World Bank support for rural roads maintenance : Philippine case study

Re,o M 7728 World Bank Support for Rural Roads Maintenance Philippine Case Study Apri 20, 1989 Operations Evaluation Department FOR OFFICIAL USE ONLý 00 .7 10 f DCen of &he rI This docUänn has a triced distribution and may be used by veciplents only in the peMmnance of thglrofficial duties. fts contents may noMtgws bedscosed wi World Bank authoriation. ABBREVIATIONS ADB Asian Development Bank AIRD Agricultural, irrigation and rural development (projects) BBR Bureau of Barangay Roads BPH Bureau of Public Highways COA Commission on Audits DLG Department of Local Goverament DPWH Department of Public Works and Highways EMK Equivalent Maintenance Kilometer INU Infrastructure and Urban Development Department Um kilometer Lau Local Government Unit m meter MLG Ministry of Local Government MLGCD Ministry of Local Government aud Community Development MPH Ministry of Public Highways M?WH Ministry of Public Works and Highways NIA National Irrigation Department OED Operations Evaluation Department P Peso (local currency) PDAP Provincial Development Assistance Program PEO Provincial Engineer's Office PPAM Project Performance Audit Memorandum PPAR Project Performance Audit Report SAR Staff Appraisal Report TD Technical Department UNDP United Nations Development Program USAID US Agency for International Development vpd vehicles per day OR OFFICIAL USt ONLY THE WORLD BANK Washington. D.C. 20433 U.S.A 01e of Diect-CeneraI Opratum0 IAtKnM April 20, 1989 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: World Bank Support for Rural Roads Maintenance Philippine Case Study Attached, for information, is a copy of a report entitled "World Bank Support for Rural Roads ZAintenance. Philippine Case Study" prepared by the Operations Evaluation Department. This docusnent has a restricted distribution and may be used by recipients only la the performance of their offRcial duties. Its contents may not otherwise be disclosed without Worl Bank athoriastion. FOR OFRCL USE OnY WORLD BANK SUPPORT FOR RURAL ROADS MAINTENANCE PHILIPPINE CASE STUDY TABLE OF CONTENTS Page No. PREFACE ... ..... .... ..... . ............. .. . . . . 1 SUMMRY ........................... 11 I. INTRODUCTION ................................. . 1 1. Rural Road Characteristics ...................... 1 2. Maintenance Issue ............................... 2 II. WORLD BANK LENDING .................................. 5 1. Overv:eL ..................... 5 2. Non-transportation Projects ..................... 5 3. Transportation Projects ......................... 6 III. MAINTENANCE PROGRESS ................................ 10 1. Sector Organization ............................ 10 2. Provincial Roads ................................ 12 3. Barangay Roads .................................. 21 4. Irrigation Roads ................................ 24 IV. CONCLUSIONS ...................................... 26 V. RECOMENDATIONS .................................... 29 Tables Table 1: Philippine Rural Roads Length ....................... 31 Table 2: World Bank Lending for Philippine Rural Roads ....... 32 Annex I Coffaents by Department of Local Government (DLG) .............. 34 This document has a restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authoriation. WORLD BANK SUPPORT FOR RURAL ROADS MAINTENANCE PHILIPPINE CASE STUDY PREFACE This is the first report in a series of planned country case studies by the Operations Evaluation Department (OED) on World Bank support for rural roads maintenance, produced in accordance with an Approach Paper dated Septem- ber 23, 1988 (JAC88-32). The reports are to shed light on a topic which is coming more and more in the foreground, following the Bank's involvement with rural roads since the early seventies and its initial focus on road construc- tion. World Bank assisted rural road investments have been substantial, esti- mated in the order of US$ 6-8 billion world wide. The planned country case studies are intended as a contribution by OED to the intensifying discussion in the development community about how to maintain large rural roads networks. In a typical country, rural roads have an aggre- gate length which As a multiple of that of primary roads, and they represent a construction value which comes close to that of primary roads. Maintaining these rural assets is an enormously important task with far-reaching economic and social consequences. Maintenance will determine to a significant extent whether the objectives underlying the road investments can be attained or not. The report on the Philippine rural road maintenance was prepared by OED staff with the help of consultants, benefitting from exemplary government support to an OED mission which visited the country in February 1988. The report reflects information collected from sources in the country, among them government officials, individuals in the private sector and representatives of aid agencies, and from former and current World Bank staff. It also incorpo- rates material on the subject in the World Bank, including OED, and documents made available by other lending institutions. Following standard procedures, OED invited comments on the draft report from the government and other parties active in the Philippine rural roads sector. The Department of Local Government (DLG), one of the country's nati- onal agencies involved in rural roads, responded to the invitation. Its reply is reproduced as Annex I of the report. Comments were also invited and re- ceived from Bank staff and incorporated in this final version of the report. WORLD BANK SUPPORT FOR RURAL ROADS MAINTENANCE PHILIPPINE CASE STUDY 1. Introduction Rural roads are vital parts of the Philippines' rural infrastructure. Bank financinit of rural roads, initially focused on construction, has been substan- tial. i. Rural roads are indispensible parts of the Philippines' rural infrastruc- ture, accounting for the bulk of rural transport by all modes. Totaling close to 130,000 km, they represent over 80% of the length of classified (non-urban) roads. About 702 of rural roads are barangay (district) roads, 22% are provin- cial roads, and 82 are irrigation roads. In terms of replacement cost, rural roads represent an enormous asset, perhaps in the order of US$ 3-6 billion. This is an amount comparable to that for national highways, which could be in the order of US$ 5 billion (paras. 1 and 3-5). ii. The World Bank has been involved in the country's rural roads since the early seventies, initially in the context of agricultural, irrigation and rural development (non-transportation) projects, and subsequently in the context of two rural roads (transportation) projects, approved 1980 and 1986. All Bank projects combined contributed to the construction or Improvement of some 14,000 km of rural roads at a cost of close to US$ 350 million (paras. 12, 14-17 and 24). iti. Throughout these years, inadequate maintenance was recognised as a major issue facing the rural roads sector, but remedial efforts were being made only slowly. The non-transportation projects concentrated on road construction almost exclusively. The transportation projects had the dual objectives of supporting civil works and setting the stage for maintenance improvements (paras. 6-11, 13-15 and 17-22). iv. The Bank has been the leading aid agency in developing the rural roads sector and sponsoring maintenance improvements. In 1982, the Asian Development Bank (ADB) patterned a rural roads project after the 1980 project by the Bank. Both lending institutions' rural roads projects focused primarily on provin- cial roads in some 30 out of the country's 75 provinces. In the mid-seventies, the US Agency for International Development (USAID) was also active in the rural roads sector (paras. 10 and 19). 2. Conclusions Although recoanised as an important issue. rural roads maintenance has not been addressed forcefully in Bank rural roads proiects. v. While the Bank, under its two transportation projects, explicitly aimed at rural road maintenance improvements, it approached the subject in a less than forceful ways maintenance was subordinated to the task of road construc- tion; the design of the projects' maintenance components was simplistic; main- tenance monitoring and supervision were handled in a casual manner; the review of the first project, when the second project was prepared, was shallow; and, perhaps most importantly, Bank assistance was given in the absence of a coherent, comprehensive plan for maintenance improvements and a considered Bank strategy for maintenance support. To this date, Bank sector work on the Philippines has not yet dealt with the rural roads sector and rural roads maintenance at any substantial length. vi. In an environment of weak government institutions for rural road main- tenance, focus on construction left little attention to the maintenance task. The design of the maintenance components was simplistic as the factors deter- mining maintenance performance were not yet well understood. Design efforts were limited and emerging lessons, if any, were not fed back into rural roads project implementation. Bank project supervision, which was modest in scope for all project components, did little to shed light on the maintenance situa- tion. Bank staff expertis- and timre devoted to the maintenance task were not adequate. The Bank rural roads projects cotstituted a sort of model for action on the waintenance issue, but the model wab no substitute for a good main- tenance plan (paras. 17-27 and 72-79). Bank initiatives on rural roads maintenance have not yet extended to all rural roads classes and produced sustainable maintenance institutions. vii. The initiatives, supported by the Bank-style rural road projects, to upgrade rural road maintenance, have not yet produced solid and sustainable results on a desirable scale. At best, some visible progress has been made on maintenance of provincial roads in a limited number of provinces while in some others the seed r - improvements has been planted. But the barangay (district) roads, which represent 702 of the rural roads system, are still far behind. In fact, neither of the Ba"k's two rural road projects has moved yet toward substantive work on barangay roads. This is an indication of the distance maintenance of the entire rural roads system has yet to go (paras. 26-71). viii. A key area, where substantial ground remains to be covered, is the designation and development of agencies responsible for barangay road vLLn- tenance. Over the last twenty years, barangay road functions were performed alternatingly by several government bodies and agencies at the national, provincial and local levels. Issues in question were the management of main- tenance operations, technical supervision over maintenance works and control over maintenance funding. Decentralization of government was a factor in the search for organizational solutions. But the principles guiding change were often obscure, the arrangements chosen were often confusing, and the process of sorting the responsibilities out is far from over (pares. 29-31). ix. In provincial roads, some progress has been made with institution build- ing both at the national and provincial levels. One achievement in this context was the production of road maintenance and equipment management manuals which codified appropriate civil works and road maintenance proce- dures. Operational for several years, the manuals provide necessary guidance for provincial road maintenance units and the national rural roads agencies. But the time seems now to have come for the release of an upgraded version which improves on several topics (paras. 39-44). x. The creation of a strong provincial road maintenance capability at the national level remains an unfinished task. The current lead agency for rural roads has limited staff resources devoted to rural roads sector activities. Only a small fraction of staff deals with maintenance issues while the larger fraction works on implementation of road improvements financed by lending agencies. All road functions are managed, with 'Attle overall coordination, through units corresponding to external sources of funding. As is the case with other government services, the agency offers employment of only limited attraction (pares. 33-38). In provincial roads maintenance, budgets are inadequate, funds are ineffi- ciently spent and equipment use is constrained. Road conditions are not yet systematically monitored. xi. Provincial roads maintenance budgets are not yet adequate, even if the funds were efficiently spent and exclusively channeled to road maintenance needs. In reality, there are deep pockets of inefficiency, and sitable amounts of funds end up in other uses, such as road improvements and general office establishment. The misapplication of funds is aided by antiquated financial accounting systems and lack of actual cost reporting. Two-thirds of the funds are provided as national aid, and one-third by the provincial governments, respectively (paras. 45-48). xii. Plenty of room is left for improvements in provincial equipment and workshop management. Faced with tight roads maintenance budgets, provincial works agencies treat equipment repair and use as residual spending activities. Equipment repair is also constrained by an official procurement process which is extraordinarily cumbersome and can take machinery out of service for months for lack of seemingly inexpensive items. When maintenance equipment is avail- able, it is overwhelmingly being used in other than maintenance works (paras. 49-53). xiii. Provincial road conditions have not yet been systematically monitored. This was due, initially, to lack of a monitoring policy and, subsequently, to slow progress in introducing monitoring procedures. Field observations lead to the conclusion that the conditions are not yet cause for satisfaction in most provinces covered by the Bank-style projects. In the other provinces, the situation is more serious (paras. 54-56). v All aspects of baranRay roado maintenance reveal serious shortcomings. Affec- ted by low maintenance standards, road conditions are generallX deplorable. x1v. Barangay roads remain virgin territory for maintenance initiatives by the Bank or other lending a-encies. The barangays, in which responsibility for barangay road maintenance :s nominally vested (at present), have typically no road expertise. Road agencies at the national and provincial levels are not well equipped either to provide technical support. No maintenance manuals have so far been produced for barangays (paras. 57-60). xv. Overall levels of maintenance futiing for barangay roads are seemingly inadequate. While national aid is substantial, provincial governments make no funding contribution, and barangays cannot finance but token amounts of maintenance expenditures because of their extremel7 narrow fiscal base. Faced with backlogs of maintenance works, the requirement to maintain roads not qualifying for national aid and the need to finance non-maintenance activi- ties, barangays spend maintenance funds as they see fit (paras. 