India - Gujarat Rural Roads Project (Credit 1757-IN) : January 1990 supervision mission

 73076 ANNEX 1 Page 1 of 7 INDIA GUJARAT RURAL ROADS PROJECT - CREDIT 1757 - IN JANUARY 1990 SUPERVISION MISSION Aide-Memoire Introduction 1.1 A World Bank mission compr~s~ng Messrs. A. Cittati (Highway Engineer) and C.S. Nawathe (Highway Engineer) visited the state of Gujarat from January 21 tht"ough 25 to supervise the project. Mr. J. Bentchikou (Sr. Highway Engineer,) joined the mission on January 25. 1.2 This Aide Memoire summarizes the mission's findings and discussions with GOI and GOG officials. However, the conclusions and recommendations recorded here, are subject to confirmation by the International Development Association. 1.3 The mission wishes to express its appreciation of the assistance received from all concerned in the Government of Guj arat and in particular for the arrangements made for visiting many of the project sites. A list of officials met is enclosed as Attachment 1. 2. Civil Works Progress of the works 2.1 The project involves construction, reconstruction or improvement of about 4000 kilometers of village roads in seven districts of Gujarat where the dairy industry predominates. The project is rescheduled to be completed in seven years from the time it became effective on August 27, 1987. After some initial difficulties, a marked improvement in project implementation was recorded in March 1989, but this positive trend did not continue. The project is now almost two years behind schedule and continues to suffer on account of poor funding, inadequate equipment, delays in acquiring land or removing encroachments, delayed technical sanctions (TS) and administrative (AA) approvals, poor enforcement of contract conditions and specifications, inadequate staff and frequent staff turnovers. None of the works started has been completed in the past 30 months. Road works are only partially completed on about 400 km. i.e. less than 10 percent of the total program length,unless immediate corrective measures discussed in the following paras are taken, the project will barely reach a 30% completion during the project period. Situation of A.A., T.S. and Procurement (Table 1). 2.2 Government's administrative approvals for the agreed programs of project works to he taken up for execution during 89-90 was considerably delayed, with the result that none of the works included in FY 89-90 budget would commence  ANNEX 1 Page 2 of 7 before the end of the financial year. Consequently, the works program for FY 90-91 has not been approved so far. This program would include all the remaining jobs. Early approval to this program is extremely important in view of the larger tender packages envisaged in the future (see para 2.7). 2.3 Due to shortage of staff, detailed engineering of the works included in the FY 89-90 program has not been finalized. Since detailed engineering and technical sanction are required for all the jobs included in a package before bids are invited, detailed engineering works need to be carried out expeditiously. The field units will have to revise their programs for carrying out detailed engineering of different jobs, on the basis of the agreed modified packaging of works. During the field visits, the mission has also observed deficiencies in the final engineering carried out by the departmental engineers and reviewed by the highest technical authority (Chief Engineer). The mission urges GOG to apply stricter control on the quality of design and take measures to strengthen the field staff without delays. 2.4 So far, bids have been accepted for 409 jobs totalling 1380 kms and bids received for 118 jobs totalling 1,522 kms are being processed. However, none of the jobs started has been fully completed, partly because of land acquisition problems, but mainly because of the Department practice to contract works well in excess of its available budget. Due to political pressure, works are initiated simultaneously in several districts and then completed in two or three years even when the contract amounts are as small as 2.5 or 3.0 Rs. million. The mission has expressed its concern about this practice and recommends that each contract be allocated sufficient funds to be completed within the contractual completion period. In as many as 33 contracts, the bank's procurement guidelines were violated and contracts were rejected without informing the Association. GOG has assured the mission that such instances will not be repeated and requested the Association to condone the past violations. Quality of works inspected 2.5 The mission visited eleven works in the four districts of the State with the hope that the improvements noted by the Feb-March 89 mission in contract execution and project supervision would have enhanced the quality of works being executed by all the field units. Unfortunat.ely defects noted by the past mission