Philippines - Second Rural Roads Improvement Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15787 IMPLEMENTATION COMPLETION REPORT PHILIPPINES SECOND RURAL ROADS IMPROVEMENT PROJECT (LOAN 2716-PH) JUNE 18, 1996 Agriculture and Environment Operations Division Country Department I East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit: Philippine Peso (P) USS 1.00 = P 18.70 (at appraisal in 1986) P 26.50 (at completion in 1995) WEIGHTS AND MEASURES Metric System FISCAL YEAR Januar) 1 to December 31 ABBREVIATIONS AND ACRONYMS ADB - Asian Development Bank DILG - Department of Interior and Local Government (former Ministry of Local Government and Community Development) DPWH - Department of Public Works and Highways (former Ministry of Public Works) GOP - Government of the Philippines ICR - Implementation Completion Report SRRIP - Second Rural Roads Improvement Project RRIP - (first) Rural Roads Improvement Project DAR - Department of Agrarian Reform PMO - Project Management Office PEO - Provincial Engineer's Office LGU - Local Government Unit ICB - International Competitive Bidding NEDA - National Economic and Development Authority RMMM - Road Maintenance Management Manual GEMS - Guide to Equipment Management Systems LBM - Labor-Based Methods EIRR - Economic Internal Rate of Return WAADT - Weighted Annual Average Daily Traffic  FOR OFFICLAL USE ONLY Table of Contents Preface ....................................................i Evaluation Summary ................................................... ii Part I: Second Rural Roads Improvement Project Implementation Assessment A. Statement/Evaluation of Objectives ....................................................1 B. Achievement of Objectives ...................................................3 C. Major Factors Affecting the Project ....................................................6 D. Project Sustainability ...................................................7 E. Bank Performance ...................................................7 F. Borrower Performance ....................................................8 G. Assessment of Outcome ....................................................9 H. Future Operation ................................................... 10 I. Key Lessons Learned ................................................... II Part II: Statistical Tables Table 1: Summary of Assessments ................................................... 13 Table 2: Related Bank Loans ................................................... 14 Table 3: Project Timetable ................................................... 14 Table 4: Loan Disbursements: Cumulative Estimated and Actual .............................................. 15 Table 5: Key Indicators for Project Implementation ................................................... 15 Table 6: Key Indicators for Project Operation ................................................... 17 Table 7: Studies Included in the Project ................................................... 18 Table 8: Project Costs ................................................... 19 Table 9: Economic Costs and Benefits ................................................... 19 Table 10: Status of Legal Covenants ................................................... 20 Table I 1: Compliance with Operational Manual Statements ................................................... 21 Table 12: Bank Resources: Staff Inputs ................................................... 21 Table 13: Bank Resources: Missions ................................................... 22 Appendices Appendix A: Completion Mission's Aide Memoire ................................................... 24 Appendix B: Economic Impact Data from a Sample of DILG Roads ........................................... 28 Appendix C: Economic Impact Data from a Sample of DPWH Roads ......................................... 38 Appendix Dl: DPWH Contribution to the ICR ................................................... 41 Appendix D2: DILG Contribution to the ICR ................................................... 48 Map IBRD 19287R This document has a restricted distribution and may be used by recipients only in the performance of their oficial duties. Its contents may not othcr-ise bc disclosed wiLhout World Bank authorization.   IMPLEMENTATION COMPLETION REPORT PHILIPPINES SECOND RURAL ROADS IMPROVEMENT PROJECT (Loan 2716-PH) Preface This is the Implementation Completion Report (ICR) for the Second Rural Roads Improvement Project in the Republic of the Philippines, for which Loan 2716-PH in the amount of US$ 82 million was approved on June 10, 1986 and made effective on October 23, 1986. The loan was closed on December 31, 1995, compared with the original closing date of June 30, 1992. Final disbursement was made on May 6, 1996 and a balance of US$114,099.85 has been canceled as of that date. The ICR was prepared by Mr. Marcelo J. Minc, Transport SpecialistlEconomist Consultant of EAI AE and reviewed by Mr. Jeffrey Gutman, Agriculture and Environment Division Chief and Mr. Walter Schwermer, Project Adviser. The borrower provided comments that are included as Appendix D to the ICR. Preparation of this ICR was begun during the Bank's completion mission in February 1996. It is based on material in the project file. The borrower contributed to the preparation of the ICR by contributing views reflected in the mission's ICR, preparing its own evaluation of the project's execution, and commenting on the draft ICR.   . jj . IMPLEMENTATION COMPLETION REPORT PHILIPPINES SECOND RURAL ROADS IMPROVEMENT PROJECT (Loan 2716-PH) Evaluation Summary Introduction i. Before the 1 970s the Bank had financed rural roads in the Philippines as transport components of irrigation, multipurpose and rural development projects. Central government agencies had been responsible for executing these road components. During the late 1 970s there was a shift in government policy towards rural development and decentralization of development responsibilities. The Government of the Philippines (GOP) planned to strengthen local government capabilities to plan, construct and maintain rural roads, and to significantly increase its investments in farm-to-market and feeder roads. To implement this plan, the GOP requested World Bank assistance in financing a rural roads project. ii. That project, the (first) Rural Roads Improvement Project (RRIP), was supported by Loan 1860-PH. Its long-term objectives were to provide improved transport services to the rural population in order to stimulate agricultural production and increase rural incomes. The RRIP experienced problems and delays, mainly due to the difficult fiscal situation and political climate prevailing in the Philippines during most of the 1 980s. Also, some of the problems were due to expectations, that the provincial governments, with largely inexperienced and inadequately trained staff, would become capable of assuming major responsibility for the rural road subsector in a relatively brief time. As a result, transport services in the rural areas were improved but not to the extent expected, and the institutional goals were only partly achieved. iii. The Second Rural Roads Improvement Project (SRRIP) originated under the RRIP, in which consultants undertook feasibility studies for rural road improvements in 22 provinces. Based on these studies, which were completed in 1982, the Asian Development Bank (ADB) agreed in 1983 to finance rural road improvements in nine of the provinces. The GOP requested the Bank to finance rural road improvements in the remaining thirteen provinces. During negotiations the GOP requested the inclusion of an additional province. In addition the Ministry