61-63). xvi. For use of maintenance equipment and provided financing for fuel is available, barangays rely rn government agencies and, on occasion, private contractors. This system leaves the barangays very exposed as the supporting agencies are seldom in a comfortable position themselves, having limited operational fleets and unfavorable prospects for equipment repair and renewal (pares. 64-65). xvil. Barangay road conditions, to a significant extent the result of low maintenance standards, are deplorable and not supportive of rural development objectives in many parts of the country. The conditions generally translate into high cost of transport. In some -ases, no transport can take place in the rainy season when the roads are closed. Field inspections reveal that up to 50% of barangay roads are in urgent need of some form of rehabilitative maintenance (paras. 66-67). 3. Recommendations In recognition of the importance of rural roads maintenance, the government should consider preparation of a comprehensive maintenance development plan. xviii. A first recommendation is for the government to accord rural roads maintenance highest priority in the management of the rural roads sector. With a network of some 130,000 km of rural roads in place, maintenance is to safeguard the value of a major public sector asset and to ensure that the economic and social benefits, for which the investment was made, can be realized. As a first step toward a high-priority and effective maintenance policy, preparation of a comprehensive development plan for rural roads maintenance would be appropriate. Possibly drafted in collaboration with the Bank, ADB or other development agencies, the plan should give full coverage to barangay roads and reflect the experience from the Bank's first rural roads project. Specific topics of the plan would include institution building, vi maintenance guidelines and procedures, equipment and workshop management and maintenance financing, costing and accounting (para. 80). The Bank should consider to support the preparation of a maintenance develop- ment plan and make maintenance a topic of its transport sector work for the PhIlLppines. xix. The second recomendation is for the Bank to support government efforts at preparing a rural roads maintenance plan. The support should include transport sector work which recognizes maintenance as a major policy Iassue. As tha latest transport sector report by the Bank has recently been issued with little coverage of the maintenance topic, a special free-standing maintenance report could be prepared. Perhaps, the paper on rural roads could be combined with one for national highways which, despite a series of Bank leading opera- tions, still face acute maintenance problems (para. 81). The government and the Bank should env sage preparation of a rural roads maintenance project. xx. The third recommendation is for the government and the Bank to consider preparation, as early as possible, of a rural roads maintenance project based on the proposed maintenance development plan. The project, if any, should make a credible start with barangay roads. Not to detract attention from the main- tenance task, road construction components should be kept within limits. The project should be supported by Bank procedures generating meaningful super- vision reports on maintenance advances. In the meantime, future supervision reports for the ongoing second rural roads project should be upgraded in the same spirit (para. 82). The Bank should assign adequate staff and budgets to rural roads maintenance activities. xxI. The fourth recommendation is for the Bank to make special allowances when staffing and budgeting future rural toad maintenance activities, to respond to the dimensions and complexities of the maintenance issue. Consideration should be given to pooling the Bank's maintenance expertise in desiznated operational units (para. 83). 1 WORLD BANK SUPPORT FOR RURAL ROADS MAINTENANCE PHILIPPINE CASE STUDY I. INTRODUCTION 1. Rural Road Characteristics 1. Rural roads are vital parts of the Philippines' rural infrastructure. Facilitating the movement of people and goods, they touch on all aspects of socio-economic rural existence. Rural roads, which serve three quarters of the country's population, dominate rural transport, though in some places, water- be- r other forms of transport are also significant. Expansion, improvement a. ~ueep of rural roads systems are perennial and traditionally high prio- rity concerns in the life of rural communities. 2. Rural roads, as defined in this study, are classified (non-urban) public roads serving predominantly the needs for local rural transport. In the Philippines, most of the (non-urban) roads belonging to the provincial, barangay.l and irrigation road systems fit this functional description, and therefore, they will be treated as synonymous with rural roads. National high- vays, the fourth category of classified (non-urban) roads, will be excluded from the rural roads definition because they carry primarily inter-regional and -city traffic, though in some cases, local rural traffic is also of importance.21 Provincial roads are administered by provincial governments; barangay roads, by local jurisdictions, traditionally supported by other government units; irrigation roads, by the National Irrigation Administration (NIA)IJ; and national highways, by the Department of Public Works and Highways (DPWH), the national highway authority.A/ 1/ A barangay, represented by a captain, is the smallest administrative unit in the Philippines. Several barangays are 3rouped into a municipality, which is headed by a mayor. Municipalities are distinguished by classes, corresponding to levels of incomes. 2/ Also excluded from the rural roads definition are unclassified tracks and footpaths. While serving genuine transport needs as well, these "roads" do not receive maintenance attention, though some of them are candidates for upgrad- ing in due time. 3! Official public road classifications usually omit the irrigation roads. A/ Formerly the Bureau of Public Highways (BPH), the Ministry of Public Highways (MPH) and Ministry of Public Works and Highways (MPWH). 4012 3. The majority of Philippine rural roads are characterized by low standards and low traffic volumes. Most roads, albeit a lesser portion of barangay roads, are engineered to some degree to carry regular motorized traffic, but they also include a few tracks which can accommodate vehicles when seasonal conditions are favorable. If fully engineered and properly maintained, rural roads have a width sufficient for passing vehicles, drainage and reinforced surfaces, usually made up of gravel. Single and double digit numbers of vehicles per day (vpd) are most common, but there are rovd sections which carry several hundred vpd. Traffic is a mix of all types of vehicles, ranging from animal drawn carts to motorized tricycles and heavy trucks. 4. Statistical information on the rural road length was somewhat sketchy until the mid-seventies, when the government embarked on a more systematic development of the ruial roads sector. At present, the network is as follows Provincial roads 28,000 km ( 221) Barangay roads 91,000 km ( 70%) Irrigation roads 10,000 km ( 82) Total 129,000 km (100%). National roads total about 26,000 km (Table 1). Thus, rural roads represent over 801 of the country's (non-urban) road system. About 25 years ago, rural roads may have been in the order of 40,000 km, also representing over 802 of non-urban roads, though these earlier statistics have to be taken with some care. Over these 25 years, rural roads grew at an estimated rate of over 41 p.a., surpassing population growth. 5. In terms of their replacement cost, rural roads represent an enormous economic value, perhaps in the order of US$ 3-6 billion at present, calculated at US$25,000-50,000 per average road km. Thus, their value is comparable to that of national highways, which could be in the order of US$ 5 billion. 2. Maintenance Issue 6. The impressive growth of the length of rural roads was accompanied by persistently poor road conditions, to a significant extent the result of insufficient maintenance, as described in many documents and reports produced since the late sixties. Other factors, which also came into play, were poor road design and construction and almost non-existent control of vehicle weights and dimensions. 7. One of the first transport studies of national scope to shed light on the road maintenance problem was the 1970 Philippine Transport Survey, financed by the United Nations Development Program (UNDP), undertaken by consultants and 3 supervised by the Bank.51 While focusing on national highways, the next in line was the 1972 Philippines Highway Technical Assistance Report, also financed by UNDP, undertaken by consultants and supervised by the Bank.61 In 1982, the third global study, the National Transport Planning Project7l/ was to follow, financed by the Asian Development Bank (ADB) and produced by consul- tants. In addition, there was a considerable flow of studies over the last 15 years which dealt with specific regions and localities, including the studies underlying the Bank's own lending operations in the rural roads sector. 8. The Bank's own transport sector work of 1973, 1976 and 1983 also echoed repeatedly the theme of poor conditions and maintenance of all types of roads,81 and all five Bank highway projects, approved in 1971, 1973, 1976, 1979 and 1984, elaborated on these issues.91 In addition, the Bank's two rural roads projects, approved in 1980 and 1986, made maintenance a principal focus.10/ For their part, other donors, including the US Agency for Interna- tional Developtent (USAID) and ADB, also voiced concern about the experience with rural roads conditions and maintenance and warned about the consequences of not addressing the situation in a determined way.11/ 9. The comments on rural roads conditions and maintenance were not unique as they were part of a larger set of observations on all Philippine roads. In fact, influenced by network priorities and the availability of information, most statements were directed at national highways, the backbone of the 5] Philippine Transport Survey, 1970. Refer in particular to National Transport Development, Volume I, General Report and Volume VII, Highways and Highway Administration and Maintenance, Volumes I and II. j/ Philippines Highway Technical Assistance Report, Phase I, Volumes I-IV, 1972. 71 National Transport Planning Project, Final Report, Part I (Overall Summary and Conclusions) and Part III (Roads), 1982. , 81 Current Economic Prospects of the Philippines, Volume II, Annex II - The Transport Sector, 1973 (Report No. 78a-PH); Transport Planning in the Philip- pines, 1976 (Report No. 1017a-PH); and Report on the Transport Sector in the Philippines, 1983 (Peport No. 3916-PH). 91 Staff Appraisal Report (SAR), Highway Project, Ln. 950-PH, 1971 (Report No. PTR-68a); SAR, Second Highway Project, Ln. 731-PH, 1973 (Report No. 258a- PH); SAR, Third Highway Project, Ln. 1353-PH, 1976 (Report No. 1297a-PH); SAR, Fourth Highway Project, Ln. 1661-PH, 1979 (Report No. 2258-PH); and SAR, Fifth Highway Project, Ln. 2418-PH, 1984 (Report No. 4535-PH). 10/ SAR, Rural Roads Improvement Project, Ln. 1860-PH, 1980 (Report No. 2896-PH); and SAR, Second Rural Roads Improvement Project, Un. 2716-PH, 1986 (Report No. 5917-PH). 111 Refer, for example, to Philippines: Rural Roads I and II, A.I.D. Project Impact Evaluation Report No. 18, 1981. 4 country's transport infrastructure. National highways' maintenance was the target of probing criticism and increasingly forceful measures to correct what was perceived as an undesirable situation. But it was always understood or made clear that if national highways were facing a serious maintenance issue, the rural roads situation was precarious even more. It is against this back- ground that Bank involvement with rural roads has to be seen. 5 II. WORLD BANK LENDING 1. Overview 10. Though the need for upgrading rural roads maintenance was well estab- lished since the late sixties, it took the Bank long to ready itself for serious action. The same was true for other aid agencies supporting Philippine transport and rural development, except for USAID which made some credible efforts in parts of the country in the seventies. The Bank's hands-off ap- proach was inconsistent with its focus on rural development since the early seventies and the widely understood role of good quality transport in rural development policies. 11. When the Bank finally got involved in a rational program of support for rural roads maintenance, it did so in a rather imperfect way. The Bank's deal- ings with rural roads were in contrast to those for national roads, which since the 1971 first highway project received comprehensive Bank assistance for maintenance improvements. In fact, maintenance was the dominant theme of all Bank lending so far to the Philippine national roads sector.12/ 2. Non-transportation Projects 12. Agricultural, irrigation and rural development (AIRD) projects were for a long time the Bank's exclusive lending operations in the Philippines with rural roads components. Nine such projects were approved in the seventies and five so far in the eighties for a total of fourteen operations (Table 2). * Geared to broader rural development objectives, these projects had typically a * local perspective of transport in the project areas, and there were no ap- parent attempts to fit the rural road activities into any sort of regional or national plans for transport investments or policies. 13. Virtually all AIRD projects concentrated their rural road initiatives on road improvement or construction, rather than on upkeep. In a few cases, road maintenance equipment and technical assistance for road maintenance were procured under the project, but this was the extent to which maintenance was addressed. In general, project documents simply noted or implied that the road agency, which would inherit a project road by virtue of the road classifica- tion, would take care of maintenance. 14. Eight irrigation projects with large road components were made for the benefit of the National Irrigation Administration (NIA), and in this case, road upkeep remained usually under the agency's jurisdiction. Virtually all J Refer to Project Performance Audit Report (PPAR), Philippines Third Highway Project, Loan 1353-PH, July 22, 1988 (SecM88-873). 6 NIA roads are open to public traffic, and the majority are service roads along canals to facilitate operation and maintenance of the irrigation systems. The remainder are access roads to villages, NIA construction sites and NIA refo- restation areas. Because NIA v2s seen as a technically competent and ade- quately financed organization, the Bank projects did not concern themselves in detail with NIA's road maintenance expertise and capacity. In the six AIRD projects where NIA was not involved, the roads were designated as belonging to the national, provincial or barangay road systems. 15. Contributing little to the resolution of the rural roads maintenance issue, the AIRD projects set out to add about 11,700 km of new or improved rural roads to the existing stock.131 About 8,350 km (71%) were NIA roads, perhaps half of them access roads and the other half service roads.141 Of the remaining 3,350 km (29%), 380 km were national, 480 km provincial and 2,490 km barangay roads. The NIA roads were located in the irrigation areas of Luzon, Visayas, Leyte and Mindanao, with a concentration in the first and the last locations. The non-NIA roads, some of them also related to irrigation (com- munal schemes), were also distributed over several regions, with some con- centration in Visayas. 