Liberia - Fifth Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4393-LBR STAFF APPRAISAL REPORT LIBERIA FIFTH HIGHWAY PROJECT February 21, 1984 Western Africa Projects Department Transportation Division 1 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency EquivaElents US$1.00 = Lib$1.00 Fiscal Year July 1 - June 30 System of Weights and Measures: British/US Metric 1 foot (ft) 0.305 meter (m) 1 mile (mi) 1.61 kilometers (km) 2 1 square mile (sq mi) 2.59 square kilometers (km ) 1 ton (long ton) 1.016 metric tons (m tons) Abbreviations and Acronyms AfDB - African Development Bank AL - Air Liberia ED - Engineering Division FMB - Financial Management Bureau FRG - Federal Republic of Germany MCIT - Ministry of Commerce, Industry and Transport MPEA - Ministry of Planning and Economitc Affairs MPW - Ministry of Public Works MTA - Monrovia Transit Authority NPA - National Port Authority OB - Operations Bureau PPB - Programming and Planning Bureau USAID - United States Agency for International Development VOC - vehicle operating cost vpd - vehicles per day  FOR OFFICIAL USE ONLY LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page I. THE TRANSPORT SECTOR ...1 A. Geographic and Economic Factors ..... ........... I B. The Transport System ...................... ..... .0. ...-. ......1 C. Transport Policy, Planning and Coordination. 2 D. Previous Bank Group Involvement in the Sector .......3 II. TH-' HIGHWAY SUBSECTOR... .. o .... 4 A. Road Network.. . 4 B. Road Fleet and Traffic . 5 C. Road Transport Industry. 6 D. Domestic Construction Industry ............7......o. ......7 E. The Ministry of Public Works............... . ......... 8 F. Highway Financing ..... . ............. . ..... .10 III. THE PROJECT .... ...... .. 12 A. Objectives ........ 12 B. Description ................................. 13 eC. Cost Estimates. ........... ..o...o ...o......... 16 D. Financing .... ..............1 18 E. Implementation and Reporting Requirements ...... 20 F. Procurement..... . ...... ......... .... 21 G. Disbursements ............... o ... ................... 22 IV. ECONOMIC EVALUATION .23 A. General ........ ......... 23 B. Economic Analysis of the Road Maintenance Program .24 C. Project Risks.......... ......... ... . .o .. 25 V. AGREEMENTS REACHED AND RECOMMENDATION .25 This report was prepared on the basis of an appraisal mission in September/October 1982, by Stanley Hayden and Nico Pijl. It was typed by Jacqueline Williams. This document has a restricted distribution and mnay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - TABLE OF CONTENT'; (Continued) Page ANNEXES 2-1 Organization of the Ministry of Public Works ...... 27 2-2 Actual and Projected Revenues and Expenditures on Roads 1980/81-1986/87 ........... ... ............ 28 3-1 Regravelling Program .. ..................................... 29 3-2 Procurement of Maintenance and Workshop Equipment . . 30 3-3 Outline Terms of Reference for Technical Assistance to the Ministry of Public Works ........................ 31 3-4 Outline Terms of Reference for Road Maintenance Study ...... 37 3-5 Detailed Estimate of Routine Maintenance Operating Costs ....................41 3-6 Government Funding for Maintenance .........................42 3-7 Project Implementation Schedule . . . .43 3-8 Project Progress Reporting Requirements ....44 5-9 Materials Cost of Individual Road Maintenance Operations . ... 47 3-10 Estimated Schedule of Disbursements ........................ 48 4-1 All-Weather Road Condition Inventory by Class .............. 49 4-2 Vehicle Operating Costs (VOC) .............................. 50 4-3 Estimated Average Daily Traffic, 1981 ...................... 51 MAP IBRD 16873 Liberia: Fifth Highway Project - Transportation Network and Road Maintenance Facilities.  - iii - Liberia Fifth Highway Project DOCUMENTS CONTAINED IN THE PROJECT FILE File Code A. Selected Reports and Studies on the Transport Sector Al. Second National Socio-Economic Development Plan, Doc.#129.885(1) July 1981 - June 1985: Chapters on Transport Development. A2. Road Maintenance Advisory Services'Quarterly Ln.1573-LBR and Annual Reports. Prepared by Sauti-ICE Consulting Engineers, 1979-1981. A3. Traffic Surveys 1981. Prepared by Planning and Doc.#129.885(6) Programming Bureau (MPW). A4. MPW Revised Budget for FY 1982/83, August 1982. Doc#129.885(7) B. Selected Reports Relating to the Project B1. Fifth Highway Project - Proposed Highway Doc.#126.945(l-14) Maintenance Program. Prepared by MPW and Sauti-ICE Consulting Engineers, May 1981. B2. Report on the MOW Fleet and its Resources. Doc.#129.885(4) Prepared by A. Mackie, Consultant Mechanical Engineer, May 1982. B3. Details of Program for Three Year Routine and Doc.#129.885(5) Periodic Maintenance Operations. Prepared by Operations Bureau (MPW), October 1982. B4. Miscellaneous short working papers, 1982/83 Doc.#129.885(8)  - iv - LIBERIA FIFTH HIGHWAY PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Republic of Liberia Amount: SDR 10.9 million (US$11.4 million equivalent) Terms: Standard Project Description: The project seeks to improve Liberia's public road network by strengthening the Ministry of Public Works' (MPW) capacity to carry out road maintenance. It provides for: (i) technical assistance and training to improve MPW's financial and administrative management and help plan and execute the maintenance program; (ii) a three-year routine maintenance program covering the entire public road network of about 4,725 miles; and (iii) periodic maintenance on about 450 miles of priority primary and secondary roads through rehabilitation or regravelling. Liberia's population would benefit from reduced transportation and vehicle operating costs; rural areas that are now difficult to reach due to the poor state of the road network would have improved access to markets. The main risks of the project are that planned improvements in MPW's management performance would not be fully realized and that the Government would be unable to provide sufficient funding for maintenance thus reducing maintenance output. The project would minimize these risks by providing technical assistance and gradually phasing in the Government's contribution to incremental recurrent maintenance costs.  v Estimated Cost -------(US$ million)------- Local Foreign Total Project Item Equipment and Workshop Rehabilitation 0.5 1.9 2.4 Periodic Maintenance - Gravel Roads 1.7 5.6 7.3 Materials for Routine Maintenance 0.7 3.5 4.2 Consultant Services and Training 0.4 2.3 2.7 PPF 0.1 0.3 0.4 Base Cost 3.4 13.6 17.0 Physical Contingencies 0.1 0.3 0.4 Price Contingencies 0.4 1.6 2.0 TOTAL 3.9 15.5 19.4 Financing Plan Local Foreign Total IDA 0.5 10.9 11.4 USAID 0.7 2.4 3.1 Government 2.7 2.2 4.9 TOTAL 3.9 15.5 19.4 Estimated Disbursements: -------------------(US$ million)------------------ FY84 FY83 FY86 FY87 FY88 Annual 1.4 4.0 2.9 2.1 1.0 Cumulative 1.4 5.4 8.3 10.4 11.4 Economic Rate of Return: Over 100 percent   LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT I. THE TRANSPORT SECTOR A. Geographic and Economic Factors 1.01 Liberia is a relatively small country with a land area of 43,000 square miles consisting of a narrow coastal plain with extensive swamps, tidal lagoons and creeks, a central area of plateaux and valleys covered by high rain forests, and a mountainous area along the Guinea border. Rainfall is heavy at over 2,500 mm per annum and largely concentrated in a 6-month period from May till October. Although these geographical and climatic features do not constitute a major obstacle to transport development, they make construc- tion and maintenance of transport infrastructure rather expensive. 1.02 Liberia is well endowed with natural resources, notably iron ore, timber and rubber. These allowed the country to realize rapid economic growth in the sixties and early seventies through spectacular increases in value added and output, and improvements in its terms of trade. However, the energy crisis and the subsequent recession in the industrialized countries killed the export-led boom and the rate of GDP growth dropped to less than 1.0 percent between 1974-79, despite an expansionistic investment policy followed by the Government; the major decline occurred in iron ore exports, from 25 to 17 million tons. Persistent weak external demand, deterioration of the invest- ment climate following the change in Government in 1980 and reduced public investment led to a decrease in real GDP of about 15 percent between 1980 and 1982. The medium term outlook for a resumption of rapid economic growth appears bleak. B. The Transport System 1.03 Historically transport infrastructure evolved around the private concessions, which created feeders from the natural resource locations to the ports of evacuation. It was only in the second half of the 1960s and particu- larly in the 1970s that an integrated highway system began to take shape as part of Government's strategy to create a more diversified agriculturally- based economy. Still, many potentially productive agricultural areas have only poor and circuituous connections to the ports and the main market center, Monrovia. Transport infrastructure presently consists of about 6,200 miles of roads, three mining-related railway lines totalling about 300 miles, four seaports, two international airports and numerous airfields. Generally poor management and inadequate funding for maintenance, have in recent years led to deterioration of a large part of the infrastructure.  1.04 Major transport flows reflect the pattern of economic activity and are primarily based on iron ore and timber, followed by rubber and other agricultural products, and imported goods. Road transport, the predominant mode but for iron ore, is concentrated around Monrovia and along the Monrovia- Ganta axis where the principal rubber plantations are located. Public use of the railways is very limited; only the LAMCO line carries some general cargo and timber traffic on a contract basis, and operates a daily passenger ser- vice. Domestic air transport usefully complements the underdeveloped land transport system by serving business interests 4n remote areas. Despite a substantial cost advantage over land transport, commercial coastal shipping between Monrovia and the isolated southeastern part of the country is limited due to pilferage, damage and customs problems. 1.05 The deepwater ports of Monrovia and Buchanan account for the major portion of port traffic, including all iron ore shipments; the shallow-water ports of Greenville and Harper handle mainly log exports. Between 1974 and 1980 total port traffic declined by about 5.5 pe!rcent per annum from 27.3 million tons to 19.4 million tons. As a consequence the National Port Author- ity (NPA)'s operating results deteriorated and, after the change in Government in 1980, were undermined further following the hiring of several hundred unnecessary additional staff. With Government concurrence NPA is presently taking steps to redress the situation by bringing staffing in line with the present level of port activity and is implementing other cost saving measures as well. With minor investments to improve their efficiency, the capacity of the ports of Greenville and Harper is adequate to handle probable future traffic. The port of Monrovia requires rehabilitation of the existing margin- al wharf and the construction of specialized cargo handling facilities to deal with the growing container traffic. 1.06 Liberia has two international airports, both in the vicinity of Monrovia, and numerous airfields of which four are served by scheduled flights of Air Liberia (AL), a Government-owned airline. Between 1971 and 1979, international passenger traffic increased rapidly at a rate of 11 percent per annum to about 118,000 passenger movements but dropped significantly in 1980 as a result of the decline in general economic activity. Development of domestic passenger traffic followed a similar trend. AL suffers continuous losses, because of too low tariffs and poor management; during the second half of 1982 the Government purchased a Boeing 727 for executive use and a second hand Boeing 707 for international passenger flights. These acquisitions have increased AL's operating losses. Government is taking steps to enter into a management contract with a foreign carrier in orier to reverse AL's deteriora- ting operational and financial situation. C. Transport Policy, Planning and Coordination 1.07 Liberia's Second Development Plan (1981,/82-1984/85) has the character of a stabilization program, giving priority to completion of ongoing projects, and incorporating only essential new projects in priority areas. In the roads sub-sector this strategy translates into the postponement of most new highway investments, increased emphasis on highway maintenance, and feeder road devel- opment in support of the priority sector, agricu:Lture. 