of Agrarian Reform (presently Department of Agrarian Reform (DAR)) had undertaken feasibility studies for a land settlement project in 1981 and updated them in 1985. Since the rural roads component enjoyed the highest priority in the GOP's regional planning, the Bank agreed to also include related rural roads in the SRRIP. iv. One aspect of the project which requires clarification is the title which indicates that the roads to be constructed are "rural roads". The term rural roads is not precisely defined anywhere in the Bank, but is generally taken to mean the lowest level of roads in the network, essentially roads connecting villages to the secondary road system, or connecting farm to markets. It does not normally include major roads in rural areas. The  - iii - roads proposed for construction under the Department of Interior and Local Government (former Ministry of Local Government and Community Development) (DILG) component of this project were virtually all classified as provincial roads. The need was accurately defined, as these provincial roads needed upgrading and improvement before any connecting farm-to-market roads were constructed, but they were generally of a higher classification than normally considered under rural road projects. The Department of Public Works and Highways (former Ministry of Public Works) (DPWH) roads were designed for the purposes of land settlement and as such were accurately described in the SAR as national and barangay roads, instead of the Bank's traditional "rural roads". In fact some of the DPWH barangay roads (e.g. Wao-Banisilan) appear to be candidates for reclassification to provincial or national highways. Project Objectives and Description v. The SRRIP continued the Bank's efforts, which began with the first RRIP. The objectives were to: (a) alleviate poverty in rural areas by providing farmers with access to markets, thereby stimulating food production and employment opportunities; (b) provide the infrastructure required to support land settlement efforts; (c) facilitate provision of health care and other services to the rural population; and (d) further strengthen institution-building efforts in DILG and the provincial governments started under the RRIP. Conceptually the project had timely and appropriate goals: (1) rural development and (2) decentralization through capacity building. Objectives (a), (b) and (c), which dealt with the first aspect, were transparent and project components specifically responded to them. Performance indicators for objective (d) to strengthen institution building efforts in DILG and provincial governments were not clearly specified at appraisal, making it difficult to evaluate the success of this objective. vi. To accomplish those objectives, the project consisted of two separate components: (a) rehabilitation, upgrading and improvement of about 750 km of high priority provincial roads, including bridges in the following 14 provinces: Abra, Agusan del Norte, Agusan del Sur, Bohol, Cagayan, Catanduanes, Davao del Sur, Ilocos Norte, Marinduque, Misamis Oriental Southern Leyte, Surigao del Sur, Surigao del Norte, and Samar. This project component was implemented by DILG and the provincial governments; and (b) improvement of about 580 km of rural roads (national, provincial and barangay through labor-based methods (LBM)) including bridges in the following three settlement areas: Kabankalan, Sultan Kudarat-South Cotabato and Wao-Banisilan. This project component was implemented by DPWH. Implementation Experience and Results vii. There were various factors that adversely affected the SRRIP, delaying its implementation. These delays caused the loan to be closed three and half years later than planned at appraisal time, i.e., December 31, 1995 instead of June 30, 1992. The main factors were: (a) unusual typhoon and bad weather conditions in the project areas; (b) numerous peace and order problems in the project areas, especially in the land settlement areas under the DPWH component; (c) the 1986 revolution which caused major institutional changes in implementation agencies; and (d) the 1991 economic crisis, following the middle east crisis of 1990-1991, which caused excessive cost increases in  - Iv - construction materials. All of these factors made contractors reduce or completely stop construction activities for several months at a time. viii. Despite the numerous difficulties, SRRIP achieved most of the original objectives. Roads built/rehabilitated in rural areas: (a) provided farmers access to markets, stimulating food production and employment opportunities; (b) provided the infrastructure required to support land settlement efforts; (c) facilitated the provision of health care, education and other services to the rural population. Recording the objective to strengthen institution-building efforts in DILG and the provincial governments there were no specific targets and it was difficult to evaluate the success of this objective. However, provincial engineers' offices were strengthened by the provision of maintenance equipment, workshops, office equipment, and training. ix. Total cost of the project was estimated to be US$ 127.5 million, or about 4.3% higher than the US$ 122.2 million estimated at appraisal. In order to assess the economic impact of the roads built/rehabilitated, DILG carried out impact studies in five provinces: Agusan del Norte, Davao del Sur, Marinduque, Surigao del Norte and Surigao del Sur. Economic internal rates of return (EIRR) were re-estimated in four of the studies, ranging from 1 1% to 29% as compared with 17% to 18%, estimated at appraisal for the same roads. For all of the 5 roads where the impact study was conducted, the study showed that: (a) agricultural production increased, also due to the increase of visits to the areas of influence by agricultural extension workers (DAR staff, provision of fertilizer and banks); (b) travel times to the provincial connectors were substantially reduced; (c) access to the areas of influence increased to year-round; (d) traffic substantially increased; and (e) transportation costs to the main road were reduced. x. The Bank's performance at appraisal was partially satisfactory. From the positive side, there was: (a) commitment of the GOP, the implementing agencies, and the beneficiaries to the project; and (b) incentives for stakeholders to sustain the project. Since the appraisal mission took place in July 1985, and negotiations shortly after the 1986 revolution, it is surprising that the Bank did not revisit the institutional aspects of the SRRIP, and did not include it as a risk for project performnance. Bank's performance during supervision was also partially satisfactory, even when considering the difficult project launching period. Project implementation progress, and the lack of it, were adequately reported, and problems were identified and assessed. Proper advice was given to DILG and DPWH, but still delays kept occurring. The working relationship between the Bank, GOP, and implementing agencies was very good. However, the DILG and DPWH noted that the Bank was slow giving clearances, and that more Bank field supervision during the SRRIP's initial implementation phase, would have helped to avoid delays. Summary of Findings, Future Operations and Key Lessons Learned xi. Because of the nature of the civil works component of the SRRIP, sustainability depends mainly on the maintenance that will be performed to the roads and bridges built/rehabilitated. The Bank's completion mission verified the commitment of the Provincial Engineer's Offices (PEOs) to conduct adequate maintenance activities, and the existence of sufficient funds to do them. Experience in other