16. Rural roads were major components in the Bank's AIRD projects. Total road investment cost of all AIRD roads was close to US$ 180 million, which was about 18% of the total project cost (Table 2). The total road cost in the NIA projects was US$ 86 million, corresponding to 131 of project cost, and the total road cost of the other AIRD projects was US$ 92 million, which is equivalent to 291 of project cost. 3. Transportation Projects 17. In 1980, the Bank made the first of two transport projects to date focused on rural roads, and in 1986, it followed with the second. Both pro- jects, similar in design, were aimed at these objectivest construction or improvement of some length of rural roads; upgrading of rural roads main- tenance in some provinces; and institution building in the road sections of selected provincial administrations and the Department of Local Governments (DLG)11, the umbrella organization for provinces. The transport operations, covering a wider band of sector issues, were vast improvements over their AIRD cousins which were largely content with financing rural road invest- 13/ Based on appraisal targets. Actual achievements are not yef; compiled as some projects are still active and for others no completion reports have yet been written. 14/ Data based on a review of SARs. As classified by NIA, about 851 of the roads in its current inventory, which excludes transfers to other agencies, are service roads. 15/ Previously Ministry of Local Government and Community Development (MLGCD) and Ministry of Local Government (MLG). 7 ments. Yet, the transport projects had also serious shortcomings: they largely sidestepped barangay roads, which have the greatest length of all road clas- seall; they did not address maintenance with the same attention to purpose and effort as shown under the Bank's national highway projects; and they placed maintenance off conter stage, focusing instead on civil works.171 18. The first operation, the 1980 Rural Roads Improvement Project, provided financing for construction or improvement of 880 km of roads, representing less than 1% of the rural roads network. About 755 km were classified as provincial, 35 km as barangay and 90 km as national roads.181 The works were concentrated in the provinces in which road maintenance was to be upgraded. The program of raising maintenance performance was designed for six out of then 73 provinces, and despite suggestions that barangay roads would be fully covered as well191, the project was essentially geared to provincial roads only. To implement this program, the project included purchase of road main- tenance equipment, construction or improvement of workshops and procurement of technical assistance. Institution building was also to be achieved through recruitment of technical assistance. Total estimated project cost were US$ 105 million, of which two-thirds referred to road construction. 19. In 1982, ADZ approved a road project which had significant rural roads components. Displaying similar design features as the Bank's Rural Roads Improvement Project, the ADB operation was meant to extend foreign-aided maintenance assistance t an additional nine provinces.20/ 20. By late 1988, implementat.on of the Rural Roads Improvement Project was three and one-half years behind the original schedule. The maintenance equip- ment had been procured, the workshops had been built and technical assistance had been delivered, but the road construction program still had some length to go. Under these circumstances, the Bank advised the government that applica- tions for loan disbursement would be accepted until the end of the year and that financing of the unfinished part of construction (close to 20%) would be the government's obligation. Focusing on physical achievements in procuring 161 In the view of DLG, the two Bank projects sidestepped barangay roads because they are under the supervision and responsibility of DPWH and not DLG. Refer to letter by DLG to OED, dated 01 September 1988 ("DLG, 9/01/88"), page 1, reproduced as Annex 1 to this OED report. 171 DLG confirms that the Bank's orientation was more on construction than maintenance. "In addition", DLG notes, "despite semi-annual maintenance progress reports being submitted, there was never any comment from the Bank mission nor serious attempt to discuss issues regarding maintenance." DLG, 9/01/88, page 1. 18/ SAR, Ln. 1860-PH, Table 3.6. 19/ The SAR, Ln. 1860-PH, para. 3.05, for example, notes that project focus was on maintenance of provincial and bArangay roads. 20/ ADB, Third Road Improvement Project, Ln. 597-PHI, 1982. 8 goods and services, mission reports did not systematically trace road main- tenance success under the project.211 21. The 1986 Second Rural Roads Improvement Project, noting that the govern- ment was giving high priority to the economic development of rural areas22/, continued construction and improvement of rural roads, this time 1,335 km overall, about 1Z of the rural roads network. About 975 km were provincial, 280 km barangay and 80 km national roads. Other repeat components were pro- grams for upgrading provincial road maintenance in 14 new provinces, bringing the Bank total to 20, and continuation of technical assistance to build up DLG's road management capabilities. The provincial road maintenance programs, again, included purchase of road maintenance equipment, workshop construction and various kinds of technical assistance. 22. The second project made no claims that maintenance needs of barangay roads would be on the agenda, though it reported continuation of the Bank's rural development efforts begun under the first rcal transport project.23 Once more, the VAR did not explain what, if any, programs existed for barangay road maintenance and what this meant for rural transport and development, and the Bank's strategies for lending and sector work activities. 23. The second project made barely any attempt at analyzing the experience under the first project, even though the approval dates were six years apart and the question could have been raised whether the maintenance and institu- tional strategies devised in 1980 were paying off. The only substantive comment by the SAR on implementation of the first project referred to con- tracting problems which it reported as having been resolved. Otherwise, it reached the conclusion that there were no particular problems which should lead to modifications of future rural road projects.24/ In the view of govern- ment officials who met with the OED mission, the second project was rushed, coming well before the first was completed and before solid lessons were drawn. 24. Total estimated cost of the second rural roads project was US$ 122 million, of which four fifth referred to road construction. Thus, total rural roads financing under all categories of Bank projects reached about US$ 400 million, with a civil works component of about US$ 345 million. All projects combined made investments in 14,000 km of roads, just over 10% of the total rural roads stock at present (Table 2). 25. In late 1988, implementation of the Second Rural Roads Improvement Project was about two- and one-half years behind schedule, in large part because of slow construction progress. The final completion date was expected 1/ Bank project files. 22/ SAR# Ln. 2716-PH, para. 3.02. 23/ SAR9 Un. 2716-PH, para. 3.03. 24/ SAR, Ln. 2716-PH, para. 1.07. 9 to be delayed by at least one year. About two and one-half years after start of implementation, no solid conclusions had yet surfaced about how provincial road maintenance was developing as a result of the Bank's interventions. As under the (first) Rural Roads Improvement Project, there were few signs that Bank supervision dealt systematically with the question of rural roads main- tenance results.251 251 Bank project files. DLG emphasized that it regularly monitored main- tenance progress under the (first) Rural Roads Roads Project, but that its reports to the Bank 'yielded not even a coment from the Bank". DLG, 9101188, page 2. 10 III. MAINTENANCE PROGRESS 1. Sector Organization Bank Role 26. The Bank's contribution to the organization of the Philippine rural roads sector has consistently been modest throughout the seventies and eighties. In case of provincial and irrigation roads, far which clear and workable institu- tional arrangements were gradually evolving, the Bank's posture may have been perfectly appropriate. In case of barangay roads, which experienced a stormy and not yet completed evolution, the Bank's role was less understandable. There is no doubt, that the manifold problems of the barangay road sector can be linked, in large part, to the frequent and confusing shifts in policies on its organizational setup. 27. Up to the end of the seventies, the Bank was virtually silent on the question of how to organize the barangay road sector. In subsequent years, it voiced or implied some opinions, which, however, were not necessarily consis- tent and did not benefit from much analysis.26/ There also was no apparent attempt by the Bank to commission a study on the subject, as is often done with a complex and delicate subject. Even the latest transport sector paper, written to lay the groundwork for futute Bank operations with emphasis on institutional reform, skirted the organizational issue, though it recognized that it deserved "priority attention".271 Provincial Roads Organization 28. Since the late sixties, the Provincial Engineer's Offices (PEO), which are part of provincial administrations, are charged with provincial roads business, including roads maintenance. Aside from roads, the PEOs deal with provincial health, water, educational and other infrastructure. Administra- tively, the PEO's depend on the provinces, which, in turn, are grouped under 261 Under the (first) Rural Roads Improvement Project (1980), the Bank made a pitch for rural roads responsibilities placed on local government units. Under the Second Rural Improvement Roads Project (1986), the Bank noted, without explanations, that national highways would be in charge of barangay roads financed under the project for settlement areas. Refer to SAR, Ln. 2716-PH, para. 3.23. In a similar fashion, without taking a position, the Bank's latest transport sector paper (1988) reported that the national highway authority was responsible for maintenance of barangay roads. Refer to Philippines Transport Sector Review, 1988 (Report No. 7098-PH), para. 3.10. In 1984, it called the then prevailing arrangements for barangay road maintenance, which involved the PEOs, as "likely to be satisfactory in the future". SAR, Fifth Highway Pro- ject, Ln. 2418-PH, para. 2.41. 271 Philippines Transport Sector Review, 1988, para. 3.11. 11 the umbrella of the Department of Local Government (DLO). In technical matters concerning roads, the PEOs were until 1980 under the supervision of the nati- onal highway authority, and since then, control seems to have been divided between national highways and DLG, though the demarketion line has not been fully clear.28/ Barangav Roads Organization 29. Until the early seventies, no clear responsibilities seemed to exist for roads other than what are today the national and provincial road systems. To bring order into the lower tier of the rural road sector, the government created in 1975 the Bureau of Barangay Roads (BBR) in the national highway administration, which was charged with all barangay road functions, including maintenance, in coordination with the ministry of local governments.29/ One of the early tasks of the BBR was to set citeria for barangay road classifica- tion and produce a barangay road inventory. In the next few years, some barangay road functions were gradually withdrawn from BBR and shifted to other departments or agencies, including the Ministry of Local Governments (MLG) and Local Government Units (LGU).30/ 30. In 1981, at the start of the Bank's first rural roads project, the BBR was abolished and its (remaining) functions were absorbed by other units of the national highways administration. In 1984, some barangay road functions were restored to national highways, which were also reconfirmed as being in charge of barangay road maintenance.311 In 1980, DLG reached an agreement with 28/ One of the purposes of the Bank's two rural roads projects was to install DLG as the central body, which would exercise technical control over road (including maintenance) activities of the PEOs. By mid-1987, a total of 29 provinces were covered under this arrangements (Bank 20, ADB 9). Despite all this, government instructions issued shortly thereafter specified that the national highway authority was responsible for technical supervision. Refer to Department of Budget and Management, Commission on Audit and Department of Finance, Joint Circular No. 5-87, dated August 1, 1987. Commenting on the present situation, DLG makes the point that "as far as maintenance funds and technical matters are concerned, .. (it still] does not have any control over the PEO0s". DLG, 9/01/88, page 2. 291 Presidential Decree No. 702 of 1975. 30/ Raising the question whether it is desirable for DLG (rather than DPWH) to have jurisdiction over barangay roads, Bank staff expressed the opinion that the "decision to have DLG responsible for the barangay roads ... con- tributed to the present state of barangay road maintenance." In OED's view, these questions should preferably have been settled before the Bank embarked on the (first) Rural Roads Improvement Project, and in any case, they should have been addressed before the Second Rural Roads Improvement Project was approved. As neither of the two Bank projects dealt with these issues, they should now be taken up in the Bank's review of the Philippine rural roads sector proposed later in this report. 311 Executive Order No. 970 of 1984. 12 DPWH to the effect that DLG would be charged with the final distribution of central government funds for road maintenance to local government units. The agreement fell apart as the yearly budget appropriations acts made no cor- responding provisions.32/ In 1985, local government units were authorized to undertake barangay road improvements and maintenance, under the technictl supervision of the national highways authority.131 A similar arrangement for road improvement, but not maintenance, had been put in place in 1982 for the six provinces included in the Bank's first Rural Roads Improvement Project.34/ More recently, the armed forces also got involved in rural roads activities, partly for reasons of security in sensitive areas, and partly, in the view of observers, because of government dissatisfaction with other implementation agencies.35/ 31. In 1987, the process of organizational changes continued unabated. Just after mid-year, national highways were confirmed as being the implementing agency for barangay road maintenance.36/ Funds for maintenance were to be ad- ministered by national highways. Later in the same year, maintenance funds were dirwctly given to barangays, and this was construed as a shift of full maintenance responsibilities to them. Irrigation Roads Organization 32. Responsibility for the irrigation roads sector has always been straight- forward. As special purpose infrastructure, irrigation roads were planned, built and maintained by the National Irrigation Administration. There were or are no plans to alter this basic arrangement, though some roads which were non-essential for operating the irrigation systems were shifted from NIA to road agencies. 