persist. Major shortcomings noticed during the mission visit are caused by ineffective supervision, absence of minimal equipment at construction sites, lack of trained equipment operators, improper sequence of operations during construction, poor enforcement of technical specifications and poor standards of acceptability of the finished works. Most commonly noticed defects are: not following the proper sequence of operations such as carrying out bituminous layers(WBM/LBM/SDC) before completion of formations and side supports; using oversized. not properly graded, handbroken stones for WBM construction; absence of control on camber, grade, super elevation during  ANNEX 1 Page 3 of 7 construction of the subgrade. subbase. and base layers; dumping of earth in heaps for the work of widening of formations. absence of layering for earth works construction and absence of compaction in lower layers; digging borrow pits close to the toe of embankment; non building of longitudinal gutters for the road sections in cutting; inadequate side slopes for the earthworks in embankment; non completion of earth work true to the designed section, especially in the reaches of high embankments; lack of effective and appropriate hand tools (the only tool used is the hoe); excessive dependence on static rollers and refusal to use modern equipment; tackling works allover the length of the road without concentrating on completion section by section; poor construction of masonry and concrete for the hume pipe culverts. Programming and Packaging 2.6 Some of the roads included in the original(SAR) program have been, in the Ineanwhile, executed by Panchayats; others have been dropped by R&BD because of excessive cost after detailed engineering was carried out. GOG is therefore proposing to reduce the scope of the project from 1,025 to 922 roads, with a corresponding reduction in total length from 4,042 km to about 3,670 km. The cost of civil works for the reduced program is estimated by R&BD at Rs.l,620.5 million, inc luding contingencies, 1. e Rs. 103.4 million lower than SAR estimates. However the mission informed R&BD that some flexibility is allowed in the original SAR program and that alternative road sections could be replaced in the project, provided an economic evaluation is undertaken for these roads and the Association's approval is sought before implementation. 2.7 The mission discussed the status of procurement of civil works with R&BD officials in relation to the size of bid packages. Average value of contracts is in fact about 240,000 US$ equivalent and not even one contract reaches the value of 500,000 US$ equivalent agreed as a minimum value of bid packages, pursuant to Schedule 1, Section I, Part C.S of the Project Agreement. Two of the main project's objectives are the modernization of the construction industry and the application of higher technical standards and these can only be achieved through contracts large enough to justify the acquisition by the contractors of " the equipment required to satisfactorily execute the works.  ANNEX 1 Page 4 of 7 2.8 It was therefore agreed that R&BD will review its packaging criteria for the 1989/90 and 1990/91 program so that, works will be rearranged in packages of 500,000 US$ equivalent or more. Funding Requirements 2.9 In spite of the commitments made under Section 3.01 of the Development Credit Agreement, GOI has not been able to cause Gujarat to perform in accordance with the Project Agreement. In the past 2.1/2 years, the funds provided by the GOG amounted to only 30 percent of the appraisal estimates, and the situation is not expected to improve during FY90-9L If the project is to follow its schedule, the level of funding will have to be more than doubled (Table 2) from now on. 2.10 This budgetary Crunch is in fact the direct result of financial rules which require GOG to provide in its budget for 100% of the project expenditures despite the fact that IDA finances 70% of the project. After all, IDA financing should be considered additional to GOG financing because otherwise, IDA assistance would not be needed. In the current situation the IDA money goes to the general revenue section of the budget. The mission strongly recommends that DEA authorize GOG to input the IDA financing directly into the project account so that GOG'S limited budgetary resources can be used to their full effect to finance exclusively GOG's share of project cost. One possibility could be to split payments to contractors into 2 parts, one part corresponding to IDA's share, paid directly out of the project special account or by using IDA's disbursement procedure III, and the remaining part paid by GOG's usual means using budgetary resources. Prequalification of Contractors 2.11 The mission noted that out of 33 on going contracts, 18 are not completed more than 6 months after the contract completion date and 10 are delayed by more than 