Document of 'rhe World Bank FOR OFFICIAL USE ONLY Report No: 22254-UG IMPLEMENTATION COMPLETION REPORT (IDA-25870) ON A CREDIT IN THE AMOUNT OF SDR 54.5 MILLION (US$75.00 MILLION EQUIVALENT) TO THE REPUBLIC OF UGANDA FOR TRANSPORT REHABILITATION PROJECT JUNE 28, 2001 AFT: TRANSPORT 1 AFRICA REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2000, official rate) Currency Unit = Ugandan Shillings (UShs.) UShs.1.00 = US$ 0.000599 US$ 1 = UShs. 1670 FISCAL YEAR Govemment - July I to June 30 ABBREVIATIONS AND ACRONYMS AIDS -Acquired Immunodeficiency Syndrome ADB -African Development Bank CAS -Country Assistance Strategy DANIDA -Danish Agency for Development Assistance DflD -Department for international Development EIRR -Economic Internal Rate of Retum FINNRA -Finnish National Road Agency GDP -Gross Domestic Product GOU -Government of Uganda GTZ -Gesellschaft fuer technische Zusammenarbeit (German Aid Agency) ICR -Implementation Completion Report IDA -International Development Association ILO -International Labour Organization MOFEDP -Ministry of Finance, Economic Development and Planning MOLG -Ministry of Local Government MOWHC -Ministry of Works, Housing and Communications NDF -Nordic Development Fund PPF -Project Preparation Fund QAG -Quality Assurance Group RAFU -Road Agency Formation Unit RDP -Road Development Program RFRRMSP -Rural Feeder Roads Rehabilitation and Maintenance Strategy Paper RMI -Road Maintenance Initiative RSDP -Road Sector Development Program RSISTAP -Road Sector Institutional Support Technical Assistance Project TSIREP -Transport Sector Investment & Recurrent Expenditure Plan TRP -Transport Rehabilitation Project TSM -Transport Sector Memorandum UShs. -Uganda Shilling(s) URC -Uganda Railways Corporation Vice President: Callisto E. Madavo, AFRVP Country Manager/Director: James W.Adams, AFMTZ Sector Manager/Director: Maryvonne Plessis-Fraissard, AFTTR Task Team Leader/Task Manager: Yitzhak Kamhi, AFTTR FOR OFFICIAL USE ONLY CONTENTS Page No. I. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 1 4. Achievement of Objective and Outputs 5 5. Major Factors Affecting Implementation and Outcome 11 6. Sustainability 13 7. Bank and Borrower Performance 14 8. Lessons Leamed 15 9. Partner Comments 16 10. Additional Information 16 Annex 1. Key Performance Indicators/Log Frame Matrix 17 Annex 2. Project Costs and Financing 20 Annex 3. Economic Costs and Benefits 22 Annex 4. Bank Inputs 30 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 33 Annex 6. Ratings of Bank and Borrower Performance 34 Annex 7. List of Supporting Documents 35 Annex 8. Full text of the Borrower's Contribution 36 NP: 1BRD 2548 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Project ID: P002923 Project Name: TRANSPORT REHABILITATION PROJECT Team Leader: Yitzhak A. Kamhi TL Unit: AFTTR ICR Type: Core ICR Report Date: June 28, 2001 1. Project Data Name: TRANSPORT REHABILITATION PROJECT L/C/TFNumber: IDA-25870 Country/Department: UGANDA Region: Africa Regional Office Sector/subsector: TH - Highways KEY DATES Original Revised/Actual PCD: 03/15/88 Effective: 11/29/94 11/29/94 Appraisal: 07/07/93 MTR: 03/09/97 03/09/97 Approval: 03/24/94 Closing: 12/31/2000 12/31/2000 Borrower/Implementing Agency: GOVERNMENT OF UGANDA/MOWTC/MOLG Other Partners: NORDIC DEVELOPMENT FUND STAFF Current At Appraisal Vice President: Callisto E. Madavo E.V.K. Jaycox Country Manager: James W. Adams Francis Colaco Sector Manager: Maryvonne Plessis-Fraissard Stephen Weissman Team Leader at ICR: Yitzhak Kanhi, AFTTR Hayley Gons ICR Primary Author: Yitzhak A. Kamnhi; Ephrem Asebe; John D. Riverson 2. Principal Performance Ratings (HS=-Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN'-Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outconme: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: Background. At the time of preparation of this project, Uganda was emerging from a period of severe economic decline and instability. Government revenue was low even by Sub-Sahara African standards (about 7% of GDP), and it was dependent on foreign funding not only for public investments, but also for part of recurrent expenditure. At the same time, the Govemment was undertaking public expenditure reform, rationalizing its development budget, and prioritizing its recurrent expenditure. The Transport Rehabilitation Project (Cr.2587-UG) was designed in support of Uganda's economic recovery. By rehabilitating and maintaining roads and strengthening commercial management of rail operations and services the project was to reduce transport costs and improve accessibility to productive agricultural areas, and ensure that the infrastructure would be well maintained and efficiently managed at a sustainable level. Private sector involvement was to be promoted. A pilot program for labor-based feeder road construction was included, parallel-financed by the Nordic Development Fund (NDF). NDF financing covered technical assistance for the planning and supervision of feeder road works in the project districts and the associated institutional capacity building and training activities at Ministry and district level; while IDA provided funds for the building of overall feeder roads planning capacity and monitoring, construction of civil works and the procurement of equipment for the lease-own arrangements. The Project objectives were to: (a) protect the capital investment in, and increase the service life of, selected rehabilitated main roads; (b) improve maintenance planning and operation of the main road network; (c) improve Ministry of Works, Transport and Communications' (MOWTC) capability for project implementation; (d) introduce labor-based methods of road maintenance and feeder road rehabilitation whenever cost-effective; (e) improve Ministry of Local Government's (MOLG) and the Local Authorities' (Districts) capacity to plan, manage and monitor feeder road rehabilitation and maintenance; (f improve feeder road network accessibility in four districts; (g) train, advise and employ domestic small and medium sized contractors for feeder roads works; and (h) re-orient Uganda Railways Corporation's (URC) management towards commercial operation and promote its financial autonomy. Assessment of Development Objectives. The project objectives were conceptually clear and supportive of the Country Assistance Strategy (CAS) and government priorities. The project had been in the making since 1985. It was appraised in July 1993 and became effective in November 1994. During this long gestation period, serious attempts were made to clarify and test the realism of the development objectives through harmonization with (a) IDA's Uganda CAS Objectives,(b) the findings of IDA's Transport Sector Memorandum (TSM, February 1991) and (c) the Government's Rural Feeder Roads Rehabilitation and Maintenance Strategy Paper (RFRRMSP, November 1992). The CAS (dated 05/09/95) objectives focused on macroeconomic stability, improved private investment, strengthened human resource development and poverty alleviation. The TSM covered the need for medium-and long-term investments for a sustainable main road network. It stressed among other things: (a) a balanced and sustained roads improvement program, with better planning and programming of main road maintenance, (b) increased labor productivity with no diversion of funds from maintenance to reconstruction/rehabilitation, (c) cost-effective feeder roads rehabilitation and maintenance; and (d) commercial orientation for the railways. The RFRRMSP, prepared with the extensive assistance of GTZ, ILO and IDA staff, focused on improving district feeder road planning, introducing and gradually increasing the application of a labor-based/light equipment supported approach for feeder road rehabilitation. The Govemment's medium-term transport sector strategy was also spelled out in The Way Forward 11, Medium Term Sectoral Strategy (January 1992) and Letter of Transport Sector Policy ( March 1994). The latter recommended the establishment and implementation of a Transport Sector Investment and Recufrent