole were supplied regularly. 2.14 A full program of identified projects for possible future lending was only provided twice. As a large number of these still remain unfunded, they may still cover a significant proportion of future work. There is however currently no annual updating of the schedule, hence no indication of what has been dropped or what new projects are being considered. Procurement 2.15 The Bank has only recently started to concern itself with actual consultant selection procedures. Accordingly, reports on the evaluation of proposals were not provided for in the agreement, nor were they requested. 2.16 There were cases (FO 169, 244, 245 in Appendix 2) where consultants once selected -and contracted- had to be dismissed because the Government taxation provisions for foreign consultants made it impossible for them to continue. Disbursements 2.17 Even though the foreign exchange requirements of the sub-projects were more than covered by the Bank loan, payments in foreign currency were subjected to the fuLl weight of control procedures. The need for Ministry of Finance permission to incur obligations in foreign currency was a frequently cited reason by FONADE for delays in signing contracts. This nullifies one of the possible advantages of Bank finance. Performance 2.18 There were no sub-borrower complaints or disputes under any of the sub-loans. The Bank was, however, disappointed that much of the highway design and engineering had to be redone. Impact 2.19 One of the objectives of the loan was to change the sectoral balance of studies. As can be seen from Appendix 1, Table 2 this was not achieved. For example, agricultural studies accounted for 5.5% of the  total over the first five years of FONADE operations. They were forecast to increase to 24.9% but in fact, in 1979, only amounted to 3.1% (the proportion of the Bank Loan was 6.8%). The proportion allocated to Urban and Regional Development in 1979 showed an improvement over the earlier years (18.2% as against 15.4%) but was also far below the target of 44.8%, while Bank participation in financing studies for the sector was minimal (4.8%). The impediments to improved distribution are largely on the side of the sub-borrowers and reflect weaknesses in one or more out of identification, planning, finance and execution capabilities (see Appendix III, 3.2 et seq.). 2.20 Another objective was to make it easier to employ foreign consultants where appropriate. This also was not achieved, foreign costs accounted for only 12% of the total cost of sub-projects -as against 25% forecast in the President's Report (para. 37). 2.21 The Bank loan conditions tended to favor employment of foreign consultants, since 100% of foreign exchange costs and only 50% of local were financed. However, partly as a result of higher cost and partly because of a tax on foreign consultancy which made them even more expensive to use (40% tax, requiring a 67% surcharge), only 41% of the loan was disbursed for foreign costs. 2.22 The extra cost of foreign consultants should be a sufficient disincentive where there is no techrical necess:ty to emplc impossible to prove rigorously that the tax has adverse effects on project design, but the size of the tax, and the necessity of using foreign consultants all the same in several of the sub-projects does support the hypothesis that foreign intervention is below the optimum level, both for project design and for technology transfer. 2.23 The experience of implementing this project, and similar ones in other countries, has identified wider possible areas of impact. These are treated under "Institution Building" below. III. BORROWER PERFORMANCE AND INSTITUTION BUILDING Sub-borrower Relations 3.1 Relations with sub-borrowers were good. FONADE acts only as a lender and does not attempt to review the technical decisions of its clients or follow-up on the implementation of the conclusions of the studies it finances. 3.2 There was nothing in the project design to speed-up sub-loan processing. This was a pity, as the lead time is still too long for FONADE to replace UNDP and piggy backing as a convenient method of financing project preparation on a routine basis. Improvements would also generally help increase the impact of FONADE. However, there has been no shortage of business and it will be difficult to encourage faster processing.  -7- Promotion 3.3 On of the reasons for the initial slowness of the disbursements was the lack of requests for sub-loans, even though the requirement for studies had been identified. Real progress has been made in the area of promoting FONADE financing. This, however, is largely dependent on individual management style, and the number of recent changes in senior personnel makes it impossible to assess the present situation. Accounting 3.4 The annual accounts are detailed and informative. Recently however, certain aspects of the format have changed, which makes progress difficult to follow. The lack of a cash flow forecast reduces the visible commitment of management to any specific policy, as well as the ability to recognize success. Institution Building - FONADE 3.5 While FONADE does the job assigned to it well, it is not using its position as a base for expansion into other fields of work where its accumulated experience would be beneficial (see Appendix III). 3.6 During supervision a number of suggestions were made to this end. Subjects discussed included the formulation and critique of consultancy laws and policy; the assessment of sub-borrowers' implementation capability and the identification of areas for improvement; acceptance of responsibility for archival and evaluation problems on a continual rather than one shot basis in the preinvestment sector; the refinement of selection and contracting procedures. 