34948 AfricaTransport Technical Note SSATP Note 36 March 2004 Training of Small Scale Contractors for Rural Road Maintenance in Lesotho Some lessons from Experience by Subhash C. Seth Until 1994, maintenance of rural roads in Lesotho was carried out using force account The Contractor Training Pro- procedures. The culture of contracting out road maintenance did not then exist. With gram in Lesotho is a good the objective of promoting labor based work methods, the Department of Rural Roads example of the promotion of (DRR) has so far trained 65 small-scale contractors with internal and external sup- small-scale construction in- dustry in the region, and con- port. The Contractor Training Program (CTP) is now continuing under local financ- tractors from other countries ing. Currently 100% routine and periodic maintenance, 100% rehabilitation (exclud- are already participating in ing emergency works), and 30% upgrading works are carried out through awarding this program. This note sum- contracts to contractors trained through CTP. This has made road maintenance not marizes the methodology, only efficient and cost effective, but has had a positive impact on poverty reduction challenges and lessons by generating temporary employment for more than 4,000 workers. DRR is in the learned in the planning, man- process of expanding this program to road construction and upgrading. agement and organization of the CTP in Lesotho. OBJECTIVES OF THE TRAINING PROGRAM Subhash Seth, a Highway Engineer in the Africa Region Lesotho is a small, landlocked and mountainous country surrounded by the Republic of the World Bank, is actively of South Africa. Its population is 2 million and its area is 30,000 square km. The size involved in the planning, de- sign and supervision of the of its road network is 6,860 km (paved 1,220 km, gravel 3,760 km, and earth 1,880 Contractor Training Program, km). In 1993, the Government decided to involve the private sector in creating em- an initiative of the Transport ployment opportunities for migrant workers returning from the mines in South Af- Sector Projects in Lesotho. rica. The local construction industry at that time had capacity only to carry out build- ing works, and no local contractors were available to execute road maintenance. The The purpose of this series is to Contractor Training Program (CTP) started in 1994 with the main objective to phase share information on issues out force account procedures for carrying out rural road maintenance, which were raised by the studies and work neither efficient nor cost effective. The immediate objectives were to: of the SSATP. The opinions expressed in the notes are those establish a cadre of new entrepreneurs trained in labor-based works methods; of the authors and do not neces- create a sustainable road maintenance system for the Department of Rural sarily reflect the views of the Roads (DRR) 2,100 km of gravel roads that will establish an enabling environ- World Bank or any of its affili- ated organizations. ment for newly trained entrepreneurs; strengthen the institutional capacity of the DRR to manage the CTP effectively and efficiently including evaluation of contractors' performance; For information on these notes, strengthen the capacity of contractors through training of their staff; contact the SSATP in the Africa Region of the World Bank. review procurement and financial procedures to allow new contractors to com- pete for and execute road maintenance works; and ssatp@worldbank.org refurbish and develop training facilities. Sub-Saharan Africa Transport Policy Program (SSATP) UNECA and the World Bank 2 MANAGEMENT OF THE TRAINING PROGRAM tially screened based upon educational qualifications and previ- ous experience in labor-based works methods; and (b) a written The DRR under the Ministry of Public Works and proficiency test is administered to evaluate knowledge of English Transport is responsible for the overall management and mathematics. The accepted candidates are invited to attend a of the CTP. The DRR is divided into three sections: one-day orientation workshop. Given the high rate of unem- Technical, Finance, and Administration. The Techni- ployment in Lesotho, more than 100 candidates apply every year cal Section has four units: Operations, Planning, for about 15-20 positions. Training, and Contracts. The Contracts Unit, headed by the Senior Contracts Engineer, is responsible for 2. After successful completion of the ROMAR training, and the planning, programming and implementation of given the limited starting capacity of new contractors, newly contracts. The Training Unit, headed by the Senior trained contractors are allowed to execute one "no­bid" routine Training Engineer, is responsible for the management maintenance (RM) contract valued at less than US$10,000. Based of the training school. The DRR training school is on capacity and performance, contractors can be gradually up- being used for training DRR staff, new entrepreneurs graded to be eligible for carrying out more than one contract for and staff from other agencies. DRR has decentralized routine maintenance