2. Provincial Roads Institution Building 33. One of the specific objectives of the first rural roads project was to upgrade the capacity of provincial governments to plan, design, construct and maintain rural roads.37/ All provinces, including those covered under the 32/ MLG, 9/01/88, pages 2 and 3. 3/ ExecutivA Order No. 1004 of 1985. 341 Executive Order No. 767 o' 1982. 35/ Executive Order No. 1041 of 1985. 361 Department of Budget and Management, Commission on Audit and Department of Finance, Joint Circular No. 5-87. 371 SAR, Ln. 1860-PH, para. 3.11. 13 Bank project, were lacking experience to adequately perform these functions. In parallel, the capacity of the Ministry of Local Governments (MLG, now a departmewt - DLG) to guide and monitor the provinces was also to be developed. Institution building was to be achieved through full involvement of the provinces in road construction and maintenance and through technical assis- tance to the PEOs and the DLG. 34. Though the project completion report has not yet been written, it does not seem that progress at the provincial level has been fully satisfactory, at least not for construction. The works took much longer than expected, prompt- ing the second project to entrust construction responsibility to domestic consultants, rather than the provinces.381 Without being directly involved in construction under the second project, provincial staff will have to acquire the requisite expertise through training programs, also included in the second project39/. This of course raises the question, at what time capacities will actually be built up. 35. If progress on provincial road construction is any indication, developing provincial road maintenance capabilities may not have been a full success either in the six provinces forming part of the (first) Rural Roads Improve- ment Project. Ordinarily, construction outperforms maintenance, which fre- quently is seen as an unattractive and unrewarding engineering assignment. Observations of road conditions and visits to PE0s by the study mission tend to support this conclusion. Reorganizations of provincial administrations, following the 1984 change in government and the more recent provincial elec- tions, were definite factors setting back the provincial road sector. In the wake of these events, many trained staff lost their previous assignments, and to some extent, the build-up of staff expertise has to be started all over again. 36. The t;vo Bank projects recognized institutional development of DLG as a key for developing the entire provincial roads sector. At the time of apprai- sal of the first rural roads project, DLG had virtually no capabilities in planning and directing road development and maintenance programs. Eight years later, after having received its own share of government reorganization accompanied by staff changes, DLG still is in a state of transition. While many staff are driven by a sense of mission, most are young, with limited experience, and all face a multitude of organizf-tional and administrative obstacles and the prospects of an unrewarding career. After years of trying, some are close to accepting what they perceive as the futility of their efforts. 37. Both Bank rural road projects were designed for dual purposes, improve- ment of road infrastructure and upgrading of maintenance performance. Under this constellation, DLG created a road adminstration, which puts most energy and staff resources into implementing road construction, to the detriment of 381 DLG, 9101/88, page 3. 391 SAR, Ln. 2716-PH, para. 3.20. 14 road maintenance.401 On the experience of the first project, DLG's construc- tion involvement increased under the second. The bias against maintenance was likely reinforced through the standard Bank supervision practice to pay most attention to the project components governing loan disbursement.Alf In retio- spect, the questions would have been appropriate during project design, how DLG would cope with the sheer volume of project assignments and whether priority should be given to preserving, upgrading or adding to the provincial road infrastructure. 38. The internal organization of the road functions and the general staffing situation compounded DLG's weak disposition to deal with maintenance issues. At present, all road functions are managed, with little overall coordination, through units corresponding to external sources of funding. While road manage- ment activities have increased, if only in relation to the number of provincer covered under the Bank-style projects, staffing positions have fallen far behind. In addition, trained staff has been lost through "reorganizations", as already mentioned, and conditions for government employment are unattractive, as they have been for many years.42/ Guidelines and Procedures 39. The Bank's first rural roads project set itself the important task of producing guidelines, under which the PEOs would conduct their provincial roads business and DLG would monitor and guide the provincial performance. Drafted by the project nonsultants, the guidelines were tested and issued in the form of two manuals, the Road Maintenance Management Manual and the Equip- ment Management Manual, dubbed the Blue Book and the Orange Book respectively because of the color of the covers. The manuals were officially adopted in 1984 for all of the country's provinces, and training courses were run to familiarize staff with them. The guidelines are similar, but not identical, to national highways guidelines which were recently revised. 40. As an initial exercise, the guidelines were a big step toward specifying procedures for managing provincial road activities, and field visits by the study mission revealed that the books are being consulted. The Blue Book, among other functions, specifies the tasks of provincial maintenance manage- ment, work programming and schedules, equipment and workshop management, budgeting and performance evaluation. The Orange Book addresses questions of managing an equipment pool, equipment servicing and repair, parts, costing and funding equipment and planning for equipment replacements. 40/ In the DLG office in charge of the Bank's two rural roads projects, for example, only 4 out of 18 professional staff dealt with maintenance, in early 1988, while the others were primarily assigned to construction. 41/ The Bank supervision reports for the two rural roads projects typically trace progress on the funded components, in particular road construction while giving little attention to non-funded activities. 421 The question of unattractive employment conditions in the public sector has surfaced very early in Bank lending to the roads sector. 15 41. In their present form, however, the guidelines still need considerable improvements as important issues were not addressed fully or adequately. As written, they limit DLG in effectively monitoring and guiding the provinces, as called for under the DLG statutes and noted in the Bank projects, and they constrain DLG in representing sector interests vis-a-vis other government agencies.431 Further, they restrict the provinces in directing and evaluating their maintenance operations. 42. The Second Rural Roads Project missed the opportunity to take up these issues, based on a close examination of the content of and the initial ex- perience with the manuals. More than the management of construction works, the design and review of maintenance guidelines and procedures were tasks for which competent and timely Bank participation would have been desirable and which could not be left solely to DLG and their consultants. DLG staff still struggles with more basic tasks, and consultants cannot ordinarily review their own work on behalf of the client. 43. Among the topics, which are not yet adequately covered, ares a. Accounting for cost of maintenance works. At present, records of actual cost in the provinces are incomplete, and budget estimates serve in part as "actual" cost.441 For the programming of works, standardized inputs and unit costs are being assumed, established at some time in the past to represent country-wide conditions. Some standardized cost, in particular for equipment and spare parts, seem questionable.45/ 43/ The sole documents DLG presently receives from the provinces on a regular basis are the work accomplishment reports. Open to much abuse and subject to many kinds of errors, these reports often lack credibility. DLG pointed out that its role in monitoring and guiding the provinces will be restricted, contrary to the design under the (first) Rural Roads Improvement Project, as long as DPWH retains major responsibilities for maintenance of provincial roads. DLG, 9/01/88, page 3. 441 Originally, introduction of cost accounting procedures was part of the terms of reference for the Technical Assistance Advisors to Provinces (TAAP), financed under the (first) Rural Roads Improvement Project. In 1984, the consultants completed draft "Guidelines for the Provinces' Financial Monitor- ing for t-ueir Road Maintenance Activities." However, thase were not imple- mented and finally deleted from the TOR. 45/ The guidelines, as an interim measure, adopted the equipment rental rates of the national highway authority for calculation of equipment cost, without specifying how the cost were built up and without giving the provinces an opportunity to amend them according to their own specific conditions. - DLG takes a more benign view of the quality of actual cost data generated in the provinces. DLG, 9/01/88, page 4. 16 b. Maintenance expenditure reporting. At present, there is no clearly defined separation of maintenance and non-maintenance accounts in the expenditure reporting of provincial governments. Further, suitable subheadings for maintenance operations, such as for equip- ment rental services, are misb.*-k. The financial accounts, there- fore, are not geared to financial discipline and safeguards in the Implementation of maintenance programs. c. Priorities for maintenance works. At present, the guidelines place equal emphasis on all maintenance activities. This approach works potentially against the choice of the most cost effective main- tenance operation and against preventive maintenance, which in many circumstanaes deserves first priority. d. Deferred maintenance worka. Listing routine maintenance, periodic maintenance and rehabilitation and betterment as the only main- tenance works to be performed, the guidelines do not deal explicitly with maintenance backlogs. However, backlogs need special considera- tion, as they can lead to a denial of national aid for maintenance, and, if not removed in time, to more costly road rehabilitation works. e. Road inspections and condition ratings. Neither is being called for under the current guidelines. Adequate road conditions are the ul- timate purpose of maintenance, and condition ratings would demon- strate to what extent the maintenance efforts are successful.46/ 44. Another impoitant topic around which the guidelines skirted is the ques- tion of equipment replacement. Noting that replacement was a critical issue which needed resolution, the guidelines suggested one of two possible courses of actions a "firm" commitment by provincial governments to finance the capital investment, upon demonstration of the underlying economics; or the establishment of a separate, self-sustaining equipment fund. Neither proposal has been implemented, and neither is much in favor by government planners, though the third alternative, making no advance funding provisions, is not satisfactory either because of the obvious risks to the equipment fleet and 46/ Annual road condition inventories were part of an action plan agreed under the Second Rural Roads Improvement Project. Originally due by June 1987, the inventories have not yet been produced. SAR, Ln. 2716-PH, Annex 1, page 3. - Even though maintenance of national highways is more advanced than that for lower class roads, its condition ratings are not yet fully operative either. PPAR, Ln. 1353-PH, paras. 18-19 of Project Performance Audit Memorandum (PPAM). 17 road mainenance.471 So far, the Bank, which funded equipment purchases under the two rural roads projects, has not taken a position on the subject.A81 Funding and Expenditures 45. Since its involvement with national highways, the Bank made funding of national roads maintenance a major sector priority. As a result of its con- tinuous representations and the government's own initiatives, allocations to national highways increased steadily though in uneven steps since the seven- ties, in absolute amounts and per kilometer of roads length. 46. In parallel, allocations to provincial roads also rose, based on the requirement that provincial roads maintenance snould receive 75% of funds for a standardized national roads km, known as the Equivalent Maintenance Kilome- ter (EMK).49/ Two-thirds of the provincial roads allocation come from national aid (50% of EMK), and one-third from the provinces (one half of 50% of EMK). The funds are to cover routine and periodic maintenance operations. The allo- cation to a specific kilometer of national road, presently P 17,100/year, is calculated as a function of road characteristics, such as road pavement. width, type and length of bridges and traffic. By contrast, allocations to provincial roads are not adjusted for any of these factors and solely based on length, even though the cost of maintaining individual provincial roads can vary considerably. At present, the allocation for a provincial road km from both national and provincial sources is about P 12,800/year. 47. While the Bank dealt at length with the principle of steady funding of provincial roads maintenance, including periodic adjustments for inflation, it gave less thought to the specific funding levels. The 1980 (first) Rural Roads Project expressed the opinion, that the funds were "generally adequate", though not efficiently expended.50/ The 1984 Fifth Highway Project and the 1983 companion report on the transport sector came to a similar conclusion.51/ Given without elaboration and not demonstrating good judgement, these views 47/ The creation of a trust fund for equipment renewal was disallowed by the Commission on Audits (COA), according to DLG. The department is now attempting to remedy the situation through a special program for equipment rehabilita- tion. DLG, 9/01/88, page 4. 481 Under the five highway projects, made for the national highway authority, the Bank also dealt with these issues at arms length. While it noted the exis- tence of an equipment rental system, which potentially would arrange for equipment renewal through accumulation of rental income, it did not react to the malfunctioning of the system. PPAR, Ln. 1353-PH, para. 26 of Project Performance Audit Memorandum. 