countries and from previous  - v - projects in Philippines, however, raise concerns about maintenance and sustainability without specific project follow-up activities. Regarding the institutional capacity building, the PEOs were the main beneficiaries of the project and are ready to assume expanded responsibilities. The only drawback is that the DILG SRRIP PMO, which was also trained during the project, is a temporary office and will be dismantled shortly after the project is completed. Also, on the successfully executed DPWH LBM sub- component, there seem to be no institutional vestiges of it, four years after completion. xii. Regarding future operations, the Bank together with NEDA, DPWH and DILG is reviewing its strategy towards rural infrastructure, in order to support the GOP policy of devolving from the national government to the Local Government Units (LGUs), the provision for the delivery of basic services and facilities, such as rural roads, water supply, etc. Issues under discussion are: (a) institutional responsibilities for the provision of rural infrastructure including roles of central versus local governments; (b) appropriate cost recovery policy for investment and for operation and maintenance; (c) strategies for community participation; (d) application of appropriate technology and quality control procurement methods; (e) responsibilities for maintenance; (f) methods of planning, decision-making and appraisal of locally proposed projects; and (g) multisectoral versus sectoral project design. xiii. The lessons learned from SRRIP's preparation and appraisal experience, include the need to: (a) designate a nucleus within the implementing agency with highly qualified staff to be responsible for planning and managing the implementation of the project. This could substantially minimize the institutional risks to a project; (b) establish clear and realistic capacity building goals for the implementing agencies; (c) assure up-front the commitment of the implementing agencies to dedicate funds to maintenance of the built/rehabilitated roads; and (d) encourage local communities to participate in the design of the project. xiv. Summarizing, among the lessons learned that could be drawn from SRRIP's implementation, there is a need to: (a) improve the pre-qualification process by making it more rigorous and transparent. This would reduce contract terminations and recisions, unnecessary delays and project costs; (b) speed up clearances by the Bank and disbursements by the borrower; (c) improve Bank supervision during the implementation stage; (d) engage the services of an independent technical consultant to assure quality control in project performance; (e) develop more specific interventions to ensure adequate maintenance and project sustainability; and (f) avoid including projects in remote areas of the country where security risks limit adequate supervision.  IMPLEMENTATION COMPLETION REPORT PHILIPPINES SECOND RURAL ROADS IMPROVEMENT PROJECT (Loan 2716-PH) A. Statement/Evaluation of Objectives 1. Prior Bank Involvement. Before the 1 970s the Bank had financed rural roads in the Philippines as transport components of irrigation, multipurpose and rural development projects. Central government agencies had been responsible for executing these road components. During the late 1 970s there was a shift in government policy towards rural development and decentralization of development responsibilities. The Government of the Philippines (GOP) planned to strengthen local government capabilities to plan, construct and maintain rural roads, and to significantly increase its investments in farm- to-market and feeder roads. To implement this plan, the GOP requested World Bank assistance in financing a rural roads project. 2. That project became loan 1 860-PH: (first) Rural Roads Improvement Project (RRIP). Its long-term objectives were to provide improved transport services to the rural population in order to stimulate agricultural production and increase rural incomes. The short-term objectives were: (a) to reconstruct, rehabilitate and maintain priority rural roads, and (b) to strengthen the capacity of provincial highway authorities to plan, design, administer, and execute rural roads programs and to maintain their rural road network under the overall direction of the Department of Local Government (DLG), (currently Department of Interior and Local Government (DILG)). The RRIP had three components: (a) construction and maintenance of rural roads, (b) construction and improvement of a national road, and (c) technical assistance to the Department of Transportation and Communications (DOTC) and to the National Economic and Development Authority (NEDA) for transport planning. 3. The RRIP experienced numerous problems and delays, mainly due to the difficult fiscal situation and political climate prevailing in the Philippines during most of the 1980s. Also, some of the problems were due to the project expectations, that the provincial governments, with largely inexperienced and inadequately trained staff, would become capable of assuming major responsibility for the rural road subsector in a relatively brief time. As a result, transport services in the rural areas were improved but not to the extent expected, and the institutional goals were also only partly achieved. 4. The Second Rural Roads Improvement Project (SRRIP) originated under the RRIP, in which consultants undertook feasibility studies for rural road improvements in 22 provinces. Based on these studies, which were completed in 1982, the Asian Development Bank (ADB) agreed in 1983 to finance rural road improvements in nine of the provinces. The GOP requested the Bank to finance rural road improvements in the  -2- remaining thirteen provinces. During negotiations the GOP requested the inclusion of an additional province. In addition the Ministry of Agrarian Reform (presently Department of Agrarian Reform (DAR)) had undertaken feasibility studies for a land settlement project in 1981 and updated them in 1985. Since the rural roads component enjoyed the highest priority in the GOP's regional planning, the Bank agreed to also include related rural roads in the SRRIP. 5. One aspect of the project which causes some confusion is the title which indicates that the roads to be constructed are "rural roads". The term rural roads is not precisely defined anywhere in the Bank, but is generally taken to mean the lowest level of roads in the network, essentially roads connecting villages to the secondary road system, or connecting farm to markets. It does not normally include major roads in rural areas. The roads proposed for construction under the DILG component of this project were virtually all classified as provincial roads. The need was accurately defined, as these provincial roads needed upgrading and improvement before any connecting farm to market roads were constructed, but were generally of a higher classification than normally considered under rural road projects. The DPWH roads were for the purposes of land settlement and such were accurately described in the SAR as national and barangay road, again not normal Bank "rural road". In fact some of the DPWH barangay roads (e.g. Wao- Banisilan) appear to be candidates for reclassification to provincial or national highways. 