3.7 The only tangible improvements which have been made are in the realm of Consultant registration, where computerized access to a list including wider information than previously available has been provided. There has however been no attempt to maintain the register of studies set up under the loan, nor to use the information available from it as a guide to establishing standards of success in the preinvestment field. 3.8 Similarly there has been no follow-up on the studies evaluation exercise funded under the loan, nor are records kept of the state or success of the implementation of study findings and recommendations. 3.9 Both the studies just mentioned -for the evaluation of studies and for setting up a register of studies- were carried out satifactorily, with interesting and useful results. Neither, however, have led to any further action, either to maintain the register or to extend the evalua- tion work. This also may be due to lack of continuity in management and the matter was taken up during the final mission.  3.10 The demonstration effect of both studies could be important beyond the currently weak impact on FONADE itself. Efforts at dissemination to other Funds through the Centro de Informacion en Preinversion para Latinoamerica y el Caribe (CIP),Qf which FQNADE is a leading meTRbep have been and are still being made. Institution Building - Sub-borrowers 3.11 With FONADE's responsibilities confined to financial management and preinvestment procedures, the Loan gave no opportunities for assisting in sub-borrower development in project identification, study supervision or project implementation. As the final impact of the loan was mainly in the traditional sectors, there was in fact little opportunity to affect project execution in the weaker sectors. However, such development of the sub-borrower is probably the key to changing the distribution of FONADE's portfolio (see Appendix III, 3.3). IV. BANK PERFORMANCE General 4.1 This was the first project of its kind in the Bank. It became increasingly clear during supervision that there were opportunities for providing more in such operations than simply a line of credit. It also became clear that the institution building aspects may delay initial implementation and subsequent disbursement by encouraging projects in the weaker sectors. Compromise is accordingly necessary to achieve immediate impact in the creation of a useful pipeline of projects and long- term impact to make the process self perpetuating. 4.2 Our own formulation of the possibilities occurred late in the project, and was broached with diffidence because of the length of time FONADE had been in the field. It is really with this evaluation exercise that what had been formalized in later projects now comes to be formalized here. A large number of issues, which were not part of project design, but which were discussed with FONADE during supervision, are collected in Appendix III. 4.3 It should be emphasized here that projects designed for technical assistance have somewhat different logistics to normal Bank projects. In the latter, the main expenditure of manpower is in identification and design. In the former, it is in supervision, which ideally becomes a partnership between Bank and borrower in the solution of institutional problems and the exploitation of potential advantages.  - 9 - Project Justification and Objectives 4.4 The project helped to establish FONADE as a key institution in the preinvestment process. The growing appreciation of the potential for FONADE, although partly dissipated in the organization itself because of management changes, should hasten the achievement of some of the stated objectives -better sectorial distribution, diversification of sources of expertise; and of other goals- the speeding up of the selection and contracting process, the wider dissemination of study results. 4.5 The size of the project was also sufficient to support the cash flow requirements over the period. FONADE, however, has not yet achieved financial independence, and is likely to require further support for some time to come. This is currently being supplied by the IDB. 4.6 It is in Eact questionable to what extent financial independence should be an objective. To achieve it, interest would have to cover both inflation and administration costs even if FONADE had no loan capital to service. As all income consists of transfer payments the advantages of "self sufficiency" are either independence or increased motivation for efficiency. The former is illusory, because of FONADE's political situation; the latter can be accomplished by efficiency targets. These how- ever will require a lot more conscious management investigation into operations until they can be established with any degree of realism (see Appendix III, 4). 4.7 The Bank's favorable assessment of the administrative capacity of FONADE was correct. The nature of the requirements of promotional effort were not so well understood and were rectified more by personnel changes than any effort on the part of the Bank. As a result, the initial forecasts of disbursements were over-optimistic. Later improvements, however, showed that they were realistic as far as demand was concerned. Operations in 1979 were more than twice the total for the years 1968 to 1973 (Appendix I, table 2). 