49/ Presidential Decree No. 17 of 1972 and subsequent amendments. 50/ SAR, Ln. 1860-PH, para. 3.05. 51/ SAR, Ln. 2418-PH, para. 2.40; and Report on the Transport Sector in the Philippines, 1983, para. 4.22. 18 were not necessarily helpful for adjusting funds to actual cost situations, and they may have worked against a d-tailed probe of the funding question. The 1986 Second Rural Roads Project did not comment on the adequacy of existing funding, but reported that during negotiations, agreement was reached on an "adequate base level", including appropriate inflation adjustments.521 How- ever, it left open by what method and when this level was to be found. The level deemed "adequate" has not yet been determined. 48. A rough calculation by the OED mission using 1987 data suggests that the present allotment to provincial road maintenance is totally insufficient, for a typical provincial road system, if adoquate maintenance were attempted, all maintenance funds went into maintenance and maintenance were efficiently handled.531 In reality, funds are frequently diverted to other uses and, as the 1980 project noted, inefficiently expended.541 Another problem which surfaced in a province covered under the first project was the partial with- holding of provincial counterpart funds for maintenance, disguised through "creative" accounting.,51 Aided by the antiquated financial accounting systems and lack of actual cost reporting, many non-maintenance functions, such as design and planning, are subsidized from the maintenance budget. In addition, in provinces which are short in investment budgets, the road maintenance allotment is used to absorb parts of the PEOs' administrative cost, including workshop overhead cost. Further, political pressures often lead to inflated staffing levels, financed from maintenance funds. All these issues exist, in one form or other, in most provinces, independent of whether or not they are part of a Bank-style rural roads operation. 52/ SAR, In. 2716-PH, para. 2.13. 53/ Assuming an inventory length of 400 km of provincial roads, the yearly maintenance allocation would be P 5.14 million for routine and periodic maintenance. If 60 km (15%) of the network were paved, 340 km (85Z) would require blading at least twice a year, and 68 km a year would need regravel- ing to a minimum of 15 cm depth on an average width of 6 m, to achieve a 5- year regraveling cycle. With a typical labor force of 150 people, paid at an average monthly rate of P 1,700, the payroll would be P 3.0 million/year. General overhead cost would add another P 0.5 millionlyear. At an output of 5 km and cost of P 3,000 per day, the cost of operating motor graders would be P 0.4 million/year, and with the cost of motor rollers and water trucks, total equipment cost could be in the order of 0.6 million/year. Finally, at P 50 per cubic meter delivered, the cost of gravel would amount to P 3.1 millionlyear, bringing the overall maintenance cos': to P 7.1 million/year, against an allo- cation of P 5.1 million. 541 The misapplication of funds was, in part, aided by lax financial auditing practices, according to DLG. DLG, 9/01/88, page 5. 55/ Provincial counterpart funding is one of the conditions of national aid for maintenance. 19 Equipment and Workshops 49. Next to construction of roads, maintenance equipment and workshops were the largest component in the Bank's rural roads projects. While some road maintenance tasks are suitable for labor-intensive methods, minimum levels of equipment are indispensible for efficient maintenance operations. Lack of maintenance equipment and workshop facilities was, therefore, identified as a main obstacle for upgrading road maintenance, and the Bank-financed units were seen as welcome additions to existing stock, which was typically depleted and dilapidated. 50. Unless, however, arrangements are made for the timely equipment renewal, stocks could revert to the original situation within 4-8 years, if not ear- lier, depending on type of equipment, as a result of conditions under which some pieces are actually used and repaired. As already ncted, existing proce- dures are inadequate to facilitate equipment replacement at the right time for the road maintenance organization. The Bank-style rural roads projects would not be the first occasion that provincial equipment fleets were built up, only to deteriorate thereafter for want of a workable renewal policy. In the early seventies, the first significant investments were made in provincial road maintenance equipment, as part of USAID's Provincial Development Assistance Program (PDAP). In the late seventies, the second round of acquisitions was started, this time financed primarily through Philippine Land Bank loans. Both phases were quickly followed by a general decline in the size and deteri- oration of condition of the fleets. 51. Under present procedures, not straightened out by the Equipment Manage- ment Manual (Orange Book), the repair of equipment also leaves a lot to be desired because of lack of funding. Faced with tight or insufficient road maintenance budgets, PEOs traditionally give first priority to labor and overhead cost in the maintenance establishment, including the workshops. Next in line are materials, not necessarily sufficient, for periodic road main- tenance, and the little that is left goes to repair and use of the fleets. In case of the two Bank projects, the situation was not helped by the fact that the spare parts procured represented only a small percentage of the fleet value. In the absence of sufficient funding for fleet repair, the equipment is used beyond good practice, and to keep some pieces running, others are gradually being cannibalized. 52. Repair of equipment is also constrained by an official procurement process which is extraordinarily cumbersome and can take machinery out of service for months, for lack of seemingly simple items such as tires. Other procurement issues are the prevailing custom to give primary attention to price and little consideration to quality of the goods procured, the lack of central or regional parts inventories and the minor involvement of the private sector in equipment overhauls6/. Again, the equipment or related guidelines 561 The point of limited involvement of the private sector was, for example, made in the context of ADB-financed technical assistance for the development of Palawan province. 20 did little to address these matters, even though they are hardly of lesser importance than the acquisition of machinery itself. 53. Even when equipment is available and in good repair, its use for road mainue.nance work is typically limited for lack of fuel financing. Thus, when all restrictions on equipment use are combined, perhaps no more than 10% of total fleet availability time is consumed in routine and periodic road main- tenance. The slack is taken up elsewhere through loaning and sometimes hiring out of the equipment to contractors, municipalities and other agencies, and through equipment use in road improvement. This practice, seldom reported, is easily concealed, as the Orange Book prescribes reports on daily, rather than hourly, equipment utilization. Unlike the DLG equipment guidelines, interna- tional norms call for recording of equipment life and use by the hour. Road Conditions 54. To what extent the Bank-style maintenance efforts have so far improved provincial road conditions, and in fact will improve in the future, is a question not easily answered, if only, because no provision has yet been made for condition monitoring.,2/ This, in turn, leaves the question open what con- tribution maintenance has made to date to such formidable project objectives as alleviation of poverty, provision of health care and stimulation of food production and rural employment opportunities.581 Without the information, it would require an act of faith to proceed with more of the Bank-style projects. 55. Based on a road sampling by the study mission5g/, current provincial road conditions are poor to bad on average. Many provincial roads had deformed, scoured and rutted surfaces, often with p-ar to non-existent and sometimes negative cross-falls. Unless motor graders and rollers are routinely used to shape surfaces, gravel is periodically applied and rollers are used for compaction, the stage is set for progressively worsening conditions, which finally may require at least partial rehabilitation.60/ Ta no province visited was there evidence of equipment being used in support of routine or periodic road maintenance, even though the last visit fell into the dry season, when mechanical operations should be performed.61/ In one exceptional province, im- pressive labor-intensive efforts were being undertaken, especially on road- 57/ Introduction of a system of road condition monitoring will be soon on its agenda, according to DLG. DLG, 9/01188, page 6. 58, SAR, Ln. 2716-PH, para. 3.03. 591 The road sampling was undertaken in early 1988. 60/ DLG noted that in most provinces lack of maintenance in the past requires at least partial rehabilitation of roads. DLG, 9/01188, page 6. 61/ DLG officialt pointed out that lack of maintenance activities at the time of the mission's visit was due, in part, to delays in the release of main- tenance funds by the treasury. 21 side maintenance, and here were the only maintenance work crews seen during the field visits. 56. In the six provinces covered by the (firat) Rural Roads Project, the overall situation might be slightly better, but it is debatable, whether it is satisfactory overall. In the view of government officials, the project has not yet improved road con-Litions very noticeably, due to a range of factors. This is also the impression gained by the study mission. In one province, however, it found visible improvements. In another, by contrast, the project seemed to have left few traces.621 3. Barangay Roads Institution Buildin& 57. Without explaining and rationalizing its position, the Bank has not yet become involved systematically in barangay road maintenance, either in Im- proving institutions or operations. Other lending agencies did not fill the void either nor had the government a clear and consistent plan and approach of its own.631 This has left barangay road maintenance in a situation which is much more precarious than that for national and provincial roads, which still have a long way to go. 58. At best, the Bank has made an indirect contribution to institution build- ing in the barangay road sector, by giving support to the national highway administration, DLG and the provinces, which are, or have been, at one time or another, associated with barangay road maintenance. But none of these entities has received specifically help by the Bank for barangay road maintenance, nor are they well equipped for the task at present. For all, barangay business is a side activity performed in the context of their primary assignments. The municipalities and barangays, the lowest local government units, in which barangay road maintenance is nominally vested, have typically no road exper- tise. All this has placed maintenance of barangay roads, which constitute by far the largest road sub-sector, into a sort of institutional vacuum. 59. Whether and how barangay road maintenance operations are being performed is a matter of luck and circumstances. If everything goes well, a barangay can 621 The unsatisfactory maintenance progress was confirmed by a Bank recent supervision mission. Refer to Bank project files. 63/ Bank staff expressed the opinion that the oil crisis of the seventies led the government to concentrate on national and the major provincial roads, to the detriment of rural roads in general and barangay roads in particular, in a bid to conserve foreign exchange. In OED's view, the oil situation may have been an explanation for government policies in the seventies, when oil prices were high, but hardly in the eighties, when the prices reverted to much lower levels. Further, effective government action on the rural roads maintenance issue never depended significantly on financial resources alone. 22 count on sympathetic technical support by the district office of national highways, the PEO and, in some places, NIA. This does not necessarily mean that maintenance operations are adequate, but at least that some kind of efforts are being made when funding is available and road conditions become intolerable. If luck is exceptional, a barangay may count on a private bene- factor, who organizes, undertakes and even partially finances some works. Often, neither luck nor circumstances are favorable. Guidelines and Procedures 60. No guidelines and procedures, comparable to DLG's Blue and Orange Books, have to date been drafted to deal with the specifics of the barangay road sector. This may already be a harAAicap for national highways, the PE0s and NIA, if they are involved in barakay road maintenance. Though parts of their networks have barangay road characteristics, these agencies are not specia- lized in low-class roads. To the municipal and barangay administrations, which typically lack engineering expertise, lack of manuals could mean that they are prevented from organizing efficient maintenance of their own and from effec- tively participating in technical discussions about maintenance to be per- formed.641 Funding and Expenditures 61. National aid for barangay roads is currently about P 6,8001km per year (40% of EMK), without regard to road design, condition, traffic or other road characteristics. Because of their extremely narrow fiscal base, barangays are not expected to provide counterpart financing. Also, provinces make no funding contribution. Without actual cost accounting, opinions differ about whether the funds are adequate under usual circumstances, provided they flow into maintenance and are efficiently spent. The allocations, as national aid for other roads, are granted for specific identified roads. 62. National aid is only given for classified barangay roads, which by virtue of their engineering characteristics are perceived as "maintainable".65/ To be classified, a road must meet these minimum requirements: right-of-way of 10 M; travelled way of 4 m, and 1.5 m shoulders on each side; and surfacing with gravel or other granular materials. The national highway authority, which keeps the inventory, performs the classification checks as best as it can. The standards are seemingly excessive, eliminating maintenance funding for some 64/ For some time during the eighties, some municipalities exercised direct and immediate supervision over barangay road maintenance in their jurisdic- tions. 651 To be classified, barangay roads must be the subject of a resolution by the barangay council, and they must be existing, not abandoned and-carry traffic by vehicles. 