Turkey - Cukurova Region Urban Engineering Project

Document of Tne World Bank FOR OFFICIAL USE ONLY C Report No. 9227 PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (LOAN 2537-TU) DECEMBER 21, 1990 'S. Infrastructure Division Country Department I Europe, Middle East ano North Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MEASURES AND EO'J VALENTS 1 hectare - 10,000 square meters - 2.47 acres 1 meter - 39.37 inches 1 square meter - '0.76 square feet 1 cubic meter = 264 US gallons GLOSSARY OF ABBREVIATIONS CMTA - Cukurova Municipalities Training Association CPA - Cukurova Project Account CUEP - Cukurova Region Urban Engineering P'oject CUDP - Cukurova Region Urban Development Project DSI - State Hydraulic Works DSF - Development Support Fund GDTC - General Directorate of Title and Cadastre HUDC - Housing and Urban Development Company IB - Iller Bank KGM - State Highways Authority MHF - Mass Housing Fund MOI - Ministry of Interior MGH - Mapping General Headquarters (of Turkish Armed Forces) MOE - Ministry of Education MOF - Ministry of Finance MOH - Ministry of Health MPWS - Ministry of Public Works and Settlement PCR - Project Completion Report PCU - Project Coordination Unit (SPO) PRIMU Project Review, Implementation and Management Unit (Iller Bank) PTT - Posts and Telecommunications Authority SPD - State Personnel Directorate SPO - State Planning Organization TEK - Turkish Electric Authority UEA - Urban Expansion Areas UPPRG - Undersecretariat Project Promotion and Research Group (of the SPO) WSC - Water and Sanitation Corporation UNDP - United Nations Development Program  TH WOLtD &l41 FOR OFFICIAL USE ONLY WasH"'on. O.C. 20433 U.S A Office of Dinsc -Goe l December 21, 1990 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Turkey Cukurova Region Urban Engineering Project (Loan 2537-TU) Attached, for information, is a copy of a report entitled "Project Completion Report on Turkey - Cukurova Region Urban Engineering Project (Loan 2537-TU)" prepared by the Europe, Middle East and North Africa Regional Office with Part II contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment Th es Zu _lbuooonwj d mbumr s abeu b _"m only t Xworm of sh G" oNN 10 =RU r9 not otlm be d_ wnbm W_UB ,_xmm.  rUR Urrif-LL UML UINLX PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (LOAN 2537-TU) TABLE OF CONTENTS Page No. Preface . ......................................................... i Evaluation Summary .............................................. ii PART I. PROJECT REVIEW FROM THE BANK'S PERSPECTIVE 1. Background, Sector Development Objectives, and Policy Context ...... . . .......................... 1 2. Project Objectives and Description. 2 3. Project Design and Organization. 3 4. Project Implementation. 5 5. Project Results. 9 6. Project Sustainability .12 7. Bank Performance .12 8. Borrower Performance .14 9. Project Relationships .14 10. Compliance With Covenants .15 11. Consulting Services .15 12. Project Documentation and Data .16 13. Findings and Lessons .16 PART II. PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE Summary of Implementation Results .18 Performance of Project Agencies .23 Summary of Findings and Lessons Learned from the Borrower's Perspective .26 PART III. STATISTICAL INFORMATION Table 1. Related Bank Loans/Credits .28 Table 2. Project Timetable .29 Table 3. Cumulative Estimated and Actual Disbursements 30 Table 4. Project Financing .31 Table 5. Studies, Feasibility and Design Work .32 Table 5A. Project Costs .39 Table 6. Statement of Compliance with Legal Covenants 40 Table 7. Missions .41 Table 8. Bank Staff Resources .43 Table 9. Suimmary of Arrangements for Implementation, Finance and Cost Recovery .44 r This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (LOAN 2537-TU) PREFACE This is the Project Completion Report (PCR) on the Cukurova Region Urban Engineering Project in Turkey, for which Loan 2537-TU in the amount of US$9.2 million was approved on May 9, 1985. The loan was closed on June 30, 1989 as planned. 99% of the funds were disbursed by the end of FY87 and the last disbursement was made on January 20, 1989. The PCR was jointly prepared by the Infrastructure Division, Country Oper .ions I of the EMENA Regional Office (Preface, Evaluation Summary, Parcs I arn III), and the Borrower (Part II)--because of the length of this document, it was condensed without changing its substance, while the full text can be found in the project files. Preparation of this PCR was started during the Bank's final supervision mission of the project, and is based, inter alia, on the President's Report, Loan and Project Agreements, supervision reports, correspondence files, internal Bank memoranda, and extensive interviews with key staff and management.  - ii - PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (Loan 2537-TU) EVALUATION SUMMARY INTRODUCTION PND BACKGROUND I. The economic setting against which the Cukurova Region Urban Engineering Project (CUEP) was identified is discussed in the April 18, 1985 President's Report (PR, paras 4-25). The most salient development in the urban sector was the Government's decentralization policy, adopted in 1984 (PR, paras 37-38). The Government's main objectives were to decentralize respcnsibility for urban planning and certain services to municipalities, improve the management of local administrations, provide adequate infrastructure and services, and reduce housing shortages. Municipal revenues had been growing rapidly since 1980. Support for the Government's decentralization policy was the underlying rationale for the CUEP. II. When CUEP was appraised in November 1984, the Bank had experience with two differing approaches to urban investment and institutional reform in Turkey. Both single sector and integrated urban approaches had been attempted in parallel operations during 1972 with the Istanbul Water Supply Project (LN 844-TU) and the Istanbul Urban Development Project (CR 324-TU). Although the integrated approach was generally acknowledged as unsuccessful in Istanbul while the operation in the water sector led to institutional innovation and further investment, the merits of these two approaches were still a contentious issue at the time the Cukurova project was proposed (para 1.01, 9.01). The Bank and the Government hoped to overcome the risks encountered in the first urban loan through more thorough preparation utilizing heavy external input financed with an engineering loan. OBJECTIVES III. Intended: The CUEP obiectives were first, to identify and design investments for five municipalities in the Cukurova region which could subsequently be financed under a follow-on Bank loan; and second, to develop complementary policies and national, regional, and local institutional mechanisms to support decentralization, achieve integrated regional and urban planning, and improve urban efficiency. Achieved: CUEP was an innovative concept, but subject to a high degree of risk due to its complexity and ambitious institutional objectives. It required the active collaboration of a large number of disparate government entities (31), sometimes with competing  - iii interests and. jurisdictions (para 4.02a). Although CUEP did result in appraisal and subsequent approval of a follow-on Bank investment, the Cukurova Region Urban Development Project (CUDP LN2819-TU), many of the objectives for specific components and institutional reforms were not achieved. IMPLEMENTATION EXPERIENCE IV. Implementation experience with CUEP components is summarized belowi a) To review experience and make recommendations on appropriate regional develoRment obicctives and organizational arrangements. Since the Government lost interest in establishing a regional planning authority, the comprehensive analysis was not completed (para 5.02, 14.01). b) To design urban investments and suitable institutional and financial arrangements to sustain them in water supply and sewerage, solid waste management and composting, upgrading "Gecekondu" or informal housing sites, development of urban expansion areas (UEAs) and other possible urban investments including wholesale markets and transport facilities. Final designs and tender documents were produced for 11 municipal investments during CUEP. Because of the increasing scale and complexity of CUEP, design work was deferred to CUDP for some comiponents including Gecekondu Upgrading and Housing Management Areas (paras 5.01, 14.03). Of the investments for which final designs were completed, two were of q1uestionable value because they lacked commitment by the municipalityy and two had to be dropped from CUDP due to events which compromised their viability.Y Institutional objectives necessary to support investments and improve urban efficiency incl-ded the development of local government reorganization Rlans and the establishment of autonomous Housing and Urban DeveloRment Comnanies (HUDCs) in each municipality to provide infrastructure and market serviced sites in Urban Expansion Areas (UEAs). Municipal reorganization plans were developed during CUEP and approved by municipalities, but they were not approved by the Government (paras 5.03, 14.05). HUDCs were established in four municipalities, but did not generally fulfill their intended role (paras. 5.04, 14.02). Ceyhan sanitary landfill, Ceyhan Sewerage and Drainage (para. 5.02). V Adana Se-werage (para 5.02) and Adana Urban Expansion Area (para 5.04).  - iv - c) To identify. recommend. and assist in imRlementing improvements in municipal accounting and financial management. New accounting standards were designed, but were not approved by the Government during CUEP (paras 5.03, 14.06). d) To develoR programs of local government staff training. A regional training institution, the Cukurova Municipalities' Training Association (CMTA), was established by decree, but the objectives and scope were overly ambitious and not fully embraced by municipalities (paras 5.03, 14.08). e) To advance completion of the regional and national cadastral surveys. Equipment was purchased for the regional cadastral office, but the national cadastral component was dropped from CUDP when a feasibility study completed during CUEP indicated it was too ambitious (paras 5.02, 14.09). f) To prepare sDecial studies on the role of Iller Bank and the Adana Transportation system. The study on Iller Bank was completed, but was unsatisfactory and no agreemont was reached with the Government on a reform program (paras 4.06- 07, 5.03, 14.10). The Adana transport component was expanded and transport studies were carried out for each municipality, but this component was dropped after appraisal of CUDP in an attempt to reduce project complexity (paras 5.02, 14.11). V. The borrower complied with covenants. The final audit has not yet been submitted (para 10.0) RESULTS VI. The estimated cost of CUEP was US$10.71 million of which US$6.05 million equivalent were local costs. IBRD financed US$9.2 million or 85% of the total appraised cost. The actual project cost was US$13.2 million (Table 5A). Planned Droject comrletion was December 31, 1988 (Table 2). Actual Rroject comRletion was in October 1987. The loan closed on June 30, 1989.  v SUSTAINABILITY VII. The issue of CUEP sustainability can be addressed more meaningfully in the Project Completion Report for CUDP, but results of CUDP to date have not been encouraging. Civil dorks have not progressed, municipal finance and organizational improvements have not materialized, and project managemer.t by Iller Bank has not been effective. After 2 1/2 years since loan effectiveness, about 1X of the loan has been disbursed. The Government and the Bank concluded recently that the original design and objectives of CUDP are not viable and have agreed on the need to restructure the project by reducing its size and scope and changing the project execution arrangements. FINDINGS AND LESSONS VIII. The PCR indicates that several specific aspects of the CUEP design and organizational framework hampered results of both CUEP and subsequently of CUDP. First, the project design was too complex, with five municipalities, a large array of investments, and institutional innovations at the national, regional, and local level (para 3.02a). Second, the increasing scope and scale of CUEP over time detracted from project preparation efforts (pora 3.02b). Third, the Project Coordination Unit (PCU) was not sufficiently accountable to project entities, contributing to these entities' weak commitment to CUEP objectives (para 3.02c). Fourth, the lack of personnel and institutional continuity between CUEP and CUDP had a negative impact on the project (para 3.02d). Fifth, CUEP did not result in an agreed reform program for Iller Bank prior to its appointment as executing agency for CUDP resulting in an inconsistency between the project objectives and that of the institution expected to implement them (para 3.02e). Finally, Bank analysis and conclusions presented in Part I of the PCR differ in spirit and substance from the Borrower prepared PCR summarized in Part II of this report. While the Bank's assessment is that the project was beset with problems, the Borrower's conclusions would suggest that either there were no problems or that if there were, they were quickly resolved. Several lessons may be considered for future operations: (a) Bank support for municipal strengthening is appropriate in Turkey, but the single-sector project approach (eg. water supply and sanitation) has been more effective than the integrated urban approach in furthering this important objective. A phased approach to municipal development aimed at one sector limits the number of institutional contact points, thereby simplifying the tasks of coordination and consensus-building, and is better tailored to the current implementation capacity of municipalities in Turkey, which lack the experience, financial systems, or personnel required to implement complex multi-sectoral projects with complicated financing and cost recovery mechanisms. Integrated urban projects also imply a heavy commitment of Bank resources for supervision, a factor which should be taken into account when budgeting resources for such operations.  - vi - (b) For urban projects to succeed, strong government commitment at the central and local level and coordination between the two are necessary. In order to engender project "ownership" and sustained commitment to objectives, entities which are to be affected by planned institutional reforms or investments should be fully involved in the formulation of such pl.,ns. The Bank should have devoted more attention to discussion of the cor-lusions of important studies prepared during CUEP at appros iate levels with the entities that were to be affected to ensure that recommendations were understood xnd consenrus reached. Some staff working on CUEP have noted that language constrained staff/consultant effectiveness in this area. (c) Institutional continuity between project preparation (eg. CUEP) and implementation (eg. CUDP) is highly desirable. For very complex projects, it may be advisable to use the same consultants for engineering and technical supervision of engineering. (d) Like other Bank investments in Turkey, engineering loans should encourage the Government to finance local costs to the extent possible and share at least a portion of those costs with final beneficiaries. Some cost sharing with municipalities during CUEP combined with mechanisms to ensure their effective input into the preparation process may have prompted cancellation or revision of certain components or withdrawal by some municipalities, but it would also have encouraged preparation of a demand-driven project in which participants demonstrated commitment to objectives.  PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (LOAN 2537-TU) PART I: PROJECT REVIEW FROM THE BAN1ZIZS PERSPECTIVE Project identity -Project Name: Cukurova Region Urban Engineering Project -Loan Number: LN-2537-TU -RVP Unit: EMIIN -Country: Turkey -Sector/Subsector: Infrastructure/Urban 1. Background. Sector Development Objectives. and Policy Context 1.01 When CUEP was appraised in November 1984, the Bank had experience with two differing approaches to urban investment and institutional reform in Turkey. Both single sector and integrated urban approaches had been attempted in parallel operations during 1972 with the Istanbul Water Supply Project (LN 844-TU) and the Istanbul Urban Development Project (CR 324-TU). According to the 1983 Audit Performance Report (4872-TU) for the Istanbul Urban Development Project (CR 324-TU), the Bank's goals were in the abstract appropriate, but the project was overly ambitious, lacked sustained government support, suffered from poor coordination, failed to achieve integrated metropolitan planning, and resulted in no investments. Although the Istanbul Water Supply Project was delayed due to institutional and firnancial constraints, it was eventually implemented, contributed to institutional development in the establishment of the Istanbul Water and Sewerage Authority as an autonomous entity, and by 1982, led to a second project (Istanbul Sewerage; LN 2159-TU). The merits of these two approaches were, however, still a contentious issue at the time the Cukurova project was proposed (para 9.01). 1.02 Interest in a second integrated urban loan to Turkey coincided with the completion of the Bank's Urban Sector Review (4631-TU) in 1983. The most salient development in the urban sector at that time was the Government's decentralization policy (President's Report, paras 37-38). Municipal revenues had been growing since 1980. The Government's objectives, articulated in 1984, were to devolve responsibility for urban planning and certain services to municinalities, improve the management of local administrations, provide adequate infrastructure and services, and reduce housing shortages. CUEP was conceived as an innovative response to the need to strengthen local governments' capabilities to respond to these new challenges and reshape the supporting role of central government institutions such as Iller Bank. The concept for the Cukurova project was presented to the Government during the discussions of the Urban Sector Review, which provided the conceptual framework and institutional objectives. Although the Urban Sector Review itself raised many fundamental policy issues for the Government to consider  and Vhitch subsequently were incorporated into CUEP (e.g., reform of Iller Bank), these issues may not have recei':.-d the attention they deserved as participants preferred to focus on identifying possible iivestments. 1.03 The Bank and the Governmenlt were cognizant of the failure of the IstanbuAl Integrated Urban Development (p4ra 1.01), ano hopvd to limit the risks of a second fajlure through more thorough preparation, Because the requirements for preparing the Cukurova project were expected to exce6d the resources available through the Bank's Project Prvaparation Facility (PPF) which had already been tapped, the Government requested an engineering loan to prepare a pilot inv2stment project for five municipalities (Adana, Mersin, Iskenderun, Tarsus, Ceyhan) in November 1984. The Cukurova region was selected as a pilot area because of its rapid urban population growth and munici-al service deficiencies. b' 2. Project Obectives ad DescrintioD: 2.01 CUEP was a project preparation loan. Its objActives were first, to identify and design investments for financing under the follow-on Cukurova Region Urban Development Project (CUDP; LN2819-TU) and second, to develop complementary policies and national, regional, and local institutional mechanisms co szopport decenitralization, integrated planning, and improved urban efficiency. The total planned cost of CUEP was US510.7 million. 90% of project costs were budgeted for consultants to manage preparation activities and carry out institutional, feasibility, and design work. Components included waser suply and qgverage, solid waste ntanagem=r., urban grangport upgrading infrastructure and services in infgrmal hgu_s5in aga (i.e., Gec.ekondus), design of on- and off-site infrastructure for Urbar_Exngnsion Areas (UAEs) and establishment of municip4l Housing and Urban Development Companies (HUDCs) to market serviced land in these areas. 2.02 In addition to the municipal infrastructure and related institutional components such as creating separate water authorities within municipalities, CUE? aimed to develop e ztion plans for_local wove.rnment, design and implement new un-ictal aceoLnrinp: stAndards and eatablish a new r-egionalRlanain authority. Funds were also budgeted for staff training, technical assistance and equipment for the national and regional cad&stral programs V, and a study to examine the role of 111 .Bank. Population in the five major municipalities increased 6.2% p.a. from 1980-85 and over half lived in unplanned gecekondu settlements in 1985. Half of the total area of 2000 ha. wias to be developed for low income families. The objectives of the regional cadastral component were ti advance survey completion from 15 to 3 years including mapping 25,000 km2, title registration in 2,300 km2 villages, and surveys of 68,000 plots in municipalities.  -3- While CUEP was expected to result in new infrastructure and managerial improvements for five municipalities in the Cukurova region, the Bank's underlying justification for CUEP was considerably more ambitious. The underlying objective was to establish a technical, managerial, and financial basis for implementing national decertralization policies. 3. Proiect Design and Organization 3.01 The State Planning Organization (SPO) was executing agency for CUEP. It established a Project Coordination Unit (PCU) staffed by consultants in Adana to oversee the three phases of work, including; phase I (4 mos.), for sub-project identification and pre-feasibility studies; phase II (8 mos.) for feasibility studies; and phase III (7 mos.) for detailed engineering and preparation of tender documents. Institutional reforms such as establishing HUDCs, new municipal accounting systems and municipal reorganization plans were to be initiated during CUEP while the study on Iller Bank would set the stage for reforms to be implemented under the follow-on loan. 3.02 Several specific aspects of the CUEP design and organization hampered results: (a) The CUEP design was too complex. The project design combined five municipalities, a large array of investments, regional planning, and institutional innovations at the national, regional, and municipal level. In order to achieve its obiectives, CUEP required the active collaboration of a large number of disparate government entities (31), sometimes with competing interests and jurisdictions.y It envisioned financial input for CUDP from several different sources on varying termsV and adoption of seven distinct cost recovery/financing instruments.Y This panoply of implementation entities with varying financing sources and cost recovery mechanisms wece too difficult for the Government or municipalities to manage (Table 9). The wide scope of the project also led to fragmentation of responsibility and authority, hence difficulty in coordination. The PCU in Adana, staffed exclusively V' In addition to five municipalities, their Water and Sanitation Corporations (WSCs or ASKI in Adana), Housing and Urban Development Companies [4] and the Cukurova Municipalities Training Association (CMTA), 16 central government entities were involved. See para 14.12 for a listing. 11 World Bank, Development Support Fund, Municipalities (5], Iller Bank. The Central Government, Posts and Telecommunications Authority (PTT) and Turkish Electricity Authority (TEK) were to provide some complementary facilities/infrastructure in Urban Expansion Areas. Municipal Taxes, land prices for UAEs, Improvement Levies, tariffs and charges, Iller Bank income, Legalization charges, Central Government Budget.  - 4 - by consultants, had the responsibility for ensuring the active collaboration of all entities, yet it lacked authority necessary to achieve this objective. Municipalities also lacked experience in planning and implementing their own investments and were unable to assimilate such an ambitious and multi-sectoral institutional reform program in the timeframe that was envisioned.V (b) The large scale of the investment program detracted from the preDaration of CUDP. The size of the CUDP investment program doubled during CUEP from the original US$211 million investment program that consultants recommended as feasible and affordable by municipalities at the end of phase I to US$420 million (para 4.02- 03). This expansion and increasing demands for consultant reports to support the complex operation detracted from the results of preparation, thus many components remained incomplete or at a relatively early stage of preparation despite intensive consultant input. Several factors affected the desire for a large project. Bank staff working on the project mention that it was felt that a large project (approximately US$500 million) would be needed to capture the attention of policy makers thereby enhancing the prospects of replication. The limited number of operations in Turkey in a given year and inability to finance local costs may also have played a role in determining project size. (c) The PCU was not sufficiently accountable to Rroiect entities. contributing to their weak commitment to objectives. To ensure the participation of all agencies concerned, national and regional project Steering Committees were to be formed according to the loan agreement for CUEP, however, these committees did not function effectively. The PCU developed investment plans and reform packages affecting municipalities and key government agencies such as Iller Bank and the Ministry of Interior, but with insufficient input from, or accountability to their leadership. The failure of the PCU to build a consensus for the program they recommended strained relations with these entities. The opposition to CUEP which developed within the Iller Bank and the Ministry of Interior reflected to some extent differences on the scope and pace of decentralization, a policy spearheaded by SP0 and the underlying rationale for CUEP. (d) Lack of personnel and institutional continuity between CUEP and CUDP had a negative impact on the project obiectives. Premature demobilization of the PCU and departure of all its staff, selection of new consultants to assist the new Project Review and Implementation Unit (PRIMU) established in Iller Bank to execute CUDP, leadership changes in SP0 and Iller Bank, and reassignment The Government's decentralization policy was still in its infancy when CUEP was designed. Iller Bank had been responsible for financing and executing most infrastructure investment on behalf of municipalities in the past.  of all Bank staff that had been involved in CUEP during the Bank's reorganization led to a loss of momentum and control during the critical transition period from CUEP to CUDP. (para 4.09) Most importantly, control over CUDP was trarsfer-e. ^rom SPO to Iller Bank, an agency with conflicting purposes an, Known antipathy toward the project objectives. (e) CUEP did not result in an agreement on reform of Iller Bank. From the inception of CUEP, it was clear that Iller Bank was the key institution which could be used to support and strengthen the Go-ernment's commitment to decentralization. It was also clear, however, that the CUEP concept of municipalities taking control over the planning, design, and implementation of their own public works from Iller Bank while shifting Iller Bank into position as a financial intermediary was antithetic to Tller Bank's traditional objectives, which included retaining central control over public works engineering and implementation while keeping municipalities dependent on its subsidized finance. The basic inconsistency between the project objectives and those of Iller Bank was widely recognized, but the Bank's strategy was te carry out a study of Iller Bank's functions and management during CUEP and hope that during project preparation there would be a political opening to initiate the reform process. This strategy was unsuccessful for several reasons; first, the CUEP study on Iller Bank was inferior and poorly received by Iller Bank management; second, the PCU did not involve Iller Bank sufficiently in CUEP; and third, the Government did not firmly commit itself to a reform program in the face of strong opposition from Iller Bank. 4. Proiect Implementation 4.01 Loan Effectiveness and Proiect Start-Up. Eight months elapsed between the Government request for an engineering loan in November 1984 and CUEP effectiveness. US$600,000 from the Project Preparation Facility was provided in the interim to cover expenses and later refinanced. SP0 selected a local consulting firm in late 1984 to provide the administrative framework for the PCU. The PCU staff were, however, selected by the SPO and engaged by the consulting firnm at their behest. The consultant's contract was effective in February 1985 and was expected to be completed in December 1987 -- a period of 35 months. The PCU then selected a joint venture consulting firm to identify subprojects, undertake feasibility and institutional studies, prepare final designs and tender documents for municipal investments. The joint venture consultant team mobilized in April 1985, but the contract was not signed until July 12, 1985. CUEP implementation was thus underway before CUEP was declared effective on July 24. 