Sri Lanka - Third Roads Project

 ICRR 10477 Report Number : ICRR10477 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: C2183 Project ID : P010363 Project Name : Third Roads Project Country : Sri Lanka Sector : Highways L/C Number : C2183 Partners involved : Economic Development Cooperation Fund, Korea Prepared by : Hernan Levy, OEDST Reviewed by : Ridley Nelson Group Manager : Gregory Ingram Date Posted : 08/19/1999 2. Project Objectives, Financing, Costs and Components : Objectives a) Restore major trunk roads to reduce transport costs and delays, b ) restore priority road infrastructure damaged by flooding and slides, c ) carry out institutional strengthening covering planning, design, programming and implementation of road works, maintenance administration, upgrading technical standards and better use of materials, and, d) upgrade the Road Development Authority's (RDA) capacity for execution of works and for developing the local construction industry . Components i) Rehabilitation of about 417 km of roads, ii) repair, rehabilitation and replacement of 24 bridges, iii) repair roads damaged by floods and landslides, iv ) procurement of equipment, and v ) technical assistance to improve contract monitoring and cost control Cost. Cost . Actual project costs were $ 63.6 million, or some 10% less than appraisal estimates ($70.5 million) due to across the board lower than estimated costs . Financing . IDA financed $37.8 million ($4.7 million were canceled from the original amount ). Korea's Economic Development Cooperation Fund (EDCF) financed $17.1 million ($14.5 million at appraisal) and the remaining was financed by the government. The IDA credit was approved in FY 91 and closed on December 31, 1998, six months behind schedule. 3. Achievement of Relevant Objectives : The physical objectives were substantially achieved . Of the 417 km of road works, 387 were contracted and 310 km were actually completed by project closing . Completing the contracts is underway financed by RDA's own resources . Similarly, work on 13 out the original 19 bridges has been completed, and contracts are underway to complete all bridges financed by RDA. The project's limited institutional objectives were only partially achieved . RDA's project management and administrative capability were enhanced through the establishment of a Project Management and Monitoring Unit (PMMU), the installation of computerized programs for monitoring the project's physical and financial progress and through the training of RDA staff . A Road User Charges study was completed but its recommendations have not been implemented. A study of the domestic construction industry was carried out and its main recommendations were implemented by RDA with the assistance of the contractors' association . 4. Significant Achievements : The development of the local construction industry under the project was significant, as local firms accounted for some 35 percent of IDA disbursements on road construction works . 5. Significant Shortcomings : As the ICR clearly notes, the main shortcomings were in the limited institutional objectives, and that RDA remains largely a traditional public agency, with a large overall size and performing many operations by force account or through other government agencies . Failure to implement the road user cost study recommendations, a covenant under the project, was also a major shortcoming . 6. Ratings : ICR OED Review Reason for Disagreement /Comments  Outcome : Satisfactory Satisfactory Institutional Dev .: Partial Modest Broadly equivalent under different scales . Sustainability : Uncertain Uncertain Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : Three key lessons emerge from this project : i) When a (road) agency is characterized by a traditional structure and little innovation, too narrow institutional objectives are inadequate and will help little to modernize and make the management of the (road) sector more efficient. ii) Greater participation in Bank-financed works is an important incentive to the local construction industry, but where it is a relatively infant industry it needs to be supported by measures oriented to improving their financial management (including securing adequate working capital ) and to ensuring an adequate stream of on -going construction awarded through competitive contracting to provide the newly created industry with steady work opportunities. iii) Decentralization of the road network is a long -term process that requires (a) appropriate transfer of funds from the central authorities, (b) long-term support through setting standards, regulating, training and helping prepare local-level highway plans, and (c) a well designed monitoring system to assess the technical and financial performance of the decentralized agencies . 8. Audit Recommended? Yes No 9. Comments on Quality of ICR : The ICR is comprehensive. It contains a detailed economic analysis, a well thought -out section on future operations (although it could have been stronger had it contained performance indicators ), and gives a brief but useful perspective of the major events happening in Sri Lanka during project implementation .