1.08 Total planned public expenditure for transport development during the Second Plan period is set at US$159.3 million of which the roads sector  accounts for 68 percent (US$109.0 million), civil aviation for 1 percent (US$1.5 million) and ports for 31 percent (US$48.8 million). The investment program reflects well the priority needs of the sector with the exception of the proposed expansion of Monrovia Port; it is envisaged to construct a separate container wharf south of the existing wharfs, to handle 60,000 containers per annum. The proposed facility would be larger than required and Government should reassess the planned investment paying due regard to the economic justification and long term effects on NPA's finances.In any event, the investment targets are unlikely to be realized considering that two years of the plan period have already passed with very little investment activity. 1.09 The Ministry of Commerce, Industry and Transport (MCIT) has the overall responsibility for transport management but performs regulatory func- tions only, leaving the broader questions of transport policy formulation and coordination unaddressed. The Bank-financed Feeder Roads Project provides for technical assistance to strengthen the Ministry's Bureau of Transportation in the latter two areas. The Infrastructure Division of the Ministry of Planning and Fconomic Affairs (MPEA) is making efforts to fill to the extent possible the existing vacuum but does not have adequate experienced staff either. Therefore, at the request of Government, the Loan Agreement for the Feeder Roads Project was amended in December 1983 to transfer the transport planning component from MCIT to MPEA. This is expected to provide the basis for the establishment of a properly trained transport policy and coordination unit. D. Previous Bank Group Involvement in the Sector 1.10 Historically, Bank Group financial assistance to Liberia's transport sector totals US$67.3 million, comprising six projects -- four for main roads, one for feeder roads and one for the port of Monrovia. The First Highway Project (Loan 368-LBR, 1964, US$4.25 million) was completed in 1969. The project consisted of road reconstruction and the supply of equipment for road maintenance. The Port of Monrovia Project (LoeLn 617-LBR, 1969, US$3.6 millio- n) completed in 1977, comprised dredging, purchase of tug boats and naviga- tional equipment, technical assistance and studies. No PCRs were prepared for these early projects but they created the foundations for further development of the sector. The Second Highway Project (Loan 907/Credit 395-LBR, 1973,US$5.6 million) was completed in 1978 and included road construction in Monrovia, procurement of highway maintenance and workshop equipment, technical assistance for road maintenance, and studies. The Project Performance Audit Report concluded that the project was executed satisfactorily but that the appraisal had been overly optimistic as to the time required to set up an effective maintenance organization. The Third Highway Project (Loan 1156-LBR, 1975, US$27.5 million) comprised construction of a road and river crossing in Monrovia, construction of the Totota-Ganta section of the principal trunk road into the interior, provision of operating funds for a feeder road construction brigade, technical assistance for road transport planning and studies. The project was completed in 1981, more than two years behind schedule, but within the original cost estimate. The principal cause for the time overrun was the slow implementation of the main civil works component, the construction of the 83 mile Totota-Ganta road, which took five and a half years to complete. In retrospect, splitting of this work into two separate contracts might have enabled completion in time and at lower cost. A Project Completion Report, basically prepared by the Government, was issued December 30, 1982.  -4- 1.11 There are two on-going projects in the trarnsport sector. The Fourth Highway Project (Loan 1573-LBR, 1978, US$13.8 milLlion) comprised rehabilita- tion of the Paynesville-Totota and Paynesville-Robertsfield roads, technical assistance for the organization and execution of road maintenance, technical assistance for road transport planning, and stud-Les. The Paynesville-Totota road rehabilitation suffered a substantial cost overrun, leaving part of the road and a bridge uncompleted. A supplemental credit (Credit 1311-LBR, 1982, SDR 1.7 million) was approved to reconstruct the bridge and update the engi- neering of the remaining road works, activities which were successfully con- cluded by the end of 1983. The African Development Bank has agreed in princi- ple to finance the remaining road works as a separate project in 1984. The Feeder Roads Project (Loan 1664-LBR, 1979, US$10.,7 million) continues and expands the feeder road activities started under the Third Highway Project. It originally consisted of the construction or improvement of some 700 miles of feeder roads, mostly in support of Bank/IDA - financed agricultural pro- jects, related consultant services, technical assistance for the development of the domestic contracting industry and technical assistance for the streng- thening of the transport co-ordinating role of the MCIT. From the onset the project suffered from inadequate local funding, poor management and procure- ment problems and, after the change in Government; in 1980, it came practically to a standstill. Upon the request of the Government the Bank approved a loan amendment increasing disbursement percentages and setting up a revolving fund to ease the financial constraints. Simultaneously, Government took steps to strengthen project management and, as a result, feeder road construction was resumed in late 1982 and is now showing increasing progress. II. THE HIGHWAY SUBSECTOR A. Road Network 2.01 The public road network totals 4,726 miles as shown in the following table. Of this some 2,450 miles are all weather roads and the remainder roads serviceable during the dry season only. In 1981, the paved network consisted of some 366 miles, making its share in the public road system quite low at about 8 percent. In addition to the public road network, the iron ore, rubber and logging concessions have built and maintain close to 1,500 miles of pri- vate, mostly laterite surfaced roads and an undetermined mileage of tracks in the forest areas. The public network is inadequate both in extent and quality given present traffic levels and development needs. Only 366 miles of the public road system are paved, while about 400 miles out of 2,100 miles of the all-weather laterite network are estimated to carry more than 300 vehicles per day and their paving would probably be justified. However, given the shortage of resources the Government is experiencing, thiE is not feasible.  - 5 - Liberia - Road Network, 1964-1981 (miles) 1964 1971 1974 1977 1981 A. PUBLIC ROADS Primary Roads Paved 160 203 208 230 366 Gravel (all weather) 650 941 968 946 799 810 1,144 1,176 1,176 1,165 Secondary and Feeder Roads Gravel (all weather) 330 487 707 893 1,285 Earth (dry weather) 610 1,270 1,265 2,050 2,276 940 1,757 1,972 2,943 3,561 Sub-total A 1,750 2,901 3,148 4,119 4,726 (all weather) (1,140) (1,631) (1,883) (2,069) (2,450) B. PRIVATE ROADS Paved 30 86 86 90 93 Gravel and Earth 500 1,184 1,308 1,354 1,381 Sub-total B 530 1,270 17,394 1 ,444 1,474 TOTAL 2,280 4,171 4,542 5,563 6,200 Source: Planning and Programming Bureau, Mihistry of Public Works, 1982. 2.02 During the First Plan period (1976/77-1979/80) the mileage of paved roads and all weather secondary and feeder roads increased by 50%. On the other hand the quality of the primary gravel roads deteriorated due to inade- quate maintenance; although classified as all-weather roads, passage over a number of these roads has become difficult during the rainy season. The mileage and composition of the private road network did not change much over the past decade. B. Road Fleet and Traffic 2.03 Vehicle fleet statistics are derived from vehicle registration records; the composition and development of the fleet is shown in the follow- ing Table.  - 6 - Liberia - Motor Vehicle Registration, 1972-1981 1981 1972 1973 1974 1975 1976 1977 1978 1979 1989 1981 Fleet units -------- - - Passenger Cars 10,607 10,769 9,875 10,375 11,800 11,234 10,659 8,482 9,263 8,019 44.4 Taxis 3,384 3,507 4,576 2,421 1,967 2,981 3,046 2,460 3,210 3,350 18.5 Buses 2,575 4,924 1,800 2,497 2,6C0 1,355 1,049 1,103 1,341 1,481 8.2 Trucks 4,730 3,589 5,841 5,466 4,770 5,621 6,427 5,C83 5,914 5,224 28.9 Total 21,296 22,789 22,092 20,759 21,137 21,189 21 ,181 17,128 19,748 18,074 1C0.0 Source: Ministry of Finance, Motor Vehicle Division, 1982. Although the figures for the last three years show a drop in the overall fleet and are to some extent supported by the trend in vehicle import statistics, it seems likely that the fleet presently in use is somewhat higher. The Table reflects vehicles for which revenues were collected; enforcement of vehicle registration has been lax especially since the change of Government in 1980 after which a large number of private vehicles were confiscated. 2.04 The last country-wide traffic counts were conducted in 1971; since then counts have been limited mostly to specific roads in conjunction with feasibility studies. With technical assistance under the Fourth Highway Project a comprehensive national traffic survey is being implemented. Al- though it is not yet completed, preliminary results indicate that a major drop in traffic occurred after 1980, presumably as a consequence of the imposed travel restrictions and the continuing decline in economic activity. This trend is confirmed by a decline in fuel consumption. The most heavily traf- ficked road outside the capital is the Monrovia-Paynesville-Totota-Ganta road which carries about 9,000 vpd on the first section decreasing to some 1,500 vpd north of Paynesville and about 500 vpd near Ganta. Traffic is likely to gradually return to previous levels with the recent lifting of travel restric- tions. C. Road Transport Industry 2.05 The road transport industry consists of a large number of small private truckers, minibus owners, and small taxi enterprises. Entry into the road transport industry is relatively open with Government intervention lim- ited to vehicle registration, licensing and inspection. Government sets maximum tariffs for public passenger transport and inter-city trucking ser- vices but enforcement is limited and actual tariffs do sometimes exceed offi- cial tariffs in areas where poor road conditions discourage competition. Otherwise the industry is free of regulations and competition generally en- sures adequate services to the public. Vehicle occupancy rates in Monrovia are quite high with an average of 3.5 for taxis and 70 percent of capacity for  - 7 - buses. These indicate a transport system operating at near capacity. Passen- ger transport is profitable and the lack of expansion of service is primarily due to scarcity of investment capital. 2.06 A public bus corporation, the Monrovia Transit Authority (MTA) was established in 1979 but due to the corporation's under-capitalization, weak management and poor maintenance capability, its original fleet of 22 buses is largely broken down. In-city services have all but ceased operations and the remaining buses are operating for one of the mining companies on a contract basis. From the point of view of economic efficiency Government divestiture of MTA would be warranted. 