6. Statement of Objectives. The SRRIP continued the Bank's efforts, which began with the first RRIP. The objectives were to: (a) alleviate poverty in rural areas by providing farmers with easy access to markets, thereby stimulating food production and employment opportunities; (b) provide the infrastructure required to support land settlement efforts; (c) facilitate provision of health care and other services to the rural population; and (d) further strengthen institution-building efforts in DILG and the provincial governments started under the RRIP. 7. To accomplish those objectives, the project consisted of two separate components: (a) rehabilitation, upgrading and improvement of about 750 km of high priority provincial roads, including bridges in the following 14 provinces: Abra, Agusan del Norte, Agusan del Sur, Bohol, Cagayan, Catanduanes, Davao del Sur, Ilocos Norte, Marinduque, Misamis Oriental Southern Leyte, Surigao del Sur, Surigao del Norte, and Samar. This project component was implemented by DILG and the provincial governments; and (b) improvement of about 580 km of rural roads (national, provincial and barangay through LBM) including bridges in the settlement areas of Kabankalan, Sultan Kudarat-South Cotabato and Wao-Banisilan. This project component was implemented by DPWH. 8. Specifically, the DILG project component covering 14 provinces comprised: (a) rehabilitation, upgrading and spot improvement of about 750 km of high priority provincial roads; (b) provision of road maintenance equipment, construction of mechanical workshops and quality control laboratories, and procurement of workshop, laboratories, and office equipment and tools; (c) consultant services for detailed engineering and road construction supervision of the above roads; (d) technical assistance  - 3 - to DILG and the provincial road authorities to improve their capability to implement the project, to prepare feasibility studies for an additional 10 provinces and to train local staff; and (e) overseas training and special courses and seminars for senior staff selected from DILG and the 14 project provinces. 9. The DPWH project component covered the three settlement areas and consisted of: (a) improvement of about 80 km of national roads, 220 km of provincial roads and about 280 km of barangay roads; (b) provision of road maintenance equipment to enable DPWH and provincial governments to maintain the above roads; (c) consultant services for detailed engineering and road construction supervision of the above roads; and (d) technical assistance to DPWH to assist in implementing road construction by labor intensive methods and to provide on-the-job training for local supervisory staff and overseas study tours for senior staff. The barangay roads sub-component was executed through Labor Based Methods (LBM). This approach was selected because: (a) it provides greater employment opportunities than would machine intensive methods; (b) it directly involves the targeted communities; and (c) it enhances the capacity of local communities to carry on maintenance of the roads after the life of the project. 10. Evaluation of Objectives. Conceptually the SRRIP had timely and appropriate goals: (i) rural development and (ii) decentralization through capacity building. Objectives (a), (b) and (c) (para. 4), which dealt with the first aspect, were transparent and project components specifically responded to them. Objective (d) (para. 4) to strengthen institution building efforts in DILG and provincial governments was not clearly specified at appraisal, making it difficult to evaluate the success of this component. 11. Attendance at training and overseas seminars are necessary but not sufficient condition to strengthen institution building efforts. It is important that those courses and seminars be part of a plan to create or improve the ability of an agency to plan and manage the implementation of projects. Therefore, there should be a commitment from the agency to designate the staff to be part of this effort. This recommendation does not mean that the agency should massively hire technical staff to become an "engineering firm or contractor". The idea is that there should be an in-house, highly qualified nucleus that could plan and control the tasks to be given to consultants, designers, construction supervisors, etc., who will be the ones that will actually implement the projects. Also, this would ensure the sustainability of the technical assistance programs B. Achievement of Objectives 12. Despite the numerous difficulties (paras. 16, 17, 18), SRRIP achieved most of the original objectives satisfactorily. A significant amount of rural roads were built, although in the case of the DILG program, a much lower total length was built than planned at appraisal. These roads (a) provided farmners access to markets, stimulating food production and employment opportunities; (b) provided the infrastructure required to support land settlement efforts; and (c) facilitated the provision of health care, education and other services to the rural population. The objective to strengthen institution-building  -4 - efforts in DILG and the provincial governments was not clearly specified at appraisal. As there were no specific targets, it was difficult to evaluate the success of this component. However, provincial engineers' offices were strengthened by the provision of maintenance equipment, workshops, office equipment, and training. 13. Under the DILG part, civil works component, 773 kms of provincial roads were designed by local consultants and Provincial Engineering Offices (PEOs), in four different stages. Biading of 36 contracts was done in 1990, of which only 27 were successfully awarded in 1991. The remaining 9 contracts were not awarded due to design problems and/or bidding failures. At project completion, 463 kms of roads and 54 bridges with combined length 1,968 linear meters were built. There are still two remaining contracts in Samar Province which were delayed due to inclement weather, but these will be completed by June 1996. Five workshops and quality laboratories in different provinces were completed. Thirty school-type buildings which served as the engineer's offices, were turned over to the local authorities. 14. There appear to have been two main reasons for the reduction of the DILG road construction program from the 773 kms planned at appraisal to the 463 completed. They are the unit cost per km and the change in disbursement percentage by the Bank. Regarding the unit cost per km, at appraisal it was planned to construct the 773 km for US$ 51,500 base plus 42% contingencies, or an average of US$ 73,300 per km. In fact the 463 km cost US$ 53.4 million or US$ 114,000/km. The difference was not primarily due to overruns on the quantities in the contracts, but to low cost estimates at the feasibility study stage. Bank policy usually requires that detailed engineering for "major" road works be substantially completed at appraisal, but for this project as is standard practice with "rural" roads, detailed engineering was carried out as part of project execution, and the targets do not appear to have been formally revised as a result of the later more precise cost estimates. 15. The higher cost per km was affected by the conditions of peace and order under which the construction of many of the roads took place. Such problems do not lend themselves to solutions by the normal process of competitive bidding and contracting assumed for Bank procurement. Several contractors found themselves unable to carry on under theses dangerous conditions (some experienced harassment and equipment was burned), and the rate of contract terminations by mutual consent was high. Rebidding inevitably delayed project progress, and gave rise to higher prices to cover such risks as well as the normal inflation of prices. The completion mission would suggest that if the government cannot assure the safety and freedom of contractors from harassment, that the Bank consider whether its normal procurement guidelines are appropriate for construction in such areas. 