4.8 Bank supervision concentrated initially on sub-project processing and disbursement. The only time charged to the project was by the Project Officer. Review of sub-projects and supervision of sub- borrowers by other Bank staff was absorbed in project preparation and sector work. The recorded supervision, therefore, shows only a total of twelve supervision missions and thirty-nine man weeks. This,however, was sufficient for the recognition and discussion of the various institutional issues mentioned in this report. 4.9 Administration of the Loan involved consideration not only of rather more than the 42 sub-projects against which disbursements were made (some which were presented were later withdrawn) but also of the 139 contracts into which they were broken down. The variable percentage of the Bank contribution, depending on the relevant percentages of local and foreign  - 10 - expenditure, imposed a considerable burden on Controllers. This can be avoided in future by having one rate for all sub-projects, regardless of currency. 4.10 Relations with FONADE were good. Initially, Bank response to requests for approval were said to be slow. Later these requests were treated more as administrative than technical assistance requirements, with faster action but less attempt to develop FONADE. This may have been compensated by greater inputs at the sub-borrower level, although this is not recorded. 4.11 This highlights the complexity of the internal administration of this type of project, which has, however, now been solved by channelling all correspondence with the borrower through the Project Officer with copies to the relevant sectoral division; while correspondence with the sub-borrower originates in the sectoral division and is copied to the Project Officer. V. SUMMARY AND CONCLUSIONS 5.1 The project was useful and, by contributing to cash requirements during a period of rapid expansion, helped to establish FONADE as a central point in project preparation. Of the four objectives mentioned in 1.12 above, the first, support of cash flow, was certainly achieved. The transfer of Bank experience -in project preparation in general and in certain sectors in particular- was only partially successful, due in part to staff changes in FONADE. The last objective, diversification of sources of foreign consultants, was not achieved at all. 5.2 This being the first project in the sector it is natural that project design did not cover all the issues. While this report concentrates on the project as conceived, Appendix III gives a general description of issues and opportunities in the Preinvestment Sector. These have been progressively addressed in subsequent projects. 5.3 From this the additional work which FONADE will need to do to realize its full potential can be gauged. Encouragement and guidance is being provided through the CIP. However, progress here is now dependent purely on FONADE's acceptance of CIP and Bank's recommendations without the additional incentive provided by Bank financing. 5.4 The main areas which could be addressed by FONADE, apart from internal procedural improvements are: 1. Institutional assessment of non-traditional sub-borrowers, with technical assistance where required (3.11);  - 11 - 2. Monitoring report implementation, with early identification of areas of difficulty and technical assistance where required (3.11); 3. Monitoring of relationships between study forecasts and final outcome, and use of the resultant material to improve study design and supervision (3.8); 4. Improving access to foreign exchange when required (2e17); 5. Assessing the objectives of the relationship between foreign and local consultants, and serving as a center for suggestions for legislative reform (3.6); and 6. Further development of FONADE's promotional role to achieve a better sectoral balance of projects (2.19). 5.5 In additicon FONADE could contribute to the development of local consulting through identifying and monitoring institutional impediments (e.g., slow payment, guarantee requirements, size of contracts). 5.6 Any future project should include a clearer definition of the Bank's role in the s;upervision of the various stages of the preinvestment process.  - 12 - APPENDIX I Table 1 LIST OF STUDIES BY SECTOR Estimated Sub-Project Sub-Project Cost of Study Construction Cost No. Name Type of Study Col$ US$ USS 1979 ('000) AGRICULTURE FO 167 Magdalena Cauca I Feasibility 46,300 -- 11,600 FO 225 Rio Naya - Geology and Forestry Pre-feasibility 11,943 -- -- FO 230 Cauca Valley and Region Feasibility 1,969 _- 83,500 Reafforestation FO 243 Alto Sinu Agroindustry Feasibility 4,370 8,160 FE 038 Lake Tota Conservation Feasibility/Final 8,700 -- 3,000 Engineering _ - Suh-t-otals 73,282 106,260 HEALTH AND WATER FO 188 Bogota Hospital Final Engineering 10,030 -- 29,000 FE 031 Boyaca/Santander Water Supply Final Engineering 8,000 -- 4,600 FE 035 Montero Water Supply Final Engineering 4,988 -- 10,500 FE 039 National Health Study Pre-feasibility 54,005 -- -- Sub-totals 77.023 44.100 INDUSTRY PO 195 Cartagena Free Zone Final Engineering 15,792 -- 58,000 PO 196 Samper Cement Feasibility -- 91 112,000 /2 FO 206 Cellulose Production Feasibility -- 28 FO 212 Milk Commercialization Pre-feasibility/ 1,209 17 3,600 Feasibility FO 220 Rio Suarez Cane Sugar Feasibility 3,232 - 5,000 FO 240 Santander Industries Feasibility/Final 6,000 -- 14,000 Engineering FO 268 Direct Reduction Plant Feasibility 5,054 141 74,000 FO 270 Steel Plant Study Feasibility _ 275 216,500 /2 o31287 j2 483.100 POWER FO 169 Patia 236 Hydroelectric Feasibility 66,724 48 423,500 FO 178 Three Rivers Hydroelectric Feasibility 61,771 191 456,000 /1 FO 179 Five Hundred kv Interconnection Final Engineering 48,811 560 135,000 P0 180 Rio