2.07 Control of axle-load legal limits is not enforced despite that five weighbridges were procured by the Ministry of Public Works in 1976. One weighbridge was assembled and installed but the access ramps are yet to be built; it is estimated that enough parts are still available to assemble two more weighbridges. During negotiations Government agreed to fully install these weighbridges and make adequate budgetary provisions to cover their operating and maintenance costs by December 1985. D. Domestic Construction Industry 2.08 The involvement of domestic contractors in the relatively large volume of road construction over the past five years has been limited; almost all major road construction contracts have been awarded to foreign firms as domestic contractors do not have the capacity to undertake paved road con- struction. The three most important domestic contractors have periodically been engaged in the construction of rural secondary roads, private roads for concessionaires and sub-contracting for foreign contractors. They have fair engineering competence but are generally under-equipped, lack adequate mana- gerial expertise and have insufficient working capital. Slow payment by Government for work performed and lack of job opportunities, due to the de- cline in new road construction activity since 1980, have aggravated their cash-flow problems. 2.09 It is Government's stated objective to further the development of the domestic contracting industry but a sustained effort to develop and implement a suitable development program to this end has been lacking thus far. The ongoing Feeder Roads Project includes US$4.0 million for construction of feeder roads by domestic contractors, as well as funding for technical assist- ance to the local contracting industry. The first bids for civil works are expected to be invited in 1984. MPW is expressing renewed interest in the role of domestic contractors in the country's highway development and main- tenance efforts and is presently preparing a position paper on the issue for Government's consideration. As a longer term policy direction MPW proposes to gradually reduce its force account maintenance activities in favor of the private contracting industry. Under the proposed project, funds are included to let some of the regravelling works on the primary road network to domestic contractors (paras. 3.08 and 4.01). If successful, this approach could pro- vide continuity of work to contractors thereby eliminating one of the major bottlenecks to their development.  - 8- E. The Ministry of Public Works 2.10 The Ministry of Public Works (MPW) is responsible for the planning, design, construction and maintenance of the public highway system. The orga- nization of MPW is shown in Annex 2-1. The four main functions of administra- tion, engineering, construction and operations (maintenance) are undertaken by separate bureaus. Although MPW's responsibilities include the feeder road network, its capacity constraints have led the Government to set up additional construction capability within other Ministries and governmental agencies. This proliferation of agencies involved in feeder roads, working by and large in isolation, has spread available scarce human and physical resources so thinly that in the end little output is realized, quality standards are gener- ally low and economic losses are being incurred. The new transport policy formulation and coordination effort being supported under the ongoing Feeder Roads Project (para.1.09) will review the situation with a view to improve efficiency and ensure adequate coordination between the various executing agencies. 1. Staff and Training 2.11 MPW employs on its Recurrent Budget a permanent staff of 3,200 which for certain categories is excessive. In addition, varying numbers (presently less than 100) of semi-permanent staff are hired on the Development Budget for construction jobs. MPW professional staff include 45 engineers, 8 architects, i transport economist and 2 accountants. Management is entirely Liberian and only a few expatriates on local contracts remain in technical positions. Senior staff in the highways sector were generally trained abroad and have good qualifications. However, partly due to the exodus of professional staff from the Ministry since the change in Government, it is weak in middle level managers and engineers. Working conditions are difficult under the prevailing budgetary constraints and staff morale and job performance are poor; all Government civil servants' pay scales have been reduced by 16-25% as of Janu- ary 1, 1983. The proposed project will to some extent improve working condi- tions; however, the adequacy of present financial incentives to attract and retain sufficiently qualified professional and managerial staff should be assessed at the national level. 2.12 As part of its manpower development program, over the years MPW has provided scholarships for study at the Universit;y of Liberia and overseas. In addition, MPW engineers have been assigned to consulting firms supervising foreign funded road construction projects to expose them to up-to-date con- struction and contract management methods. 2.13 MPW operates a Road Maintenance Training Center for sub-professional staff at Camp Mechlin. The Center was established in 1975 with technical assistance from the Federal Republic of Germany (FRG), and has trained road technicians, mechanics and equipment operators at a rate of some 30 per annum. In view of recently imposed hiring limitations, the emphasis of the training program has shifted from training of new recruits to upgrading skills of existing MPW staff. FRG's assistance was discontinued in 1981 but under a Japanese loan for equipment, provision is made for instructors and training aids to reinforce the Liberian staff at Camp Mechlin. Training capacity is adequate for MPW's needs.  - 9 - 2. Highway Planning and Programming Bureau 2.14 Road planning is carried out by MPW's Planning and Programming Bureau (PPB) in consultation with MPEA. PPB's functions include collecting and analyzing data on roads and road transport and carrying out studies to deter- mine economic priorities and design standards. All major projects, however, are preceded by feasibility studies carried out by consultants. Technical assistance for the organization and development of the PPB was provided under the Third and Fourth Highway Projects and good progress has been made. How- ever, the prevailing budgetary constraints have led to a slowdown in the activities of the Bureau. 3. Engineering Division 2.15 MPW's Engineering Division carries out preliminary investigations and road and bridge designs with assistance from MPW's soils and materials labo- ratory, but engineering and supervision of major road projects is done by foreign consultants. Liberia's terrain and climatic conditions pose few pro- blems for highway designers and builders. However, there is a dearth of hydrological data, making the estimation of drainage requirements difficult. Geometric and pavement specifications are generally based on US design stan- dards adapted to local conditions. 4. Bureau of Construction 2.16 For major road works, MPW employs contractors following suitable prequalification and tendering procedures; contracts are normally let on a unit price basis. In recent years, MPW's Bureau of Construction has under- taken several force account road construction projects, but with mixed re- sults, and MPW is, partly as a result, expressing active interest in develop- ment of local contractors (para. 2.09). 5. Operations (Maintenance) Bureau 2.17 MPW's Operations Bureau is responsible for the maintenance of the entire public primary and secondary road network, as well as for the annual reshaping and periodic regravelling of the improved feeder roads network. Routine maintenance of feeder roads is to be carried out by local communities largely on a self-help basis and with technica:L supervision provided by MPW. This approach will be tested on a pilot basis in two counties under the on- going Feeder Roads Project. 2.18 For maintenance execution the country is divided into three regions (consisting of 3 counties each) each headed by a regional engineer, and 12 districts headed by district engineers, including one district covering metro- politan Monrovia. The Operations Bureau employs some 2,200 staff for road maintenance which is more than sufficient for the present network in numbers but inadequate with respect to skill requirements. In the lower ranks there is a large number of older employees who have received little or no formal education or training, while there is a dire need at the middle and senior management levels for more qualified engineers, and mechanical and works superintendents. Although 30 staff occupy the position of engineer only about 12 have the required qualifications. In addition, the Operations Bureau employs about 25 technicians, 35 superintendents, 160 foremen, over 700  - 10 mechanics, operators and drivers, 260 administrative support staff, and close to 1,000, mostly unskilled, laborers. Maintenance operations are largely mechanized, but labor gangs carry out some of the routine maintenance tasks. However, labor productivity is low while nominal wages are relatively high at around US$10 per active working day, making labor intensive maintenance prac- tices rather unattractive. 2.19 Over the past 10 years the Bank Group has been actively involved in road maintenance development in the country, primarily through the provision of technical and capital assistance under the Second and Fourth Highway Pro- jects. Some progress was achieved in terms of improvements in the set-up of the maintenance organization, warehouse operations, development of annual work programs, and the preparation of a comprehensive five year maintenance program that serves as the basis for the proposed project. However, despite these sizable technical assistance inputs, ample manpower and an equipment fleet of some 250 units, the minimum road maintenance needs have not been met due to insufficient recurrent funding, frequent personnel ch&nges, inefficient fleet management and shortcomings in financial management which have resulted in widespread waste and diversion of scarce resources. These deficiencies will be addressed under the proposed project as discussed in Chapter III. 6. Financial Management Bureau 2.20 The accounting structure currently in use provides little information to MPW management that could be used to monitor performance, identify problems and take corrective action. The present system is limited to appropriation and allotment of budget funds to various MPW units and on ensuring that the complex of clearances, authorizations and signatures have been satisfactorily obtained before funds are expended. With a Project Preparation Facility advance, MPW has engaged consultants to develop a modern cost accounting and performance budgeting system to be introduced under the project, which would allow improved planning, budgeting, control and verification of MPW's opera- tions (para. 3.03). F. Highway Financing 2.21 Highway maintenance is financed from the Recurrent Budget while highway investments are included in the Development Budget which is largely made up of grants and credits from bilateral and multilateral aid programs. Annual highway investments averaged about US$20 million during the First Plan period but have dropped to less than US$5 million since 1981/82. Recurrent maintenance funding was adequate in the mid-1970s but has in recent years become increasingly insufficient to maintain the expanded network. 2.22 Recurrent annual maintenance expenditures financed from the general budget steadily increased from about US$5.5 million in 1976/77 to US$ 8.6 million in 1981/82 but decreased to an estimated US$6.2 million in 1982/83, as shown below:  - 11 - Liberia - Government Recurrent Maintenance Expenditure, 1976/77-1982/83 (in US$'000) Ratio Personnel to Personnel Operations a/ Total Operations 1976/77 2,100 3,446 5,546 38/62 1977/78 2,917 3,807 6,724 43/57 1978/79 3,177 3,523 6,700 47/53 1979/80 3,298 3,626 6,924 48/52 1980/81 6,268 1,944 8,212 76/24 1981/82 6,874 1,701 8,575 80/20 1982/83 (est.) 5,100 1,100 6,200 82/18 a/ Fuel, spare parts, materials, administrative overhead, etc. Source: Operations Bureau and Planning and Programming Bureau, Ministry of Public Works, 1982. Immediately after taking office in 1980, the new Government doubled the mini- mum wage rate which dramatically altered the composition of maintenance expen- ditures. In 1976/77 about US$3.4 million or 62 percent went for non-personnel expenses (fuel, spare parts, materials, etc.) compared to only US$1.7 million or 20 percent in 1981/82 and estimated to have been even lower in 1982/83. This decline becomes even more dramatic when seen against the background of a more than fourfold increase in fuel prices over the referenced period. Under a Standby Agreement with the IMF, the Government agreed for 1982/83 to a 15 percent across-the-board cut in recurrent expenditures from 1981/82 levels, leaving it to the individual ministries to attain this reduction by whatever means they deemed appropriate. As a first result, the allocation for person- nel costs in the Operations Bureau was initially reduced from US$6.9 million to US$6.4 million through pensioning off of some staff, while non-personnel costs were cut from US$1.7 million to US$0.7 million, or less than 10 percent of the total maintenance budget. 