16. The Middle East oil crisis occurred during execution of the project. This significantly increased costs of all civil works, and the government did not encourage contractors to apply price variation formulae. At the same time the government shortage of funds, reduced funding available to pay contractors (who were paying about 24%  -5- annual interest) faced severe financial difficulties and were unable to carry on. To partially alleviate this, the implementing agencies and the Bank agreed to use the system of direct payment to the contractors, rather than the reimbursement method which had been the rule in the Philippines before then. At the same time, the Bank agreed to raise the percentage of civil works contracts financed under the loan from 64% to 75% following the oil crisis. This assisted the cash flow situation but the higher percentage resulted in a reduced number of kms which could be constructed for the available Bank funding. 17. Under the equipment component, 270 units of various maintenance equipment were procured through international competitive bidding (ICB), and workshop tools, surveying and office equipment were procured for the PEOs. Under the consultancy component, seven local firms were hired to provide detailed engineering services. Also the PEOs of fourteen provinces were commissioned to undertake detailed engineering of 192 kms of roads. Nine local firms were contracted by DILG to provide construction supervision services from 1991 to 1995. Three local firms were hired to perform feasibility studies in 22 provinces, of which 950 kms found feasible were packaged and submitted to NEDA in 1994, for consideration for future Bank financing. Also the DILG SRRIP PMO contracted an expatriate coordinating consultant (in joint venture with a local firm), which proved to be essential for the successful completion of the project. 18. Under the technical assistance component, the coordinating consultant assisted not only in the management and implementation supervision of the civil works component, but also in improving different guidelines developed during the RRIP, including the Road Maintenance Management Manual (RMMM) and the Guide to Equipment and Management Systems (GEMS). Additionally, a training program was developed and carried out including overseas seminars, local road maintenance and equipment management courses and hands-on training. However the DILG SRRIP PMO, which was also trained during the project, is a temporary office and will be dismantled shortly after the project is completed. 19. The fourth stage of detailed engineering was commissioned to be undertaken by the PEOs of the 14 provinces included under the project, in 1991. With the assistance of the DILG SRRIP PMO and the coordinating consultant, the PEOs were able to complete designs and draft tender documents for 17 contracts covering 192 kms of road. However, they could not be implemented under SRRIP due to limited loan funds and the inability of the GOP to wholly finance the projects. DILG is hoping to implement these deferred civil works projects under a future Bank loan. 20. The DPWH component for national and provincial roads was 98% built at project completion. Kabankalan-Tapi national road, Bantayan-Tabugon-Inapoy provincial road and Tabugon-Tapy provincial road, all in the Kabankalan settlement area, Negros Occidental were all completed, after long delays, in August 1995, five years after the construction contract was first awarded. Those delays were caused by bad weather, financial, and peace and order problems. This situation was typical of the project  -6 - components in the land settlement areas. Projects in the Sultan Kudarat area were completed and turned over to the authorities in 1993. In this case delays were a result of design deficiencies in estimating the quantities of materials. Projects in the Wao- Banisilan settlement area were 96% completed at the time when this completion report was prepared. The road Libungan-Wao-Maramag is of regional importance because it provides a shorter alternative to the existing links between cities in Southern Mindanao (Davao, General Santos and Cotabato City) and Cagayan de Oro in the North. There were also delays in this project area due to the problems mentioned above. 21. The DPWH sub-components for barangay roads executed through LBM were successfully completed in 1991. The positive results of the LBM component include: (a) the actual average cost per kilometer was about $13,800, lower than $15,700/km estimated at appraisal;' (b) 450,000 workdays were created by the LBM units with many unskilled workers benefiting from transfer of skills in such fields as surveying, concreting, masonry, repair of vehicles, bookkeeping, etc.; and (c) others benefited indirectly including small traders, store keepers, blacksmiths and transport operators. Among the aspects that could have been improved, the appraisal report called for maintenance after the LBM roads were completed, but there were no identified amounts for this operation, neither was provision made under budget releases for individual road construction. Furthermore, while national and provincial roads were provided with a twelve-month warranty, no such consideration was afforded for LBM barangay roads. 22. Total cost of the project was estimated to be US$ 127.5 million, or about 4.3% higher than the US$ 122.2 million estimated at appraisal. Average actual cost per km for the DILG component was US$ 114,000 as compared to US$ 73,300 planned at appraisal. For the DPWH component, average actual cost was US$ 79,000/km as compared to US$ 48,000/km estimated at appraisal. But, as mentioned in para. 19, the Bank agreed to eliminate the fourth-year program of the DILG component, for implementation under the SRRIP, in order to keep costs within the amount established at appraisal. C. Major Factors Affecting the Project 23. There were various factors that adversely affected the SRRIP, delaying the implementation of it. These delays caused the loan to be closed three and half years later than planned at appraisal time, December 31, 1995 instead of June 30, 1992. The main factors were: (a) unusual typhoon and bad weather conditions in the project areas; (b) numerous peace and order problems in the project areas, especially in the land settlement areas under the DPWVvH component; (c) the 1986 EDSA revolution caused major institutional changes in implementation agencies; and (d) the 1991 economic crisis, following the Middle East crisis of 1990-1991, which caused excessive cost increases in construction materials and limited budget outlays to pay contractors. All of these factors made contractors reduce or completely stop construction activities for several months at a time. 1 These costs are not directly comparable with those in para 22, because the standards are different.  - 7 - 24. There were alsofactors subject to implementing agency control including: (a) numerous management changes in the implementing agencies SRRIP PMOs, seven PMO Directors for DPWH and five for DILG; (b) cumbersome and non-transparent pre- qualification and bidding practices; and (b) slow procurement procedures and disbursements. 