1985. 4.02 ImDlementation: Phase I. The joint venture consultants during Phase I identified subprojects, completed 16 working papers and pre-feasibility studies on municipal finance, regional development, water supply, sewerage, solid waste, electricity and telecommunications, gecekondu upgrading, urban expansion areas, and prepared 8 Terms of Reference for major studies on Iller Bank, household surveys, orthophoto mapping, housing finance, and national  - 6 - cadastral surveys. (See Table 7 of Part III for list of consultant output for each phase.) Based on this preliminary investigation and affordability estimates, they recommended to the PCU an investment program of about USS211 million equivalent (1985 prices) over the period 1986-90. Phase I was completed in August 1985, shortly after the date of effectiveness for CUEP. 4.03 Phase II: The scope of work agreed in October 1985 for phase II was expanded beyond what was envisaged in the original terms of reference for the consultants. This was due to requirements for additional studies, a decision to accelerate preparation of tender documents for on- and off-site infrastructure for three UAEs from phase III to phase II, the decision to implement accounting and organizational reforms in several municipalities during Phase II, and most importantly, the increasing scale and complexity of the investment program. The joint venture consultants were requested to continue to identify and prepare sub-projects up to a maximum of USS420 million. Despite the increase in the scope of work which occurred during Phase II, the time frame for completion of CUEP was not extended resulting in an expansion of man-month requirements and an increase in the scale and complexity of the operation.12 4.04 Phase II was completed as planned in May 1986 (8 months). The consultants produced 70 studies on a broad range of issues and investments (Table 7) including housing, municipal finance, institutional development and town-specific feasibility studies on water, sewerage, solid waste, urban expansion areas, and housing upgrading. In transport, only the Adana study had been envisioned originally, but expansion of the scope of work led to four separate town studies for transport. Only feasibility studies were completed for the UAEs with final design again deferred to Phase III. 4.05 Contract signature for Phase III was delayed by 7 months because the Government objected to the consultant's estimated man-month requirements. The consultants requested that the Government reduce the number of subprojects for detailed engineering if the budget was limited, but the PCU insisted on maintaining the larger size and scope. In agreeing to complete the necessary inputs for this investment program, the consultants obtained a supplemental contract for phase III from the Government. This was signed in November 1986 to cover additional studies and work requested by the client. The original contract for phase III was amended and signed with the consultant joint venture in December 1986. The Bank had appraised CUDP in November 1986 with total costs estimated at US$467 million. 4.06 During this same period (November 1986), the management study of Iller Bank carried out during phase II was completed by one of the joint venture partners. This study had a negative impact on the future of CUEP and the follow-on CUDP investment, for which Iller Bank was made the executing MM/ The consultant's contract covered all three phases, but only phase I was a lump sum amount. The firm negotiated unit costs for the remaining phases since the scope of work was to be defined during the first phase. Man-month requirements were then submitted and negotiated prior the each subsequent phase.  agency. Consultants recommended a rapid and fundamental transformation of Iller Bank from a public works agency under the Ministry of Public Works and Settlement (MPWS) to a commercially-run financial intermediary within the banking system. Although this generdl concept had some support within the Government, Iller Bank management strongly resisted any attempt to reduce its traditional role in engineering services and construction supervision. Iller Bank management felt threatened by consultants' sweeping recommendations including restructuring its Board of Directors and governing General Assembly, reducing technical service staff from 600 to 200, and phasing out subsidies. Although the Bank also wished to see Iller Bank begin to function more like a financial intermediary for municipalities, staff doubted whether it was wise or feasible to attempt to implement all of the report's proposals in the short time envisioned and felt that the report diagnosed only Iller Bank's weaknesses, neglecting strengths which could be capitalized on in building the institution. Unfortunately, consultants rejected the Bank's suggestion that priorities and more limited reform objectives be established for Iller Bank. 4.07 The drastic reform of Iller Bank proposed by consultants may be seen in retrospect to have severely reduced the possibility for CUEP or Bank staff to work in a collaborative manner with Iller Bank management to strengthen the institution along lines acceptable to its management. Consultant failed to build a consensus for their recommendations within Iller Bank. Their expectation that the Government would be able to force rapid reform on Iller Bank was a tactical misjudgment with high costs for CUDP, for which Iller Bank became the executing agency (para 4.09). The study on Iller Bank required 14 man-months of consultant services compared to the 45 estimated at appraisal and the team completed the study in only three months. Given the critical nature of the Iller Bank study to project success, greater resources and long- term attention should have been devoted to it during preparation. 4.08 Phase III: During Phase III, about 60 studies were completed and 11 subprojects prepared to tender stage. Phase III was completed in July 1987 in line with the original 7 month work estimate, but 6 months late due to the protracted contract negotiations (para 4.05). The three phases together consumed a total of 27 months of actual calendar work time by consultants, 42% more than the 19 months Enticipated at appraisal. The appraisal estimate of consultant input requireA to complete CUEP was 109 staff years. The consultant joint venture billed the client for 172 staff years for the three phases as a result of escalation in work program and man-months agreed to during phases II and III. The consultant's own estimates indicate that they provided 205 staff years to complete the work, but the client was not billed for this higher amount since man-month requirements were fixed at the start of each phase. In addition to joint venture consultant's services, consultant input for the. PCU was estimated at 33 staff years at appraisal. 4.09 After completing CUEP, the Bank expected the PCU in Adana to continue to operate under SPO and be responsible for overall project administration of CUDP. This arrangement was to ensure continuity between the two operations. Since SPO is primarily a planning agency, it reduced PCU operations following the negotiations for CUDP in April 1987 and closed the office in October 1987 when full implementation responsibility was transferred to Iller Bank. Iller Bank's management was relu ant to take on responsibility for CUDP because of  disagreements over key project ob4ectives, including its own reform, but accepted the Government's decision. Since neither Iller Bank nor their new consultants had been directly involved in CUEP, they were not well prepared to take over the complex operation, even if Iller Bank management had been motivated to do so.111 Iller Bank initially appointed weak management to the Project Review and Implementation Unit (PRIMU) it established to implement CUDP. The lapse in effective and committed project management resulted in a loss of control over key project activities (e.g., HUDCs). The actions of two municipalities, Adana and Ceyhan, also contributed significantly to the loss of momentum during the transition period between CUEP and CUDP. Both had grown disenchanted with CUEP and felt that as a result of the financing plan which passed on the foreign exchange risk of borrowing under CUDP to municipalities and a perceived attempt by the project to curtail the availability of subsidized finance from Iller Bank, participation in CUDP could prove to be too "expensive". The Mayors of Adana and Ceyhan considered withdrawing from the project on different occasions including at the negotiations for CUDP. IV Although they eventually decided to participate, both municipalities delayed signing onlending agreements thereby delaying CUDP effectiveness for all municipalities by six months (until January 1988). 4.10 Procurement: Consultants for the project and equipment were procured according to Bank guidelines. A local firm with government equity participation was engaged by SPO under sole source arrangements to house the PCU. The consulting joint venture hired by the PCU to carry out identification, feasibility, and design work was selected from a shortlist. The main joint venture partner was given a separate sole source contract to carry out the transport and cadastral studies while the other foreign partner was hired under sole source arrangements for the Iller Bank study. All equipment for CUEP was procured under LCB since individual packages were not expected to exceed US$250,000 equivalent or local shopping for smaller items. Invitations to bid for cadastral equipment and the transfer of procured items were delayed because SPO had to procure on behalf of the National Cadastral Office. 4.11 Proiect Costs: The estimated cost of CUEP at appraisal was US$10.71 million. The final cost estimate was US$ 13.2 million (23% overrun; see Tables 4 and 5A). IBRD financed US$9.2 million while SPO covered the balance. The major cost overrun was for feasibility, institutional, and design studies Consultants and staff for the new Iller Bank Project Implementation Unit (PRIMU) in Adana had still not been fully mobilized by April 1988, though CUDP became effective January 1988. (Table 2) 12. All mayors attended negotiations for CUDP in Washington during April 1987. After their return; the Municipal Assemblies of Adana and Ceyhan, which together were to receive 46% of the Bank loan, voted to withdraw from CUDP. These decisions were reversed in October (Ceyhan) and November (Adana) 1987 when both municipalities agreed to participate.  - 9 - and special studies. Appraisal estimates for these items were US$7.6 million compared to actual costs of US$11.14 million paid to the main consulting joint venture or its partners individually. 4.12 Disbursements and Loan Allocation: The Bank financed 85% of CUEP's estimated US$10.71 million costs though US$6.05 million equivalent were estimated as local costs. There were no significant deviations from appraisal estimates of the disbursement schedule. The last disbursement was made on January 20, 1989 and the loan closed on June 30, 1989 as anticipated. (Tables 2 and 3) 5. Project Results. 5.01 Consultants produced final designs and tender documents for 11 municipal investments including on- and off-site infrastructure for UAEs (Adana, Tarsus, Mersin), water and sewerage infrastructure (Adana, Iskenderun, Ceyhan, Tarsus), and sanitary landfills (Iskenderun, Ceyhan). (Table 5) Because of the increasing scale and complexity of CUEP, consultants had to defer work on a number of key components to CUDP, which thus remained at an early stage of preparation. Feasibility studies were completed for gecekondu upgrading and housing management components, but no final designs. These unfinished tasks were to be passed on to the new Upgrading Units which were to be established in each municipality as part of the master plan for municipal reorganization. Unfortunately, the reorganization itself was never approved thus progress on these two components was halted (para 5.03). 