2.23. However, these allocations were significantly revised again in the course of the fiscal year, following the Government's decision in December 1982 to reduce civil servants' pay scales as of January 1983 by 16-25 percent, depending on grade. This measure was prompted by mounting budgetary pres- sures, caused by a shortfall in revenues, and the realization that the limited allocations for logistics in MPW's and other ministries' budgets did not even allow them to sustain minimum levels of operations. In its announcement of the salary cut, the Government explicitly stated that it had opted for equit- able sharing by all civil servants of the burden of the required budget ad- justment rather than to resort to mass lay-offs. As a result of the budget realignment total resources allocated to maintenance in 1982/83 were reduced from US$7.2 million to an estimated US$6.2 million, while funding for non- personnel expenditures increased to about US$1.1 million, or about 18 percent of total. Personnel expenditures were meanwhile reduced to US$5.1 million,  - 12 - the lowest level in three years. Nevertheless this level of funding is total- ly inadequate for maintenance needs which wouldl under normal circumstances (no deferred maintenance) require some US$11 million for non-personnel expendi- tures. The project will take the first step in a longer term effort to re- store maintenance funding to appropriate levels and to further restructure the maintenance budget through gradual reduction of excessive payroll costs (paras. 3.06 and 3.19). 2.24 Road users contribute to Government re!venues through taxes and duties on fuel, lubricants, vehicles and spare parts, and through license and regis- tration fees. In 1981, fuel taxes were increased from 12 cents to 32 cents per US gallon of gasoline and from 10 cents to 30 cents per US gallon of gasoil. Duties on vehicles range from 23 percent of cif prices for buses and light trucks to 35 percent for heavy trucks; duty on spare parts is 40 percent of their cif price. The rise in fuel taxes greatly increased total revenues from road user charges from an estimated US$12.3 millior. in 1980/81 to about US$17.8 million in 1981/82. At the start of fiscal year 1983/84 the gasoline tax was increased to 92 cents per US gallon, expected to generate an addition- al US$11 million in tax revenues. Thus, the level of road user taxes is adequate since in addition to covering maintenance expenditures, including expected increases, road user revenues make a significant contribution to the capital costs of the network as can be seen from Annex 2-2. 2.25 As a consequence of the reduced maintenance funding in recent years, fleet maintenance has been inadequate, routine maintenance only partial and periodic maintenance negligible, resulting in accelerated erosion of capital invested in roads and equipment, and increased transportation costs. Liberia is fortunate in that most of its paved network is of relatively recent origin and therefore poses no immediate major maintenance problem. However, the situation with respect to the main gravel network is far less comforting; consultants employed under the Fourth Highway Project estimated that a period- ic maintenance backlog of some 775 miles has developed. A principal objective of the proposed project is to stop further deterioration of the network and make a start with the elimination of the maintenance backlog. III. THE PROJECT A. Objectives 3.01 As originally conceived, the proposed project was to continue upgrad- ing the primary network by paving road sections identified and prepared under earlier projects, and further improve road main';enance. However, in view of the Government's limited ability to provide counterpart funds for new road construction, the deterioration in MPW's managerient capability and the inade- quacy of present maintenance operations, it was agreed with the Government that the proposed project, prepared by MPW with the assistance of consultants under the Fourth Highway Project, should focus on: (i) strengthening of MPW's technical and financial management capabil- ity to ensure efficient use of scarce available resources for the development and maintenance of Liberia's public road network; and  - 13 - (ii) preservation of past investments in highway infrastructure by securing adequate funding for minimum routine maintenance and by taking a first step toward elimination of the periodic maintenance backlog. B. Description 3.02 To attain the above objectives the proposed project consists of: (i) the development and implementation of a medium term program for improvement of MPW's managerial and financial accountability, including related technical assistance and training; (ii) a three year road maintenance program to include: (a) routine maintenance by force account to cover the all- weather network (2,450 miles) and gradually be extended to include the dry weather network (2,280 miles); (b) periodic maintenance on about 450 miles of gravel roads by force account (350 miles) and by contract (100 miles); (c) basic rehabilitation of workshop facilities, including replacement of ancillary equipment and hand tools; (d) limited additions to the road maintenance equipment fleet and overhaul of some of the existing equipment; (e) consulting services to: (alpha) assist the Operations Bureau in improving the efficiency of road maintenance operations; (beta) prepare in collaboration with the PPB a follow-up maintenance program; and (gamma) auditing ser- vices to audit project expenditures; and (f) fellowships. 1. Strengthening of MPW Management 3.03 The Ministry has prepared a medium term management strengthening program outline, aimed at better coordination between its various bureaus through improved management information flows, both technical and financial; and the improvement of MPW's efficiency in carrying out its assignments on time and within established budgets. The program rests on the design of a modern cost accounting system coupled with changed responsibilities in the MPW structure to monitor and use the management information that would be gene- rated. A PPF advance of US$340,000 was approved in May 1983 to hire consul- tants to assist the Government in further developing an appropriate management information system, prior to project start-up. The project will provide for additional technical assistance, particularly in the accounting area but also in general management to implement the program (,para. 3.11) and conduct on the job training. The Government agreed during negotiations that a newly dev- eloped accounting system acceptable to the Association, will become operation- al not later than July 1, 1984 and that as of fiscal year 1984/85, budgets would be recast along functional lines.  - 14 - 2. Routine Maintenance 3.04 The routine maintenance program covers initially the entire all- weather road network of 2,450 miles and expands to include the 2,280 miles of dry weather roads by the end of the project period. In view of the financing constraints, routine maintenance activities have been set at minimum standards compatible with road type and traffic levels. Priority will be given to preservation of recent large capital investments in the paved network. 3.05 Maintenance operations such as heavy bush clearing, grading, com- pacting and anti-corrugation brushing will be :Largely mechanized while other operations such as patching, pot-hole filling, emergency repairs and shoulder and structure clearing will mostly be carried out by manual labor. Each main- tenance district will organize specialized light mechanized units and labor gangs to carry out the various maintenance tasks as per the annual routine maintenance programs to be approved (para. 3. 23). 3.06 Even with the expected increase in maintenance activities under the project, redundancies in certain staff categories, notably unskilled laborers and mechanical workers, will continue to exist. However, staff reductions through lay-offs at this time would be difficult for socio-political reasons in light of Government's recent explicit pronouncement on its employment policy (para. 2.23). Therefore, desirable adjustments in staffing levels can only be brought about gradually and primarily through normal attrition. Over the past few years, staff turnover has been considerable and it is considered feasible to reduce overall maintenance staff by about 75 per annum, while at the same time still leaving some room for recruitment of a limited number of qualified new staff for key positions. This strategy could bring total maint- enance staffing down from 2,200 to about 1,950 by the end of the project period. As a further adjustment measure MPW intends to change the employment status of about 800 unskilled maintenance workers from permanent to temporary staff, only to be hired during the six-month dry season. This would reduce personnel cost by about US$800,000 per annum. The corresponding payroll savings from both staff measures, estimated at about US$3.0 million over the project implementation period, are to be allocated to the maintenance operat- ing budget, thereby significantly reducing Government's incremental mainte- nance funding requirements (para. 3.19). 3. Periodic Maintenance of Gravel Roads 3.07 Some of the gravel roads have deteriorated to the extent that traffic interruptions occur during the rainy season; a more substantial effort than just regravelling, including drainage improvement and some earthworks is needed to bring these roads back to an acceptable condition before routine maintenance can be carried out effectively. It is estimated that a total of 775 miles of gravel roads will require rehabilitation or regravelling. About 450 miles of gravel roads, the most urgently in need of rehabilitation or regravelling, are included in the project and are listed in Annex 3-1. Road upgrading works will be limited to an absolute minimum with a view to maximize regravelling mileage. During negotiations, Government agreed to the list and to limit upgrading earthworks to an average of 10 percent of total regravell- ing volume to be carried out.  - 15 - 3.08 The Operations Bureau will deploy three brigades (one in each re- gion), using existing equipment and staff, to regravel about 350 miles by force account; a specialized drainage crew will be set-up to carry out drain- age improvements ahead of the brigades. In addition about 100 miles will be regravelled by contractors. Since it is important that the deferred periodic maintenance is carried out on schedule to prevent further deterioration, the Government agreed during negotiations that: (i) the output of the regravell- ing brigades will be reviewed with the Association every six months starting December 1984; and (ii) should the assessed output be less than anticipated, the amount of work to be carried out by contract will be increased. 4. Workshops and Equipment 3.09 The most recent fleet condition inventory shows that the Operations Bureau's equipment fleet is adequate in numbers and basic condition, but somewhat unbalanced. Further, a substantial number of the units is deadlined awaiting minor repairs and some require major overhaul. Some additional water tankers and lube trucks, and a few specialty items as listed in Annex 3-2 would be procured to provide balanced equipment for the maintenance brigades; the list was agreed upon at negotiations. The project would also equip labo- rers with the necessary hand tools. The units for which overhaul is justified will be reconditioned either under contract with authorized dealers or in the MPW workshops, which will also undertake the minor repairs. During negotia- tions, the Government agreed to use the existing maintenance equipment fleet of operable and repairable units exclusively for the purposes of the project. 3.10 MPW's workshop structures are acceptable for the expected workload but are in poor working condition because of lack of utilities, equipment and tools. The project will meet the basic workshop needs in terms of reliable water, electricity, compressed air and fuel dispensing services, workshop equipment, hand tools and radio equipment (Annex 3-2). The list was agreed at negotiations. 