23 existing roads, which actually serve rural transport, and unnecessarily raising investment cost for others.661 63. Limited by backlogs of maintenance works, the requirement to maintain roads not qualifying for national aid and the practice of diverting funds t non-maintenance activities (such as road betterment), local authorities operate with maintenance budgets which are less than what they are supposed to be. Defying guidelines for use of funds and bypassing checks by the Commission on Audits (COA), the barangays, municipalities or the tecbrical assistance agencies manage maintenance funds as they see fit. Equipment and Workshops 64. For use of equipment (including vehicles) in maintenance and provided financing for fuel is available, barangays rely on other government agencies, primarily the districts of the national highways, the PE0s and NIA. Sometimes, a private contractor is able to help. This system leaves the barangays very exposed, as the supporting agencies are seldom in a comfortable position themselves, having limited workable fleets, insufficient funds or facilities for equipment repairs, and uncertain prospects for renewal of worn-out pieces. 65. By all evidence, present equipment fleets by national highways and the PEOs are not scaled to barangay needs, not even in those provinces supported under the Bank's two rural roads projects, except for a tiny length of baran- gay roads (280 km) financed under the second project.671 Around 1980, when the Bureau of Barangay Roads (BBR) was abolished, the national highway authority transferred equipment to provinces, to be used in barangay road works of all kinds, including maintenance. This equipment, already aged when transferred, Is now more than ten years old, without funds for regular maintenance and in very poor and unreliable condition. Road Conditions 66. A most disconcerting impression has emerged from this study about condi- tions of barangay roads, including roads financed under Bank projects. With rare exceptions, the roads are in urgent need of routine maintenance, which as far as could be determined, is seldom performed. No road inspected had recent- ly been graded. The situation for periodic maintenance is not better, as inadequate attention to periodic resurfacing has worn many roadways Into the sub-grades. Otherwise, lack of follow-up maintenance has negated the effect of regravelling when, rarely, gravel was applied. Some sections are impassible in 66 This point, made on various occasions in the past, is again being raised in the context of the Bank's Second Rural Roads Improvement Project, under which consultants are to review the feasibility of labor intensive rural roads works. Refer to Second Rural Roads Improvement Project, LSDP II Rural Roads Component, Situation Report dated 31 October, 1987. 67/ SAR, Ln. 2716-PH, para. 3.06 (a). The 280 km are located in three settle- ment areas. The project funded equipment dedicated to these roads. 24 the rainy season. The state of the entire system is a far cry from what would be desirable for rural development. 67. From the inspections conducted, the conclusion can be reached that up to 502 of barangay roads are in urgent need of some form of rehabilitative maintenance. This would include culvert replacements, spot repair works and regravelling. Some 302 of the roads are candidates for localized improvement works, involving reconstruction of formations, upgrading from earth to gravel standards, raising of embankments and roadway widening. Significant recon- struction on new or existing alignments would also be required due to sinking of formations, bad sub-grade material and flooding conditions, among other factors. 4. Irritation Roads 68. Generously supported by several Bank projects, NIA has a reputation as a well managed and endowed government organization, taking so far reasonably good care of its assets. Against this background, local governments are usually very content with NIA managing its road retwork, including those parts which are not necessarily needed for irrigation operations and maintenance. By its own classification, NIA manages some 8,800 km of service roads, whose primary function is the servicing of the irrigation systems, and some 1,500 km of *access" roads, which open up rural areas or, at one time, were needed as access to irrigation construction sites. Service roads run usually along the canals and were reportedly introduced to NIA by the Bank. Virtually all the roads are open to public traffic, which in some cases can be significant, matching traffic on major provincial roads. 69. With good engineering staff, NIA is generally familiar with appropriate procedures for maintaining and improving roads. It also, at least at this time, still has sufficient equipment at its disposal to undertake mechanized operations, though the situation is gradually becoming difficult in the absence of funds for replacements. Funding for the roads is becoming a major issue, as NIA's operations and maintenance budgets are getting tight.f/ Except for 1987, when NIA's central office provided some but not fully ade- quate financial support, road maintenance was the exclusive financial res- ponsibility of NIA's Regions. Unless funding will be institutionalized, the issue of maintenance could become accentuated. 70. To ease its burden from road maintenance, NIA is seeking national aid for its service roads, though it intends to keep their legal title. A major part of road deterioration is due to traffic, which is mostly public, and NIA is, therefore, hoping for a sizeable national contribution to the maintenance funding. NIA expects to gradually transfer the access roads, which are still in its possession, to local governments or national highways. However, this move is not universally supported in rural areas, as it would merely shift the 681 The Bank's 1988 Irrigation Operations Support Project, Loan 2948-PH, will possibly bring some relief for the roads. 25 maintenance burden to other jurisdictions, which may have more difficulty providing adequate maintenance. 71. As observed by the OED mission, the majority of NIA roads is at present in fair condition. In one NIA Region, reportedly, the roads are in very poor shape. Access roads seem to be more deteriorated than service roads, presu- mably because of higher traffic. Many roads are in need of regravelling and localised repairs such as embankment works, replacement of culverts and reworking of formations. In many cases, swift maintenance intervention is due, before rehabilitation becomes mandatory. 26 IV. CONCLUSIONS Bank Maintenance Stratemy 72. The foregoing analyses reveal that the Bank made an initial contribution toward upgrading of rural roads maintenance. At the outset of its involvement with rural transport, based on its own and other agencies' sector assessments, it recognized the need for maintenance improvements and it put this repeatedly on record. But it acted slowly and has not yet exerted a strong influence in solving the maintenance issue, even though the opportunities existed: the scope for maintenance improvements was enormous, other lenders had a more distant relationship with the sector, the government was ready to work with the Bank, and the Bank was perceived as having a sophisticated approach to rural development and transport. 73. Despite early recognition of the maintenance issue, the Bank has not been a force in initiating a comprehensive development plan for rural roads main- tenance. No such plan has yet been produced. Neither has the Bank made rural roads maintenance the object of substantive transport sector work and drawn up a comprehensive and long-term strategy for its support to rural roads main- tenance. This may explain some of the shortcomings of its past assistance. The closest the Bank came to contributing to a maintenance plan was under the (first) Rural Roads Improvement Project, when it devised a model for exter- nally funded (provincial roads) maintenance projects. But the model lacked a clear time and country perspective, not specifying at what pace good main- tenance was to extend over the whole of the country. It was short on setting standards for concrete maintenance results. It left the larger part of the network, the barangay roads, out of consideration, and it was experimental in nature. 74. Though unequivocally recognized as a major rural transport issue, main- tenance was in the background of the Bank's lending operations. Not only was maintenance a minor concern under the %gricultural, rural development and irrigation projects, it also enjoyed only partial attention under the two rural roads projects. Under the first project, road improvement and construc- tion claimed most of the government's and Bank's financial and institutional resources. Under the second project, maintenance was by design even more relegated to a secondary status. From the perspective of maintenance, it was unfortunate to embark simultaneously on sizeable road construction with institutions weak in works implementation. 75. Quite likely, the road investments were justified in their own right and will make a contribution to the upkeep of the roads constructed. But, if government and Bank resources had to be shared between competing claims, it is debatable whether construction deserved first priority. At least when the second project was prepared, an explicit comparison of benefits from maintain- ing a great length or improving a relatively small length of roads should have been made, based on the experience from the first project. Maintenance has the potential for comparatively high returns, per unit of money and efforts in- vested. Furtter, it has the advantage of requiring relatively limited resour- 27 ces for comparable results, an Important consideration in the country's ex- ternal borrowing strategy for the sector. Bank Proiect Operations 76. The design of the maintenance components in the two transport projects went the usual route: heavy reliance on procurement of capital goods (equip- ment and workshops), a strong dose of technical assistance, and the prescrip- tion of some government commitments. There was no clear up-front understanding of complementary factors which might be needed for making these inputs work, and no strong evidence that the inputs were likely to produce results. If com- plementary factors were a concern, they were essentially left to be identified later, perhaps during project implementation. At the time the second project was prepared, an opportunity was missed to conduct a thorough review of the first project's experience. To this date, no such assessment has been per- formed in the Bank's operations complex. The record demonstrates that the design of maintenance components was an imperfect art, performed with plenty of faith in the final outcome. 77. In designing the projects' maintenance components, no convincing efforts were made for monitoring progress in institution building, equipment manage- ment, training and the like, which have a critical bearing et standards of road maintenance performed. The first project even had no provision for recording actual road conditions. The second project mandated condition ratings, which at this time are not yet operational. Under these circumstan- ces, Bank supervision missions reported primarily on procurement and loan disbursemeit, detracting from the picture which really counts: progress in institutional development, maintenance and so forth, for which the projects were ultimately made.69/ Bank Internal Orzanization 78. One characteristic of the Bank's work on Philippine rural roads was the way in which its in-house transportation expertise was initially utilized. For many years, the transport components in agricultural, irrigation and rural development projects were designed and supervised without participation of the specialists grouped in the Bank division responsible for Philippine transport. The Bank has given no explanation for this situation, though Bank staff 691 The supervision reports for the (first) Rural Roads Improvement Project did little to shed light on the maintenance situation. Some earlier reports made sweeping and uncritical statements about improvements in maintenance being made. Another, later, report made the unsubstantiated and, in light of actual conditions, remarkable claim that "the borrower complies with the standard covenant on maintenance ...". Several reports either disregarded the maintenance topic or limited themselves to peripheral details. Only very recently have Bank missions, in terse language, expressed concern about main- tenance results. 28 associated with the research and writing of the OED 1988 Rural Development report noted that this was the custom followed elsewhere in the Bank.701 79. When rural roads were assigned to the Bank's designated transport divisi- on, there still was a mismatch between the demand for and supply of Bank expertise and staff resources. Even though the maintenance issue was complex and intractable, the Bank made no apparent special provision for staff selec- tion, staff time budgeting and use of in-house expertise, assuming it was available.711 Average supervision time for all components of the first rural roads project was 13.5 man-weeks per year, a rather modest figure. By all evidence, little time was spent on the maintenance topic itself, on which the (first) Rural Roads Improvement Project purportedly was focused. Overall, Bank staff supervising the project were basically cast in the roles of "loan ad- ministrators", for whom disbursement was of paramount importance, rather than sources of technical expertise to whom the client and the Bank could confi- dently turn for guidance and advice. Despite having had a stake in the pro- jects, the implementing agencies and consultants could not compensate for limitations in the Bank's supervision activities: the agencies, the target of institutional improvements, were not et very effective; and the consultants, operating under numerous constraints, could function in an advisory capacity at best. 70/ "Rural Development. World Bank Experi"ce, 1965-86", A World Bank Opera- tions Evaluation Study, 1988. 1/ DLG notes that in case of the (first) Rural Roads Improvement Project, no Bank staff monitored maintenance progress and activities. DLG, 9/01/88, page 7. 29 V. RECOMMENDATIONS 80. The first recommendation is for the government to accord rural roads maintenance policies highest priority in the management of the rural roads sector. With a network of some 130,000 km of rural roads in place, maintenance is to safeguard the value of a major public sector asset and to ensure that expected economic and social benefits, which led to the road investments, can be realized. As a first step toward a high-priority and effective maintenance policy, preparation of a comprehensive development plan for rural roads maintenance in the Philippines would be appropriate. The plan should cover all classes of rural roads and all provinces. DLG's currently prop"sed maintenance program could be a good starting point for this undertaking./21 Possibly drafted in a collaborative effort with the Bank, ADB or other development institutions, the plan should take account of the experience from the (first) Rural Roads Improvement Project, for which the project completion report soon will be due. Topics to be dealt with should be the organization of the rural roads sector, with full coverage of the barangay roads, institution building, maintenance guidelines and procedures, equipment and workshop management, financing, cost, financial accounting and staff development. As part of the exercise, the issue of appropriate levels of maintenance for various road categories and the effectiveness of the present maintenance management systems could also be reviewed.731 The plan should have a time dimension and be speci- fic on actions to be taken. 