5.02 Several components or investments were reduced in scope or eliminated during CUEP. The objectives of the regional urban growth management component were revised when the Government lost interest in establishing the proposed new regional planning authority and adequate consultant resources could not be allocated due to the increasing scope and complexity of preparation efforts at the municipal level (para 14.01). The national cadastral component was dropped when a pre-feasibility study indicated that the task was overly ambitious (14.09). Feasibility studies were completed for transportation improvements for four municipalities, but this component was deleted from CUDP in an attempt to simplify it (para 14.11). A serious problem was the unwillingness of Iller Bank to share information with the PCU on its ongoing or planned investments in the project municipalities (para 14.04) The final designs for Adana Trunk Sewers were rendered useless by a competing design that Iller Bank had simultaneously prepared during CUEP and offered to finance on concessional terms. Despite agreement with the Adana municipality on the location of a proposed sanitary landfill and completion of preliminary designs, the municipality used the land for another purpose (14.04). Ceyhan disagreed with the CUEP final designs for investments in a Sanitary Landfill and Sewerage and Drainage system (para 14.04).  - 10 - 5.03 Results of CUEP's major institutional objectives were disappointing. The study on the role and function of Iller Bank resulted in no consensus or agreed reform program during CUEP.13 Given the strong opposition of Iller Bank to any fundamental changes in its operations, the Bank lowered its target from reforming Iller Bank to that of establishing a Project Review and Implementation Unit (PRIMU) within the institution which would test its ability to function as a financial intermediary for the Cukurova region. Unfortunately, by appointing weak management and insufficient staff to the PRIMU after CUDP negotiations and not giving PRIMU authority over all Iller Bank-financed works in the Cukurova municipalities as envisioned under CUEP, Iller Bank undermined the effectiveness of PRIMU. The objective of implementing a new municipal accounting system on a pilot basis was also not achieved because the new system that was designed under CUEP was not approved for implementation. Three municipalities that implemented portions of the new accounting system during CUEP in parallel with their traditional system were subsequently forced to revert to the old system on instructions from the Ministry of Interior (MOI) thus incurring unnecessary costs and contributing to municipalities' disenchantment with the project (para 14.06). Municipal staff that had been trained in the new accounting standards were eventually moved to other positions.W/ The credibility of CUEP with municipalities was further eroded when the Government failed to approve the local government reorganization Rlans designed under the project after their approval by municipal assemblies, a factor which had negative repercussions for several components, particularly upgrading and financial management. Like the accounting reforms, municipalities such as Iskenderun that began to reorganize without MOI or State Personnel Directorate (SPD) final approval incurred unnecessa.ry expense since they were subsequently instructed to dismantle the reforms (para 14.05).i.I The MOI did not clarify the reasons for its failure to approve these key project components. The local government staff training component did result in the establishment by decree of Cukurova MuniciRalities Training Association (CMTA), an innovative regional training institute to be financed and managed by the municipalities, but the objectives and scope of 13/ The SAR for CUDP noted that the Government had agreed during negotiations to decide on role and functions of Iller Bank by December 31, 1987, without specifying the direction of change or making this a condition of loan effectiveness. Iller Bank has maintained its strong opposition to changes in its operations and the Government has not yet made any decisions regarding this issue. ,LU/ The SAR for CUDP also notes that it was agreed during negotiations that the new accounting system would be approved by September 30, 1987, but this was also not included as a condition of loan effectiveness. The SAR for CUDP noted that the MOI and Department of Personnel were expected to approve the local government reorganization plans designed under CUEP "shortly", but approval was not granted before CUEP closed and was not made a condition of effectiveness for CUDP.  - 11 - CMTA were overly ambitious and the concept was never fully embraced by municipal leadership.ie 5.04 Four municipalities established new Housing and Urban Development Companies (HUDCs) during CUEP to provide infrastructure and market sites in urban expansion areas (UEAs). Unfortunately, establishing these institutions proved easier than influencing their growth and development. Although the role of HUDCs was restricted in the Policy Statements agreed to under CUP? to land development and marketing, some began to contract for housing construction even before site plans and infrastructure designs were completed thus defeating the objectives of planned development of urban expansion areas (para 14.02). Much of the housing did not adhere to building standards, income criteria, or cost recovery targets established under CUEP (para 14.04). In Adana, the UEA component was dropped from CUDP despite the fact that final designs had been prepared when it became evident that cost recovery and affordability standards were not being met by its HUDC. Iskenderun was unable to acquire sufficient land for its UEA (para 14.02). 5.05 The institutional and other studies carried out under CUEP increased the Bank's knowledge of the sector, but the volume exceeded the municipalities' absorptive capacity and contributed to their loss of interest in the project. Most reports prepared during the first two phases, the critical period for building consensus on project objectives, were produced only in English, with Turkish summaries (Table 5) thus making results inaccessible to key municipal staff. The volume of reports and feasibility studies is so large (165) that only a relatively small proportion underwent adequate review by local authorities or were discussed at appropriate levels of the Government. Only a small sample could be reviewed in preparing this PCR. A large multi-disciplinary Bank team or outside consultants would be required to review all reports and pass professional judgement on their quality. 5.06 The financing concept for CUDP developed during CUEP was too complicated and did not have the full support or understanding of the Iller Bank or the municipalities. In addition to municipalities' owni funds, there were three major sources of finance for the project including IBRD, Iller Bank, and the Development Support Fund (DSF), all with differing terms and conditions.)V IBRD, Iller Bank, and DSF funds were to be channelled through the Cukurova Project Account (CPA) to be established within Iller Bank and managed by PRIMU. The flow-of-funds and on lending arrangements MMi Municipalities and WSDs were expected to pay .5% of their revised budget expenditures each year to support CMTA. 285 man-months of consultant input was to be utilized during CUDP to supplement permanent CMTA staff, which would provide courses for 4800 trainees between 1987- 92. UY In addition, the Government, the Turkish Electricity Authority (TEK), and the Ports and Telecommunications (PTT) were to contribute resources separately to facilities and infrastructure in the UAEs.  - 12 - recommended under CUEP for CUDP were also complicated, involving the IBRD Special Account (managed by Treasury), the CPA with five municipal accounts (managed by Iller Bank), and municipal sub-accounts for each HUDC. Iller Bank's contribution to the project and its non-CUDP investments (ongoing and new) in each of the municipalities were tc be channelled through the CPA, a requirement designed to prevent recurrences of the situation in Adana sewerage when Iller Bank used its subsidized resources to compete with a CUEP-designed investment (para 5.02). Iller Bank, however, never accepted the principle that its PRIMU unit should manage all its resource flows to these municipalities. Moreover, there were seven distinct cost-recovery instruments applied to different components including tariffs, tax revenues, land sales, improvement levies, and income on Iller Bank lending. This panoply of implementation entities with varying financing sources and cost recovery mechanisms were too difficult for the Government or municipalities to manage (Table 9). 5.07 There were also several problems with the assumptions underlying the financing plan for CUDP. Firqt, some municipalities never fully embraced the concept that they would bear the foreign exchange risk of borrowing under CUDP. Second, the SAR assumptions for CUDP on interest rates and amortization terms for Iller Bank cofinance were less than the legal rates prevailing at the time that CUDP was negotiated, a factor which the Bank did not uncover and that Iller Bank failed to clarify, but which would have affected the affordability of the investment program which the Bank appraised.MM Third, Iller Bank failed to clarify that it could not legally provide Cukurova municipalities with resources at 0% interest from the Municipal Fund, as was assumed at appraisal of CUDP because these concessional funds were only available for Iller Bank-designed and tendered works, not investments implemented by municipalities as required under the project. 6. Project Sustainability 6.01 The issue of CUEP sustainability can be addressed more meaningfully in the Project Completion Report for CUDP, but results of CUDP to date have not been encouraging. Civil works have not progressed, municipal finance and organizational improvements have not materialized, and project management by Iller Bank has not been effective. 2 1/2 years since loan effectiveness, about 1% of the loan has been disbursed. The Government end the Bank concluded recently that the original design and objectives of CUDP are not viable and have agreed on the need to restructure the project by reducing its size and scope and changing the project execution arrangements. 7. Bank Performance 7.01 The Bank correctly diagnosed the critical need to address deficiencies in municipal infrastructure and management at a time when high level political support for decentralization prevailed. The Bank was, MMi Iller Bank's interest rate was changed from 16% to 30% on January 1, 1987, following the CUDP appraisal in November 1986, but prior to loan negotiations which took place in April 1987.  - 13 - however, overly optimistic about the pace at which decentralization could occur including the Government's ability to promote institutional objectives such as municipal reorganization, new accounting systems, and reform of Iller Bank. The Bank also overestimated the capacity of the municipalities to implement such a complex project. The Bank should also have adjusted the objectives and scope of CUDP and its administrative arrangements to reflect the high risks it identified before and during CUEP. 7.02 In reviewing CUDP, the Bank's senior management felt that the project design developed under CUEP was too ambitious and that fewer conponents could still provide the desired municipal focus. It recommended excluding the UEA component, since evidence during CUEP indicated that there was no agreement on the role of HUDCs. The Staff Appraisal Report (SAR) on CUDP also clearly identified the serious project risks which had been identified during CUEP including the difficulty of making simultaneous improvements in several fields in five municipalities, the risk that PRIMU would not be able to fulfill its key roleSU, and the political risks relating to municipalities' commitment to project objectives and Central Government commitment to decentralization. The SAR went so far as to postulate that if the decentralization process slowed, the project might need to be restructured. While these risks were recognized, it was felt on balance that reducing the number of components or the size of the project would compromise the operation's urban identity, the scale of the Bank loan, or the need for a highly visible operation to increase the probability of replication. Deleting the UEA component might have jeopardized some mayors' interest in CUDP given their strong interest in housing investments. 7.03 The Bank may have been reluctant to conclude that CUEI was operating in an overconstrained environment and therefore reluctant to reassess its overall commitment to CUDP because substantial resources had already gone into project preparation and SPO continued to support the project. The Bank should, however, have delayed its approval CUDP until key institutional issues such as reform of Iller Bank, municipal reorganization plans, and municipal accounting changes were fully resolved. Although this was considered, it was felt at the time that such a delay would risk the interest of municipalities. If such key institutional objectives were to be deferred from CUEP to CUDP, agreements on these items should have been maintained as conditions of loan effectiveness for CUDP rather than dated covenants. The Bank should not have agreed to Iller Bank as executing agency for CUDP in the absence of adequate Government oversight and an agreed reform plan for Iller Bank. 7.04 The Bank provided adequate staff resources for CUEP. Supervision by multi-disciplinary teams was carried out every 3-4 months. 