5. Technical Assistance 3.11 Consultants will be appointed to assist MPW in the implementation of the management information system being developed under the PPF advance, the strengthening of its management capability in key areas, the execution of the road maintenance program, and the preparation of a follow-up maintenance project. The team will consist of a senior road maintenance engineer (18 man- months); a cost accountant (18 man-months); an equipment management specialist (18 man-months); a warehouse/procurement specialist (12 man-months); three road maintenance superintendents (54 man-months); and three mechanical super- intendents (54 man-months), for a total of 174 man-months. The experts will assume direct operational responsibilities and authority within MPW's admini- stration, and will provide on-the-job training to local counterpart staff. One road maintenance superintendent and one mechanical superintendent will be assigned to each of the three regions to assist the Operations Bureau in improving field operations and procedures for routine and periodic mainte- nance, ensuring optimum utilization of equipment, facilities, manpower and materials in their respective regions. During negotiations the Government agreed to: (i) hire the experts from a single firm satisfactory to the  - 16 - Association to ensure maximum coordination and continuity between the various technical assistance activities; and (ii) the terms of reference as outlined in Annex 3-3. 3.12 In addition, the consultants shall, in collaboration with the PPB and with the help of short term specialists (10 man-months), carry out a road maintenance study in preparation for an expanded maintenance program which could be implemented under a follow-up project. The study will make a compre- hensive assessment of the maintenance needs of the network, covering a five year period, and formulate specific recommendations on their method of execu- tion (contract versus force account); equipment, facilities and manpower requirements at all levels for the part to be carried out by force account; and funding needs. Outline terms of reference for the study are given in Annex 3-4 and have been agreed with Government during negotiations. 6. Audits 3.13 Independent auditors will be appointed for annual verification of the propriety of project expenditures, including those channeled through the revolving fund. As part of the review the auditors will also give their opinion on the adequacy of the unit rates for the various maintenance opera- tions adopted for the purpose of disbursement of asasit proceeds (para. 3.25). During negotiations the Government agreed that, starting with the 1983/84 accounts, it would engage independent auditors on terms and conditions acceptable to the Association, to audit project expenditures and send to the Association the audited accounts together with the auditors' report, within four months after the closing of each fiscal year. 7. Fellowships 3.14 In support of the longer term effort to strengthen MPW's management capability, the project will provide a limited number of scholarships for advanced training of mechanics to prepare them for eventual assignment in supervisory positions in MPW's workshop organization, as well as for some selected candidates for university studies in the field of accounting and business administration. C. Cost Estimates 3.15 The total cost of the project, net of taxes and duties, is estimated at US$19.4 million, of which about US$14.5 million represent capital costs and about US$4.9 million incremental recurrent costs Total foreign costs amount to US$15.5 million (80%) and local costs, net of taxes and duties, to about US$3.8 million. Non-waived taxes and duties are estimated at US$0.7 million. Detailed estimates of project costs are presented in the following Table and those of routine maintenance operating costs in Annex 3-5.  - 17 - Project Cost Estimate (US$'000, base costs at November 1983 prices) Total Total Foreign Net of with as % of Foreign Local Taxes Taxes Taxes (3) _____________~~~~~~~~~~~~~T1- 72 Y 74T -Y -Y -T7- A. CAPITAL COSTS I. Equipnent and Workshop Rehabilitation 2,209 570 2,779 - 2,779 79 (i) Highxqy maintenance equirment 496 87 583 - 583 85 (ii) Equipment overhaul 795 199 994 - 994 80 (iii) Workshop equipment, tools 640 213 853 - 853 75 Base cost 1,931 499 2,430 - 2,430 Physcial contingencies (IC%) 193 50 243 - 243 Price contingencies 85 21 106 - 106 II. Periodic Maintenance Gravel Roads 6,300 1,954 8,254 724 8,978 76 (a) Force Account 4,127 1,229 5,356 - 5,356 77 (i) Fuel, lubricants 2,144 212 2,356 - 2,356 91 (ii) Spare parts 1,312 326 1,638 - 1,638 83 (iii) Laterite royalties - 498 49 - 49 - (iv) Other materials 166 43 209 - 209 80 Base cost 3,622 1,079 4,701 - 4,701 - Price contingencies 505 150 655 - 655 - (b) Worls by Contractor 2,173 125 2,8g8 724 3,622 75 Base cost 1,945 648 2,593 648 3,241 - Price contingencies 220 77 305 76 381 - III. Consultant Services, Training 2,638 429 3,067 - 3,067 86 (i) Technical Assistance 2,073 366 2,439 - 2,439 85 (ii) Auditing Services 84 12 96 - 96 87 (iii) Fellowships 162 - 162 - 162 100 Base Cost 2,319 378 2,697 - 2,697 - Physical contingencies (5% on (i)) 103 18 121 - 121 - Price contingencies 216 33 249 - 249 - IV. PPF 340 60 400 - 400 85 B. INCREMENAL RBRRErT COSTS Materials for Routine Maintenance 4,045 806 4,851 - 4,851 83 Base cost 3,535 704 4,239 - 4,239 - Price contingencies 510 102 612 - 612 - TOTAL PROJECT COST 15,532 3,819 19,351 724 20,075 80 Base cost 100C 13,692 3,368 17,060 648 17,708 - Physical contingencies 102% 296 68 364 - 364 _ PTice contingencies 113% 1,544 383 1,927 76 2,003 -  - 18 - 3.16 Cost estimates for equipment are based on recent bids received by MPW and local dealers' quotations. The cost of periodic maintenance of gravel roads by contractor is based on the mission's best estimate as no recent bids for similar works are available. The detailed cost estimates of periodic and routine maintenance operations (excluding local personnel cost and equipment depreciation) have been developed by MPW with the assistance of consultants Sauti-ICE of Italy. Man-month costs of consulting services including salary, overheads, profit, as well as international travel, local subsistence and other minor expenses, are expected to average about US$13,000; rates are in line with recent experience in Liberia. In addition, contract costs for consulting services include the cost of vehicles for local transportation and equipment for roughness measurements to be used in the preparation of a follow-up maintenance project. 3.17 Base cost estimates are as of November 1983 and price contingencies amounting to about 13% of total base cost, including physical contingencies, have been calculated using the following expected inflation rates: 8% in 1983; 7.5% in 1984; 7% in 1985 and 6% in 1986. Physical contingencies have been applied as follows: 10% on road maintenance and workshop equipment; 10% on equipment overhaul by contract; 10% on spare parts for equipment overhaul by force account; and 5% on technical assistance. No physical contingencies have been taken into account on the periodic and routine maintenance elements since these are based on a flexible program. D. Financing 3.18 The Association and USAID will finance 75% of total project cost, net of taxes. The IDA Credit of US$11.4 million equivalent will cover 66% of project capital costs and 38% of incremental recurrent cost of materials on a declining basis, namely, 60% of incremental recurrent expenditures for mater- ials made before January 1, 1985, 40% in 1985, and 20% thereafter. The above percentages are equivalent to 30% of estimated total recurrent expenditures for materials made before January 1, 1985, 24% in 1985 and 15% thereafter (Annex 3-5). The USAID grant of US$3.1 million will finance 21% of project capital costs. The Government is expected to finance US$4.9 million, net of taxes, or 25% of total project costs; of this USS0.6 million represent royal- ties on laterite 1/. In addition, the Government will continue to finance the payroll of its maintenance staff, currently amounting to about US$5 million per annum, as well as minor expenses for equipment replacement and administra- tive overheads, estimated at US$1.5 million over the project period. A condi- tion of effectiveness of the proposed IDA Credit will be that the Government makes satisfactory arrangements for obtaining the USAID grant. Details of project financing are given in Annexes 3-5 and 3-6 and are summarized below. 1/ Private land owners are legally entitled to cDmpensation for laterite extracted from their land. The present royalty is US$.50 per cubic yard; however, the new Government has suspended payment of all claims, pending a revision of the system. Allowance for the corresponding payment has been made, nevertheless, under the project.  -9 - Finencing Pln 1984-86 (in US$ million, including contingencies) GOVERMOT USAID IDA TOTAL GRAND Local Foreign Local Foreign Local Foreign Local Foreign TOTAL A. Capital Costs I. Equipment and Workshop 0.3 - - - 0.3 2.2 0.6 2.2 2.8 Rehabilitation II. Force Account Regravelling 1.0 - - - 0.2 4.1 1.2 4.1 5.3 III. Contract Regravelling - - 0.7 2.2 - - 0.7 2.2 2.9 IV. Consultant Services 0.4 - - - - 2.5 0.4 2.5 2.9 V. Trainig - - - 0.2 - - - 0.2 0.2 VI. PFF 0.1 - - - - 0.3 0.1 0.3 0.4 B. Incremental Recurrent Costs Materials 0.8 2.2 - - - 1.8 0.8 4.0 4.9 TTUAL 2.6 2.2 0.7 2.4 0.5 10.9 3.8 15.5 19.4 a/ Excluding taxes. Note: Detail may not add to total due to rounding. 3.19 Under the project the Government will increase its maintenance expen- ditures (excluding payroll, administrative overheads and equipment replace- ment) from US$0.9 million in FY83 (before project start), to US$1.4 million in the second half of FY84, US$2.8 million in FY85, US$3.1 million in FY86 and US$1.6 million in the first half of FY87 (Annex 3-6). The additional amounts required from Government for operating expenditures will, to a large extent, be offset by personnel cost savings from staff reductions to the tune of about US$3.0 million over the project period (para. 3.06). During negotiations the Government agreed to: (i) provide the minimum annual allocations for mainte- nance during project implementation as set out in Annex 3-6; (ii) include the amounts for routine and periodic maintenance in the Recurrent Budget as of  - 20 - FY85, when the latter has been restructured along functional lines (para. 3.03); (iii) send for review to the Association, not later than May 15 of each year until five years after completion of the project, the proposed road maintenance budget for the following fiscal year; and (iv) ensure that no sector activities would be undertaken that woulLd impair the efficient carrying out of the project. 3.20 Experience with the Feeder Roads Project has shown that under the prevailing budgetary constraints the Government is hard put to prefinance the Loan share of operating expenses for force account operations, which are too small for Procedure III payments. As a consequence of late payments, sup- pliers become reluctant and slow in processing of orders, resulting in imple- mentation delays. Therefore, it was agreed during negotiations to establish a revolving fund under the project, similar to the one in use under the Feeder Roads Project, on the following terms and conditions: the Government will open a Project Account and a Special Account in a local bank acceptable to the Association; make an initial deposit equivalent; to US$400,000 in the Project Account; channel all expenditures for routine and force account periodic maintenance (with the exception of salaries and claims for laterite royalties) through the revolving fund; quarterly replenish withdrawals from the Project Account; increase the initial deposit to US$600,000 equivalent by December 1984; and have the accounts periodically audited by external auditors accept- able to the Association. Opening of the Project Account and the Special Account, and Government's initial deposit of US$400,000 equivalent in the Project Account will be conditions of Credit effectiveness. Upon Credit effectiveness the Association will make an advEnce disbursement of US$600,000 into the Special Account and will replenish eligible drawings from the advance disbursement upon receipt of Government withdrawal applications, accompanied by appropriate supporting documentation including a certified statement that Government has replenished its drawings from the Project Account during the preceeding quarter. E. Implementation and Reporting Requirements 3.21 MPW, through its administrative and technical services, will be responsible for all project elements. The project would be implemented over a three year period; under a PPF advance the technical assistance was started in September 1983. The expected implementation schedule for the major activi- ties of the project is shown in Annex 3-7 and has been discussed and agreed at negotiations. 