Expenditure Plan (TSIREP) for FY1 995-FYI 997. The sector policy adopted by the - 2 - Government reaffirmed the earlier findings of IDA's TSM which were agreed with the Government and served as the basis for the project preparation. The design of the project provided a transparent framework for donor coordination and stakeholder consultation and incorporated specific targets of outcomes and outputs. Staff assessment of the main risks facing the project was realistic and recognized the severe budgetary constraints for road maintenance and core road rehabilitation. The main implementation risks were identified as: (i) lack of significant progress of URC in transforming itself into a commercial enterprise and losing its share of the market; and (ii) lack of substantial and substainable improvement in management of public investment including prioritization and execution of contract management and implementation and, especially, in procurement planning and processing. These diagnoses reflected the reality facing project implementation in Uganda at the time. Equally realistic were the corresponding mitigating measures outlined in the project. The project design gave attention to environmental and social factors; in particular, the spread of AIDS was to be mitigated through an AIDS awareness program. However, the project experienced a time lag between design and implementation and the capacity of the implementing agencies to absorb the project, particularly with regard to timely and orderly procurement processing. As a result, engineering cost estimates of main road sections generally underestimated the true improvement costs of the roads, which deteriorated overtime due to the lack of adequate maintenance. Also, given the institutional weaknesses at the start of the project, the scope was relatively complex and demanding for the borroweres implementing agencies. The capacity for implementing the feeder roads component was enhanced by technical assistance. While the decision to transfer responsibility for feeder roads from MOLG to MOWHC was a strategically positive move (consolidating road network management under one roof in Government), the timing initially created some problems in form of disruption and logistics in the implementation of the feeder roads component which was already in an advanced stage of implementation under MOLG. 3.2 Revised Objective: The original objectives of the project were maintained throughout project implementation. 3.3 Original Components: The above development objectives were to be achieved through the following four components: (a) Main Roads (US$76.8 million equivalent) (i) a share of the four year FY95-FY98 National Roads Maintenance Program: maintenance of selected main roads, including routine maintenance of 1,746 km and periodic maintenance of 720 km; (ii) strengthening and improvement of 32.5 km of the Kampala-Entebbe road; (iii) upgrading, regravelling/rehabilitation of about 162 km of gravel roads including Mbarara-lbanda Road; (iv) Institutional strengthening of MOWTC. (b) Feeder Roads (US$16.5 million) (i) rehabilitation of 680 km of feeder roads and maintenance of up to 880 km per annum of feeder roads in Mbale, Kapchorwa, Tororo and Palissa districts; (ii) establishment of feeder roads rehabilitation and maintenance capacity using labor based contractor executed works; (iii) strengthening MOLG/ED's planning and monitoring capacity. (c) Railways (US$3.2 million equivalent) (i) institutional strengthening of URC through technical assistance and training; (ii) procurement of ferry maintenance spare parts and oil spill containment equipment; and - 3 - (d) Transport Sector Planning (US$1.0 million) (i) Technical assistance for National Transport Database; and (ii) container terminal. In addition, a Project Preparations Fund (PPF) of US$1.50 million was allocated out of the total project appraisal cost of US$99.00 million. 3.4 Revised Components: The contracts for strengthening and improvement of Kampala-Entebbe Road and the upgrading of Mbarara-lbanda Road experienced cost increases and contractors' claims. Project disbursement also lagged due to delays in procurement. To rectify the shortcomings related to cost increases and delayed procurement, IDA and the Government agreed to drop all the road upgrading, regravelling Irehabilitation in the sub-component except for the Mbarara-lbanda (66.5 km) section. Also, to speed up disbursement, the threshold for IDA review of routine mechanized maintenance contracts was raised. The Development Credit Agreement was appropriately amended; the development objectives, however, remained unchanged. 3.5 Quality at Entry: The project did not benefit from formal review at entry by the Bank Quality Assurance Group (QAG). However, in September 1998 the QAG reviewed the project progress and rated it as satisfactory. The ICR also assesses the quality at entry as satisfactory due to several factors, including: (i) alignment of the IDA's CAS and Transport Sector Strategy with the Government priorities which focused on poverty alleviation and growth; (ii) identifying critical risks to development objectives and design of appropriate strategy, (iii) innovative approaches to road maintenance financing and private-sector led labor-based feeder road rehabilitation in the context of Uganda's macroeconomic situation; and (iv) addressing the institutional constraints. Alignment of the CAS and sector strategies of IDA with Govemment priorities was brought about in the course of considerable discussion among stakeholder-donors (KfW/GTZ, BMZ, Nordic, EC) and the government agencies. The extended discussion was based on several studies: the Transport Manpower and Training Survey (1987); the Railway Master Plan Study (1987); the Transport Modal Efficiency Study ; the NDF Transport Strategy Development and Training Project (1987); and other subsequent studies and policies cited in Section 3.1 above. The stakeholders' discussions helped identify and assess factors that could put the project at risk, such as: (i) establishing effective financing mechanism by government to ensure adequate budget allocations for road maintenance; (ii) enhancing the effective labor-based approach for feeder roads, and (iii) establishing a sustainable institutional framework including private sector participation in labor based feeder road rehabilitation and maintenance. The extended debate on road maintenance also led to a country tailored approach to road maintenance financing. The approach took particular note of the macroeconomic constraints facing Uganda, which was undergoing structural adjustment at the time. At first, on the donors side, there were strong views in favor of a dedicated road fund similar to the one being sponsored under the Road Maintenance Initiative (RMI). However, under the leadership of the Ministry of Finance, Economic Development and Planning and with adequate controls, the implementation of the Transport Sector Investment and Recurrent Expenditure Plan (TSIREP), provided a transparent and comprehensive framework in which all the stakeholders could periodically agree on a sustainable size and composition of the sector's investment and recurrent expenditure. A sustained TSIREP approach to road maintenance financing would overtime serve as a good comparator to the road financing approach established under the RMI in many other countries including Tanzania. The search for an approach to equipment leasing/renting for labor-based civil works led to a review of experience of other African countries. Here, too, the outcome of the exercise contributed to the involvement of private-sector-led labor-based contractors, who would eventually own their equipment through the rent-to-own arrangement implemented under the feeder road - 4 - component. Of pfimary concern to both the Association and the Government was the design and implementation of a viable institutional framework for the transport sector. Both IDA and GOU saw that attracting and recruiting qualified national staff would be essential for successful implementation and subsequent operational sustainability. Other institutional arrangements adopted included: (a) the creation in the Ministry of Local Government of a small committed and dynamic national team in charge of the program to rehabilitate the rural feeder roads; (b) a semi-autonomous, or a more commercially oriented road agency able to offer competitive terms and conditions of employment; and (c) a unified system of incentives for government staff attached to donor-assisted projects. Notwithstanding these important conceptual breakthroughs and innovations in the design of the project, there were a few shortcomings. Given the weak government revenue base, the design of the project assumed strong financial support from the donor community, particularly for maintenance of the main roads, which did not fully materialize (see Table 2, Section 4.2). Also, at project effectiveness, capacity of the implementing agencies was weak. This factor coupled with the significant time lag between the technical design of the roads and their implementation contributed to further road deterioration. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: In terms of IDA's principal mission of poverty alleviation and the CAS objectives, the overall project outcome/impact is substantial. In terms of the project development objectives and sector strategic objectives, the project outcome/impact is also assessed as substantial and achievement of the project development objectives and outputs as satisfactory. Improvement of the transport infrastructure and transport service (see section 4.2) have benefited all and, in particular, rural women living in the roads' zone of influence. The results of surveys done before (1994) and after completion (1997) of feeder roads, showed an increase in disposable incomes of 20% due to increases in farm gate prices, partly because women can now put more time in the field for crop production. The labor-based construction industry initiated by the project generated over 1,717,800 person-days of employment between April 1996 and December 2000. There has been an increase in school enrollment, and in the number of people using primary health care, and additional facilities have been constructed along the newly rehabilitated roads. In particular, the project made substantial contributions to the achievement of its objectives as follows: Transport efficiency. Despite initial implementation delays due to procurement difficulties, the rehabilitated and maintained main roads have shown up to 30% reduction in vehicle operating costs, 20% traffic increase and 30% reduction in travel time. The resulting efficiency in transport operation has,- for example helped stabilize the taxi fares on the Kampala-Entebbe route at about UShs. 1000, thereby providing significant benefits to the traveling public. The increase in disposable income, mentioned in paragraph 4.1 also affirmed the contribution of improved transport access to agricultural production in the areas where the roads have been improved. The main shortcoming with respect to this objective is that not all the planned roads could be executed due to cost overruns and claims of contractors on the two main road contracts. Road maintenance planning and finance. An innovative approach with transparent stakeholder participation has been tested and made functional with a positive impact. In this respect, the TSIREP and the Three-Year Road Development Plan have proved effective as mechanisms for allocating adequate resources for a sustainable road network. With support from the IDA Credit, the project achieved 100% of its main road maintenance target and 115% of the feeder road maintenance target. - 5 - Private sector led construction industry. The demand created by the project has enhanced the development of the private sector-based construction industry by contracting work through competitive bidding. It has also created increased private sector participation, increasing sector activities and adequate resource allocation for the construction sector. Both the improvement in the competitiveness of the sector and the development of such an interest group would provide, in the long term, a sound basis for further sustainable transport infrastructure. Labor-based private sector construction. The private sector labor-based approach to feeder road rehabilitation has proved viable and is now being used by ADB, DflD and DANIDA Projects covering the 33 out of 45 Districts. This approach combined efficient resource use with a poverty alleviation impact. The consensus is that the project has made a significant contribution to the Initial development of a labor-based private sector construction industry. The feeder road component has also substantially contributed to the achievement of the project objectives of poverty alleviation, improving access, and institutional capacity building in the selected five districts. URC Commercial Operation. The re-orientation of URC's management towards commercial operation, promotion of its financial autonomy and right sizing of staff has led to increased volumes of freight and passenger traffic. As a result, URC at present operates without subsidies from the Govemment MOWHC and Districts Institutional Capacities for Planning and Management. The capabilities of MOWHC and the District Governments to plan and manage the road network have been improved; and a significant number of technical staff have been trained in contract management. A road maintenance management system has been developed. Prioritization of road maintenance planning, supervision and monitoring has now become possible. The project implementation experience, however, highlighted the need for an effective and professional system to plan and manage road operations. Since the capacity building method failed to yield the expected results, commercialization of these services by outsourcing them to a newly established Road Agency Formation Unit (RAFU), the nucleus of a future road agency, have been introduced. The major features of RAFU are the procurement and management of contracts and outsourcing of design and supervision services instead of these being carried out by the Ministries. With its highly professional staff employed on a renewable performance based contracts, RAFU procures and manages works contracts. In addition, the corresponding planning and financing activities have been placed under the Ministry of Finance Planning and Economic Development ( MOFPED), which serves as a professional coordinating office tasked with reviewing, planning, prioritizing and financing the road program. MOWHC, in the meantime, has been spinned off towards a regulatory and policy making authority. These reforms are being supported by the IDA-financed Road Sector Institutional Support Technical Assistance Project (RSISTAP) and the Road Development Program (RDP) as well as by the other donors, DANIDA, EU, etc. Under the project, a total of 20 feeder roads rehabilitation contractor firms were trained of which 15 qualified and were awarded contracts under the project. In addition, 39 foremen- and 29 assistant foremen were trained to assist the contractors in contract supervision. Also, with respect to routine feeder roads maintenance, a total of 39 maintenance contractors have been trained who could support the District Works Departments in future programs. -6 - Environmental and Social Impact. The project is a category B project. As the road works were mainly rehabilitation, the environmental impact was small. An AIDS awareness program was executed with positive impact along the feeder roads being constructed or maintained. 