works, subsequently for periodic mainte- its operations to four regions: North, South, Central, nance (PM) works, and finally for rehabilitation works valued at and East. The Head of each region, a Senior Regional less than US$100,000. Contractors who have been found success- Engineer (SRE) is responsible for monitoring the per- ful in the implementation of rehabilitation contracts are consid- formance of trained contractors. ered for training in ROCAU. IDA-financed and ILO-executed technical assistance 3. The ROMAR training consists of five steps with a total dura- (TA) comprised of international and national special- tion of nine months: ists, provided advisory services in the initial period (a) classroom training in technical subjects, three week dura- 1994-97. The key objective was to set up the curricu- tion; lum, prepare training material, and carry out training (b) site demonstration, six weeks (2 weeks for routine mainte- of the national staff to take over the responsibility nance works and 4 weeks for periodic maintenance works) from the foreign specialists. The program is currently (c) classroom training in "business management", three managed by a team of national staff. The TA was re- weeks; sponsible for providing technical support and special- (d) trial contracts for RM works, three months; and ized training with emphasis on the following: (a) se- (e) trial contracts for PM works, three months. lection of potential new entrepreneurs; (b) prepara- 4. The classroom training covers technical and business man- tion of simplified bidding documents; (c) planning, agement topics. The technical topics are: road materials; techni- designing and execution of trial contracts; (d) moni- cal specifications; cost estimates, bid preparation and work su- toring of trainees' performance; (e) training of DRR pervision. The business management topics are: contract admini- staff for managing CTP; and (f) advice in the prepara- stration; site management; book-keeping; preparation of invoices tion of training materials, technical handbooks, and a and certification of payments. Trial contracts for routine mainte- trainer's manual. nance covered the following: understanding of contract docu- ments; source of materials; setting out road alignments; estimat- ORGANIZATION OF THE TRAINING PROGRAM ing needs for labor and equipment; work organization, and 1. There are two types of training programs: (a) a preparation of works accounts. nine-month program for road maintenance and reha- 5. Works selected for trial contracting are already included in bilitation (ROMAR); and (b) a one-year program for the annual roadwork program, and their costs are charged as part road construction and upgrading (ROCAU). ROCAU, of the road's budget. The contracts are awarded through a lottery an advanced stage of ROMAR, is only offered when system (no competitive bidding) on the basis of negotiated rates one is successful in ROMAR. The DRR capacity to based on engineers' estimates and a 10% contractor's profit. Dur- train new contractors has now increased from 12 to ing negotiation, each trainee is accompanied by his/her "site su- 24 contractors every year. Candidates are selected pervisor" who also went through the classroom training on using the following procedures: (a) an advertisement "technical topics". is placed in local newspapers and candidates are ini- 3 KEY CONTRIBUTIONS 4. Reliance on construction equipment reduced, and foreign exchange saved. To ensure the success of CTP, DRR has taken the fol- lowing initiatives: 5. Implementation capacity of small scale contractors strength- ened in bid preparation, site management, and carrying out 1. Simplified procedures for inviting bids, issuing road works in quality and quantity. contracts, and making payments. 6. DRR's managerial and technical capacity strengthened (20 2. Provided financial support by creating a revolv- DRR supervisors trained in site supervision and contract ing fund to allow contractors easy access to management). equipment based on hire/purchase leasing ar- rangement. 7. During the year 2002/03, the following works were carried out using newly trained contractors: 2,100 km RM; 56 km 3. Recommended to commercial banks that contrac- PM; 45 km rehabilitation; and 20 km upgrading in an tors should be provided access to credit facilities amount estimated at US$ 7.5 million. As a result, more than and performance guarantees. 4,000 new temporary jobs were created in the private sector. 4. Prepared quarterly and half-yearly progress re- The budget spent on works carried out through new con- ports to monitor performance of individual train- tractors was about 44% of the total DRR 2002/03 budget of ees and analyzed critically the program's success. US$ 17.5 million, which included government's contribution and donor support. 