3.22 Implementation of the routine maintenance program will increase with equipment availability. The existing equipment is expected to be repaired and fully operational at the start of the 1984/85 dry season. The performance accounting system to be developed and implemented with the assistance of consultants (para. 3.03) will enable MPW management to closely monitor the efficiency of road maintenance operations and take corrective action where required. 3.23 At negotiations the Government agreed to submit to the Association by May 15 of each year of project implementation cnd for five years thereafter, for its review, a program of routine and periodic maintenance to be carried ou; in the following fiscal year. Government also agreed on progress report- ing requirements as set out in Annex 3-8, which should include target indices  - 21 - for measuring implementation, and the submission of a project completion report, in a form satisfactory to the Association, not later than six months after the closing date of the Credit. F. Procurement 3.24 Procurement arrangements are summarized in the table below: Procurement Arrangements (in US$ million) Procurement Method Total Project Element ICB LCB Other N.A. Cost Equipment and Workshop Rehabilitation Highway maintenance equipment 0.7 - - - 0.7 (0.6) ()() -) (0.6) Equipment overhaul 0.1 - 1.0 - 1.1 (O.1 ) () (0.9) () (1 .0) Workshop equipment, tools 0.8 0.2 - - 1.0 (0.7) (0.2) (-) (-) (0.9) Force Account Periodic Maintenance Fuel, lubricants - 2.7 - - 2.7 (-) ~(2.4) () -) (2.4) Spare parts, other materials 0.6 0.1 1.4 - 2.1 (0.5) (0.1) (1.3) (-) (1-9) Laterite royalties - - - 0.6 0.6 Contract Periodic Maintenance - - 2.9 - 2.9 Consultant Services, Training Consultant services - - 2.9 - 2.9 (-) (-) ~~(2.5) () (2.5) Fellowships - - 0.2 - 0.2 Materials for Routine Maintenance 1.0 5.1 2.1 - 8.2/a (0.2) (1.1) (0.5) (-) (1.8) PPF refinancing - -- - 0.4 0.4 (-) (--) (-) (0.3) (0.3) TOTAL 3.2 8.1 10.5 1.0 22.8/a (2.1) (3.8) (5.2) (0.3) (11.4) /a Total differs from total project cost figure as item "Materials for Routine Maintenance" includes US$3.3 million non-incremental materials for routine maintenance, to be purchased under the procurement arrangements of the project. Note: Figures in parentheses are the respective amounts financed by IDA.  - 22 - Contract periodic maintenance (US$2.9 million) and fellowships (US$0.2 million) are co-financed by USAID and will follow USAID procedures. Highway maintenance equipment (US$0.7 million), and non-propietary spare parts and road building materials (US$3.0 million) will be grouped whenever possible into contracts valued at US$60,000 or more and will be procured through ICB. A margin of preference equal to 15% of the cif bid price of imported goods or the actual customs duties and import taxes, whichever is less, will be allowed for domestic manufacturers. Contracts for miscellaneous equipment, tools, spare parts and materials valued at less than US$60,000 will be purchased through LCB, up to an aggregate limit of US$1.5 million. Minor items of essential and urgently needed spare parts and materials costing less than US$10,000 per purchase and aggregating not more than US$500,000 may be pro- cured by local shopping or by direct purchase in the case of a single local supplier. Equipment overhaul by contract (up to US$0.6 million) will be carried out by authorized dealers and proprietary spare parts (US$3.9 million) will be procured from the original manufacturers, under directly negotiated contracts satisfactory to the Association. Fuel (US$J.6 million) will be procured through LCB from local distribution companies, which obtain their products from the Government-owned refinery. Consultants will be selected in accordance with IDA guidelines. All IDA-financed works contracts, and goods contracts over US$60,000 each, will be subject to prior review by the Associa- tion, which will cover about 80% of the total value of such contracts. Other contracts will be subject to selective post-award reviews. During negotia- tions, the procurement arrangements were reviewed and agreed upon. G. Disbursements 3.25 Disbursements from the Credit will be made as follows: Allocation and Disbursement of IDA Credit (US$ million) Item Amount Application Equipment, tools, spare parts for 2.19 100% of foreign, or 90% of equipment overhaul and equipment total for locally procured overhaul contracts items. Materials cost of force account 3.76 80% of total regravelling Consulting services 2.15 100% foreign Materials cost of routine 1.63 30% before 1985; 24% in 1985; maintenance 15% after 1985 Initial deposit in Special Account 0.60 Refinancing of PPF advance 0.34 Unallocated 0.73 Total 11.40  - 23 - Disbursement applications for equipment, equipment overhaul by contract, spare parts for equipment overhaul and consultants' services will be fully documented. Withdrawal requests for operating costs of routine and periodic maintenance by force account will be based on unit costs of routine and periodic maintenance operations as given in Annex 3-9, and with the agreement of the Association, adjusted from time to time to reflect actual costs as established under the analytical accounting system to be introduced under the project; the application will be accompanied by a statement signed by the Assistant Minister of the Operations Bureau, indicating the referenced period and giving the quantities of the various road maintenance operations carried out on each identified road. During audit inspections (para. 3.13), unit cost of individual maintenance operations will be checked for cost efficiency. The Government will channel op-rating expenditures for routine and periodic main- tenance by force account, other than personnel cost and laterite claims, through the revolving fund. 3.26 The projected schedule of disbursements from the IDA Credit is pre- sented in Annex 3-10. The project basically consists of a three year time slice of the road maintenance operations of MPW and its disbursement profile is therefore much steeper than the standard profile for highway projects which relates more to civil works construction projects. The PPF advance of US$340,000 has been included as fully repaid at effectiveness. Taking into account some delay in implementation and processing of withdrawal applica- tions, it is assumed that the proceeds of the Credit would be fully disbursed after four years. IV. ECONOMIC EVALUATION A. General 4.01 Although some progress was achieved in road maintenance under pre- vious projects through technical and capital assistance, these advances could not be sustained due to the progressive decline in the availability of opera- ting funds in recent years and the deterioration in management capability as a result of the exodus of experienced senior staff subsequent to the 1980 change in Government. Consequently, the efficiency and coverage of maintenance operations have become increasingly inadequate leading to accelerated erosion of infrastructure and rising transport costs. The proposed project is a step in a longer term effort to reverse this trend and is expected to rebuild the management capacity of the executing agency, ensure minimum acceptable funding for current operations and carry out priority periodic maintenance. Better maintenance of the road network will yield widely distributed quantifiable and non-quantifiable economic and social benefits. The principal quantifiable benefits of the project will be vehicle operating cost (VOC) savings and reduced investment outlays for road reconstruction and strengthening. Bene- fits from lower transport costs would initially accrue to transporters but will, in the competitive environment, be passed on to consumers and producers in the form of lower transport tariffs for goods and passengers. The present project design is considered the least cost solution; a possible project alternative whereby all maintenance activities are contracted out would be  - 24 - more costly as, in the short term, existing MPW maintenance equipment and manpower cannot readily be put to alternative productive uses. B. Economic Analysis of the Road Maintenance Program 4.02 Without the project it is assumed that Government funding for mainte- nance would remain at FY83 levels, allowing only manual side brushing, drain- age cleaning, some grading and limited bituminous patching. The available equipment with a replacement value of about US$20 million would stay largely immobilized and maintenance staff costing about US$5.0 million per annum severely underutilized. With the project MPW is expected to be able to carry out normal routine maintenance on the entire all weather road network (2,450 miles), emergency repairs on the more trafficked roads of the dry weather network, as well as periodic maintenance on about 450 miles of priority later- ite roads. 4.03 Project costs and benefits were calculated in September 1982 prices, net of taxes. Costs include incremental force account operating costs for routine and periodic mainterance, payments to contractors for regravelling works, equipment and tools, and technical assistance for the maintenance program, together accounting for 95% of project costs. The only benefits taken into consideration were VOC savings. Therefore, the economic analysis results are conservative. 4.04 The road maintenance strategy and VOC savings were assessed using the methodology developed under the Bank and Transport and Road Research Labora- tory (TRRL) research programs in Kenya. MPW, with the assistance of consul- tants, carried out a road inventory of the al:L weather network, dividing it into sections according to surface type, traffic density and road condition. The results of the inventory are summarized in Annex 4-1. VOC savings were calculated as the difference between VOC on the rapidly deteriorating network under current maintenance levels and those resulting from implementation of the project's maintenance strategy, applying road deterioration parameters and user cost relationships developed by TRRL (Annex 4-2). 4.05 No recent comprehensive traffic counts are available; the national traffic survey, presently underway, has produced partial data for 1981 which would indicate a decline in traffic. However, the results are distorted by the special circumstances that prevailed after April 1980, including the imposition of travel restrictions until April 1982. The situation has now returned to normal and therefore, for the purpose of the economic analysis, use has been made of the consultant's traffic estimates for 1981 based on extrapolation of earlier traffic data. Between 1981 and 1983 traffic levels are assumed constant considering the depressed state of the economy and beyond 1983 resumed traffic growth is projected at a modest 3% per annum. Estimated 1981 average daily traffic on the all weather road network is given in Annex 4-3. 4.06 Given that the small incremental out-lays for operating expenses enable the realization of benefits on comparat:ively large past, investments in road infrastructure and equipment, and make the annual maintenance payroll productive, the project's benefit/cost ratio Ls a high 6:1 at a 12% discount rate while the ERR well exceeds 100%. The benefit/cost ratio on the paved network is 4.8:1 and on the gravel network 6.1 :1. Even though routine  - 25 - maintenance cannot realistically be separated from periodic maintenance, a cross check on the advantages of the regravelling program was carried out, giving a benefit/cost ratio of 7.4:1. The high ratio is explained by the fact that the regravelling program is limited to sections with highest traffic density (200 vpd or more) and most deteriorated road condition. In fact some of the sections have already lost all their surface material and reverted to earth rc ad standards, while the others would do so in the near future, without the project. 