9 months. Still, no action has been taken by R&BD against those non- performing contractors and they have been all prequalified for the current 1989/90 construction reason. The mission regards this situation as unacceptable and it has been agreed with the Department that contractors whose contracts have expired by six months or more be automatically disqualified from future bids. Furthermore, a liquidated damage clause will be added to contracts and strictly applied,unless GOGrecognizes that the delays are due to factors outside of the contractor's control and revisions of the completion dates are submitted to and agreed with IDA. 3. Equipment 3.1 The mission expressed concern to the Department officials for the unsatisfactory situation of equipment procurement and deployment, which is summarized below for some of the most urgently needed items:  ANNEX 1 Page 5 of 7 ICB Procurement SAR Available Under proc. Pneumatic Tyred Rollers 10 0 5 Vibrating rollers 20 2 5 LCB Procurement SAR Available To be procured Motorgraders (120HP) 7 1 7-10 Water tankers 100 10 NA Tandem rollers (1-2t) 20 5 10 Plate compactors 20 5 NA The mission noted that out of the three small tandem rollers seen, two had the vibration control unusable and the third one was being used as a static roller. 3.2 Bids for equipment procured under ICB were received on September 1, 1989 and bid evaluation is nearly completed. The mission urged R&BD to expedite the remaining administrative steps so that the bid evaluation report be submitted to the Association for review without further delays. 3.3 In view of the critical need for adequate equipment to ensure an acceptable quality of the works the mission has recommended. and the Department has agreed, to complete the procurement of necessary equipment within the current year. In particular it has been agreed that R&BD will revise the list of equipment required and, after review by the Association, start the procurement procedure for all items at once and without further delays. 3.4 However GOG has expressed its intention to procure equipment in amounts well below the SAR estimates and to require the contractors to provide the bulk of the necessary equipment. The mission concurs with GOG's position, subject to the the following : (i) contractors will be entitled to a mobilization advance and a machinery advance. each of them in the amount of 10% of the contract value, covered only by a bank guarantee; (ii) interests rates charged by GOG on the above advances, at present in the amount of 20% per annum, will be reduced to more reasonable levels, acceptable to the Association: and (iii) strict enforcement of Schedule C of Clause 7 of the general conditions of contract. which specifies in detail the equipment to be provided on site by the contractors before starting the works. 3.5 The mission would like to draw the attention of GOI and GOG that reductions in equipment procurement are likely to generate unused project funds which will have to be cancelled. at the Credit's closing. Land Acquisition 4.1 Posts for the 21 surveyors and the 3 land acquisition officers needed to  ANNEX 1 Page 6 of 7 process land acquisition cases have been sanctioned but no staff is in place yet. Frequently, farmers refusal to settle the cases through private negotiation is resulting in stoppage of works on part or even the entire length of 29 new roads and in substandard improvement and rehabilitation works because of farmer's encroachment on the right-of-way. GOG has given formal assurance that the survey teams and the acquisition officers will be posted at their duty stations by March 15, 1990. 4.2 I t was further agreed however that, effective immediat.ely, R&BD will submit for review by the Association, before tenders are announced, the list of roads included in such tender together with a certification that the land acquisition process has been completed for the entire length of the road and for the full width of the right-of-way. 5. Studies 5.1 Technical proposals for the Road Maintenance Study have been received on December 4, 1989 from four of the five prequalified consultants. Evaluation of the proposals by R&BD is under way and the evaluation report is expected to be submitted to the Association for review by February 28, 1990. 5.2 Preparation of the Road Safety Program, agreed during project appraisal, will start shortly and GOG has undertaken to submit the program for comments to the Association by December 31, 1990. 