81. The second recommendation is for the Bank to support government efforts at preparing a rural roads maintenance development plan. The support should include transport sector work which recognizes maintenance as a major policy issue. The secror work, in turn, should be incorporated into the Bank's strategy for assisting the transport sector. As the latest Bank sector report has recently been published with litle thought given to road maintenancet a special free-standing maintenance document could be prepared. Perhaps, the paper on rural roads could be combined with one for national highways, which still have acute maintenance problems. Not to lose further time in dealing with the rural maintenance issue, after close to 20 years of Bank involvement in the rural roads sector, the sector work should be treated with a sense of urgency. 82. The third recommendation is for the government and the Bank to consider preparation, as early as possible, of a genuine rural roads maintenance project, perhaps within one year after submission oi the proposed outline development plan for rural roads maintenance.74/ The project, if any, should 721 DLG, 9/01/88, page 7. 73/ Based on Bank staff comments. 74/ In the meantime, tne government is preparing a loan request to the Bank aimed at making real progress in rural roads maintenance. 30 include a credible start with barangay roads. Not to detract attenti. from the maintenance task, road construction (including rehabilitation) components should be kept within limits. Among the project features should be a main- tenance monitoring system aimed at observing real progress in road conditions, institution building, equipment management and staff development, among other areas. Procedures should also be put in place to generate Bank supervision reports which give meaningful accounts of maintenance advances. In the mean- time, the supervision reports for the Second Rural Roads Improvement Project should be upgraded in the same spirit. 83. The fourth recommendation is for the Bank to make special allowances for the complexities of maintenance when staffing and budgeting future rural roads maintenance activities. This should include the ongoing Second Rural Roads Improvement Project. Perhaps, a nucleus of maintenance expertise should be organized in the new Technical Department (TD) of the Asia Region to-provide advisory support to the regional country operati"ns divisions. Thought might be given to establish the new TD unit on a permanent basis, in response to the dimensions and complexities of the maintenance issue and the Bank's recent reorganization which foresaw the creation of regional centers of technical expertise in the Bank. It might also be appropriate to integrate the Bank's Infrastructure and Urban Development Department (INU - in the Policy, Planning and Research Staff) in the rural roads maintenance efforts, given its more recent success in the analysis of the maintenance issues of major highways and roads. Table 1 Philinin. Rural Roads Length (km) Road Ca%egoriesa2I 21 112 121 AI 98 18 National, secondary 8,000 9,000 8,969 13,878 Provincial ( 32,000 ( 35,000 23,775 28,103 28,431 28,224 29,954 28,333 Municipal ( ( 16,315 13,045 8,257 9,526 Barangay 32,580 56,519 85,264 90,879 Irrigation 5,000 10,000 10,000 Other 14,378 Total rural 38,000 44,000 48,786 69,404 69,268 99,269 125,218 129,212 National (vio secondary) 7,000 7,000 9,080 7,437 21,260 22,305 23,957 26,229 Total overall 45,000 51,000 57,866 76,841 90,528 121,574 149,175 155,441 Sources All roads in 1962 and 1965: OD estimates, based on Current Economic Prospects of the Philippines, Volume II (Special Annexes), 1973 (Report No. 78a-PH). All except irrigation roads in 1969 to 19821 Staff Ap- praisal Reports (SARs) for highway projects. All except Irrigation roads in 1986s Department of Public Works and Highways (DPWH). Irrigation roads only in 1978 and 1986: National Irrigation Administration (NIA) and OED estimates. Т�tв ? Рояо 1 �г1д 9enk Laлdinя Рлг PAilieelм Rnм1 R� Рюiвеt ffввв � ��lвкаiР{свilлл Rлвд LмeEh tK�1 [лм%г. C�f�NS! � Рглlвеt [est � Аягiаиltnмl/Iггбявbiоn/Rим1 Овvвtорввnа Projвets Тагlsа Iгггiяs0iол 8уsаввв Lpr. L 1�-Рl1 1Z/17/74 Iггiявtiоп 426 1.4 а4.в Ruгat Dowlopiи�t (Уlпдого) L цб'1-РИ D4/D8/7b ltatiionвl 16в Рм�tло:.i � 4а�е 8.s бв.е й Увяаt Riивг 1Аtltiригрмв L 11b4-PH в7j42/76 Irгi�iioв Ва2 18.7 84.е Chieo Riwг 2ггiяаtiод L 12?7-РН ва/Za/7в Proviмisl в6 18.д ц.б Jslauг Iггiяs4ion � 18в7-РН в'1/б1/77 Iггiяsi�ion 686 В.8 а4.а Ns41. irгlявtion 8уаt�мв Iврг. L 1414-РН в6/Оа/77 Iггi�ia� 1,я1® 17.1 ц/.4 Sвcond Rим1 Ооvвlорвмti L 14ц-РН вб/17/ТТ Pгоvinaial 1� Вамлрв�� а99 бвв я.я аа.в Sвеогад Nвti. 2ггiрвbiа� L 1bZв-PH 02/28/78 2ггiяaiion �,А66 �.7 14в.! Rим1 Iлtгмbгиаtигв t в7Dд-РН 04/11/78 Baranяay 1,48D Z4.4 Sя.S 8амг Istand Rим1 Овrвlорвмti � 177Z-P1i 1�/е4/7я Nsbioмl 280 1я.8 46.е waбarseaб. srгtя.eta� � lевя-Рн еа/1а/ев IггiBaiion 1,14в в.4 11e.s wаймhвд М011Т аад Eмslon рЛR L 18яв-РН /7jee/80 IггiявЫвn 410 я.в 7i.в с�..wмб iггt�боп ar.to�ю � ц7а-Рн ев/ее/ez Zrгlystioп ил 1s.e 1ц.е Смtга! У1и�►аs Rpioмl Dwв1. L 2аQв-РМ 12/ва/8а Bsгan�► вя7 1а.8 44.8 aab�oiвl 1 Provlмiвl 486 } 8afanяsy Е,487 } я?.Е а14.я Nat1 ом 1 а8в } Iггtявbiол в,ве7 вь.в вва,s �11,7в� �1п.е) tяв8.4) Tab[& 2 Pa" 2 llorld &ank Landing tgr PhItIffilne Rural Roade Lnltr Ne. Aø Clagelfleation pr61" £21&-Gmja Transportetløn prøj«tø Rural 11«& lfåprovamt L 1888-N 86129/8Ø Prøvlneiel 755 Bare~l 85 National ge sa 79.8 186.8 S~nd Rural R~ xøprøya~ L 2no-m øsjiø/w prøvinciai 978 Bare~ 2N Katlonel a i,m 97.6 ift.e Subtotal 2 Prøvinel*i 1,7se Bar~ us National 176 (2,216) (187.8) (127.8) All Proj«te Provinelel 2,215 > OgraftFy 2,W2 > 269.2 441.9 National SIM > Irrleatløn 8,M7 85.8 GU.S (t8,924) sour~s naff Approlmal R~m (Sms). Annex I Page 1 of 8 Comments by the Department of Local Government (DLG) Dated 9/01/88 vaW M SiM FM HIIRAL KM IW M PHU= PHULIPINS CM SMW- OED Cousents The numbers below correspond to the numbering used in the Bank's Draft Report dated June 10. 1988. The statenest in block form was copied fron the said draft report wnile those in itaiies represent the OcOMunts or reactions of the Department of Local Government/Rural Roads Improvenent Project Office. 16. In 1980, the Bank finally unde the first of two transport projects focused on rural roads, and in 1986. it followed with the second. Both projects. similar in design, were aimed at these objectives: construction or improvement of some length of rural roads; upgrading of rural roads maintenance in some provinces; and institution building in the road sections ot selected provincial adrinistrations and the Department of Local Government (DLG) , the umbrella organizations for provinces. The transport operations, covering a wider band of sector issues, were vast improvements over their A/RD cousins which are largely content with f inancial rural road investments. I. THE 1RAVSAM PROS IAD ASO SERIOUS SHRHIMG: THE! LAIELY SIDESTEPPED BRAlMY IM. which have the greatest length of all road classes; they did not address umintenance with the same attention to purpose and effort as shawn under the bank's highway projects; and they PIAM MUIMEANE CFF CENTE STAGB, MIS INSTEAD ON CIVIL Mil. rootnotes 16 and 17 The two transport projects on rural roads sidastpped barangay added to fial roads because they are aner the supervislon an responsibility rt of Department of Public works and Highways (DPAN) and not DL. Also, maintenance was placed off center focusing instead on cIvil works probably because the Bank mLssion's oftentation as more on construction than miIntance. In audition, despite semi-annual maintenance progress reports being subaitted, there was never any comnt from the fantr mission nor serious attempt to discuss issues regarding maintenance. 20. THE SIID P91M NM D CAIM HAT MINTENEE NEMB CF BARAMAY IDS WOULD BE ON THE AGENDA, though it reported continuation of the Bank's rural development efforts begun under the first rural transport project. Once more, the BAR did not explain aat, if any. program existed for barangay road maintenance and wMat this meant for rural transport and development, and the Bank's strategies for lending and sector work activities. Ise dealt with Legally, although OLG was the lead agency for SRRP, the in paras. 26-27, maintenance coopanent specifically for oarangay roaas was never 29-31 of final really transterrea to it such that while the project prescribed 231of fathat DLG will Implement rao maintenance, the existing laws report. Incluaing supervision and financial matters still rested with OPrM. Ana as earlier mentioned, barangay roads are wder the ssipervislon of IW. 23. In late 1987, aitVieritatition of the second rural roads project was about two years behind schedule. in large part because of slow construction progress. The final completion date wes expected to be delayed by one year. ABOUT ONE AND ONE-HALP YEAR AFTER STARr CF AI MMIA iON, to CONCLUSIONS HAD YET SURFACED ABIT I1W PIOINCIAL IED MU IAlM WAS DEVELOPING AS UNDER THE FIRST PROJECT. PEsS R o S AND PIIEF MIMINGK M tOr SEt UP 10 SYSMWTICALLY DEAL WITH IS QiMK. 35 -Annex I Page 2 of 8 Footnote 25 added Maybe on tne saue of the Bank. it is true that orogress reports to final report. ano project monitoring were not set up to deal with how provincial rosa maintenance was eveloping. However, as far as first rural road project is concerned, the DLG has been consistent in its reports to the Bank, but which yielded not even a comment from the Bank. The first rural roaas project of f Ice is also regularly monitoring progress in maintenance in the six provinces. To quote lines from the RRIP Maintenance SaW.Annual Reports, January-June 1987 page 8, line 1... "Political Intervention greatly affected the monthly maiatenance programes activities. A total of 300 capatazes ana Maintenance workers have been employed thru the recommendation of a high ranking official. Three shif ts of the monthly work assignents were exercised to accomouate all these employed personnel... Shortage of hand tools also hampered the performance of activies such as .. Again on page 12, RRIP Maintenance Seml-Annual Report January-June 1987, line No. 6..."They claimed that lack of equipment was the major problem but It was fousnd out that the province has enough equipment for maintenance operations. It was learned that most of these equipment have been used for san other purposes like having them rented." 28. Since the late sixties, the Provincial Engineer's Office (PED), which are part of provincial administrations, are charged with provincial roads business, including road maintenance. Aside fran roads, the PEs deal with provincial health, water, educational and other infrastructure. Administratively, the PEOs depend on the provinces. which, in turn are grouped under the umbrella of the Department of Local Goverment (010). IN TECHNICAL MATMRS 03CEING 1BM, TIl PEs tE UNtIL 1980 UIINDMR THE SUPERVISION OF 11M NATIONAL HIGMAY AINISITION AND SIS THEN CIMflW SEEMS TO 8E DIVIDED BETWEEN NATIONAL HIGHWAYS AND DEW, TIEM1I THE OMRATION LINE IS 10 ERrIRELY CLEAR. Footnote 28 of The DPWN, p to this year (1988) exercises technical supervision final report over the repair and maintenance of local roads, which inclue enlarged. provincial roads, and up to 1987, maintenance fwds, were coursed through OPiN and not OLG. Thus, as far as maintenance fun0s and technical matters are concerned, OLG does not have any control over the PEs. 28. In 1981, at the start of the Bank's first rural roads project, the BReas abo lished and its ( r eaining) funct ions were absorbed by other unit s of the national highway administration. In 1984, some barangay road functions were restored to national highways, which were also recontirmed as being incharge of barangay road afintenance. In 1985, local goveranent units were authorized to undertake barangay road iaprovemnts and maintenance, under the technical supervision of the national highways. A SIMILAR ARRANGEMENT FOR IOD IMVWMMtf, HUT 10 MAITNAlM. HAS BEN PUT IN PLACE IN 1982 MC THE SIX PII INCUMADED IN 1m SANK'S IRAL ROADS IMPROVEMENT PROJECT. More recently. the armed forces also got involved in rural roads activities, partly for reasons of security in sensitive areas, and partly, in the view of observers, because of government dissatifactiton with other inplenentation agencies. Para. 30 of final In aaoition, at the time when OLG expects to negotiate the ARIP report revised. with ISRD, a memoranduw of agreement between OW ano CPI was signea on April 15, 1980 specifying that disbursement of the repair and maintenance of roads funds shall be coursed from Ministry of Budges (now Department of Budget and Management) to 0PrH which shall then release said funds to OtG for aIstraution to local government units. However, this agreement was never 36 Annex I Page 3 of 8 effected due to the failure of the National Government to translate this into Law because in the yearly Budget Appropriations Act since 1981, there was no provision which will make this agreement effective. 29. In 1987, the process of organization changes continued unabated. Just after aid-year, national highwya were confirmed as being the impleaenting agency for barangay road aintenance. Funds for maintenance were to be administered by national highnys. LATE IN IMe YEAR. ,%INrENANCE FUNDS WERE DIRECTLY 4IYEN TO BARAIIAYS. and this as continuet as a shift of full maintenance responsibilities to them. In 1987, maintenance fusas for other local roads (provincial, municipal, cityJ were also released directly to these local government units. But still, DPWH has the technical supervision over these roads. 32. Though the project completion report has not yet been written, it does not seem that provincial roadA has been encouraging, at least not for construct ion . THE %il 1I0 a=E EI THAN EP=TED, pIPrlw THE SBIDD EM 10 THANSME CONWKff ION RESOISIBILITY 10 DIG, WI1HI PARTICIPATION O TllB PiOWINIS 1O SPED UP IWIAENFATION. Without being directly involved in construction under the second project, provincial staff will have to acquire the requisite expertise through training programs, also included in the second project. This of course raises the question at what time capacities will actually be built up. Para. 34 of final The second sentence is not totally trust Before, most roaas report revised. under the RRIP waere uder the supervision of Consultants and yet the construction did not progress well. Moreover, to save on cost, LG decioe to allow te provinces, instead of consultants to directly servise. So far, this was yielding better results in more provinces. However, for the secona project (SRRIP), domestic consultants will be hired to undertake road construction supervision. For the construction/improvement of workshoplbuildings, the provinces will be given the responslflIty to design and supervise. 39. In their present form. hoever the GJIDELINES still need considerable improvement as iaportant issues were not addressed fully or adequately. As written, THEY LIMIT DIG IN FFEIVELY UITIORING THE PWINES. as called for under the DEG statutes and noted in the Bank projects, and they constrain 00 in representing sector interests vis-a-vis other goverment agencies. Further, they restrict the provinces in directing and evaluating their maintenance operations. Footnote 43 added The role of DLG as outlined in the RRIP which Is effective to final report. monitoring an* guiding of the provinces in road maintenance matter, has been Limited because the GOP still consiaers LPM as responsible, specifically in the-area of technical supervision. 