4.07 Even with large changes in the underlying assumptions, the project would remain justified. With a 100% increase in costs or a 50% reduction in benefits, the project's benefit/cost ratio would still be 3:1, while the ERR remains at over 100%. A 50% reduction in benefits of improved paved road maintenance, reduces the benefit/cost ratio for this activity to 2.4:1 with the ERR dropping to 94%. C. Project Risks 4.08 The main risk of the project is that planned improvements in the executing agency's management performance would not be fully realized or that the Government would not be able to provide the necessary funds for the main- tenance program, resulting in lower maintenance output. However, as seen from the foregoing sensitivity analysis, even if only half of the planned mainte- nance activities were carried out, the project still remains well justified. V. AGREEMENTS REACHED AND RECOMMENDATION 5.01 During negotiations agreements were reached on the following: (i) installation and operation of weighbridges (para. 2.07); (ii) that an improved accounting system will be developed under the project to be fully operational by FY1985, at which time the Recurrent Budget would be recast along functional lines, providing minimum targeted amounts (paras. 3.03 and 3.19); (iii) the overall program for periodic maintenance and the maximum share for rehabilitation type earthworks (para. 3.07); semi- annual review of physical progress in force account regravell- ing (para. 3.08); review of annual work programs for routine and periodic maintenance (para. 3.23); (iv) the repair and use of existing maintenance equipment (para. 3.09); (v) the lists of road maintenance equipment (para. 3.09) and workshop equipment and tools (para. 3.10); (vi) that acceptable auditors shall be appointed to annually audit the project accounts and submit their report within four months of the fiscal year closing (para. 3.13);  - 26 - (vii) that by May 15 of each projec-t year, and for five years there- after, the Government will exchange views with the Association on the proposed maintenance budget for the next fiscal year (para. 3.19); (viii) the establishment of the revo:Lving fund, its operating arrangements, and the increase in advance deposit in the Project Account from US$400,000 equivalent to US$600,000 equivalent by December 1984 (para. 3.20); (ix) the project implementation schedule (para. 3.21) and reporting requirements (para. 3.23); and (x) procurement and disbursement procedures (paras. 3.24 and 3.25); and the terms of reference and conditions of employment of consultants (paras. 3.11 and 3.12). 5.02 At negotiations, the Government gave assurances that no sector activ- ities would be undertaken that would impair the efficient carrying out of the project (para. 3.19). 5.03 During negotiations, the Government agreed to the following condi- tions of Credit effectiveness: (i) to make satisfactory arrangements for obtaining the USAID grant (para.3.18); and (ii) to open the Project Account and the Special Account, and to make an initial deposit of US$400,000 equivalent in the Pro- ject Account (para. 3.20). 5.04 As satisfactory agreements on the above items have been obtained, the proposed Project is suitable for a Credit of SDR 10.9 million (US$ 11.4 million equivalent) on standard IDA terms.  - 27 - LIBERIA FIFTH HIGHWAY PROJECT ANNEX 2-l Staff Appraisal Report Organization of the Ministry of Public Works ....... ___. . e MOroeerefl A oooror greorn Orros Ors esOveO Oenrr Bored,1~~~~~~~~~~~~~ BrrteOUecr,oo DeFuh Mmisbl . | DsipulyMmisiw~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. ~ ,Or-BrOlier AsssstOt Mtoeh ths AqmmshuhOn~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Orrro Feede Red Oghott Ros, n,nrnSr lehm MoI Cob MOpn Coustbt Eqi F usto d 19 ts nl Oe -24444t Oet ons g r Mte O i 0011 e 0 O t CoO Do rsio h DiOrtln DiorC, Febluan.19F4~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~~~~~~~~~~~~~~~~~~wo COettnMoor Od oool Qewnoo244   - 28 - ANNEX 2-2 LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Actual and Projected Revenues and Expenditures on Roads, 1980/81 - 1986/87 (million US$) Road User Revenues as % of Taxes Maintenance a/ Construction Maintenance Expenditures 1980/81 12.3 11.7 17.,6 105 1981/82 17.8 12.5 4.8 142 1982/83 18.5 10.4 3.6 178 1983/84 30.0 12.0 7.0 250 1984/85 31.0 17.5 13.0 177 1985/86 33.0 19.6 20.0 168 1986/87 35.0 20.1 24.0 174 a/ Including payroll and depreciation of maintenance equipment. SOURCE: Mission Estimates. February 1984   - 29 - ANNEX 3-1 LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Regravelling Program Road Sections Length 1981 Traffic (miles) (vpd) 1. Bomi Hills - Lofa Bridge 13.7 481 2. Lofa Bridge - Mano River 35.0 481 3. Gba - Bo 42.7 259 4. Madina - Robertsport 27.5 215 5. Bambli - Greenville 71.0 306 6. Harper - Karlokeh 32.0 269 7. Zwedru - Cestos River 54.0 284 8. St. Paul River - Mendikoma 113.0 497 9. Ganta - Cestos River 61.1 332 Total 450.0 Source: Operations Bureau, MPW, 1982 February 1984  - 30 - .NEX _ LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Procurement of Malntenance and Workshop Equipment (in US$'OO0 at Ncvember 1983 prices) Item Units Unit Cost Total cost Maintenance Equipment 583 Lube Truck, wilth mounted fuel tank 3 84 252 Water Tanker 2 71 142 Flat Bed Truck 1 39 39 Backhoe 1 48 48 Industrial Tractor, with drag 3 22 66 Hand Ccmpactor 2 18 36 Workshop Rehabilitation 475 Utilities 421 Radio Equipment 54 Tools 378 Workshop Tools 162 Mechanics Hand Tools 130 Rcad Maintenance Tcols 86 Total 1,436 SOURCE: MPW and mission estimates, 1982. February 1984  - 31 - ANNEX 3-3 Page 1 of 6 LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Outline Terms of Reference for Technical Assistance to the Ministry of Public Works I. INTRODUCTION 1. The Government of Liberia has requested the assistance of the International Development Association (IDA) to carry out a highway project whicb will extend over a period of about 3 years (1984 - 86). The consulting services required to execute the project are outlined below. II. OBJECTIVES 2. The purpose of the services is to: (i) assist MPW in the introduction and use of a financial management system developed with the help of consultants prior to the start of the project; (ii) provide management expertise to improve workshop and equipment management, and support services (procurement, stocking and supply distribution); (iii) assist the Operations Bureau (OB) in the efficient execution of the road maintenance program; (iv) conduct on the job training for managerial office and field personnel; and (v) with the assistance of short term experts, help to prepare a follow-up maintenance program under separate terms of reference. III. SCOPE OF CONSULTING SERVICES A. General 3. The Consultants shall advise and assist MPW in the performance of all engineering and administrative work, organizational reforms, financial analyses, field investigations, rehabilitation and maintenance operations, personnel training, and all related work described hereunder, as required to attain the above objectives. In the conduct of this work, the members of the Consultants' team, with the exception of the accounting expert, shall assume direct operational responsibilities and authority within MPW's administra- tion. MPW in turn will provide the data and services outlined in Section  ANNEX 3-3 - 32- Page 2 of 6 VI. The Consul ants, however, iill be responsible for the checking, analysis and interpretation of all data received, and for the conclusions and recommen- dations contained in their reports. B. Financial and Administrative Management 4. The Consultants shall assist MPW's Financial Management Bureau (FMB) in the introduction and use of a modern analytical cost accounting and performance budgeting system, including related organizational changes in the accounting structure, and Head Office and field personnel training required for the proper functioning of the system. 5. The Consultants shall advise the internal audit and cost control group, established for the purpose of analyzing and interpreting data generated by the new accounting structure, in the preparation of periodic reports for management. 6. The Consultants shall advise and assist FMB's Procurement and Supply Divisions with a view to ensure the timely acquisition and distribution of spare parts, supplies and materials for MPW's operating units. C. Workshops, Plant and Equipment 7. The Consultants will advise and assist OB in the rehabilitation of the existing road maintenance equipment fleet and workshops, and the procurement of spare parts, complementary highway maintenance equipment, workshop equipment and tools. 8. The Consultants shall assist MPW in the reorganization of the Mobile Equipment Division, the Central Workshop and the District workshops, with a view to implement improved road maintenance equipment and workshop management practices. In particular, the Consultants will: (i) based on the routine maintenance and periodic maintenance sub- programs of each region and district, and the total availability of equipment as per the updated inventory, reassign the equipment in order to improve the utilization, reduce costs given the physical targets or maximize the work within the budget constraints, and avoid purchases of unjustified units; (ii) make recommendations regarding related inputs, in particular on the way equipment is operated and the method by which fuel, oil, grease and other inputs are and should be stocked, storaged and distributed; (iii) maintain the equipment fleet inventory up-to-date, including location, age and condition, availability and coefficient of utilization of each unit; (iv) develop and implement a performance evaluation system of equipment operators, mechanics and other mechanical staff for personnel management purposes, incLuding the development and implementation of training programs;  - 33 - ANNEX 3-3 Page 3 of 6 (v) based on a review of the capacity, quality and relative cost effectiveness of repair work by force account and by the private sector, make recommendations on the type and level of repair works to be carried out by MPW's workshops and by the private sector, and develop suitable types of contractual arrangements; and (vi) with regard to spare parts, implement a system to keep the spare parts inventory permanently updated, to store daily spare parts for equipment in service, and to maintain maximum and minimum fast-moving spare part stock levels. D. Routine Maintenance Program 9. The Consultants will advise and assist the OB in all aspects of the planning, programming and execution of the routine maintenance program, including: (i) the preparation of detailed quarterly and annual routine maintenance programs by district and by sector based on minimum levels of serviceability requirements of the network and taking into account prevailing resource constraints; (ii) the implementation of the work programs with a view to improve operations and procedures for maintenance of the network, resulting in optimum utilization of equipment, facilities, manpower and materials, and efficient control of costs; (iii) the development and implementation of a simple system to evaluate the performance of field maintenance staff for personnel management purposes; and (iv) the acquisition of all materials and supplies needed for the performance of routine maintenance operations, including the preparation of bidding documents, bid evaluation and contract awards. E. Rehabilitation and Regravelling Program 10. The attached list and map specify the 450 miles of high priority gravel roads which form part of the three year rehabilitation and regravelling program, all as developed by OB with the explicit understanding that the rehabilitation works should be held to the absolute minimum in order to maximize regravelling distance. 11. The Consultants shall advise and assist in the review and analysis of all existing plans concerning rehabilitation work on the selected roads; organize, direct and train the force account brigades; assist in the procure- ment of necessary supplies and materials; and assist in the tendering and supervision of contract works.  - 34- ANNEX 3-3 Page,4 of 6 VI. STAFFING 12. Recommended staffing and staff qualifications of the team would be as follows: (i) Road Maintenance Engineer/Team Leader (18 man-months): should have extensive experience in developing countries, both in the management and direction of road maintenance operations, and in the supervision/management of technical assistance teams; (ii) Cost Accountant/Management Systems Specialist (18 man- months): should be experienced in implementing cost accounting techniques applicable to the construction industry and road maintenance public works departments in developing countries, and related analysis and interpretation of data generated for management reporting purposes. Should have the proven ability to train local counterpart staff in the above areas; (iii) Equipment and Workshop Management Specialist (18 man- months): should be experienced in the development and implementation of modern road maintenance equipment and workshop management practices for Public Works Departments in developing countries; (iv) Warehouse/Procurement Specialist (12 man-months): should be experienced in the organization and management of procurement, stocking and supply functions of Public Works Departments in developing countries. Should be capable of determining optimum stocking levels, order quEtntities, instituting modern stock inventory control and retrieval techniques, and in organizing and training of personnel in such functions; (v) 3 Road Maintenance Superintendents (18 man-months each): should be experienced in the direction of field maintenance operations on paved and lateritic gravel roads, as well as able to instruct field staff in more efficient maintenance methods. Should be prepared to be stationed away from Head- quarters; and (vi) 3 Mechanical Superintendents (18 man-months each): should have broad experience in all matters pertaining to equipment repairs and maintenance; in the direct supervision of all shop activities; in the instruction of mechanics; and in stocking of repair parts. Should be experienced in the general care of all highway equipment, including preventive maintenance and all procedures which should be employed by equipment operators to prevent excessive wear and damage to the equipment. Should be prepared to be stationed away from Headquarters. (vii) short term specialists (10 man-months) in disciplines to be determined, to assist the team in the preparation of the follow-up maintenance program.  - 35 - ANNEX 3-3 Page 5 of 6 V. REPORTING 13. The consultants shall prepare and submit the following reports (20 copies) within the period indicated: (i) Inception Report, within three months after the starting date, presenting a general Plan of Aclion for the technical assist- ance activities to be carried out, including a detailed on- the-job training program to meet MPW's training requirements; (ii) Progress Reports, at three month intervals giving a statement of all work performed during the reporting period, a summary of interim findings, and an outline of the work program for the next reporting period. (iii) Draft Final Report, within sixteen months of the Starting Date, summarizing (a) all works performed; and (b) major findings and conclusions. (iv) Final Report, within eighteen months of the Starting Date, incorporating (a) all revisions deemed appropriate by the consultants after receipt of comments on the Draft Final Report from the Government and the Association; and (b) an annex listing all comments which have not resulted in revisions of the report (number of copies to be determined by the Government and the Association). 14. The reports mentioned in (i) to (iv) above shall contain a concise first chapter summarizing all important results, findings, problems, and recommendations of the Consultants. The Draft Final Report shall be edited and complete, so that the production of the Final Report can proceed without delay. VI. DATA, LOCAL SERVICES AND FACILITIES TO BE PROVIDED BY MPW A. Technical and Economic Data 15. The Government is to provide the Consultants with all available data on: (i) maps of the country and its transport networks, including existing inventory data; (ii) inventory of existing OB personnel, including information on training, past experience and present responsibilities; (iii) operations and accounting systems of the OB for road maintenance and rehabilitation; and (iv) relevant consultants reports and studies.  - 36 - ANNEX 3-3 Page 6 of 6 B. Cooperation of Governmental Agencies 16. In connection with work by the Consultants that requires the cooperation of local authorities or other Government agencies, the OB is to provide liaison and to ensure that Consultants have access to all information required for the completion of the Action Plan. 17. The Government is to take all necessary steps to enable the Consultants' travel without hindrance in all parts of the country, as required for the performance of their services. 18. The OB will assign qualified counterpart staff on a full-time basis to work with the key personnel of the Consultants. C. Facilities and Supporting Staff for the Consultants 19. The Government is to provide the following facilities and staff to help the Consultants perform their services in Liberia: (i) office space and furniture including desks, chairs, tables and filing cabinets; (ii) administrative, secretarial and clerical staff in numbers to be agreed during contract nego-tiations; (iii) supporting staff including surveyors, draftsmen and field assistants in numbers as required; (iv) drivers for vehicles to be purchased by the Consultants. 20. The Government is to assist the Consultants in locating satisfactory and appropriate living accommodations for the personnel of the Consultants. February 1984  - 37 - ANNEX 3-4 Page 1 of 4 LIBERIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Outline Terms of Reference for Road Maintenance Study I. OBJECTIVES In collaboration with MPW's Planning and Programming Bureau and the technical assistance team financed under the project, the Consultants will prepare and justify a comprehensive follow-up road maintenance program. More specifically the Consultants will: (i) carry out a complete inventory of the public road network, including measurement of roughness for all main and secondary roads, as well as, for selected paved roads: approximate measurements of areas subject to moderate and heavy cracking, and strength parameters by deflection measurements. From this, identify sections where major rehabilitation efforts are needed before normal cycles of routine and periodic main- tenance can provide a satisfactory year-round level of serviceability; (ii) review and make further recommendations on improvements in operation and procedures of maintenance works that could lead to better utilization of equipment, facilities, manpower and materials, including recommendations on the most appropriate mix of labor and equipment for the different maintenance operations, (iii) determine the level of rehabilitation and maintenance for different road types and traffic levels, incorporating an assessment of the effect of different levels of maintenance on vehicle operating costs as well as subsequent maintenance and rehabilitation costs. If the economically optimal level of the program is not considered feasible due to financial, mana- gerial or other intractable constraints, a "constrained opti- mum" program which is feasible and practicable will be devel- oped in accordance with the principles of incremental cost- benefit analysis. The economic analysis shall include an assessment of the sensitivity of the main results to possible variations in the scale or efficiency of the program, and an assessment of the major risks in achieving the proposed program. (iv) delineate the proposed program of maintenance and rehabili- tation, including a timetable and associated resource require- ments for those road sections requiring rehabilitation; quality and quantity standards for each major maintenance operation for principal classes of road types and traffic  - 38 - ANNEX 3-4 Page 2 of 4 volumes; performance standards and input coefficients; work quantities, and associated labor, equipment and material requirements; (v) determination of the annual financial and economic costs of the recommended rehabilitation and maintenance programs. Costs of items included in the programs shall be broken down into local and foreign currency elements; (vi) make recommendations on methods of execution of rehabilitation and periodic maintenance works (contract, force account or combination thereof) with a view to the capacity of the local and resident contracting industry; (vii) determine the Operations Bureau's total needs for road main- tenance equipment, spare parts and workshop facilities in each year to carry out their part of the program and determination of purchase requirements for t:he above items as the balance of total needs and of available stock; (viii) make recommendations for possible improvements in road maintenance organization and operations, including: (a) the division of road maintenance responsibility among MPW, County Administrations, the Monrovia City Corporation and other public entitities; (b) the organization and administration of road maintenance at the MPW headquarters, regional, district and subdistrict levels; (c) the location and road network assigned to each maintenance center and the internal organization of these centers; (d) the labor, staff, equipment and materials assigned to each center; (e) present practices for repair and servicing of maintenance equipment and staffing; (f) management of spare parts stocks; (g) policies for regulation of traffic (axle loads and dimensions of vehicles, road safety measures) in accordance with established road design standards, and administrative arrangements for their implementation; (h) recommendations for upgrading of training facilities and for the training of the permanent road maintenance staff, including the staff concerned with equipment operations and maintenance, storekeeping and management information, as required to successfully implement the program;  - 39 - ANNEX 3-4 cge 3 of 4 (i) recommendations for any technical assistance which might be required for implementing the recommended maintenance program and other findings of the study; (j) estimates of the annual budget allocations (by major recurrent and capital expenditure items) required to implement the program. II. DATA, LOCAL SERVICES AND FACILITIES TO BE PROVIDED BY THE GOVERNMENT The MPW is to make available to the Consultants: (i) free access to all information, data and previous studies carried out in the transport sector and public administration in Liberia; (ii) existing equipment (excluding transport) and staff for deflection measurements; (iii) traffic counts as required to establish the forecasts of road traffic. In connection with work by the Consultants which requires the cooperation of Government or other public agencies, the Government is to provide liaison and is to ensure that the Consultants have access to all information required for the study. The Government shall assign qualified counterparts to work with the key personnel of the Consultants. Such counterparts should be assigned on a full time basis for the purpose of training, and review of the findings and recommendations of the Consultants. III. TIME SCHEDULE FOR CONSULTING SERVICE AND REPORTS The Consultants shall prepare and submit the following reports within the time limits stated below: (i) Inception/Progress Report: two months after Starting Date, stating progress of work to reporting date, including a summary of the preliminary Consultants' findings and recommendations, and proposed methodology for establishing the maintenance program; (ii) Draft Final Report: not later than September 30, 1985, stating the Consultants' recommended road maintenance program and all reviews, analyses and recommendations listed under Section I. The report shall contain a concise first chapter summarizing all major findings and recommendations of the Consultants. (iii) Final Report: thirty days after receipt by the Consultants of comments on the Draft Final Report by the Government and the International Development Association, incorporating all revisions to the Draft Final Report deemed necessary by the Consultants and Government.  - 40 - ANNEX 3-4 Page 4 of 4 The Inception/Progress Report and the Draft Final Report shall be submitted to the Government in 10 copies and to the Association in 3 copies. The final report shall be submitted to the Gcivernment in 20 copies and to the Association in 5 copies. The Draft Final Report shall be carefully edited and complete so that the production of the Final Report may proceed without delay upon receipt of the Government's and the Association's comments on the Draft Final Report. February 1984  - 41 - A1NEX 3-5 FDiTH HIIW r I IMT STAN APPRAISaL RFIRT Detailei 6,zinate of Routine 'a" - E ra