Sinu Hydroelectric Feasibility 14,347 239 371,000 F0 215 Guajira Thermal Electric Feasibility/Final 45,561 230 175,000 /2 Engineering FO 218 San Juan Hydroelectric Feasibility 28,765 61 883,000 /2 FO 242 Betania Power Study Final Engineering 162,706 600 440,000 7T P0 244 Rio Guavio Hydroelectric Feasibility 50,641 47 570,000 73 FO 245 Canafisto Povwr Study Feasibility 76,000 520 783,000 FE 044 Pollution Control (Betania) Feasibility 8,203 86 -- Sub-totals 563.529 2,496 4.236.500 TRANSPORT FO 143 Paved Roads Rehabilitation Final Engineering 24,948 124 120,000 FO 166 Three Projects in Magdalena Cauca Feasibility 14,033 -- 90,000 PO 203 Four Roada, Phase III Final Engineering 96,293 -- 112,600 PO 208 Roads in Valle de Cauca Pre-feasibility 6,026 -- 232,100 FO 235 Seventeen Feeder Roads Feasibility/Final 7,329 -- 4,000 Engineering Sub-totals 148.629 124 558.700 URBAN AND REGIONAL DEVELOPMENT F0 201 Medellin - Municipality Feasibility 1,085 -- -- F0 202 Antioquia - Maps Pre-feasibility 3,610 -- -- PO 204 Medellin - Roads Final Engineering 5,285 -- 49,500 PO 205 Cali Suburban Improvements Feasibility 4,421 -- 13,600 FO 217 Bogota - Suburban Planning Pre-feasibility 1,697 -- -- FE 033 Municioal Water Supply Final Engineering 10,900 -_ 11,600 FE 034 Real de Minas Township Final Engineering 7,242 __ 58,100 FE 040 Bucaramanga Development Plan Pre-feasibility 16996 -- -- Sub-totals 51,236 132,800 T 0 T A L S 944,986 3,172 5,561,460 1/ US$ 1980 2/ US$ 1978 3/ US$ 1977  CDMPARA-TIvE SUMMARY OF ACTUAL AND PROPOSED PROGRAMS (In Col$ Thousand Equivalent - Cutrent Prices) 1968 - 1973 fA^e-91) LIOfADg'a List of Studies (1974-78 fore 2/ Project Studies (1974-79)-/ 1979 Orerations (Totalir/ 1, Number Percent Amount Percent Average Number Percent Amout Percent Average Nunber Percent Amount Percent Average Amount Percent Sector: - of of for of Size of of of for of SIze of of of for of Size of for of Loans Total Sector Total Study Loans Total Sector Total Study Loans Total Sector Total Study Sector Total riculture 7 5.7 29,900 5.5 4,271 16 30.1 148,400 24.9 9,275 5 12.8 73,282 6.8 14,656 29,382 3.1 au'stry 27 22.0 47,180 8.7 1,748 8 15.4 16,500 2.8 2,062 8 20.5 53,533 5.0 6,692 68,537 7.3 wer 20 16.3 154,950 28.5 7,748 2 3.9 35,000 5.9 17,500 10 25.6 664,118 61.9 66,412 461,522 49.1 ansportation 21 17.1 140,118 25.8 6,672 6 11.5 84,500 14.2 14,083 5 12.8 153,626 14.3 30,725 136,245 14.5 ben & Regional 17 13.8 83,549 15.4 4,915 13 25 267,500 44.8 20,577 8 18.0 51,236 4.8 7,319 171,043 18.2 Development - _____ TOTAL 123 100.0 543,897 100.0 4,422 52 100.0 596,900 100.0 9,576 40 100.0 1,072,818 100.0 26,260 939,417 100.0 1/ Education, Telecommunications, Tourism and "Other, are oitted as there were no sub-projects in those sectors. 2/ These are taken from the Presidents Report, excluding the sectors in Note 1. - 3/ This ia a sumary of Table I. jl These are total POMADE operations for the year, for trend mad comparison. I  - 14 - APPENDIX II SUB-PROJECTS 1. Introduction 1l1l The sub-project summaries which follow are based on replies to a Bank questionnaire requesting the following information: Borrower Reference Number Study Title Type of Study Original Cost Estimate Final Cost Consultants Reasons for Cost Variations Reasons for Time Variations Construction Cost Estimate Finance Source for Construction Benefits of Study Anticipated B/C Ratio of Project Stage of Implementation 1.2 Unfortunately, there were no answers to the last question, and information was, therefore, only evailable on those studies which led--or are leading--to Bank projects. FONADE does no post-study monitoring, which deprives the system of feedback on the effectiveness of the studies and the efficiency of the sub-borrower. 1,3 Study cost figures are based on average current dollar conversions. Implementation cost figures are estimates given in response to the question- naire and may differ from study estimates. 1.4 The sub-projects are presented in chronological order. The two technical assistance studies, not included in Appendix I,are summarized at the end. 2. Sub-Project Summaries F0143 Paved Roads Rehabilitation - $830,000 Detailed design for the rehabilitation of 17 roads, undertaken by seven firms of local consultants coordinated by one expatriate firm which was also responsible for the economics. Led to a Bank project (1471-CO), for partial implementation with an investment at appraisal of $74.4m. FO 166 Three Projects in Magdalena Cauca - $390,000 The three projects were feasibility studies for the realignment of the Dique Canal, sedimentation control in the canal and river training of the Magdalena at Barrancabermeja. The work was undertaken by three local consultant firms, and the economics evaluation was done by the Ministry of Public Works and Transport (MOPT), who calculated an ERR of 26%. The sub- sequent project was financed by IDB.  - 15 - FO 167 Magdalena Cauca I - $1.3m An investigation into the agricultural potential of the Magdalena- Cauca Valley at Nechi-San Jacinto. The economic rates of return were not promising (about 9%), but the Government feels implementation,at least in part, may be justified by social considerations. They hope to put up a case to either the Bank or the IDB. FO 169 Patia 236 Hydroelectric Study - $1.9m Like all the hydroelectric studies in this project, this one con- cerned itself with only a small part of the total feasibility--in this case, geological optimization. The study was delayed because of problems with the foreign consultants arising out of local laws. The consultant eventually had to withdraw. The final cost was more than double the original budget,with local firms getting 90% of the business, as opposed to the original plan of 50%. FO 178 Three River Hydroelectric Study - $1.9m The three rivers are La Miel, Guarino and Manso. Here again the withdrawal of the foreign consultant led to a reallocation of work to the local consultants (88% as opposed to an original 46%) with a price increase of 36%. FO 179 500 kv Interconnection - $1.6m Final design and bid documents for a 500 kv interconnection. This time the foreign consultants stayed on the job. The 13% price increase (6% for foreign, 19% for local) was attributed to last minute changes in specif- ication and tendering procedures. A B/C ratio of 2.8 was calculated. FO 180 Rio Sinu Hydroelectric Study - $630,000 A partial feasibility study for the two Urra projects, the second of which would involve redirecting the Verde River. The project was delayed because of local political unrest. Even so, the final cost was only 3% above the original estimate. At the same time, there was an increase in local involvement from 45% to 62%. It is expected that the USSR will finance the resultant project. FO 188 Bogota Hospital - $290,000 Final designs for the Bogot'a "Santa Fe" Hospital, using six local consultant firms and two local individuals. FO 195 Cartagena Free Zone - $430,000 Final design and socio-economic studies for the Free Zone. The study was extended so that the final cost was about 25% above the original estimate. The project is being financed by Loan 1593-CO.  - 16 - FO 196 Samper Cement - $91,000 Feasibility study for increasing the production of cement works. The first part of the study identified an alternative solution to the problems of expansion. This, in turn, required additional work (5% increase). Unfortunately, there has been no evaluation of the benefits of the alter- native over the original plan which could be set against the cost of the study. Implementation is to be financed as to 38% local funds, 36% suppliers credits and 26% international banks. FO 201 Medellin Municipality - $30,000 Valuation survey to determine tax base for the finance of various municipal requriements, and to serve as a basis for future urban development. FO 202 Antiocuia Maps - $100,000 Aerial photography and mapping of 41 townships as a preliminary aid to project identification. FO 203 Four Roads, Phase III - $2.6m Final engineering for four roads (out of an original set of ten), undertaken by four local consultants. The design for one of these is being revised by MOPT because the traffic expectations have declined (Tumaco Refinery is not to be built). This one is to be financed by the IDB. Fi- nance for the other three roads has not yet been identified, but one will probably merely be restored through a special maintenance program. The re- maining two each have an estimated cost of about $24m and show B/C ratios of about 2 at 13%. FO 204 Medellin Roads - $140,000 Final design studies for urban road improvements in Medellin. Eight local firms were involved. Only 10% external finance (about $5m) will be required for implementation. FO 205 Cali Suburban Improvements - $110,000 A feasibility study for the provision of public services, ranging from water supply to education, to the outlying suburbs. The study covered upgrading to achieve present minimum standards. No benefit/cost calculations are available. FO 206 Cellulose Production - $28,000 Feasibility study for expanding production of the client, "Procecolsa". The latter reduced the scope of the study to a very prelimi- nary assessment. FO 208 Roads in Valle de Cauca - $160,000 Although this was a prefeasibility study concerned with integration of the sub-region in the Department, and with improving the linkage into the national road network, preliminary B/C ratios were calculated for five  - 17 - roads (1.9 to 3.2) and additional paving on three primary sections (1.8 to 2.9), at 12%. There is as yet no finance plan for this $232m project. FO 212 Milk Commercialization - $45,000 Prefeasibility study to identify areas with potential for milk production and processing, with some subsequent feasibility work, but not to the point of C/B analysis. FO 215 Guajira Thermal Electric - $1.4m Part of the feasibility and final engineering of this thermal electric plant, the first stage of which is now under construction. FO 217 Bogota-Municipality - $40,000 A planning study to indicate investment and development priorities in seven suburbs. FO 218 San Juan Hydroelectric - $760,000 Additional studies on the technical feasibility of harnessing the San Juan River. Undertaken by two foreign and one local firm, plus three individual expatriate consultants. The price increased by about 50% (mainly in the local firms) due to salary escalations and redefinition of work. FO 220 Rio Suarez Cane Sugar - $80,000 A feasibility study to identify the best alternative for unrefined sugar production in an under-exploited area. Finance of the resultant project is expected t;o come at least partly from private sources. FO 225 Rio Naya - Geology and Forestry - $290,000 A prefeasibility resource study of Naya River Valley, covering 205,000 hectars. FO 230 Cauca Valley and Region Reafforestation - $50,000 Feasibility for regional reafforestation projects, studying three alternatives, with implementation costs going up to $83.5m. The best requires an investment of some $75m over thirty years for an ERR of 16%. The output is intended both for pulping and for sawmill. F0235 Seventeen Feeder Roads - $180,000 Feasibility and final engineering for feeder roads in five depart- ments. Seventeen local consultants were involved. Twelve of the roads have been selected for construction, at a total estimated cost of $4m, of which 64% will be provided locally and the remainder from three international agencies, including the Bank (a component of Loan 1352-CO). FO 240 Santander Industries - $150,000 Feasibility and final engineering covering a brick factory at Bucaramanga, a hotel, public library, commercial center and urban development.  - 18 - Five local consultants were involved. Implementation will be financed by private sources with assistance from the relevant municipalities. FO 242 Betania Power Study - $4.6m The loan was applied to only a small part of this detailed engineering study. Finance for implementation has not yet been identified. There was a cost increase of 60% for this study, mainly in the local com- ponent. Part of this was due to a higher than anticipated rate of inflation, but there were also a number of late design changes which required consi- derable additional work. FO 243 Alto Sinu Agroindustry - $110,000 Feasibility study to identify areas for investment. Area under study was increased by 96% and the cost by 55% while work was in progress. While the study concluded that there was a potential for over $8m in invest- ment, no rates of return were specified. FO 244 Rio Guavio Hydroelectric - $1.7m Additional feasibility studies (technical) for a 1,050 mw plant. A reallocation of work, from foreign to local consultants, together with an increase in subsoil investigations increased the cost of the study by 19%. The plant has subsequently been appraised for a Bank loan. FO 245 Caiiafisto Power Study - $2.3m As above, for a 1,500 mw plant. In this case, however, the price increase was 110%. Finance for the $783m plant (1979 prices) has not yet been identified. FO 268 Direct Reduction Plant - $260,000 Two sizes of plant for sponge iron were studied--220,000 and 330,000 tons per annum at $61m and $74m respectively. No B/C or financial analysis was included. Supplementary studies for $750,000 are now contem- plated. No finance source has yet been identified. FO 270 Steel Plant Study - $275,000 Feasibility study for a steel plant to produce 400,000 tons of sponge iron, 228,000 tons of steel sheet and between 170,000 and 354,000 tons of laminate per annum. The cost would be $217m (1978). No B/C or financial analysis was undertaken. No finance source has yet been identified. FE 031 Boyaca-Santander Water Supply - $200,000 Final engineering for some 35 water supply projects, including four treatment plants. Twenty local consultants were engaged. The imple- mentation will cost about $4.6m and will be financed partly by the IDB, partly by the Bank. FE 033 Municipal Water Supply - $270,000 Final engineering for water supply and disposal for nine munici- palities or departments. Seven local consultants were involved. The  - 19 - implementation is forecast to cost $11.6m. Finance is being sought from, the IDB as well as the Bank. FE 034 Real Minas Township - $170,000 Final engineering for a-self contained township, undertaken by four local consultants. The implementation cost should be about $58m, to be financed localLy. There was no B/C or financial analysis. FE 038 Lake Tota Conservation - $200,000 Feasibility and design studies for the preservation of the amenities of the area, including some reafforestation for erosion prevention, some drainage and riuver training. Benefits should include trout farming possibilities and tourism. There was no B/C or financial analysis. Im- plementation cost is reckoned at $3m. FE 039 National Health Evaluation Study - $1.3m A study in social medicine aimed at identifying the areas and nature of preventible disease as a means to project preparation in the sector. FE 040 Bucaramanga Development Plan - $400,000 Prefeasibility study to help formulate a development policy, including zoning, standards for services and employment generation. The study cost increased by nearly 80% as it was found necessary to study additional items, reorganize available statistical information, and in- crease the area undetr consideration. FE 044 Pollution Control (Betania) - $280,000 Feasibilit:y study to indicate the improvements and forms of treatment which wou].d be possible for the Betania and Mamoral Plants. It also set the standards and methodology for control. The final cost was in conformity with t:he consultants' proposals, which came out 20% below the owners' forecast:. 3. Technical Assistance Studies AT 001 Post Evaluation of Studies - $45,000 This was the first attempt at an "audit" report on studies. Its usefulness was reduced by its length, so that a number of excellent points will not have the impact they deserve. There is, in fact, no indication of steps being taken to learn from this report, or to follow the Bank's reco- mmendation to make an executive summary and to pass on the benefits to other preinvestment funds. AT 002 Inventory of Studies - $80,000 Consultants prepared an inventory of some 2,000 studies going back to 1966 and covering both public and private sectors. The inventory broke out eleven parameters, which could be used not only for physical location of the work, but also as basis for control of sectorial distribution, implemen- tation and the relation between study and construction costs. Unfortunately, this has not been kept up-to-date.  - 20 - rix n - 20 - ~~~~APPENDIX III THE PREINVESTMENT SECTOR The Preinvestment Sector consists of the following activities: 1. The provision of finance for studies. 2. The optimization of those studies. 3. Ensuring a pipeline of appropriate projects. 4. Generation and provision of information.  - 21 - 1. The Provision of Finance. 1.1 While this is the most obvious function of a Preinvestment Fund (PF), it is not merely a matter of having available funds which are additional to the current individual secto:cal budgets, although this itself is also important. Vital also are speed, if not ease, of access to those funds, and certain priv- ileges or exemptions from specific controls when such funds are used. 1.2 Speed of access is governed by the type of controls by which access is governed. Good use of the funds mean that the implications of a positive outcome of a study, for the internal national budget, for external finance and balance ofpayments, and for sectorial balance in development, are all understood. This means an easy relationship with the Ministry (or equivalent) of Planning, the Ministry of Finance and the Central Bank. A successful PF must be able to provide such relationship in the first phase simply better than its clients can achieve directly; ultimately improving it still further to the best possible level. 1.3 From this follows that it should have preferred access to foreign funds when these are required and as simple an assurance of repayment from its clients as it is possible to conceive while maintaining the control that the National Budget authority requires. Local circumstances will dictate in the first instance whether a guarantee from the borrower is required, or whether all operations carry an implicit or explicit guarantee from the Ministry of Finance, for example. Where applicable, the foreign exchange risk should also be covered by such guarantee. 2. The Optimization of Studies. 2.1 This consists in quality control of Terms of Reference, correct dimensioning of studies, selection of the most appropriate consultants, negotiation of a suitable contract, ensuring the proper level of supervision. Because a PF is engaged continuously in all these activities, it should achieve a greater expertise in them than its individual clients, who may only be in- volved in one or two studies a year. This expertise should be reflected not only in improved quality but also in improved speed. 2.2 In the provision of Terms of Reference the questions requiring attention are not only cLear format and completness, but the degree to which methodology and inputs shall be specified, as opposed to merely outputs and the format of those outputs. 2.3 The relationship and responsibilities of client (owner) and consultant need clear expression. This is particularly the case where the client is pro- viding counterpart staff, and where the study includes a training component. Trade-offs between optimization of design, transfer of technology, training (local consultants and/or client) and cost must be considered consciously and an explicit policy formuLated in each case. 2.4 The question oE dimensioning is that of the budget. The Terms of Reference should be analyzed from the point of view of the inputs required to satisfy the real needs of the client. This helps to control costs, and to help in laying the basis for the choice between the various proposals which will be  - 22 - made. It also helps relate available funds to the secondary objectives already mentioned such as training. 2.5 Considerable experience is required for this, again more than the individual client is likely to have in many sectors. Even in those where client does have expertise the FP can help to make sure that it is consciously and properly applied. 2.6 The ways in which studies can or should be split into phases should also be considered, as well as the appropriateness of giving a whole parcel to one firm or splitting it up amongst a number. This requires recognition of the capabilities of the various consultants, from the points of view of absolute scale (how much road or irrigation can one firm study in what time), interdis- ciplinary requirements (can the same firm handle both the economics and the engineering) and the overall interrelationship of the work (are individual studies, or one study with sub-contracts more appropriate). 2.7 The selection of consultants requires expertise in the fields of preselection, writing of requests for proposals, and evaluation of those proposals. 2.8 In many cases, items of the above are covered by local laws. There is a continuous requirement for monitoring effects of such laws and their appropriateness or necessity. The latter may well vary as between a PF and clients operating on their own. A FP should moreover be able to make represen- tations which will enable the legislative authority to make any changes which experience may show to be necessary or desirable. 2.9 Specific problems to be addressed include whether prequalification should be by advertisement or from a register; how to limit short lists and criteria for inclusion thereon (e.g., geographical spread, regional coopera- tion, new firms, previous local experience, how many local firms); how to organize local/foreign cooperation; how to indicate the scale of work in the invitation; methodology of proposal evaluation. 2.10 In addition, familiarity with the above tasks should enable progres- sive reductions to be made in the time it takes from the production of agreed terms of reference to the end of the selection procedure without any loss of quality. 