40. The second rural :cad mt ised the opportunity to take up these issues, based on a close examination of the content of and the initial experience with the manuals. More than the manageTont of construction warks, the DESIGN AND IHBVIEA W AKINTEAKB CIDELINES AND PIOC20URES ME TASKS EOR WHICH COMPETENT AND TIMLY BANK PARfICIPATION WIOD HAVE BWEN ESIRABLE AND V110 (iaO NOT BE LEFT SQLEL TO DIW AND THEIR CDISULTlS... 37 Annex I Page 4 of 8 rhe OLS ano the six provinces' nmintenance experience Wr the first RIP are good ewoug to review and Improve the maintenance guidelines. In fact it is now one of the major concerns of OLGIRRIP. The guidelines itself set provisions for its revisions (see Chapter 7, page 7-9 of the alue aooki. 41. Anmng the topies. which are not yet adequately covered are: a. ACOGUNTING FOR ACTUAL COST OF MAINTENANCE illB. At present. no records are being made of aetual cost in the provinces and budget estimantes serve as "actual" cost. For the programiag of works. STANDARDIZED I NFrS AND UNIT 009T ARB 8W ASSID. EUSASI at s0s TIW IN 111 PAST to represent country-wide conditions... Footnote 45 cf Nos necessarily true. The unit costs (labor. equipment ang final report materials) for the programing of works are actual average uit modified. costs from the provinces, which are annually spastea. However, for provinces which do not have data for equipment costs, they scopt the Interim equipment rental rates which was computed by the Consioltant in 1985. Accounting for actual cost of maintenance works has been develqped by RRLP. Kowever, there was strong resistance frao the provinces to implement it and the lank oid not insist on it. 42. ANOTHER 16PORTAT TOPIC ROUND WHICH THE GUIDE.INES SKIR IS THE QUESTION CP 0QUMMNr IPACMN. Noting that replacement me a eritical issue which needed resolution, the guidelines suggested one of the two possible courses of action: a "firW eommitment by provincial governmat economics; or the establistunt of a separate, self-sustaining equipmnt fund. Nei t her proposal as been apleueated and neither is nob in favor by government planners, though the third alternative, asking no advance fubding provisions, is not satisfactory either because of the obvious risks to the equipment fleet and road aiatenanhe. So far, the Bank, which funded equipment purchases under the two rural road projects, has not taken a position an the subject. Footnote 47 added RRIP has atteipted to set-4 trust accourt for future equipment to final report. replacement by instructing the provinces to set aside depreciation cost of existing equipment, but this was not allowed by COA. 0L, however at present, has developed a program for rehabilitation of equipawet of local govervmnt units, which include procurement of spare parts for these equipment. 43. Since its involvement with national highmys, the ank made funding (A national roads maintenance a major sector priority. AS A SSULT CF ITS CONTINUOUS REPRESENTATIONS AND THE GOVERNMENT'S OWN INITIATIVES. ALLOCTIONS 10 WIONAL HIGIMYS INR1ASED SrEADILY SINCB 11 SEWWISB 1 A0UIl MIMI AND WR8 ID HOW aE. Par&. 45 of final Allocations to national highways increased only since 1986 reprt modified. when the Basic Cost of ENK was 014,745.00 ane 1988 a P,17,106.00. Until 1985, the Basic cost of EMK was 011o342.00. 38 Annex I Page 5 of 8 44. IN PAFALLEL, ALLOCATIONS TO PROVINCIAL 1tMS ALSO I . based on the requieement that provincial roa amintenance shoulo receive T5% of funds for a 3tandardized national road In. knone as the Equivalent 8aintenance Kilometer (&E). T%o-thirds of the provincial roads allocation cas froa national aid (50% of 3W), and one third fra the provinces (one half of 50 of EMK). The funds are to cover routine and periodic maintenance operations. The allocation to a spelefic kilometer of national road, presently P-7.100/year. is calculated as a function of road characteristics, such as road pavment . width, type and length of bridges and traffic. By contrast, allocations to provincial roads are not adjusted for any of these factors and solell based on length, even though the cost of amintaining individual provincial roads can vary considerably. At present, the allocation for provincial roads 10m. fra both national and provincial sources is about PI,800/year. OED agrees. Although maintenance allocations for provincial roads rose with the increase in allocations for national highways, there is still much to be acne about provincial roads fuiding since technical parameters such as road width, surface type, average daily traffic, bridge length and number ware never considered, 48. A ROUGH CAILLATION USING 1987 DWA INDICATES 71 THB PREINT AILIMNEN TO PROVINCIAL MD NTUNICB SY BE 10tAfX INSUFFICIENT, 1 A TTPICAL PROVINCIAL ROAD SYSTEM. IF ADEQUATE MAINTENANE MS AIWISD. AU MAI NTENANCE FUNDS WENT II1 MIUNTENAl AND RWffrRW NtS FICIElfMLW HANDLED. IN WALITY. FUNDI Al FRIEURLY DIVERID 10 1 USES AND, AS THE 1960 PROJECT NOTED, INEFFICIENTLY EPENDED. Another problem shich surface in a province covered under the first project wae the partial withholding of provincial counterpart funds for maintenance, disguised through 'creative" accounting. Aided by the anticipated financial accounting systems and lack of actual cost reporting, many non-maintenance functions, such as design and planning, are subsidized from the maintenance budget. In addition, in provinces which are short in investment budgets, the road maintenance allotment is used to absor% parts of the PEO's administrative cost including workshop overhead cost. Further, political pressures often lead to inflated staffing levels, financed ftrom maintenance funds. All these issues exist. in one form or another, in most provinces. independed of whether they are part of Bak-style rural roads operation. Footnote 54 added Totally trust Since COA was -rot even auditing disbursent to final report. under Republic Act 917. Had CQA been aditing disbursemnt of roa maintenance funds, the use of such funds will be safeguarded and there will bo minimal diversion of funds. 48. UNLESS, 80WEVER, ARRAAKEMf MB MtE KR THE TIMM EQUIAW I2i8L. STOCKS COULD REVERT TO THE CRIGINAL SITWION WilIN 4-8 WAM. IF NOT EARLIER, depending on type of equipment. as a result of actual conditions under which same pieces are used and repaired. As already noted, no good procedures have yet been devised to facilitate equipment replacement at the right time for the road maintenance organization. The Bank style rural roads projects would not be the first ccasion that provincial equipment fleets ware built up, only to deteriorate thereafter for went of a workable tenem1 policy. In the early seventies, the first significant investment were made in provincial road maintenance equipment, as part of USAID's Provincial Development Assistant Progream (PAP). In the late seventies, the second round of acquisitions was started, this time f i"anced primarily through Philippine Land Bank loans. Both phases vas quickly followed by a general decline in the size or conditions of the fleets. 39 Annex I Page 6 of 8 There was a move Dy RRIP to set tW tevolving fAa for equipment rehaOilitation and repair to be taken fra RRIP equipn amortization. There was, however, some resistance from the Owaartnt of Finance. S2. TO WHAT SMTENT THE SANK-STYLE AIlWRAI ENI S HAVE SD FAR IMIW PROVINCIAL ROAD (IDITIONS. AND IN FACa WIJ IWIOE 1N.THE EilM. IS A QUESTION NOT EASILY MIMD, IF OILY. BASE IO IISICH HAS YfT BIEN MAWE POR CONDITIOI MI01RIN. This, in turn, leaves the question open, what contribution maintenance has nade to date to such formidable project objectives as alleviation of poverty. provision of health care and stimulation of food production and rural emplopment opportunities. Without one day providing nore information, it may require an act of faith to proceed with aore o1 the Bank-style projects. Footnote 57 added As mentioned uneer Item No. 40, the MLG will be reviewing ane to final report. Improving the Blue Book and attention will be focused an roa conditions monitoring. But it is true that the iaprovsant of provincial roaes condition is a question not easily answered since a lot of factors will have to be considered such as current maintenance fWding and the backlog in road conditions, anng other things. S. Based on road sampling by the study mission, provineal road conditions are poor to bad on average. ny provineal roads had deforand, scoured and rutted surfaces, often with poor to non-existent and suntims negative cross-falls. UIlUS DIMR GAXS AND IARlS AB 050 SHAPE SURFACES, GRAVEL IS PERIODICALLY APPLIED AND ROLLERR Agg USID FOR COMPACOON, THE STMI IS SBT I MMllSVEY 0RIID MWITIOIS, MHII FINALLY REQUIRE C EMST PARIAL ASILITATIN. 1 10 MUCB VISITED WAS THE EVIDENCE OF SQUIPMENT BEI M USED IN S1MW o1 M13II OR PERIODIC ROAD MAINTEMAKEt EVEN 11WE= THE 1AST VISIT MEL INI 111 DW SEASON, WHEN MECIANICAL OPERATIONS SHOULD BE PERFORMED. In one exceptional province, impressive labor-intensive efforts were being undertaken, espeelally on road-side maintenance, and here the only maintenance work cres could actually be sean during the field visits. in another province. regravelling has been attempted through anual spreading freM stockpi les. Footnotes 60 and 61 Evaluation mase by the technical staff of the MP revaled added to final report. that mst provincial roads, not only those uder the MIP but in other provinces as well, are in condition wherein noaal maintenance work is Inadequate. Thus, a maintenance project proposal has been prepared Which includes partial rehabilitation of these roads. Regarding the observation of the mission that thete was no equipment assisted activities... Wile true may be misleading. The national maintenance feas for same provinces were releases only starting on the third week of August thus, no major activities can be expected. 54. In the six provinces covered by the first rural roads project, the overall situation might be slightly better, but it is debatable, whether it is satisfactory overall. IN 18 VEVIEN (CE DVERNIA WFICIALS, THE MO HAS W10 YET IaPROVD IO&D CONDITIOIS VERY flICEAX. 1118 IS OILY THE IMPRESSION GAINED BY THE STUDY MISSION. In one province. however. it found visible toprovements. In another, by contrast, the project sedea to have left few traces. Annex I Page 7 of 8 Para. 56 of final While it Might be true that road conditions in the six RRIP report revised. pilot provinces has not yec inproved very noticeably, this has been due to a lot of factors such as late release of fuds, polItIcal situation, improper spending of maintenance fund, etc. 76. This study produced the definite impression that there a MIS1 I BElPEN THE DEMAND FOR AND SUPPLE OF BANK EXPERISE AND STAFF RESOURMS EVEN THOUC2 THE MIHENAE ISSUE MhS COMLEX AND ItMCA.B, TIIB 8O115WMB 10 APPARENT SP2CIAL PIWISION ER SAFF SELICION. STAFF TIMB BUM INO AND TAPPING OF 1N-HOUSE EXPERTISE, ASSUMING IT WAS AVAIIAWA. Average supervision time for all coyonents of the first rural roads project was 13.5 man-weeks per year. a modest figure not cosidered adequate by some government officials. Thus, Bank staff working on the maintenance topis were almost east in the roles of "loan administrators", rather than solid sources of technical expertise to whom the client country could confidently turn for guidance and advice. Caubined with tightening in recent years of the Bank's operating budgets, the Bank's widespread practice of giving priority to new lending operations and project focus on road construction. these conditions were not favorable to the resolution of the Philippine maintenance issue. All the handicaps were and ca*ild not compensated for through more reliance on the executing agencies and their consultants. Pootnote 71 added In the case of RIP, there wes no Gank staff ever monitored on to final report. maintenance progress an* activities. 7T. THE FIRST RECARMDTION TI THE BANK IS 10 IRAPT AN OULIN OEVELRAN PLAN FOR RURAL &M MAINITHNZ IN 111 PHILIPPINES, COEI AI. CLASSS OF RURAL ROADS, ALL MIdES, AND TB F01 1M DANK INEDS 10 FAT IN IT. The proposal is made on the assumption that the Goverment faces constraints to produce the plan on its own and the Bank can master the necessary in-house expertise. The plan, a collaboration effort with the government and possibly AM, should take account of the experience from the first rural roads project, whieh by now is alast iplemented and for which the project coupletion report soon will be due. Topics of special coverage should be the organisation of the rural road sector, with emphasis on barangay roads, institution buildlog, maintenance guidelines and procedures, equipment management, f iancing, cost and financial accounting and staff developmant. As the latest transport sector paper has recently been published without much though given to maintenance, a special free-standing aintenance document should be prepared. Perhaps the paper on rural roads could be combined with one for national higtmys, which also still have acute maintenance problems. Not to lose further tuse in resolving the rural vaintenance issue, after close 20 years of Bank involvement in the rural roads sector, the maintenance plan should be produced within one year, by about mid-1989. Footnote 72 The proposed maintenance program of OLG (Provincial Roads added to final RehabIlitationlMaintenance Progra) can Do a spring board for report. the first recommendation since it properly addresses the problems and issues In the first phase, before earking on actual worm Implementation. This program will start with provincial roads since the provinces are alreasy organized. What is needed are Institutional and operational Improvements ane staff development. The rest of the rural roads sectors follows. 41 Amex I Page 8 of 8 78. f1E SECOND REXIMEOMION KR TdE BANK IS 10 CONSIDER PRPARING A GNUINE RURAL ROAQS MAINTENANCE PIWBCI Il THE E4R FUTURE, PERHAPS WITHIN ONE YEAR AFTER SUBMISSION OF THE PROMED UJRAL ItuS MAINTENAME DBVElREINT PLAN. THE PROJECT SiMlUW MANE A CEDISIW SrART WITH BAbM X 1 . Not to detract attention from the maintenance task, road construction components snould be kept to a Minintain. Atlt the features of the project should be a maintenance onitoring system aimed at caoserving progress in road conditions, institution building, equipment managment and staff development, among other areas. The monitoring system should allow insight into project success %ftile the project is being inplanented, to provide the basis tor intervention by project management staff. AsIOe from Darangay roads of which IPiw is responsible, it is suggestea that provincial roaas of which the provincial government is responsible, shoull also be given priority. Provincial organizanon for maintenance is already existing but neeos assistance in terms of staff development and other institutional improvements. In aodition, provincial roads are important in the rural roads sector. The proposed provincial roaa maintenance project (PII) of OLG as mentionea in itm # 77 is alreagy inclucea in the pipeline projects of AEDA. I.