5. Preferred DRR former staff in the selection of trainees. PROGRAM SUSTAINABILITY 6. Checked during site inspections that contractors have followed the instructions in regard to social The program is financially sustainable and the salaries of local aspects that include the following: (a) recruit- staff as well as all operational expenses including maintenance of ment of laborers particularly in respect of em- facilities and laboratory equipment are financed from the gov- ployment of women; (b) payment of wages to la- ernment budget. DRR being a public department does not have a borers not delayed; and (c) HIV/AID awareness separate account for the operation of CTP. A nominal fee campaign conducted. (US$5,000) charged for foreign candidates, and a subsidized fee (US$2,500) for local candidates, are sufficient to cover the opera- KEY OUTPUTS TO DATE tional expenses including tuition, accommodation and meals. 1. 65 new contractors trained, 43 in ROMAR and 12 However, they do not cover the capital cost invested through in ROCAU. In addition, 24 contractors from the donor support, and the "foreign fees" are not designed for full Limpopo Northern Province of the Republic of cost recovery. The fees collected are deposited in the Govern- South Africa (RSA) have been trained. DRR has ment Treasury as revenues. To achieve financial sustainability, also received a request to train more contractors the government is considering a proposal to run the training cen- from the Kwazulu Natal Province of RSA. Dele- ter on a break-even basis. In accordance with a South African gates from other countries including Tanzania, Development Community (SADC) protocol agreed among several Botswana, Swaziland, Zaire, Zimbabwe, Mozam- states, Lesotho Government policy supports participation of for- bique, Republic of South Africa (four provinces, eign candidates to share the knowledge that DRR has gained in and research standards institutes), Ethiopia, labor-based work methods, and is not using the initiative for Uganda, and army officers from Netherlands, revenue generation purposes. have visited this program. CONSTRAINTS AND HOW THEY WERE RESOLVED 2. Temporary employment opportunities created so 1. Contractors' capacity was inadequate to handle site man- far for more than 4,000 workers -stimulating the agement. So the program was extended to cover supervisory rural economy, lowering transportation costs and staff as well. reducing poverty in the rural areas. 2. Private banks were reluctant to provide contractors access to 3. DRR's institutional efficiency improved through credit facilities for the purchase of equipment. This was re- reducing staff by 260. solved by setting up of a revolving fund in an amount of 4 US$300,000 to provide equipment to contractors 2. Traditional obstacles to this type of program such as financ- based on lease hire arrangements. ing of construction equipment can be overcome with imagi- native and proactive management from the road agencies as 3. Contractors were not able to obtain guarantees well as a supportive private sector environment. from commercial banks, creating difficulties in meeting conditions for receiving advance pay- 3. A program can make a significant impact on generating em- ments from DRR. DRR provided reference letters ployment, but to ensure work quality, it is important to use to the commercial banks, which agreed to allow appropriate technology such as soundly specified labor-based guarantees, enabling advance payments to be work methods. made. 4. It is possible to launch and implement CTP for carrying out 4. Bidding documents were judged to be too com- maintenance of paved and unpaved roads, and to phase out plex, particularly for the new contractors - thus force account procedures completely in a short span of time. DRR simplified bidding documents in consulta- 5. Packaging work appropriately helps both the road agencies tion with the trained contractors. in the management of contracts and the contractors to de- 5. Complex payment procedures which delayed the velop their implementation capacity. payment to contractors for more than three months. DRR simplified the payment procedures 6. Special attention is needed to address social issues such as by delegating some authority to the SRE, and by gender equity, and incorporation of HIV/AIDS mitigation promoting the concept of decentralization in measures through sound policies and appropriate implemen- DRR. This provided more authority to the SRE, tation. who was able to make decisions on site, and as a 7. To create market incentives, greater cooperation between result average payment time was reduced to four the private and public sector is needed through providing a weeks. regular flow of works, and simplified competitive bidding procedures. LESSONS LEARNED 1. CTPs do need long term expensive TA. But once the program is set up, adequate attention is needed for the selection and mentoring of local staff. Mrs. M. C. Pama, Chief Engineer of the Department of Rural Roads, Ministry of Public Works and Transport, is responsible for the management of the Contractor Training Pro- gram in Lesotho. Contacts for further information: Tel: 266-22314514, 266-22316269, Fax: 266-22310508 Email: Chiefengineerdrr@mopwt.gov.ls Mailing address: Department of Rural Roads, P.O. Box 1283, Maseru 100-LESOTHO SSATP publications are available on its website www.worldbank.org/afr/ssatp/