4.2 Outputs by components: The overall project performance in meeting physical output targets is assessed as satisfactory. Main Roads. (Cost US$76.8 million SAR; US$58.48 million actual). This component is rated as satisfactory. The scaled down physical targets were substantially met. Overall, the quality of work was fair/good. All of the targeted 1,746 km of main roads received routine maintenance, underscoring the effectiveness of the consultative approach to road maintenance financing using the TSIREP. However, mainly because of procurement delays, only 56% or 236 km of the scaled down target of 427 km for periodic maintenance was achieved before the project closing date. Three of the seven periodic maintenance contracts were dropped due to insurgency in the project area. For one of the contracts, it took GOU almost two years to pre-qualify contractors and hence it could not be executed within the short time left before project closing. The revised target for the Kampala-Entebbe road improvement (27.6 km) and the Mbarara-lbanda road upgrading (65.0 km) were fully achieved. However, because of commencement delays, the prolonged time needed to resolve the issue, anticipated cost overruns and contractor's claims on Kampala-Entebbe Road and Mbarara-lbanda road, the upgrading of Gayaza-Bugema-Zirobwe (30.9 km), rehabilitation of Villa-Maria Road (40.0 km) and Zirobwe-Wobulenzi road (25.0 km) were dropped at the request of the Government. In view of the importance of the cost overruns and claims of contractors to the output performance of this component, it is worthwhile to elaborate briefly describe the status of these contracts. Table 1: Main Roads Component Performance Component Cost in million of USD Length in l Appraisal Actual/latest % Appraisal Actual % Estimates estimates1 Change Target Change Main Roads Component (1) (2) (3)-(2)/ (4) (5) (6) (1)% Main Roads Maintenance 24.77 23.40 94% 2173 1982 91.2% Periodic Maintenance* (13.74) (10.36) 75% (427) (236) 55% Routine Mechanized Maint. (9.62) (9.61) 100% (1746) (1746) 100% Routine Manual Maint. (1.41) (3.43) 243% Main Roads Upgrading, 20.74 26.28 127% 162 66.5 41% Regravelling and Rehabilitation, including (Mbarara-lbanda)* _ Strengthening/impmvement of 5.54 8.80 152% 32.0 27 84% Kampala-Entebbe Rd I _I Physical contingencies 5.46 - Price Contingencies 8.18 - Total 68.20 58.48 85.4%/ . _ Note: 'Estimates based on disbursement data up to June 27, 2001, and are not final. *Revised to 427 km from 720 km from appraisal. ** Target was about 162 km and not all projects were committed at appraisal. -7 - Table 2: Maintenance Expenditure 1994/95 to 1999/00 (USD '000) Year Resource GOU Donor Total Annual Contribution Change Index 1994=100 1994/95 Plan 12,478.6 10,785.7 23264.3 100 Actual 11,458.5 1,517.5 12,976.0 100 % Actual to 92% 14% 56% Plan 1995/96 Plan 12044.7 9971.7 22016.4 95 Actual 11830.5 1,284. 13,115.1 101 % Actual to 98% 13% 60% Plan 1996/97 Plan 20,579.9 16,6100 37179.9 160 Actual 17,063.3 3,511.7 20,575.0 159 % Actual to 83% 2% 55% Plan 1997/98 Plan 23,770.3 19,325.2 43095.5 185 Actual 21786.3 1396.3 23182.6 179 % Actual to 92% 7% 54% Plan 1998/99 Plan 26246.1 24937.3 49227.5 212 Actual 20886.2 3,821.0 24707.2 190 %actual to 98% 15% 50% Plan 1999/00 Plan 31850.4 20532.7 52383.1 225 _ Actual 22680 15366.7 37974.7 293 % Actual to 71% 75% 72% Pan I Note: the relative contribution of GOU and the Donor Community. Also, note the relative gmwth of expenditure for mantenance over time. The data clearly shows the TSIREP approach used would have been even more successful if the donor community had been fiuly committed as anticipated during the planning phase. The data also shows G(OJ's commitnent to road maintenance given its limited revenue. Kampala-Entebbe (Contract Price: Ush. 6,041 million; Revised Cost: Ushs. 7,355 million; Completion cost including partial claims, as of June 27, 2001: Ushs. 6,986 million): The Kampala-Entebbe Road (32km) commenced in February 1996 and was completed on September 30, 1997 after seven months delay. While the work was ongoing, a major road master plan development was being undertaken which included the first 4.9 km of the Kampala-Entebbe road (Zana-Kibuye road Section). This section was left out of the contract but later constructed under DANIDA/GOU funding at a cost of UShs. 5,073,770 962. Mbarara-lbanda (Contract Price: Ushs. 18,855 million; Revised cost: Ushs. 27,25 million; completion cost including claims. and price adjustment Ushs. 33,716 million). The Mbarara-lbanda Road (65.0 km) commenced on January 15, 1997 and was substantially completed on August 31, 1999 after 8 months delay. The defect liability period expired on August 31, 2000 and a completion certificate was issued to the contractor on September 12, 2000. The final cost of measured work was Ushs. 29.432 million. Initially, the contractor claimed an additional amount of UShs. 15,5 billion for 'differing soil conditions and their effect upon contractor's activities'. Eventually the final cost of the road was Ush. 33,716 million including price adjustment. Contracts Dropped (Appraisal US$ 11.94 million). As the construction of the above mentioned two roads was substantially completed less than a year prior to the Credit Closing Date with no settlement, of - 8 - claims solved, IDA could not take the risk of committing funds to new contracts. The rehabilitation/regravelling of Villa Maria-Sembabule Road (40 km) contract was dropped from the project to mitigate the anticipated cost overruns. Upgrading of Gayaza-Zirobwe Road to Bitumen Standard, Regravelling/Rehabilitation of Zirobwe-Wobulenzi Road and Repair/resealing of Kampala-Gayaza Road (76 km) were also dropped. However, the Gayaza-Bugema-Zirobwe-Wobulenzi road was added to the Road Development Program funded by the Bank; and to keep the roads in motorable condition, they received routine mechanized maintenance under this project. Feeder Roads (Cost: US$16.5 million SAR; Actual/Estimated total US$13.77 million; IDA US$7.29 million; NDF US$5.00 million and GOU/DAs US$1.48 million). This component is rated as satisfactory. A total of 1,014 km of roads (115%) compared to the targeted 880 km received maintenance by 2000. The maintenance activities generated 973,400 workdays of employment with Ush 1,5 billion paid as wages. Also, a total of 514 km of feeder roads (83%) of the revised target of 622 km in the districts has been rehabilitated. Over 734,400 worker-days of employment was created with total wages of Ush. 866 million paid. The feeder road program saw a shift from force account to private contractors. This has enhanced the development of the local small to medium-sized private contractors. A total of 54 contracts were awarded based on World Bank procurement document for small works. Experience in preparing bidding documents and contract awards was gained by the Ministry and District staff. The experience gained under the project is expected to contribute to cost effectiveness and productivity increases in the contracting industry. In particular, the feeder road program implementation has created a reservoir of goodwill among the nascent local labor-based contractors that the project supported with equipment under lease-own arrangements. The participants appreciated the training opportunity and the flows of civil works contracts provided under feeder road program of TRP. Under the lease-own agreement, the participating contractors had each paid some 62% of the equipment price at closing. The contractors would be able to fully own their equipment by paying the outstanding balance. An estimated US$1.0 million worth of contracts are being financed from funds that will be made available by NDF from the balance of the initial NDF resources allocated under TRP and from GOU contributions. In all about US$0.5 million of the NDF resouce is used to finance local civil contracts and the balance, about US$4.5 million, is used for technical assistance. Railways Cost: US$3.2 million SAR; US$2.17 million Actual): The output performance of this component has been satisfactory overall. URC has made progress towards commercial operation and financial autonomy. URC has streamlined its loss making lines and now covers its operations short of depreciation costs, and productivity and workers' remuneration have increased. URC computerized its wagon tracking system to improve its wagon system; bought marine spares for engine-overhaul of three wagon ferries; and procured an oil containment facility