25. A number of factors particularly affected the DPWH land settlement program: (a) the remote and hostile locations of projects made them unattractive to bidders to participate; (b) the size of contracts were insufficient to attract major companies, even with the prospect of being awarded more than one; (c) inadequate competition admitted less competent contractors who ordinarily would not have pre-qualified; (d) the Gulf war after-effects on the economy bankrupted some of the smaller contractors; and (e) poor bid presentation by some contractors, e.g. failure to fully assess prevailing field conditions resulted in under-pricing of general items such as mobilization and camp establishment, which in turn initiated claims for bad weather, poor accessibility, intimidation, etc. Unfortunately, the difficult access to the land settlement areas reflected negatively on the credibility of the successfully completed LBM barangay roads sub-component. As an example, in Kabankalan 60 kms of reconstructed LBM barangay roads were handed over to the authorities in 1991, but remained in isolation until 1995 when the provincial roads connecting them to the network were completed. D. Project Sustainability 26. Because of the nature of the civil works component of the SRRIP, sustainability depends mainly on the maintenance that will be performed to the roads and bridges built/rehabilitated. The Bank's completion mission verified the commitment of the PEOs to conduct adequate maintenance activities, and the existence of sufficient funds to do them. Experience in other countries and from previous projects in Philippines, however, raise concerns about maintenance and sustainability without specific project follow-up activities. Regarding the institutional capacity building, the PEOs were the main beneficiaries of the project and are ready to assume expanded responsibilities. The only drawback is that the DILG SRRIP PMO, which was also trained during the project, is a temporary office and will be dismantled shortly after the project is completed. Also, on the successfully executed DPWH LBM sub-component, there seem to be no institutional vestiges of it, four years after completion. E. Bank Performance 27. Identification and Preparation. The Bank's performance during the identification and preparation phases was partially satisfactory. SRRIP's goals were consistent with the GOP's priorities of rural development and decentralization through capacity building, and a follow-on operation to an existing one. SRRIP was prepared under the RRIP. Some of the major relevant aspects of project preparation (technical, economic, financial, environmental, and sociological) were covered adequately. However, the institutional aspect was too optimistic considering the difficult political  - 8 - prevailing situation in the mid 1980s. Strangely, it seems to be that some of the bad experiences occurring in the on-going RRIP were not taken into account when designing the SRRIP. For example, ambitious expectations that projects in remote and hostile areas could be carried out by inexperienced entities, without dedicated supervision. 28. Appraisal. In general, it could be said that Bank's performance at appraisal was also only partially satisfactory. From the positive side, there was: (a) commitment of the GOP, the implementing agencies, and the beneficiaries to the project; and (b) incentives for stakeholders to sustain the project. The only project risks assessed during appraisal were: (a) possible cost overruns for the civil works component; and (b) the lack of adequate maintenance after construction. Risk (b) was appropriately identified but there were neither remedies nor maintenance funds in place to avoid the lack of maintenance after project completion. This was totally left to the individual PEOs. 29. Since the appraisal mission took place in July 1985, and negotiations shortly after the 1986 EDSA revolution, it is surprising that the Bank did not revisit the institutional aspects of the SRRIP, and did not include it as a risk for project performance. As a result of the institutional changes occurring at that time, it took DILG three years to launch its project component. Other risks that should have been assessed at appraisal were related to the project performance in the land settlement areas due to: (a) prevailing peace and order problems; and (b) remote project location made it unattractive for bidders to participate . 30. Supervision. Bank's performance during supervision was partially satisfactory, even when considering the difficult project launching period. Project implementation progress, and the lack of it, were adequately reported, and problems were identified and assessed. Proper advice was given to DILG and DPWH, but still delays kept occurring. Bank staff showed flexibility in approving a modification to the project in 1989. Since the DILG component was three years behind schedule, and costs had increased 23% by that time, the GOP requested the Bank to defer the implementation of the fourth stage of that component to keep costs close to the original loan allocation level. The Bank accepted that request. The working relationship between the Bank, GOP, and implementing agencies was very good. However, the DILG and DPWH noted that the Bank was slow giving clearances, and that more Bank field supervision during the SRRIP's initial implementation phase, would have helped to avoid delays. F. Borrower Performance 31. Borrower performance during preparation was satisfactory. They worked hand- in-hand with the Bank staff to prepare the project showing a great level of stakeholder commitment (para. 20). Borrower performance during implementation was partially satisfactory notwithstanding the number of serious events that occurred (paras. 16, 17, 18). During the first years of the SRRIP, implementing agencies were not staffed properly, and not prepared to handle the large amount of contracts specified. As a consequence, the project had enornous delays in the launching phase (three years for the  -9- DILG and DPWH national and provincial roads components). Additionally, there were numerous management changes in the implementing agencies SRRIP PMOs, seven PMO Directors for DPWH and five for DILG. This situation was slowly overcome, and the project was back on track, especially after the DILG SRRIP PMO retained the services of a coordinating consultant in 1991, who provided quality control in the management of the civil works component, and was also instrumental in implementing the technical assistance component. The performance of the DILG PMO also improved when the Project Manager was replaced, and support was given by new management within DILG. 32. The main concerns of the Bank's completion mission, regarding borrower's performance, which were shared by the implementing agencies were as follows: (a) some incompetent contractors were pre-qualified and won biddings, causing later on, a large number of contract terminations and recisions during the construction phase; (b) disbursements and payments to contractors were slow during periods of financial crisis and regularly during the start of each fiscal year; (c) quality of detailed engineering, construction and supervision was poor in several of the contracts; (d) as maintenance requirements are intensive in these types of roads, it is critical that it will be performed to assure project sustainability; and (e) the contribution of the project to capacity building of both DILG and the provinces was difficult to measure. 33. It is important to mention, that during the latter part of the SRRIP, DILG and DPWH performed extremely well. Perhaps, this was partly due to the fact that PMO Directors did not change for the last three years, and they enjoyed full support from their management Also, implementation agencies' PMOs learned from experience, and acted promptly to accomplish the objectives of the project. Unfortunately, since the PMOs are project-based entities with a limited term, the capacity building objective could be bound to this project only. G. Assessment of Outcome 34. Despite all the difficulties, the overall outcome of the SRRIP was satisfactory, assessing the achievement of the original project objectives: a) the roads built/rehabilitated in rural areas provided farmers access to markets, stimulating food production and employment opportunities; b) provided the infrastructure required to support land settlement efforts; c) facilitated the provision of health care, education and other services to the rural population. The objective to strengthen institution building efforts in DILG and PEOs was not clearly specified at appraisal. As there were no specific targets, it was difficult to evaluate the success of this component. However PEOs were strengthened by the provision of maintenance equipment, workshops, office equipment, and training. 