2.11 The negotiation of the contract requires an understanding of the commercial issues beyond the cost of the individual components. Satisfactory resolution of procedures for variation orders, of how and when payments are made, of the requirements or not of insurance, penalties, guarantees and property rights help achieve both economy and the smooth progress of work. 2.12 Supervision requires a level of involvement from the client which ensures conformity with the terms of reference and timely achievement of the objectives within the budget, but does not interfere with the professionalism of the consultant. Judgment is necessary in many cases regarding the clients ability to supervise and how to compensate for any deficiencies. For various reasons, it is not a good solution for the PF to try to replace its client in this activity, both because of the undesirable responsibility this places on  - 23 - what is primarily a fincncial institution and because of the tendency this has to promote internal techmical competition. 3. Project Pipeline. 3.1 The critical areas here are the size of the pipeline and the sectoral/ geographical distribution of the identified and prepared projects. As far as the size is concerned, this has to be related to the availability of capital for overall investment, both for the country as a whole and by sector. The fiscal implications of the work which is being done are important for project design as well as selection, tc the extent that for instance cash or foreign exchange generation may be a primary requirement, rather than say long term economic benefits. 3.2 The distribution should reflect Government priorities rather than current opportunities. This means first of all that the Government plan has to be translated into specific projects, and secondly that the projects so identified have to be brought to execution. 3.3 This may require both promotional effort and local institution building. Many agencies outside the traditional heavy investment sectors find difficulty in maintaining current operations. They can hardly service loans for studies, let alone project execution, and their human resource situation is as bad as the cash one. 3.4 The FP is only one amongst many Government agencies which can iden- tify such weaknesses. It may however be the best one to do something about it. In the first place, with sectoral targets set in conjunction with the Planning Ministry (or equivalent) it has an obligation to report the reasons for short- falls. At the same time it has an incentive to avoid their repetition. 3.5 Its work with such agencies should indicate the precise location of the human resource gaps. Its experience in consultancy and recruitment should enable it to make suggestions for filling them. 3.6 Its experience as a banker moreover, with the constant necessity of judging the ability as well as the financial viability of borrowers, should enable it to suggest org.nizational improvements which would convert a poor client into a good one. 3.7 Its relationsh:Lp with the Ministries of Planning and of Finance should furthermore give it the influence not only to have its suggestions con- sidered but also adopted., To achieve this however a PF must pursue consciously the identification and the solution of these types of problems. This requires both a general awareness and possibly the employment of some experts in the field of institution building. 3.8 In addition ad-hoc assistance in the form of short term experts can be provided. 3.9 Recognized effectiveness in all the above can be a major incentive to use of the PF by other agencies. However, this type of work can affect the apparent viability of the PF itself as its salary bill increases without a corresponding increase in turnover. It is therefore important to try to separate the costs of lending from the costs of technical assistance to borrower.  - 24 - 4.1 Information. The following items seem worth collecting for the reasons mentioned: a) Names of consultants, by discipline, location, size and experience; in order to facilitate the drawing of short lists. Knowledge of and access to other lists should complement this. b) Names of previous studies, with relevant TORs and indication of location; to prevent duplication of work. A good library of summaries can help make useful information accessible and save a great deal of time. c) Costs of consultancy; to help budget studies and to give background information for negotiations. d) Relationships between study costs and costs of works, by type and sector; to help dimensioning and budgeting. e) Relationships between cost (and other) forecasts in studies and subsequent actual experience; to help improve study design and the interpretation of recommendations. f) FP efficiency criteria-processing costs per study, per $000 lent, relationship between processing costs and technical assistance, time requirements from identification to loan; to indicate areas of possible improvement, to coordinate manpower planning with anticipated level of operations and to form a basis for exchanging experience with other FPs. 4.2 In addition, the FP should try to generate information on the use- fulness of the studies it finances. This should include an appreciation of how much it is worth paying to insure top quality - what, on a case-by-case basis, would be the implication for the client for lower grade, but perhaps faster and less expensive work. This will contribute towards the resolution of the controversies over whether to have studies at all, whether to use outside consultants or owner's staff to carry them out, how to assess and monitor cost effectiveness, and how the importance of the three items changes by sector and by type of study. 4.3 It should also evaluate the usefulness of studies not only for decision making by the owner but also for assisting in negotiations for finance for the execution of the works and in speeding the execution itself.