to revitalize maritime transport which is under URC. To improve efficiency in management and cost effectiveness of train loads, URC also trained 12 officers and upgraded its system - Operational Simplified Coasting Systems for Africa Railways. These achievements were partly due to the several measures undertaken under the project to improve customer service satisfaction. However, URC still has difficulties in making substantial progress in other areas. For example, it has yet to submit its audit reports on time. IDA has not received audited reports for 1996/97 and 1997/98. Also, the findings of Financial Restructuring Study and Kampala-Kesese Line Study have yet to be implemented. Planning and Capacity Building (Cost:US$0.8 million SAR; US$0.64 million Actual). Overall, satisfactory performance was realized in institutional strengthening of the Districts; while for MOWWC the performance was modest. Technical Assistance of 263 person-months in road maintenance, planning, organization and operation was provided by Finnish National Road Agency (FINNRA) to MOWTC under an institutional twinning arrangement. The arrangement made only modest contributions. The impact could have been more if adequate number of Ministry staff had participated on specialized topics. About 25 person-months under the twinning arrangement was later utilized to provide expatriates' inputs under RAFU for contract management and procurement. A total of 22 district -9- engineers and headquarters technical staff were trained in contract management. Standard bidding documents were prepared and workshops on contract management were organized for all district engineers and staff at headquarters. A total of 15 engineers were sent abroad: 12 engineers attended a seminar on international construction contracts in London; I principal engineer attended a seminar at the Intemational Road Federation (Washington); 1 engineer attended a Works Procurement Course in Italy; and 1 engineer attended a Transport Infrastructure Conference in Hong Kong. To improve local training, the Kyambongo Public Works Training Center was equipped with the necessary training equipment and visual aids. To improve contract supervision, 10 vehicles and 30 motor cycles were procured and used. Transport Sector Planning, Guidelines for Preparation of Road Maintenance has been developed. Also a maintenance plan with resource estimates for the year 2000-2003 has been prepared. Nationwide road Inventores are now being updated annually. Some 13 Manuals for Maintenance Planning and Budgeting have been developed. The 1992 Medium Term Transport Sector Strategy Paperwas revised in 1999 to form the basis for new policy initiatives. AIDS and Environmental Degradation Awareness Training: After identification of the local factors responsible for the spread of AIDS, the project implementation team undertook training activities along the program roads. Initially, the focus was on the contractors' employees. To assure sustainability, the consultant also trained condom distributors, Local Council leaders and Change agents. After training in proper usage and safe disposal, the consultants distributed 50,000 condoms to the targeted population. An arrangement with District Medical Officers for free supply of condoms to organized trained groups was put in effect. District Engineers and District Environmental Officers, in conjunction with Local Environmental Committees, have also been providing environmental awareness training. Quarry restoration was enforced through appropriate clauses in the civil works contracts. 4.3 Net Present Value/Economic rate of return: The project financed four components with high economic impact which would have positive contribution to Uganda's road infrastructure network. However, not all of them lend themselves to quantification of benefits. The benefits of such components as capacity building, through training and technical assistance, while they are necessary factors and have distinct costs, cannot be easily quantified and reflected in the ERR estimates. Where the benefits can be quantified, as in the case of road maintenance, the economic benefit is obviously high so it was not considered necessary to estimate it. For the same reason, the SAR did not estimate it. Feeder/ruraVroads were executed in accordance with the 1992 Feeder Road Strategy Paper. The selection of individual feeder roads was based on their agro-economic impact, using (a) investment costs for rehabilitation net of savings in future maintenance costs, (b) number of farming households in the zone of influence, (c) improvement in accessibility of roads, and (d) potential increase in net agriculture income for households in the selected zone as compared to other agro-economic zones. Based on the resul of the surveys taken in 1994 and 1997, farm gate prices resulted in an increase of 20% in disposable income. The economic viability of the investment, therefore, depends on the economic rates of return of the main completed roads, Kampala-Entebbe Road and Mbarara-lbanda Road. These roads constituted 80% of the actual total cost of the project. The EIRRs of the two roads were estimated separately using the HDM4 model; the results of the post-construction EIRR estimates are 12.7% for Kampala-Entebbe Road and 17.4% for Mbarara-lbanda Road Appraisal EIRR estimates were 12.7% and 18.2%, respectively. See Annex 3 for details. -1 0 - 4.4 Financial rate of return: The financial rate of return was not calculated at appraisal and is considered not applicable. 4.5 Institutional development impact: Institutional weaknesses were the major factors underlying the shortcomings identified in meeting the physical targets. Nevertheless, the project has contributed a number of positive institutional development impacts in the areas of enhancing staff capability and institutional reforms, as follows. The staff of the Districts and MOWHC have gained capability in contract management and administration, including valuable lessons from the mistakes made in the two main road contracts. The capability in procurement and project supervision has been developed particularly in the case of rural feeder roads. Through the TSIREP experience, the staff have gained valuable experience in road maintenance planning. The innovative approach to road maintenance financing and resource allocation which took Uganda's macroeconomic/ government revenue condition into account, has had positive results. The 100% performance in the routine road maintenance program is an indicator of the institutional impact of the project. The expenditure in road maintenance, together with the competitive bidding administration of contracts has given significant stimulus for the local contractors to strive for high standards in civil works. However, if the progress in quality is to be sustainable, there is still need to address existing weaknesses in contract management and administration. The labor-based private sector-led construction approach tested under the project is now being widely used by the donor community in 33 districts. The private sector contractors, including the labor-based contractors, now constitute an important pressure group for ensuring adequate resource allocation for road maintenance. The Project also, highlighted the weaknesses of the traditional capacity building measures and lead to commercialization of the major activities related to: planning, procurement and management of large contracts. With the establishment of RAFU, it has also been possible to demonstrate that effective use of human and financial resources could be achieved through institutional reforms and skill transfers. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control ofgovernment or implementing agency: Currency volatility. In accordance with the objective of the CAS, stabilization of the macroeconomic environment remained the overriding concern of the government. However, despite government's significant progress in stabilizing the macroeconomic situation, on the Uganda Shilling depreciated from US$1.0 to Ushs.1174 in June 1993 to US$1.0 to Ushs. 1670 on December 31, 2000. It has also been volatile, exceeding US$1 to UShs. 2000 or more in between these dates, depending on the performance of the economy and seasonal factors. To safeguard against risk of exchange loss, contractors have quoted or been made to quote in US Dollars, or if in Uganda Shilling, pegged to the Dollar at an agreed exchange rate. However, the relative value of the exchange rate of SDR to the Dollar has been rather stable during the period. At the time of project appraisal (1993), the exchange rate was US$1= 0.7177 SDR; the average rate for the total SDR 35.897,453.9 disbursed was US$1=0.7275 SDR. The loss due to the SDR depreciation against the Dollar was therefore about 1.4% on the total disbursement made. 5.2 Factors generally subject to government control: -1 1- Donor coordination. The significant achievements in road maintenance, labor-based private sector feeder road rehabilitation, and establishment of the RAFU were possible due to the support of the donor community. The Government's adoption of the TSIREP has provided a transparent framework for discussion of sector issues taking into account hard budget constraints. Delays in claim settlement. Project implementation experienced significant cost increases and contractors' claims of about US$ 20 million on the Kampala-Entebbe Road and Mbarara-lbanda Road contracts (Section 4.2). The undisbursed balance of the credit was not utilized in order to cover these outstanding claims; however, settlement of the cost increases and claims of the contractors took an unusually long time. 5.3 Factors generally subject to implementing agency control: Procurement irregularities. The various aspects of the weaknesses in procurement have been adequately described in Uganda Ex-post Procurement Audit, 1999 undertaken by IDA. A number of irregularities identified in the report have been the subject of discussions between IDA and the Borrower. The Borrower has taken note and will take appropriate actions to ensure that similar irregularities are not repeated. Delayed procurement. The implementation of this multi-disciplinary and complex project highlighted major weaknesses of the implementing agencies in contract management, contract administration, and especially in procurement planning and processing. In particular, feeder road contractors received road rehabilitation equipment three years into project implementation due to delays in procurement. Procurement of civil works suffered similar delays. This was a signifant factor in the failure for achieve the physical target for feeder road on time. Weak technical documentation. The cost overrun was partly attributed to poor engineering design of some roads, extremely long periods between appraisal and actual execution and limited capacity for supervision. 5.4 Costs and financing: Actual and appraisal costs. Annex 2 summarizes the costs at appraisal and actual. The changes in output as a result of the cost increases and claims on two contracts are shown in Section 4. Of particular importance is the reduction of the rehabilitation/regravelling target due to the anticipated cost increases of the Kampala-Entebbe and Mbarara-lbanda Road contracts. The cost increases and claims in the main road component are summarized in Section 4.2. Since contractors have sought to mitigate the risk of exchange rate loss by fixing the Ugandan Shilling to the exchange rate in US dollars, the relative weakness of the Uganda Shilling may not have resulted in significant savings in Uganda Shillings. With respect to expenditure on road maintenance, the GOU has been contributing significant amounts relative to its commitment for each year starting FY 1994/95 while the contribution of the donor community has been marginal. Project financing. Out of the total appraisal cost of US$99 million equivalent, the relative shares of financing at appraisal were IDA 75%, Nordic Development Fund 4.6%, borrower (GOU, URC and Districts) 20.4%. At closing, the total actual estimated cost of the project was US$79.95 million, and the respective shares were: IDA 71 %, GOU 23% and N D F 6%. Actual and relative shares of IDA's contribution are lower than appraisal for reasons explained above. Overall, as of June 27, 2001,about US$16.39 million equivalent of the IDA Credit was not utilized. Nordic Development Fund. Under parallel financing, the Nordic Development Fund (NDF) has provided about US$5.0 million equivalent to finance consultancy services for construction supervision, training of local labor based contractors and Districts staff and procurement of Equipment and materials for field support for implementation. The NDF credit has been extended to allow the labor-based - 12 - contractors to undertake other contracts on the basis of lease-own arrangement sand to enable them to complete their lease payments. These contracts were financed by IDA until the credit closing date, after which the financing was taken up by NDF with IDA consent following GOU request. 6. Sustainability 6.1 Rationalefor sustainability rating: The project is likely to maintain the benefits generated in relation to its objectives over the economic life of the project. Strategic attitudinal changes in policies, systems, institutional structures and capacity development have taken place in the course of project implementation. These are likely to contribute to sustainability of the benefits achieved under the project and to improve the capacity of the country. Policy and financing systems. The government has shown its commitment to road maintenance through increased road maintenance expenditure. The consolidated TSIREP provides a fundamental framework to promote cheaper, more efficient and reliable transportation services, through enhancing transparent discussion on resource allocation to priority activities in the transport sector. Also, a road maintenance strategy is now in place. The Uganda Highway Maintenance Management System and Road Database have been developed and are currently operational at the MOWHC Headquarters. This will help ensure the timely and effective planning, budgeting and programming of road maintenance under the proposed Road Agency. Institutional structure. The road network policies are now managed under one Ministry. Major institutional reforms and changes in institutional set-up have resulted in the establishment of a performance-based Road Agency Formation Unit (RAFU) and the spinning-off of the Ministry towards a regulatory and policy making institution. In addition to TRP, these reforms are being supported by yhe IDA-financed RSISTAP and RDP. Further action is needed to support District rural feeder road program implementation and management. In this context, the recently prepared Govemment vMite Paper (2001) with an updated Feeder Roads Strategy provides the basis for further actions. Capacity. A private local contracting industry has been established. A number of local contractors have been trained and developed and adequately equipped to undertake road maintenance works. The Ministrys technical staff had acquired skills and experience to procure and supervise contract works. The training school at Kyambogo is equipped with essential training equipment. The institute in Mbale was rehabilitated and is also fully operational as a labor-based technology and contractor training center. URC is at present operating on a commercial basis without Government subsidies. 