273 staff weeks were expended in moving CUDP to the appraisal stpge, including supervision of CUEP and inputs attributed to preparation of CUDP (Table 8). Indeed, Bank 2G/ PRIMU weaknesses were to be overcome first, by recruiting professionals on contract terms to supplement Iller Bank; and second, through intensive Bank supervision and monitoring. Unfortunately, it was not recognized at the time that Iller Bank is not permitted by law to engage staff on contract terms.  - 14 - supervision and involvement during CUEP was so intensive that the borrower assessed this as a negative factor affecting preparation since considerable time and effort was necessary to respond to mission requirements (para 14.12). Because the complex operation required large number of studies, Bank attention during supervision was often directed toward ensuring that outputs required for appraisal were completed according to the agreed timetable, budget, and quality. This left insufficient time for discussion of the conclusions and recommendations of studies at appropriate levels with the entities that were to be affected and reaching necessary agreements on reforms. Some Bank staff working on CUEP have noted that language constrained effectiveness, and that of expatriate consultants, in this area. 8. Borrower Performance 8.01 The PCU failed to operate through the regional or national Steering Committees which had been established to control CUEP. Its attention was most often directed at obtaining the multitude of clearances and central directives to expedite project preparation. In this process, it managed to satisfy the Bank's requirements for appraisal, but it also alienated some project entities. Although the PCU did not devote sufficient energy during CUEP to the process of building consensus on CUDP objectives among project entities, it should also be noted that it was not in a strong position to do so given that it was staffed entirely by consultants with no permanent institutional ties to any of the project implementing entities and it was over burdened by a complex project. If the Steering Committees had operated as anticipated, it may have encouraged greater commitment or "ownership" of CUEP by the project entities. 8.02 The PCU should have required consultants to revise their study on the role of Iller Bank as suggested by the Bank and should not have continued preparation of UEA components while HUDCs were violating agreed Policy Statements and project objectives. In addition, the PCU should have halted the consultants' planning for the Adana sewerage investment after it became known that Iller Bank would not collaborate and was preparing a competing design. Proceeding to the final design stage despite these unfavorable circumstances was a waste of resources. 8.03 The Government never approved municipal reorganization plans, new accounting standards developed during CUEP, or a specific reform plan for Iller Bank, thus compromising key institutional objectives. The decision to demobilize the PCU and transfer full responsibility to Iller Bank was premature, particularly in the absence of an agreed reform program or oversight for Iller Bank itself. 9. Project Relationships 9.01 From its inception, the project design for Cukurova engendered serious discord, a factor which had a material impact on its results. Senior leadership in the State Planning Organization (SPO) and Ministry of Public Works and Settlement (MPWS) supported the concept of a large, multi-sectoral approach with ambitious institutional objectives and decentralized implementation. The Bank's relationship with SPO, the executing agency for  - 15 - CUEP, was very good throughout implementation. The Treasury, however, considered the operation inadvisable. It doubted municipalities' creditworthiness, commitment to cost recovery, and capacity to implement such a large and complex project given their brief experience with decentralization. Government disagreement over the project concept was paralleled by the Bank's internal disagreements. Recalling the earlier failure with the Istanbul Urban Development Project (para 1.01), some divisions agreed with the Treasury that the operation would be inadvisable and argued for an incremental or phased approach based on single sector investments 'eg. Water Supply and Sanitation). Ultimately, the Bank and the Government agreed to proceed with the operation, but utilizing an engineering loan (CUEP) which was expected to ensure that the project was thoroughly prepared thus limiting the risk of another failure. 9.02 The relations during CUEP between the PCU and the leadership of Adana ar_' Ceyhan municipalities as well as between the PCU and Iller Bank were strained, a situation which led to a lack of cooperation and contributed to weak commitment by these project entities to CUEP objectives. 10. Compliance with Covenants. The Government generally complied with legal covenants during CUEP including the requirement to establish and maintain tiie PCU and employ qualified consultants to carry out the project (Table 6). The requirement that national and regional project Steering Committees be established may have been complied with from a legal standpoint, but these were committees in an informal sense and did not play the coordinating/controlling function for which they were intended. The requirement that the borrower make available to consultants all information necessary for successful execution was met except in cases where Iller Bank refused to provide information on ongoing and planned investments in project municipalities (e.g., Adana sewerage). Final audited accounts have not yet been submitted. 11. Consulting Services 11.01 The local consulting firm hired to house the PCU provided no technical input as such, but served mainly as a channel for hiring staff on contract rates. A joint venture of consulting firms was hired by the PCU and was responsible for the major identification, feasibility, and design work under CUEP. The main joint venture firm admits that not all components/investments that they intended to prepare to the final design/tender stage were completed (e.g., gecekondu upgrading), but they maintain that their efforts were diluted as a result of the increase in the scope of work and requirements for additional studies. Local partners of the joint venture assisted through recruitment of local personnel. 11.02 Consideration should have been given to retaining the same consultants during CUDP to complete the unfinished engineering and carry out technical supervision of the designs it prepared. In such complex projects, the benefits of continuity are likely to be significant. If the consultants lacked the requisite expertise in finance or institutional development to  - 16 - assist PRIMU with CUDP, this weakness might have been overcome through a joint-venture with a management consulting firm or alternatively by separating the technical and institutional supervision tasks and hiring two firms. 11.03 Two consultant studies prepared during CUEP contributed to unsatisfactory performance for key components. These studies on the role and functions for Iller jank and the design and implementation of the new municipal accounting system were overly ambitious in their recommendations and not sensitive to the need to establish priorities and phase in reforms in a manner acceptable to agencies that they affected. The Consultant's theoretical conception of a development bank's optimal role in financial intern.ediation was acceptable in the abstract, but not within the realistic confines of Iller Bank management's capacity or willingness to accept such drastic changes over the time frame envisioned. 12. Project Documentation and Data: Project documentation and data was sufficient for the analysis. 13. Findings and Lessons 13.01 The PCR indicates that several specific aspects of the CUEP design and organizational framework hampered results of both CUEP and subsequently of CUPD. First, the project design was too complex, with five municipalities, a large array of investments, and institutional innovations at the national, regional, and local level (para 3.02a). Second, the changing and increasing scope and scale of CUEP over time detracted from project preparation efforts (para 3.02b). Third, the Project Coordination Unit (PCU) was not sufficiently accountable to project entities, contributing to these entities' weak commitment to CUEP objectives (para 3.02c). Fourth, the lack of personnel and institutional continuity between CUEP and CUDP had a negative impact on the project (para 3.02d). Fifth, CUEP did not result in an agreed reform program for Iller Bank prior to its appointment as executing agency for CUDP resulting in an inconsistency between the project objectives and that of the institution expected to implement them (para 3.02e). Finally, the analysis and conclusions of Part I of the PCR differ in spirit and substance from the Borrower prepared PCR summarized in Part II. The conclusions of Part I indicate that the project was beset with problems in design, organization, and implementation, including contractual arrangements and inter-agency relations. Part II would suggest that either that there were no problems or that if there were, they were quickly resolved. Several lessons may be considered for future operations: (a) Bank support for municipal strengthening is appropriate in Turkey, but the single-sector project approach (eg. water supply and sanitation) has been more effective than the integrated urban approach in furthering this important objective. A phased approach to municipal development aimed at one sector limits the number of institutional contact points, thereby simplifying the tasks of coordination and consensus-building, and is better tailored to the current implementation capacity of municipalities in Turkey, which  - 17 - lack the experience, finanlcial systems, or personnel required to implement complex multi-sectoral projects with complicated financing and cost recovery mechanisms. Integrated urban projects also imply a heavy commitment of Bank resources for supervision, a factor wlich should be taken into account when budgeting resources for such operations. (b) For urban projects to succe'd, strong government commitment at the central and local level and coordination between the two are necessary. In order to engender project "ownership" and sustained commitment to objectives, entities which are to be affected by planned institutional reforms or investments should be fully involved in the formulation of such plans. The Bank should have devoted more attention to discussion of the conclusions of important studies prepared during CUEP at appropriate levels with the entities that were to be affected to ensure that recommendations were understood and consensus reached. Some staff working on CUEP have noted that language constrained staff/consultant effectiveness in this area. (c) Institutional continuity between project preparation (eg. CUEP) and implementation (eg. CUDP) is highly desirable. For very complex projects, it may be advisable to use the same consultants for engineering and technical supervision of engineering. (d) Like other B33nk investments in Turkey, engineering loans should encourage the Government to finance local costs to the extent po3sible and share at least a portion of those costs with ficoal beneficiaries. Some cost sharing with municipaliL:ies during CUEP combined with mechanisms to ensure their :7ffective input into the preparation process may have prcmpted cancellation or revision of certain components or withdrawal by some municiralities, but it would also ha-ve encouraged preparation ,f a demand-driven project in wh..sih participants demonstrated commitment to objectives.  - 18 - PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (LOAN 2537-TU) PART II: PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE rU 14. Summary of ImDlementation Results: Implementation results are summarized for each CUEP component: 14.01 Regional Urban Growth Management. The initial objective of this component was to advise the Government on the functions, staffing and institutional location, responsibilities and authority for a regional planning unit to be established in the Cukurova region. The consultant resources necessary to undertake the detailed analysis required could not be allocated due to the increasing necessity to focus on the problems at the municipal level. This component was therefore redesigned to provide a regional framework for the five project towns and findings were discussed at a workshop held in Adana during Phase III. 14.02 Urban Exansion Areas (UEAs). The Urban expansion area component comprises the development of land with infrastructure and social facilities on approximately 2,000 hectares of land owned by municipalities for sale to developers and individuals for housing, ancillary commercial, and small scale employment activities. Municipalities have acquired this land by utilizing funds amounting to 10.5 billion T.L. lent from the Development Support Fund (DSF) On-site works would be implemented by Housing and Urban Development Companies (HUDCs) which have been established in Adana, Mersin, Tarsus and Iskenderun. The Structural Plans, Development Plans and Parcelation Layouts of Urban Expansions Areas of Project municipalities were completed and approved by the relevant Municipal Assemblies. Except for Iskenderun, which was unable to acquire sufficient land due to insufficient access to credit from the Mass Housing Fund (NHF), municipalities completed necessary land acquisition. Premature construction activities, however, particularly in Adana and Mersin, caused deviations from project objectives. In Adana, basic cost recovery principles were ignored and municipal funds were used to subsidize the initial housing schemes. Serious bottlenecks in Adana also occurred when housing construction took place before the arrangements for infrastructure were complete. Similarly, Mersin constructed housing before infrastructure plans were complete, but adhered to cost recovery principles. Despite alterations by Mersin of some infrastructure designs prepared under CUEP, Mersin UEA program currently stands as the largest housing project activity in Turkey, largely as a result of CUEP. Tarsus adhered to all CUEP principles and objectives. There was less progress in Ceyhan due to its delayed LO/ Part II is a condensed version of the PCU's full report on CUEP, which it prepared according to the old guidelines for preparation of PCRs. The substance of the Borrower's original document has not been changed. The full version of the Borrower's report is included and is available in the project files.  - 19 - participation in this component and its overall lack of commitment to CUEP. Altogether, over 10,000 housing units affordable to the low income groups (unit costs within the limits of the MHF credits) were constructed during CUEP. 14.03 Management of Informal Housing Areas. The component involves three major sub-components, namely Upgrading, Housing Management and Serviced Site Development. ZY The upgrading sub-component comprises the rehabilitation and/or installation of infrastructure in informal housing areas which are already developed to a high density, reparcellation of informally sub-divided land, and legalization in terms of planning and building legislation through preparation and application of Improvement Plans. Services will be provided for about 144,000 households in the five project towns during CUDP. The housing management sub-component involves reparcellation of the informal sub- divisions prior to development so that planned development will take place. The provision of infrastructure will then follow. Housing Development Management Areas and Upgrading Areas Strategy represented on town-wide maps with priorities were adopted by municipalities. Applications for parcellation were also begun in collaboration with local Cadastral Offices. Over 6,000 titles were distributed during the CUEP. With regard to the performance of individual municipalities, Iskenderun and Tarsus displayed increasing interest and performance, mainly due to their timely municipal reorganization. Mersin's performance was affected by the absence of technical staff to coordinate the activities in this component, but did invite proposals for consultancy services. Adana approved the town-wide program and individual schemes, but did not show the expected performance during CUEP. After its decision in November 1987 to actively take part in CUDP, Adana showed an increasing interest in the upgrading and management programs. 14.04 Municipal Engineering Services. Sub-components included preparation of feasibility and design for municipal water supply, sanitation, solid waste management, drainage, roads and transport and institutional strengthening, the latter which resulted in shifting of primary responsibility for water and sewerage investments to new Water and Sanitation Corporations (WSCs) in the municipalities (the Adana Water and Sanitation Authority (ASKI) in the case of Adana). The main difficulty in engineering studies was to define the project in relation to ongoing Iller Bank works. Municipalities also seemed reluctant to accept proposed engineering standards. In Adana, the ongoing trunk sewerage construction carried out under Iller Bank contract was continued by the municipality without considering the cheaper alternative proposed by CUEP and despite previous agreement on the location of the sanitary landfill site ?J1 The serviced site development sub-component includes only Ceyhan, where there is no informal housing or squatting, and a small site (36 ha, 1750 dwelling units) has been acquired by the municipality for servicing and sale to lower income households on a sites-and-services basis. The initial proposals for the Ceyhan project were unaffordable. The component was redesigned and a revised proposal including preliminary designs, costs, estimates of financial and economic viability, and proposals for implementation was prepared in December, 1986.  - 20 - and completion of preliminary designs, it utilized the land for other purposes. The Adana HUDC also started construction in the UEA with new designs, increasing the standards which had been proposed by CUEP. In Mersin, it was agreed that ongoing Iller Bank construction and the water and sewerage project proposed under the CUEP would be done in close coordination. The Mersin HUDC, however, also changed designs to start construction in the UEA with increased standards. In Tarsus, a remarkable level of coordination was achieved with the municipality and the HUDC with respect to design standards. The Municipality also stopped ongoing Iller Bank design and tender process for trunk sewerage with the intention of tendering trunk sewerage construction with the designs proposed under CUEP. In Iskenderun, full cooperation in engineering studies was also achieved. There is no ongoing Iller Bank works in Iskenderun and the municipality is determined to tender water, sewer and sanitary landfill construction with the designs and tender documents prepared under the Project. Cevhan continues to disagree with the CUEP proposals on the scope of sewerage construction and sanitary landfills. 14.05 Municipal Reorganization: The main CUEP achievements were establishing Housing and Urban development Companies (HUDCs) to develop and market UEAs, bringing all water and sanitation activities into the newly established Water and Sanitation Corporatiors in four of the municipalities (ASKI in Adana), and rationalizing municipal departmental structures through the establishment of separate units for, inter-alia, (i) investment planning, programming and budgeting; (ii) urban planning and licensing; (iii) Gecekondu upgrading and housing management; (iv) solid waste management; and (v) manpower development. The Reorganization Master Plans prepared for each municipality were accepted by all relevant Municipal Assemblies during Phase II. Reorganization activities in Phase III included the reorganization of Mersin, Tarsus and Iskenderun. The iob descriptions for key posts in the reorganized departments were prepared and the process of preparing departmental regulations covering the structures, functions and operation of the project-related departments are under way. Cadre requests for Mersin, Tarsus and Iskenderun were officially submitted to the Ministry of Interior for processing in February 1987. The MOI has shown a basic interest in replicating the reorganization activities elsewhere in Turkey. Mersin has shown a basic interest in reorganization activities, yet refrained from actual implementation on the grounds that without the appropriate amendments in the existing legislation, the legal basis for the new municipal structure would not be justified. Ceyhan, although reluctant to fully participate in reorganization activities, reflected the CUEP proposals in its cadre request from the MOI. Despite the decision by its Municipal Assembly regarding the acceptance of the proposed organization chart, the municipal officials in Adana remain uncooperative on issues pertaining to organizational development. 14.06 Municipal Financial Management. During CUEP, financial status of the municipalities was assessed in great detail. All assets and liabilities were listed and revalued. Based on these figures and projections, affordability of the investment program to municipalities was evaluated. A new municipal accounting system was developed and introduced in municipalities except Adana and Ceyhan. Tarsus and Iskenderun Municipalities have actively participated in and contributed to municipal finance activities. Mersin also performed well yet the delay in reorganization activities in Mersin have adversely  - 21 - affected the municipal finance activities. Cevhan showed fluctuating interest in activities to improve its financial management. Adana, as a continuation of its lack of interest for developing its institutional and financial capacity, has not cooperated on this component. 14.07 Computerization: Computer software and hardware needs, staffing requirements and training needs were assessed for all municipalities except Adana and Mersin (Mersin already had a computer system operating properly). Hardware needs of Iskenderun, Ceyhan and Tarsus municipalities were met for the years 1986-87 from the CUEP budget. Micro-computers for municipalities (except Adana) were purchased by the SPO in 1986 after obtaining three price quotations and subsequently installed. Computer software developed under the Project includes, inter-alia, (i) "Projcost", which applies the physical and price contingencies to project costs; (ii) "Income Model", which forecasts future income of the municipalities; (iii) "Urban Expansion Model", which analyzes and calculates on-site and off-site infrastructure costs for each dwelling unit, and assesses recoverable and non-recoverable costs in the UEAs; (iv) "HUDC Model", which assesses the financial status of the HUDCs (based on the Urban Expansion Model); (v) "Munsum", (standing for "municipal Summary" which utilizes other models for carrying out affordability analysis; and (vi) other software developed for analyzing the financial mechanisms of the Cukurova Project Fund and the adjusted World Bank model for water and sanitation operations. 14.08 Municipal Staff Training. This has been one of the most successful components involving the establishment of the Cukurova Municipalities Training Association (CMTA) to provide specialized training to local government staff, creation of manpower development departments [thus far in Tarsus and Iskenderun] and technical assistance to introduce new ftnctions and techniques to municipalities. All municipalities participated as founding members of the CMTA during Phase II, a remarkable innovation which had positive repercussions throughout the local administration in Turkey. The bidding documents pertaining to the engagement of a team of local and expatriate consultants to provide technical assistance during the start-up phase of CMTA were prepared and approved. The CMTA's initial training program will be based on operational manuals produced during Phase III of CUEP. Courses are to be develo'ed and offered on a continuing basis between 1988 and 1992 to about 4500 trainees. The training activities during CUEP were carried out through counterpart training and a continuous series of workshops and seminars. The terms of references for different technical assistance components including contract supervision, waste water management, leak detection, road maintenance, financial management and institutional development were also prepared and finalized. 14.09 Cadastral Program. The regional cadastral component was carried out in close cooperation with the General Directorate of Title and Cadastre (GDTC) and its local offices. The GDTC established a regional directorate to support CUEP activities. Cadastral application and updating are underway in municipalities utilizing equipment procured under CUEP. The SPO issued invitation for bids for the cadastral equipment in October 1985. Survey vehicles, electronic tachometers, drafting and aerial films and main computer terminals terminal control unit were transferred to the Cadastral Office in  - 22 - January 1987. The delay in the transfer of equipment occurred because only SPO had any claims to the Bank loan proceeds thus the GDTC was unable to call for bids on its own behalf. The remaining cadastral equipment, namely the data processing and automatic drafting units for which no satisfactory bids were received, were retendered by the SPO in March 1987 and equipment was transferred to GDTC in September 1987. The Regional Program is expected to be completed in 1989. The Ministry of State which controls the National Cadastral Office suggested that the HAKAR study prepared by TUBITAK would provide adequate basis for preparing the national cadastral program without the need to engage consultants under CUEP thus the national cadastral study was suspended. 14.10 Iller Bank Study. 14 man-months of consultancy services were provided to carry out a study of Iller Bank. The objectives of the study were: (i) to review the current role and functions of the Iller Bank; (ii) to examine the effectiveness of existing Iller Bank operations; (iii) to make recommendations on the future role, objectives, functions and policies of Iller Bank in the light of government policies; (iv) to decentralize responsibility and authority for local services to local governments; (v) to strengthen urban development; (vi) to explore Iller Bank's potential as the development bank of municipalities; and (vii) to recommend a phased strategy for implementing new function and policies, including an Action Plan for strengthening the management and operation of Iller Bank, and to draft terms of reference for studies, consultancies and in-house work to formulate details and to implement those improvements. The Consultant's study on Iller Bank commenced in March 1986 and Draft Final Reports were submitted in June 1986. Suggestions and comments of Iller Bank, MPWS, SPO and the World Bank were incorporated in the Final Report which was submitted in November 1986. The Study in general was regarded by concerned agencies to be weak in defining the existing financial status of Iller Bank related to Banking activities which was also reflected in the proposals for future functions. A major common concern pertaining to the implementation of the Study's recommendations was the lack of comprehensive proposals on the transitional stage in Iller Bank's institutional development. 