35. In order to assess the economic impact of the roads built/rehabilitated, DILG carried out impact studies in five provinces: Agusan del Norte, Davao del Sur, Marinduque, Surigao del Norte and Surigao del Sur. Economic internal rates of return (EIRR) were re-estimated in four of the studies, ranging from 1 1% to 29% as compared  - 10- with 17% to 18%, estimated at appraisal for the same roads. In three cases the re- estimated EIRR were higher than the original ones. In the fourth case, the re-estimated EIRR was 11% for the Cogon-Kapatagan road, due to the extremely difficult terrain and slopes with gradients of 12%, which resulted in higher than originally estimated construction costs. However, in this road, traffic measured as weighted annual average daily traffic (WAADT), increased from 45 pack-horses and 12 motorized vehicles without the project, to 260 motorized vehicles with the project. Accessibility increased from 60 days/year (4-wheel drive vehicles during the dry season only) to 365 days/year. Travel time from the beginning of the road to the provincial connector was reduced from 12 hours for pack-horses and 2 hours for motorized vehicles, to 30 minutes for motorized vehicles. 36. For all of the 5 roads where the impact studies were conducted, the studies showed that: (a) agricultural production increased, also due to the increase of visits to the areas of influence by agricultural extension workers (DAR staff, provision of fertilizer and banks); (b) travel times to the provincial connectors were substantially reduced; (c) access to the areas of influence increased to year-round; (d) also traffic substantially increased; and (e) transportation costs to the main road were reduced. The analyses, however, assume the continued maintenance of the infrastructure which will require further efforts. For this reason, sustainability is rated as "uncertain". 37. The positive impact of the road construction/rehabilitation in the area of influence could be seen during the site inspection. The Bank's completion mission visited a sample of both DPWH and DILG roads in Mindanao. As barangays and municipalities were connected to the main road network, population and economic activity increased considerably. Some of the roads were previously trails and only accessible with pack horses and buffalo carts. Presently, the barangays and municipalities affected have regular jeepney service, which allows the communities to carry agricultural production to the markets. In some cases, transport costs were reduced by 60%-80%. Previous peace and order problems were also eased after roads were completed. Additionally, communities expressed their willingness to participate more actively in the road's routine maintenance. H. Future Operation 38. Due to the nature of the type of roads and bridges built/rehabilitated during the SRRIP, adequate maintenance is essential to assure project sustainability and proper future operation. The Bank's completion mission verified the commitment of the PEOs to conduct adequate maintenance activities, and the existence of sufficient funds to perform them, even though this was not specified at appraisal. However, there are concerns that without specific follow-up support by the Bank or other donors to continue the strengthening of these PEOs, maintenance may suffer and the infrastructure would deteriorate.  - I I - 39. The Bank together with NEDA, DPWH and DILG is reviewing its strategy towards rural infrastructure, in order to support the GOP policy of devolving from the national government to the Local Governnent Units (LGUs), the provision for the delivery of basic services and facilities, such as rural roads, water supply, etc. Issues under discussion are: (a) institutional responsibilities for the provision of rural infrastructure including roles of central versus local governments; (b) appropriate cost recovery policy for investment and for operation and maintenance; (c) strategies for community participation; (d) application of appropriate technology and quality control procurement methods; (e) responsibilities for maintenance; (f) methods of planning, decision-making and appraisal of locally proposed projects; and (g) multisectoral versus sectoral project design. 40. Since DILG has developed an internal capacity to design and implement rural infrastructure projects, it would be wise to use the momentum acquired during the last few years, to analyze the issues mentioned in the preceding paragraph. The understanding of those issues could prove to be critical for the successful identification and preparation of future rural infrastructure projects in the Philippines. I. Key Lessons Learned 41. The lessons learned from SRRIP's preparation and appraisal experience, include the need to: (a) designate a nucleus within the implementing agency with highly qualified staff to be responsible for planning and managing the implementation of the project. This could substantially minimize the institutional risks to a project; (b) establish clear and realistic capacity building goals for the implementing agencies. With (a) and (b) in place it will be easier, at least to identify the beneficiaries of the capacity building exercise, and more probability that they will remain in-house, ensuring sustainability of the efforts; (c) assure up-front the commitment of the implementing agencies to dedicate funds to maintenance of the built/rehabilitated roads; and (d) encourage local communities to participate in the design of the project. 42. Summarizing, among the lessons learned that could be drawn from SRRIP's implementation, there is a need to: (a) improve the pre-qualification process by making it more rigorous and transparent. This would reduce contract terminations and recisions, unnecessary delays and project costs; (b) speed up clearances by the Bank and disbursements by the borrower; (c) improve Bank supervision during the implementation stage; (d) engage the services of an independent technical consultant to assure quality control in project performance; (e) develop more specific interventions to ensure adequate maintenance and project sustainability; and (f) avoid including projects in remote areas of the country where security risks limit adequate supervision.  - 12 - IMPLEMENTATION COMPLETION REPORT PHILIPPINES SECOND RURAL ROADS IMPROVEMENT PROJECT (Loan 2716-PH Statistical Tables Table 1: Summary of Assessments Table 2: Related Bank Loans Table 3: Project Timetable Table 4: Loan Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation Table 7: Studies Included in the Project Table 8A: Project Costs Table 8B: Project Financing Table 9: Economic Costs and Benefits Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions  - 13 - IMPLEMENTATION COMPLETION REPORT PHILIPPINES SECOND RURAL ROADS IMPROVEMENT PROJECT (LOAN 2716-PH) Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Negligible Not applicable Macro Policies 0 0 0 E Sector Policies 0 0S] 0 Financial Objectives 0 0 0 E3 Institutional Development 0 0m 0 0 Physical Objectives 0E 0 0 0 Poverty Reduction 0 0 0 0 Gender Issues 0 0 0 E3 Other Social Objectives 0 0 0 0 Environmental Objectives 0 0 0 0 Public Sector Management 0 0 0 03 Private Sector Development 0 0 0 E0 Other (specify) 0 o 0 E B. Proiect Sustainability Likely Unlikely Uncertain (/) (/) (/) gb~~~~~~~~~~~~~~~~~~E Highly C. Bank Performance satisfactory Satisfactory Deficient (/) (/) (1) Identification 0 0 Preparation Assistance 0 01 0 Appraisal 0 01 0 Supervision 0 E3 0 Highly D. Borrower Performance satisfactory Satisfactor Deficien (/) (1) (1) Preparation 0 0 0 Implementation I 01 0 Covenant Compliance 0 0 0 Operation (if applicable) 0 0 Hhly Hih E. Assessment of Outcome satisfactoy Satisfactory Unsatisfat unsatisfactory 0 0HI 0 0 Partially Satisfactory  - 14 - Table 2: Related Bank Loans Year of Purpose Approval Status Loan Title Preceding operations Rural Roads Improvement to provide improved transport 1980 Completed Ln. 1860-PH services to the rural population 1988 in order to stimulate agricultural production and increase rural incomes Following operations Earthquake Reconstruction reconstruction operations for 1991 Ongoing Ln. 3263-PH roads, bridges, housing, irrigation, and hospitals Highway Management to improve the quality of 1992 Ongoing Ln. 3430-PH vitally important arterial highway network and thereby to reduce transport cost and increase the country's economic competitiveness Table 3: Project Timetable Date actual/ Steps in Project Cycle Date planned latest estimate Identification (Issues Paper) 1984 1984 Preparation Appraisal July 1985 July 15, 1985 Negotiations March 1986 May 2, 1986 Board presentation May 1986 June 10, 1986 Signing June 19, 1986 Effectiveness Sept. 17, 1986 October 23, 1986 Project completion June 30, 1991 Dec. 31, 1995 Loan Closing June 30, 1992 Dec. 31, 1995  - 15 - Table 4: Loan Disbursements: Cumulative Estimated and Actual (US$ Millions) FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 Appraisal estimate 3.50 16.90 36.80 62.00 77.80 82.00 82.00 82.00 82.00 82.00 Actual 5.58 5.69 13.70 21.40 30.52 49.21 65.67 75.15 81.89 Actual as % of estimate 33% 16% 22% 28% 37% 60% 80% 92% 98%/a Date of final disbursement May 6, 1996 /a As of December 31, 1995 Table 5A: Key Indicators for Project Implementation Physical Accomplishment Rural Roads Built/Rehabilitated by Province DILG Component Province Estimated at Appraisal Actual Road Length Bridges Road Length Bridges (kms.) (No./l.m.) (kms.) (No./l.m.) Abra 14.9 4/395 14.7 4/378 Agusan del Norte 37.3 6/410 26.1 3/290 Agusan del Sur 62.2 17/381 42.1 4/146 Bohol 19.9 4/141 27.4 5/176 Catanduanes 68.4 3/40 69.7 2/44 Cagayan 73.9 14/455 27.7 7/177 Davao del Sur 88.1 13/407 89.7 13/383 Ilocos Norte 44.9 5/70 49.3 3/57 Marinduque 8.6 1/30 8.2 1/31 Samar /a 63.9 11/218 42.1 7/211 Southern Leyte 11.5 1/10 11.8 1/16 Surigao del Norte 10.5 10/212 12.8 8/224 Surigao del Sur 19.0 3/45 18.0 2/47 Misamis Oriental and 225.0 40/1,200 28.1 Other Roads Total 748.0 132/3,964 467.7 60/2,180 /a To be completed by December 1996.  - 16 - Table 5B: Key Indicators for Project Implementation Physical Accomplishment Rural Roads Built/Rehabilitated by Settlement Area DPWH Component Settlement Area Estimated at Appraisal Actual Road Length Bridges Road Length Bridges l ________________ (kms.) (No./l.m.) (kms.) (No./l.m.) Kabankalan 116.4 3/78 116.1 2/48 Sultan Kudarat 179.5 21/395 162.1 19/437 Wao-Banisilan 298.1 54/824 260.0 47/818 Total 594.0 78/1,297 538.2 68/1,303 Table 5C: Key Indicators for Project Implementation Physical Accomplishment Other Civil Works DILG Component Civil Works Estimated at Appraisal Actual Workshop and Quality 5 5 (Bohol, Catanduanes, Control Laboratories Ilocos Norte, Southern Leyte, Surigao del Norte) Turned-over School type 0 30 buildings .__ _  - 17 - Table 5D: Key Indicators for Project Implementation List of Road Maintenance Equipment Procured DILG Component Description Estimated at Actual Appraisal Dump Truck 80 100 Water truck 13 8 Stake Truck 9 11 Low Bed Trailer w/Prime Mover 9 7 Motor Grader 23 32 Loader Front End 1 7 19 Road Roller 8 16 Bulldozer 18 18 Pick up Truck 37 51 Asphalt Kettle 2 0 Rock Crusher 0 4 Wheel Excavator 0 4 TOTAL 216 270 Table 6: Key Indicators for Project Operation There were no indicators for project operation set at appraisal. Maintenance of the roads built/rehabilitated will be carried out by the PEOs.  - 18 - Table 7: Studies Included in Project Study Purpose as defined at appraisal Status Impact of _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _stu d y Feasibility Identify rural roads projects in: Cavite Completed potential of Camarines Norte & Sur, Masbate, future project Romblon, Mindoro Oriental & Occidental and Palawan Feasibility Identify rural roads projects in: Aklan, Completed potential of Eastern Samar, Davao Oriental, Lanao future project del Norte, Maguindanao and Tawi-Tawi Feasibility Identify rural roads projects in: Kalinga Completed potential of Apayao, Isabela, Bataan, Aurora, future project Benguet, Nueva Ecija, La Union, Pangasinan Road Maintenance self-explanatory Completed improved the Management approach of Manual conducting (RMMM) road/bridge inventories Guide to Equipment self-explanatory Completed guide for Management proper Systems management (GEMS) system of provincial equipment pools  - 19 - Table 8: Project Costs Appraisal estimate (US$M) Actual/latest estimate (US$ Local Foreign Local Foreign Item costs costs Total costs costs Tot Executive Agency DILG Civil works in 13 provinces 18.8 20.4 39.2 24.6 28.8 Procurement of equipment 8.6 8.6 0.1 12.5 Consultant services 3.9 1.7 5.6 0.1 6.9 Technical assistance and training 0.4 1.0 1.4 4.3 Executive Agency DPWH Civil works in 3 settlement areas 9.6 10.4 20.0 19.6 22.9 Procurement of equipment 1.3 1.3 1.7 _ Consultant services 1.3 0.9 2.1 3.3 Technical assistance and training 0.2 0.6 0.8 0.5 Land Acquisition 6.9 6.9 2.2 Total Base Cost 41.0 44.9 85.9 = Contingencies 17.5 18.8 36.3 Total Project Costs 58.6 63.6 122.2 46.6 80.9 1 Table 9: Economic Costs and Benefits Sample of Province/ Length EIRR (%) EIRR (%) Road Section (Kms.) Estimated at Re-estimated Appraisal at Completion Agusan del Norte/ 12.7 18 23 Magallanes-Cabadbaran Road Surigao del Sur/ 13.0 18 29 Teleje-San Isidro-Matidum- Maitum Road Surigao del Norte/ 12.8 18 23 Mainit-Mansayao Road l Davao del Sur/ 26.7 17 11 Cogon-Kapatagan  Table 10: Status of Legal Covenants Loan/ Orl7in^l Revied Description of Covenant Commsents Loan) Orig~~~~~~~~~inal Revised Credit Covenant Ful lte Fulfill Agrement Nuwer Text Reference Clas(es) .. Statu Date _ Date LORd L 3.Ol(al 3.4.5.10 CD Carry out the projeetctith diligence end 1uVlefsentetion of the project wee marked by Lffienriency and in accordance with the initial delays beyond the control of the appropriate practices Isplementing Agency, further delays incurred becaus* of security situation in any areas, poor performance of aon contractors, delayed payment 3.01 IbI 5.10 CD Carry our the project in accordanca with the isplementetion Prog,rams for both OWYN and DlOW 1lplesentation Program have been revised t"odjust for delays incurred, progress ie again felling behind program because of additional ieplemnt tinn delays 3.02 5.10 C Procur eent of goods, works and consultants Procedures within both DPI end DIW are very slow services shall be governed by the provisions of the Loan Agreemsnt 4.01 E) 1 C Maintain racords and accounts *attdfactor chea to theayt esyloyad by OPUH and DW were raquasted and Implemeeted 4.011bl Ii) I CD Have the accounts, including the Special Account Generelly complied with, except that the adits audited. ar usually a little late 4.011b) (ii) I CD Furnish to the Bank not later than six oothe Generally coplied with, excegt that the re%