6.2 Transition arrangement to regular operations: With respect to the civil works, sustainability of the benefits of the project has been enhanced by the- introduction of the TSIREP and the establishment of RAFU. The TSIREP reflects government priorities in the transport sector and is updated semi-annually and reviewed by all stakeholders in the sector. The Government has given high priority to road maintenance under the Ten-Year Road Sector Development Program (RSDP) 1997-2006. Both feeder road rehabilitation and maintenance are being financed under the PovertyAction Fund into which saving by HIPC Debt Relief Initiative are deposited. GOU and NDF are committed to fund the ongoing subproject beyond the TRP closing date of December 31, 2000 to allow the labor-based contractors to own their equipment. With respect to feeder roads, responsibility for continued maintenance is vested in the respective Districts. The Central Government is also committed to continued allocation of funds as conditional grants to Districts for road maintenance. The establishment of RAFU is a major transitional arrangement to a possible future Road Agency, thereby ensuring the sustainability of the achievements in institutional capacity. - 13 - 7. Bank and Borrower Performance Bank 7.1 Lending: Overall, IDA's performance in lending operations was satisfactory. As noted earlier, identification of the project was consistent with the Govemment's priorities and IDA's transport sector assistance strategy for the country. Through undertaking various sectoral studies, and holding discussions on these studies, IDA helped enrich the quality of the Project at entry. During preparation, appropriate skill mixes were brought to bear on the technical, financial, economic, commercial, institutional and procurement aspects of the project. In hindsight, more forward planning could have been given to reinforce the capacity of the implementing agencies in procurement and financial management. In other respects, identification and assessment of risk was focused. A concerted effort was made to identify and assess risks facing project implementation. 7.2 Supervision: Overall, project supervision is assessed as satisfactory. Following the 1997 mid-term review and Uganda Country Portfolio Performance Reviews for IDA projects, the project was put on management watch-list. Generally, the skill mix utilized was appropriate and focused on the principal objectives. Project supervision and monitoring ratings were realistic, except in the first years following project effectiveness where the project development objective was overrated. Special measures were taken to cope with the major weaknesses of the implementing agencies in contract management, contract administration, and especially in procurement planning and processing. Although implementation problems were identified early, the response time of the implementing agencies often took longer than optimum. As noted earlier, the delays in resolving the cost overruns and claims arising from two contracts created uncertainty which hindered the proceeds of the credit from being fully utilized on schedule. Quality advice was given to the implementing agencies. The experience led to further training, major institutional reforms and a new institutional set-up which resulted in the establishment of a nucleus of the future Road Agency and spin-off the Ministry towards a regulatory and policy making institution. 7.3 Overall Bank performance: Overall assessment of the IDA's performance was satisfactory. Given the institutional weakness of the implementing agencies at the start of the project, significant progress in institutional arrangement and capacity building has been achieved which would enhance the absorptive capacity of the country in the sector in future projects. Borrower 7.4 Preparation: The preparation of this project had a long gestation period extending from 1985 to 1994. This was a time when govemment was experiencing a low revenue relative to its GDP. The project remained under review until the Government, through public expenditure reform, allocated adequate counterpart funds to infrastructure as a priority sector. The long gestation period, supported with a PPF, allowed the borrower to articulate its Uganda Transport Sector Policy which served as a basis for this project. The additional studies undertaken (See section 3.1) also contributed to the quality of the project at entry. 7.5 Government implementation performance: Government implementation performance was overall satisfactory. In response to its resource constraints, the Govemment has been creative in bringing the donor community into financing the - 14 - project. In particular, its adoption of TSIREP provided a transparent framework for resource allocation for the Transport Sector which formed the basis of consultation with its development partners. 7.6 ImplementinggAgency: The institutional capacity constraints, particularly in procurement administration, planning and project supervision, remained a major source of frustration to the implementing agencies. Initially, the performance of the implementing agencies was weak. However, some leaming had taken place and significant improvement is now being observed with the establishment of RAFU, and increased capacity in the Districts. 7.7 Overall Borrowerperformance: Overall, the performance of the Borrower is satisfactory. At the start of preparation the project faced weak institutional and macroeconomic conditions and had initial problems in implementation. The Borrower and its implementing agencies have created potentially better institutional arrangements which should improve significantly the country's absorptive capacity in the sector. 8. Lessons Learned The implementation experience of TRP has several valuable lessons essential for continuing development and increasing the absorptive capacity of the transport sector in Uganda. Commercialization of Procurement Planning and Processing. The implementation experience of this multi-disciplinary and complex project highlighted major weaknesses of the implementing agencies in contract management, contract administration, and especially in procurement planning and processing. To ameliorate the impact of delays in procurement TRP resorted to experimentation of the commercialization of procurement. The experience of TRP shows that outsourcing design and supervision to a unit staffed by professionals or consultants, and centralizing the planning and financing, can ensure project readiness for implementation, and reduce the time lag between project design and implementation. Also, the approach enhanced cost-effectiveness, which has potentially tremendous budgetary and sustainability implications. Local Construction Industry. A key achievement of TRP is the provision of incentives to the local contracting industry. In particular, the improved flow of contracts and more timely payments and guidance have created market conditions where some of the local contractors were able to progress from class C to class A contractors. Under the own-lease agreement, labor-based contractors were trained and provided contracts which would eventually help them to own their construction equipment. A number of constraints remain, however, that need to be addressed if the local contracting industry is to be sustainable. These include: (i) incompatibility of fixed rate contracts in a fluctuating macroeconomic environment; (ii) review of requirements of bidding e.g. bank guarantee which are not favorable to small firms which need to build their capacity; (iii) long time lag between tendering and awarding of contract which may require changes in the nature of maintenance works, for example, from spot improvement to surface dressing; and (iv) eliminating the risks due to uncertainty of payments for works performed. Long-term Development Partnership. Long-term partnership of the donor community with the Govemment is critical to the sustainable development of the transport sector in Uganda. GOU's decision and donors' support to design a monitoring and operational management tool recognizes the need for a long-term partnership. In this regard, the TSIREP along with the 10-year RSDP would serve as a fundamental framework in promoting cheaper, more efficient and reliable transportation service and in enhancing transparent discussion on resource allocation in the transport sector. The MOFPED has established a commendable monitoring tool by consolidating the transport investment and recurrent expenditure under various programs. On the other hand, while the GOU has been steadfast in meeting most of its commitment for funding road