6. Staffing 6.1 For the satisfactory completion of the project according to the implementation program set forth in Schedule 2 of the Project Agreement, the personnel needed to man the field establishment (1 CE, 4 SEs, 17 EEs, 68 DEs) should have been sanctioned promptly. However, only about half of this establishment has been sanctioned (1 CE, 3 SEs, 9 EEs and 34 DEs) and high turnover rates are reported, thus preempting the results of the training programs and preventing the effective utilization of the experience acquired in the execution of the project. The unsatisfactory staffing situation is affecting not only the quality of works under execution (see para 2.5 & 2.6.) but also the quality and pace of execution of the engineering designs, which are well behind schedule. In addition the scattered location of the works and the lack of transport for site supervision staff is creating serious difficulties and jeopardizing any effective quality control of the works. The mission strongly recommends that GOG take the necessary measures to correct the situatiun, including the hiring of consultants, at least on a pilot basis. for the supervision of some of the contracts. 7. Training 7.1 To date. some short term training courses have been arranged in the Engg. Staff College Ghandhinagar, but the slow progress and the turnover of the staff are denying this training of much of its effectiveness. 7.2 Regarding overseas training included in the project and agreed at  ANNEX 1 Page 7 of 7 negotiations, no decision has yet been taken by the three ministeries of GOI involved. DEA is urged to give its early approval to the overseas training courses so that the experience gained may be put to use in the project. 8. Design Specifications 8.1 The mission discussed with Depart.ment officials the pavement design specifications; in particular it was agreed that the Scm of LBM (lean bituminous macadam), presently adopted instead of the 10cm of grading 3 machine-crushed stone which is not easily available from commercial quarries, is proving too expensive and disproportionate to the standards required for rural roads. 8.2 The mission recommends the return to the original SAR specifications with the possible exception of replacing the 10cm of machine-crushed stone with an equal thickness of handbroken, hand-laid, WBM laid and compacted under the strictest condition of quality control and enforcement of specifications. 9. Audit Certificates 9.1 Audit certificate for the GOG's FY 1988-89 expenditure has been received on January 2, 1990. However this does not contain the certificates for the audit of SOEs as detailed in para 3.22 of the SAR. 10. Compliance with Covenants 10.1 Since the Road User charge study, being carried out under the NH Project (Ln 2S34-IN), has not been finalized it. would not be possible for GOG to review these changes and discuss the findings with the Bank before December 1990. 10.2 The project roads are getting completed at pace slower than expected. The Secretary, R&B has promised that the project roads would be given maintenance budget according to the norms recommended by the Eighth Finance Commission.  INDIA GUJARAT RURAL ROADS: CR 1757 IN PROGRESS REPORT FOR THE QUARTER ENDING DEC. 31. 1989 Sr. Details PACKAGE JOB LENGTH CATEGOR~~SE LENGTH OF COST IN RS MILLION REMARKS No. NO. NO. NC I -- IRC IMP CIVIL TOTAL <- -------- -kms- ---- -> WORKS I. Estimates a. SAR 287 1025 4042 1031 958 2023 1724.7 2220.5 b. Current NA 922 3670 951 948 1771 1620.5 1948.6 II. Civil Works A. A.A./T.S./Procurement a. SAR targets 3/90 220 883 3492 916 885 1692 1490.0 - b. PROGRESS i) AA - 823 3468 903 875 1690 1187.3 - ii) T S - 527 1902 526 548 828 610.8 - iii) Procurement 109 409 1380 419 373 588 537.1 - B. Physical Completion a. SAR targets 3/90 - - 1667 419 488 760 - '" Pl r; ~ b. Revised 3/90 - 266 794 330 250 214 - - cr' I-' tr1 c. Progress - - 293 NA NA NA - - (l) ~ I-' I-' III. Financial a. SAR targets 3/90 537.1 801.4 b. Revised 3/90 202.4 251. 8 c. Actual 180.4 229.9  INDIA GUJARAT RURAL ROAD PROJECT CR. 1757 FUNDING PROGRAM Rs. Million COST ESTIMATES EXP. FUNDS REQD. DURING THE PERIOD Sr. CATEGORY SAR CURRENT upto 12/89 4/90 4/91 4/92 4/93 4/94 REMARKS No. 12/89 to 3/90 to 3/91 to 3/92 to 3/93 to 3/94 to 12/94 - 1- Civil Works 1724 1581 180.4 44.6 259 364 421 274 38 2. Engg. Services 214 214 40.3 4.7 60 60 20 20 9 Tentative estimate & Training for purchase of equipment. Final 3. Equipment 224 84 1.7 18.3 50 14 - - - amount will depend on detailed list of 4. Buildings 31 3 1.2 0.8 1 - - - - equipments to be procured, still to 5. Studies & 27 27 0.5 1.5 23 2 - - - be defined by the Tech. assistance Govt. of Gujarat and subject to 6. Miscellaneous - 40 5.8 0.2 7 10 9 6 2 approval by IDA. TOTAL 2220 1949 229.9 70.1 400 450 450 300 49 ~I?: ::f£3 ~rrl ~ (l) l'-,)I~  , . INDIA GUJARAT RURAL ROADS PROJECT CR. 1757 IN CUMULATIVE EXPENDITURE/DISBURSEMENT FORECASTS Sr. ITEM FOR THE PERIOD ENDING REMARKS No. 3/90 3/91 3/92 3/93 3/94 12/94 1. Expenditure in Rs. Million a) SAR targets 801 1147 1454 1774 2103 2220 a) Appraisal rate 1 SDR = 15.426 Rs. b) Revised program 300 700 1150 1600 1900 1949 b) Current rate 1 SDR =: 22.44 Rs. 2. Disbursements in Million SDR a) SAR targets 42 62 79 91 99 101 b) Forecasts 10.96 21.21 37.53 52.2 62 63.59 - I t-j' ,,"' a", '" 'J, f-' , I (l),