14.11 Adana Transport Study. Approximately 35 man-months of consultancy services were provided to carry out a study of transportation systems and policies of the Project municipalities (except Ceyhan) and to develop a program to meet their transportation requirements. The consultants commenced work in May 1986 and was completed the work in September 1986. The performance of the consultants was remarkable and the Study was carried out and completed without significant delays. The Urban Transport Planning and Road Maintenance Study actually comprised two separate studies. In the first study, emphasis was given to transport-related investments through relevant feasibility studies. Requirements for new roads and/or major improvements in existing ones were investigated for the period 1986-1992 in relation to all factors pertaining to traffic and land use. An investment program for transport was proposed in four municipalities, encompassing the construction of 41.6 km. of new roads and the improvement of junctions in main roads. In the second study, an extensive road maintenance program was developed for the five municipalities.  - 23 - Performance of Proiect Agencies (a) The Undersecretariat of State Planning Organization of the Prime Ministry (SPO) was the coordinating agency for the CUEP. The Undersecretariat Project Promotion and Research Group (UPPRG), on behalf of the Undersecretary, was responsible from all activities of PCU. A Project Coordinator, a member of the UPPRG, was the key person in Ankara as far as the contact of PCU with government entities was concerned. The Undersecretary of SPO himself was in very close contact with the PCU, personally solving or speeding up the solution of several potential problems through intragovernmental contacts. All related departments within the SPO, especially Social Planning and Economical Planning departments, provided substantial assistance and support to CUEP through the UPPRG. (b) The Undersecretariat of Treasury and Foreign Trade of the Prime Ministry was the body of the Government communicating with the World Bank. The interest of the Treasury in the Project grew substantially after the visit by Deputy Undersecretary to the Project Office in Adana in June 1986. (c) The Ministry of Interior (MOI) is the responsible for local governments. Consequently, the MOI was very much involved through its General Directorate of Local Authorities in the reorganization, training, and accounting system components of CUEP. Such crucial and delicate components of the Project were accomplished under the very supportive approach of the MOI. The General Directorate of Security within MOI also cooperated closely in the planning of the construction of police stations in the UEAs and Upgrading Areas. (d) Ministry of Public Works and Settlement (MPWS). Two components of CUEP, namely the UEAs and Upgrading, were directly related to MPWS. In order to reflect the pilot character of the project and arrive at meaningful standards reflecting economic criteria, the MPWS -xempted the project from the by-law on urban land-use planning standards. Further, the MPWS initiated a study to review these standards for Turkey. Since Iller Bank is under the responsibility of the MPWS, several very useful mettings were held with high level officials of the MPWS on issues pertaining to Iller Bank. (e) Iller Bank is the major body of the government dealing with urban infrastructure. Iller Bank currently uses standard design criteria for water and sewerage networks. CUEP, basing the engineering designs on affordability criteria, introduced a new approach to be implemented on a pilot basis during CUDP. The actual and potential technical and  - 24 - political problems between the project objectives and Iller Bank tradition were resolved through the close cooperation among SPO, MPWS, the General Directorate of Iller Bank, and the PCU. Integration of ongoing Iller Bank projects with Cukurova Project designs was accomplished. Iller Bank established the Project Review, Implementation and Management Unit (PRIMU) to execute CUDP. It is anticipated that the positive experience of the CUEP will be passed on to Iller Bank by the pilot operations of PRIMU so that Iller Bank can replicate the project results throughout Turkey. (f) State Hydraulic Works (DSI). Two studies required the involvement of State Hydraulic Works. The first study was Mersin Water Treatment Plant. CUEP concluded that doubling plant capacity would be sufficient and could be achieved by increasing the capacity of filters and changing the filter to favor an increase the capacity of all units. In the Adana Water Supply Project, agreement was reached that CUEP consultants would work on rehabilitating existing wellfields and constructing new wellfields, water reservoirs and distribution network, and the DSI would concentrate on development of long term surface water sources. (g) Post and Telecommunications Authority (PTT). PTT in Ankara and its Regional Directorate in Adana were extremely cooperative in directing and supervising the designs prepared by CUEP Consultants. The PTT modified some of its procedures and standards based on the experience gained in the Cukurova Project. The initial intention of the Government was to propose a contribution from the World Bank for PTT and TEK investments in the related CUDP components. In due course, however, the Government decided to implement the components of the PTT and TEK activities with local funding. (h) The State Electricity Authority (TEK)/ Cukurova Electric A.S. (CEAS) Both TEK and CEAS, which has a concession for power generation and overland transmission in the Cukurova region, were involved in CUEP. The UEAs and Upgrading components had to be designed ac-ording their standards. (i) Thke Directorate of Mass Housing and Public PartnershiR Administration (commonly referred to as the Mass Housing Fund or MHF) was the lending agency to the municipalities for the purchase and/or expropriation of land in the UEAs. The MHF was very supportive of the CUEP concept of establishing HUDC's. During CUEP, the MHF started to place more emphasis on the development of land with infrastructure affordable to the low income groups. Certain adjustments in MHF regulations were made to reflect this trend.  - 25 - (j) Mapping General Headquarters of Turkish Armed Forces (MCH). MGH produced ortho-photo maps of four municipalities, the first civilian use of orthophoto mapping in Turkey and which stimulated other agencies to utilize such technology (e.g., Istanbul metropolitan Municipality). In March 1987, CUEP recommendations were considered in amending the related by- law concerning private sector involvement in the field of air photography to enable the private sector to produce air photographs larger than 1:5000 scale, suitable for urban planning and engineering designs. (k) Ministry of Education (MOE). CUEP developed several new designs for educational facilities in UEAs and Upgrading Areas. These were approved by MOE, although it is inclined toward standard designs for Turkey. The MOE's investment programs for the coming years were also revised to incorporate Cukurova project activities. Educational components in CUDP will be funded by local sources. (1) The Ministry of Health (MOH) was involved in CUEP since health centers are an integral part of the social infrastructure in UEAs and Upgrading Areas. The MOH was supportive of CUEP and revised its investment program to incorporate Cukurova project activities. (m) The Ministry of Finance (MOF). The proposed new accounting system is currently under review by the MOF officials. (n) The General Directorate of Title and Cadastre (GDTC) was involved in CUEP through the central agency and its local offices in the provision of up-to-date and accurate information on cadastral base and on landownership patterns in the Cukurova Region to aid in successful design and implementation. In close cooperation with the GDTC, CUEP recommendations concerning legal arrangements with respect to upgrading and management areas were integrated into Act No: 3290, enacted in May 1986. The provision with special importance (Article 20) is the new arrangement proposed by CUEP which gives power to the municipalities to undertake planning actions in "threatened areas" in line with "affordable standards" criteria. Project proposals regarding two important aspects of financial arrangements, namely (i) establishment of an Upgrading Fund in the municipalities; and (ii) power of municipalities to expropriate squatter areas, were integrated into a further amendment to the Act which received the Parliament's approval. Cadastral application and updating are underway in Project towns in accord with the Project's priority areas and program, utilizing the modern equipment procured under the project. In order to secure rapid and coordinated implementation in UEAs, new arrangements in land registry were introduced. A pilot application was initiated in Mersin, utilizing computer otitputs in land registry process.  - 26 - (o) The State Personnel Directorate (SPD) played a key role in reviewing the cadre request forms prepared by the municipalities pursuant to the municipal reorganization activities. Despite the SPO's and MOI's official requests for the SPD to take into account the pilot character of the project, the SPD was reluctant to forward the cadre request forms to the Council of Ministers for timely approval and tended to make significant amendments in the cadre requests. (p) The State Highway Authority (KGM) was very receptive to the CUEP proposals under its domain. The cooperation of KGM was especially significant for those municipalities where the new (proposed) express way will cross-cut the major UEAs. (q) The World Bank has shown a great interest to the Project and provided a remarkable support to the project preparation activities. Through numerous missions, CUEP progress was closely monitored at its various - and most critical stages. Notwithstanding the merits of the Bank's close involvement, a significant drawback has emerged despite the intentions of all parties to sustain the pace of progress. The project preparation activities were virtually "frozen" thtoughout the duration of the Bank missions, which were rather lengthy and frequent. The time allocated by the consultants for briefing the mission members and providing them with relevant (generally revised) data barely left any time and energy for the continuance of the work during the visits of the Bank missions. 15. Summary of Findings and Lessons Learned from the Borrowers' Perspective 15.01 The CUEP made significant contributions to the refinement and implementation of the Government's decentralization policy. It had a strong impact at the national level with respect to the revision of the urban perspective, culminating in the amendment of pertinent legislation and promotion of institutional development. Important achievements in developing and implementing the new urban policies and programs were made during CUEP. At the local level, HUDCs managed to develop over 10,000 housing units affordable to the lowest income groups in UEAs. Investments are underway in these areas to develop infrastructure also affordable to the low income families. Systematic approaches were developed for guiding the growth of spontaneous settlements and for providing them with basic services in a coordinated manner. The legalization act-vities initiated in the municipalities facilitated the distribution of over 6,000 individual titles. Lower cost planning and design standards were adopted for on-site infrastructure in the area-based programs and for the design of water and sewerage systems. Sewerage charges were introduced, progressive water tariffs adopted, and water tariffs increased significantly. 15.02 Continuous technical advice and support was provided to the concerned municipalities to assist them to manage growth and overcome service deficiencies, and invest, operate and maintain services on a self-sustaining  - 27 - decentralized basis. In this respect, innovative approaches to support efficient urban growth were developed and maintained not only in terms of appropriate design standards, but also in investment programming, financial management practices and staff development activities. 15.03 An indlrect contribution of the Project manifests itself in the form of mushrooming consultancy organizations. In fact, there is an apparently increasing desire on the side of the municipalities and other public agencies, not only in the region but throughout the country, to make use of consultancy services in their operations. The CUEP evidently played a significant role in the development of this new trend. 15.04 Arrangements have been made to enable a relatively smooth transition from the CUEP to the CUDP. In order to ensure the continuity of the project management and coordination, a period of overlap is envisaged in the operations of the PCU and the PRIMU. Furthermore, the incorporation of some of the PCU expertise into the PRIMU has been achieved. On the side of the municipalities, however, the position of Adana is problematic. 15.05 After receiving a letter from the Treasury urging the municipalit.ies to make their final decisions on whether or not to proceed with CUDP, all municipalities expressed their intention to participate. The Mayors and some other officials of the five Project municipalities, accompanied by Government officials and PCU members, went to Washington in April 1987 for negotiations. On their return, however, despite the consensus reached in Washington on outstanding issues, the Municipal Assembly of Adana Metropolitan Municipality decided to withdraw from the CUDP. Ceyhan, however, revised its decision to withdraw in early October 1987 and restated its intention to be part of CUDP. Adana also reversed its decision to withdraw in November 1987. 15.06 A major lesson that must be avoided in other similar projects pertains to CUEP and the associated local finance by the central agencies. The relatively passive involvement and the lack of enthusiasm on the side of the municipalities basically stemmed from the fact that they did not pay for project preparation activities. This weakness should be overcome in future projects by making the municipalities pay for the preparation of their own projects and thus ensure their keen interest in how their money is spent.  PROJECT COMPLETION REPORT TURKEY CUKUROVA REGION URBAN ENGINEERING PROJECT (LOAN 2532-TU) PART III STATISTICAL INFORMATION Table 1. RELATED BANK LOANS/CREDITS Loan/Credit Title Purpose Approval Status Istanbul Urban To inprove metropolitan planming, transport/land use and 1972 Closed Development prepare investments in gecekondu upgrading, sewerage, and (Cr.324-TU) 1/ traffic control. IstanbuL Water To expand water treatment, transmission, pumping and 1972 Closed Supply (LN844- distribution system for the Istanbul metropolitan area. TU) Istanbul To expand and improve sewage collection in Istanbul; to 1982 Closed Sewerage I reduce water pollution in the Golden Horn and the Sea of (LN2159-TU) Marmara; and to strengthen the institutional framework of ISKI. Izmir Water To assist in establishing an autonomous water and sewerage 1987 Active Supply & authority for Izmir; to encourage appropriate cost Sewerage recovery policies; to correct deficiencies in and expand (LN2818-TU) the capacity of Izmir's water and sewerage systems; and to bring about environmental improvements and reduce health hazards by eliminating open flows of untreated sewage in the city and the discharge of untreated sewage to Izmir bay. Cukurova Region To improve urban efficiency and finance investments in 1987 Active Urban water supply, soLid waste management, upgrading formal Development housing areas, development of urban expansion areas for Project (CUDP) five municipalities. (LN2819-TU) _/ Istanbul Water To improve and extend sewerage service to 70X of the 1987 Active Supply and population of Istanbul by the end of 1994; to provide for Sewerage appropriate treatment and disposal of sewage to protect (LN2888-TU) the water and shorelines of the Sea of Marmara and the bosphorus; to reduce unaccounted-for water; and to strengthen ISKI's operation and maintenance and industrial waste management capabilities. Ankara Sewerage To eliminate the discharge of untreated sewage to the 1989 Active (LN3151-TU) Ankara River and its tributaries flowing through Ankara; to extend sewerage to approximately 850,000 unserved persons; to reduce flooding during heavy rainstorm; and to improve ASKI operations and maintenance. 1/ Preparation loan resuLted in no major investment operation. 2/ The Cukurova Urban Engineering Project (LN2537) was a preparation loan for this operation.  - 29 - Table 2. PROJECT TIMETABLE Date Date Date Item Planned Revised Actual -Identification S 02/18/84 -Preparation 09/84 -Appraisal Mission V 11/19/84 11/84 -Loan Negotiations 03/25/85 -Board Approval 05/09/85 05/09/85 -Loan Signature 05/29/85 -Loan Effectiveness 07/24/85 -Project ComLetion 12/31/88 12/31/8t -Loan Closing 06/30/89 06/30/89 LN2537 and LN2819 identified simultaneously. No separate appraisal report was prepared. See President's Report (p-3935, April 18, 1985).  - 30 - Table 3. CUJLATIVE LITIMATED AND ACTUAL DISBURSEMENTS (US S MIn) FY 1985 1986 1987 1988 198? Appraisal Estimate 1/ 1.7 6 8.6 9 9.2 Actual 0 5.01 8.48 9.06 9.2 Actual as X of Estimated 0 83X 99X 1O12 100l Date of final Disbursement 01/20/89 I/ From President's Report. There is no separate appraisel report.  - 31 - Table 4. PROJECT FINANCING P.evised Source Planned 05/27/87 Final IBRD: EAcenditure Categories: Consultant Services 6.5 7.508 8.132 Equipment 0.83 0.68 0.668 Special Account i/ 1 0.611 0 Refunding Project Preparation Advance 0.6 0.399 0.399 Unallocated 0.27 0 0 Total IBRD 9.2 9.2 9.2 Government: 1.4 4.0 2/ 4.0 Total 10.7 13.2 13.2 J/ To prefinance Bank's share of eligible expenditures. 2/ Includes partial financing from PPF.  - 32 - Table 5. Studies. Feasibilitv and Design Vork Carried Ouc Under CRE?p PHASE I Reports Precared by Consultants (April-August 1985) Reports: 1. Project Summary and Report (2 volumes) 2. Town Report: Adana 3. Town Report: Ceyhan 4. Town Report: Iskenderun 5. Town Report: Mersin 6. Town Report: Tarsus Working PaiLers: 7. Regional Perspective 8. Regional Perspective Supplement 9. Regional Urban Growth Management 10. Municipal Finance 11. Water Supply 12. Sewerage, Stormwater and Sewage Disposal 13. Solid Waste Management 14. Electricity and Telecommunications 15. Urban Expansion and Gecekondu Upgrading Strate- 16. Economic Considerations TORs 17. Iller Bank Management Study 18. National Cadastral Study 19. Cadastral Equipment ?rocuremene 20. Emplovment and Urban Growth 21. Household Surveys for phase II and III. 22. Orthophoto Mapping 23. Other Muncipal Projects and Housing Finance 24. Telecommunications Master Plan and Training Study  - 33 - cont. Table 5. Page 2 of 7 - PHASE TT Documencs (September 1985-December 1986)' General (by Category): Proiect Management and Finance 1. Project Responsibilities 2. Financial Plans and Forecasts 3. Economic Considerations and Project Appraisal Housing 4. Housing Finance Case Studies 5. Household Surveys (2 volumes) 6. Real Estate Enquiry 7. The Potential for Extending Credit to Building Materials Suppliers 8. Urban Expansion Marketing 9. Utban Expansion Areas; Policy Statement on HUDCs 10. Informal Housing Upgrading and Expansion Municipal Engineering Components 11. Engineering Standards and Criteria 12. Policy Statement on Water and Sanitations Cor: rations (WSCs) 13. Water, Sanitation, and Solid Waste Operations nd Maintenance, Equipment Specifications and Schedules 14. Program for Water and Sanitation Leak Detect- and Data Base 15. Solid Waste Management 16. Procurement of Solid Waste Services 17. Geotechnical and Topographical Surveys Municioal Finance 18. Municipal Assets Valuation 19. User Charges and Cost Recovery 20. Accounting Systems Manual * 21. Professional and Advertisement Taxes 22. Property Tax 23. Iskenderun Payroll/Personnel System 24. Iskendbrun Purchasing and Stores Svstem 25. Iskenderun Vehicle Management System 26. Iskenderun Financial Ledger and Costing System 27. Computer Systems, Iskenderun General Systems Examined 28. Iskenderun Water Billing System 29. Iskenderun Co-mputer Strategy !Including 7 month period at the end of phase II when consultants continued to work, however, phase III contract was being negotiated.  - 34 - cont Table 5: Page 3 of 7 Inscitutional-Devel ooene and Planning 30. Municipal Organization and Management 31. Resource Management in Municipalities 32. Iller Bank Managment Study (3 vol) 33. Muncipal Manpower Development 34. Sub-Regional Plan 35. Review of Upgrading Plan 36. Informal Housing Upgrading 37. Municipal Organization Master Plan TORs Preoared for: 38. Nationwide Training Study 39. Health Impact Study TOCWN-SPECIFIC REPORTS Adana: 40. Adana Transport Study 41. Water Supply 42. Sewerage and Drainage 43. Solid Waste 44. Urban Expansion Area Feasibility Study 45. Informal Housing Upgrading* 46. Municipal Organization Master Plan * Iskenderun: 47. Iskenderun Transport Study 48. Water Supply 49. Water Resources:Hydrogeological Appraisal 50. Sewerage and Drainage 51. Solid Waste a 52. Urban Expansion Area Feasibility Studv 53. Municipal Organization Master Plan* 54. Informal Housing Upgrading*  - 35 - Cont Table 5: Page 4 of 7 Tarsus: - 55. Tarsus Transport Study 56. Water Supply 57. Sewerage and Drainage 58. Solid Waste 59. Urban Expansion Feasibility Study 60. Informal Housing Upgrading* 61. Municipal Organization Master Plan* Ceyhan: 62. Sanitation 63. Water Supply, Operations and Maintenance 64. Solid Waste 65. Housing Development Management* 66. Municipal Organization Master Plan * Mersin: 67. Mersin Transport Study 68. Water Supply 69. Sewerage and Drainage 70. Solid Waste 71. Urban Expansion Area Feasibility Study  - 36 - cont Table 5: Page 5 of 7 PHASE II! Reoorts (January-July 1987) General 1. Post Appraisal Project Update 2. Project Cost:Software and Users Manual* 3. Water and Sanitation Model:Software and Manual* 4. Urban Expansion Area '-el:Software and Manual* 5. Housing and Urban Development Company (HUDC)Kodel:Software and Manual* 6. Municipal Affordability Summary:Software and Manual* 7. Regional Urban Growth Management Workshop Manual* 8. Tendering Procedures Workshop Manual* 9. Good Citizen Public Relations-Operations Manual No. 2* 10. Plant and Vehicle Maintenance-Operations Manual No. 11 11. Solid Waste Management-Operations Manual No. 12 12. Project Appraisal, Implementation, Control and Monitoring by Muncipalities, Iller Bank, and PRIMU* 13. Community Facilities Building Design for Health Centers/Prim. Schools* 14. Informal Housing Ugrading and Devt Mgmt. Areas-General Engineering* 15. Management of Water/Sewerage O/K-Operations Manual No. 3* 16. Road Maintenance:Operations Manual No. 5* Huncioal Finance: 17. Inzome Database Guidelines* 18. Income Collection Efficiency Guidelines* 19. Cost Recovery:Recommendations for Improved Practice and Legislation* 20. Municipal Accounting Manual* 21. Management Accounting-Operations Manual No. 8-c 22. Income Model:Software and Users Manual* 23. Working Papers on Financing and Affordability Housing* Institutional Devylooment and Planning 24. Progress Report on Municipal Reorganization in Iskenderun, Mersin, Tarsus* 25. Manpower Development Workshop Manual* 26. Procedures for Municipal Planning Units* 27. Cukurova Municip4lites Training Assoc. (CMTA) Constitution* 28. CMTA Six Year and Annual Plans* 29. Corporate Planning-Operations Manual No. 1* 30. Urban Planning and Control-Operations Manual No. 7* 31. Manpower Planning, Training, and Personnel Mgmt-Operations Manual No.9*  - 37 - cont Table 5:Page 6 of 7 Town Studi&&: 32. Adana Short Term Housing Strategy (87-92)* 33. Kiremithane Housing Devt. Mgmt. Area Improvement Plan * 34. Kiremithane Housing Development 8gmt. Community Facilities Brief* 35. Kiremithane Informal Housing Upgrading Area Improvement Plan* 36. Kiremithane Informal Housing Upgrading Community Facilities Brief* 37. Hydrogeological Study Final Designs and Tender Documents: 38. Urban Expansion Area On-and Off-Site Infrastructure* 39. Water Supply* 40. Sewerage, Trunk Sewers and Treatment Plants* Iskenderun 41. Iskenderun Housing Strategy (87-92)* 42. Yildirimtepe Housing Devt. Mgmt. Area Improvement Plan* 43. Yilderimtepe Housing Devt. Mgmt. Community Fa: Lities Brief* 44. Yildirimtepe Informal Housing Area Improvemen- ?lan* 45. Yildirimtepe Informal Hsgn. Upgrading Communi- Facilities* 46. Meter Adjustment and Repair Shop Report* 47. Resource Mgmt:Iskenderun Water and Bus Operat: ns* Final Designs and Tender Documents: 48. Sanitary Landfill Site Development 49 Water Supply, Extracting and Pumping, Sanitati'n & Drainage Secondary and Tertiary Networks 50. Resevoirs CeXhan 51. Urban Expansion Area Feasibility Study 52. Sewerage/Drainage Gazi Osman Pasa Preliminary Design Report a Final Designs and Tender Documents: 53. Sanitary Landfill Site Development* 54. Sewerage and Drainage*  - 38 - cont Table 5:Page 7 of 7 Tarsus - 55. Tarsus Short-Term Housing Strategy (87-92)* 56. Yanimahalle Housing Development Management Area Improvement Plan* 57. Yenimahalle Housing Development Mgmt. Community Facilities Brief* 58. Gaziler Informal Housing Upgrading Area Improvement Plan* 59. Gaziler Informal Housing Upgrading Community Facilities Brief* 60. Bahce-Barbaros-Girne Informal Housing Upgrading Framework Plan* 61. Bahee-Barbaros Informal Hsng. Upgrading Community Facilities* Final Design and Tender Documents: 62. Urban Expansion Area On- and Off-Site Infrastruture 63. Trunk Sewers, Waste Treatment Plant, Secondary/Tertiary Networks Merlin 64. Mersin Housing Strategy (87-92)* 65. Demirtas Informal Housing Upgrading Area Impr' ement Plan* 66. Demirtas Informal Housing Upgrading Communit. acilities Brief* 67. Osmaniye Housing Development Mgmt. Area Impro- tent Plan* 68. Osmaniye Housing Development Mgmt. Ccmmunity :ilities Brief* Final Designs and Tender DQcuments: 69. Urban Expansion Area On- and Off-site Infrastr:cture *Turkish and English versions .  - 39 - Table 5A PROJECT COST (US S Million) IeA fAppraisal Estimate Actual Local Foreign Local costs costs Tota1 IBRD Funds Total 1. Project Coor. Unit (PCU) 1.43 0.39 1.82 A/ 1.11 0.25 1.36 2. Institutional Feasibility & design studies 3.21 2.52 5.73 6.72 3.4 10.12 3. Cadastral Surveys/ Equipment 0.14 0.85 0.99 0.88 0.16 1.04 4. Special Studies 0.27 0.27 0.54 h/ 0.5 0.18 0.68 5. Physical Contingencies 0.35 0.22 0.57 6. Price Contingencies 0.65 0.41 1.06 Total Project Cost 6.05 4.66 10.71 9.21 3.99 13.2 a/ Partially financed with $600,000 advance from project preparation facility. h/ Adana Transport and Iller Bank studies. c/ Based on weighted average exchange rate for 1986-87 disbursement period of US$1-757 TL. Counterpart funds from State Planning Organization.  - 40 - r3ble 6. Satatnt of Crltince with Leal Covenants LA SeCtion CovnUtS Deadtlin for Cotiiice Status 3.02 Cii) fatabtish/meintain Project Coordination unit Established; demobilized in October 1987 when llter Bank began to execute CuoP 3.32 Ci) Estabtish/meintain regional/notionat Established, if at atl, in name only project sttering comaittees and considered not to have functioned effectively. 3. 4 Ca) Borrower shall aploy consultai.ts to Satisfactory. assist in carrying out project 3.04 (b) Borrower shall make available to Nostly satisfactory though it consultants ltL such information was not always possible to coordinate as may be necessary for project pltars with ongoing successful execution. investmant plans by other goveramental agenies. 3.C4 tc) Borrowr shall furnish to the Bank copies of Satisfactory. doctumnts prepared by consultants. 4.0I ii0) Furnish audited anntul accounts 6 mos Finat audited accovnt due June ;