maintenance, the donor community did not consistently - 15- demonstrate the same commitment. (see Table 2, Section 4.2). Institutional Reforms. The implementation experience of TRP has highlighted the need and urgency of institutional reforms if investments in the road sector are to provide the expected impact. Such institutional reforms would have several key elements. At a national level, the focus would be on long term planning policy and sector strategy with long-medium rolling Roads Sector Development Plan supported by all participating donors. Such a plan would be similar to the ten year Road Sector Development Plan. At ministerial level, MOWHC would be decentralized and would focus on policy and regulatory activities. Implementation strategy would be based on separation of planning and financing and priortization activities from actual implementation. The planning, financing and prioritization would be based on the TSIREP. Implementation, including design, supervision and procurement would be outsourced on Federation Intemationale des Ingenieurs-Conseils (FIDIC) contract conditions basis. The consolidation of the institutional reforms would be a major task of follow-on projects, if the absorptive capacity of the transport sector is to be significantly improved. 9. Partner Comments (a) Borrower/implementing agencyv: The borrower's contribution recognizes the institutional weakness that the project faced at the start of the project and the progress made in the course of implementation of the project. It assessed that the project has achieved most of its physical, developmental and capacity building objectives. It rated its own performance and that of IDA as satisfactory and drew valuable lessons. The full text of the borrower contribution as submitted is attached as Annex 8 of this ICR. (b) Cofinanciers: NDF has expressed satisfaction with what has been accomplished under the Feeder Roads Program and would continue to finance the program to help the feeder road local contractors own their equipment under lease-own arrangements. NDF reports being particulariy pleased with the progress achieved under the project, given the initial constraints. The NDF is committed to working with the GOU, IDA and the donor community to promote the labor based methods approach and the further development of private sector capacity. The Fund also indicated a high level of satisfaction with the overall co-financing relationship with IDA under the Project, which has strengthened the partnership between the institutions within Uganda's road sector. (c) Other partners (NGOs/private sector): The local contractors have expressed their appreciation for the contribution made by the project in terms of work flow to the local contracting industry and the significant improvement made in processing payments for work completed. 10. Additional Information N/A - 16 - Annex 1. Key Performance Indicators/Log Frame Matrix Outcome / Imeact Indicators: ~~~-..-.- P . . . --1::: ' ::: .... ' ::::. .........'' '"i Aid : . ..... ........... Provide basic road Infrastructure to the Sustainability based on balanced program Resources are being allocated on the basis economy, and ensure that the road between: main roads, feeder roads and ral of Transport Sector Inrestment and infrastnrcture are well maintained and infrastructure; strengthening, improvement Recurrent Expenditure Program (TSIREP) effectively managed on a sustainable level and upgrading; manual maintenance; and The-year Road Devebpment Program. capacity building. Transport cost reduction by 30% on some of redueon In transport ost: inrase In traffic the rehebfiteted roads and 20% ftrfle growth; reduction in travel time; reduction in growth and reduction in trave time by 30%; perishable products; taxi fares stabilized at Ush. 1,000 after road irnprovement in accessibility to priority areas improvement. Increase in the uisposable - education and medical facuities, other income observed based on 1994 baseline service facilities; and, study and 1997 monitoring data, ADB, DANIDA and DflD sponsored projects Increase in use of labor based methods. also using labor based methods in over 33 districts. Improvement in MOWHC's capability for Improvement in planning and programminqg 22 Districts en,gineers and headquarters road maintenance planning and operations of road maintenance operations. technical staff trained in contract management; maintenance management system developed and is now operational; effective prioitization of maintenance planning supervision, and monitoring now possible. Promote the private contracting industry Develop the local constructon industry. 48 local contractors trained; and 20 contractors were fairy equipped. Reorient URCs management towards Enhance on commercial basis financial Increase volume of freight and passenger commercial operation and promotion of its autonomy. traffic; URC now operating without subsidies financial autonomy from government. The SAR predate the log frame The outconne table shown above was retrofitted later. Output Indicators: ~~~~~~~~~~. . ... ... ... . ...... .......... .. ..... . . 4rdlatlMtk- Proeced.. IatP Main Roads: Routine manual and mechanized 1746 km of roads to receive routine manual 1746 km of road maintained through maintenance of main roads and routne mechanized maintenance. contractng. Periodic maintenance of main roads Periodic maintenance of 720 km of main 170 km regravelled and 66 km of road roads; revised to 27.9 km. resealed. Strengthening & improvement of Kamvala- Strengthening and resealing of 32.5 km; 27.6 km of the road strengthened and Entebbe Road revised to 27.9 km. widened. Upgrading, regarding/rehabilitation of gravel Upgrading of 66.5 km of Mbarara-lbanda 66.5 km upgraded from gravel bitumen roads road. standards; Upgrading of 30.9 km of Gayaza- Dropped due to cost over-run; Bugema-Zirobwe; Rehabilitatin of Vil-Maria Road (40 km); Dropped due to cost over-run; and Rehabilitation of Zirobwe Wobwe road (25 Dropped due to cost over-nun. km) -1 7 - Feeder Roads Rehabilitation of feeder roads Rehabiiitation of 360 km of roads; 170 km 514 km of roads rehabilitated; spot improvement and 150 km; Creation of employment; and, approximately 734,400 worker-days of employment a'eated; and, Prepare bidding documents and contacts 54 contracts awarded based on the World awarded. Bank document for small works. Maintenance feeder road Guidelines for the preparation of Maintenance plan with resource estimates maintenance; preparation of maintenance for the year 2000-2003 prepared; plans with resource estimates; Decrease in works, using force account; Force account restricted towards grading;approximately 973,400 worker-days km and % of network covered during the employed and UShs. 1.5 billion paid as period of implementation wages; 1,014 km were maintained in all the five districts. Institutional strengthening of Districts of MOWHC: Institutional Strengthening of MOWHC Provision of TA in road Maintenance, 288 person-month of specialist service: One Planning Organization and Operations Road Maintenance management Engineer, one Road Maintenance Planing Engineer, One contract management adviser and one training specialist utilized. Training of Ministry's technical staff Workshop in contract management for all districts and engineers and headquarters staff; Seminar in intemational construction for 12 engineers; seminar for 1 principal engineer at international road federation; works procurement course for one engineer in Washington; and transport infrastnucture conference in Hong Kong. Improvement in canrying out contract Procurement of supervision vehiles. 10 vehicles and 30 motor cycles procured for supervision. supervisory use. Equipping of the Kyambong public works Procurement of training equipment and An assortment of training equipment and training. visual aids. visual aids procured for the center. Railways Increased customer satisfaction on UCR Improve the wagon tracking system. A computerized wagon tracking system Improvement of marine service Procurement of marine spares. Marines spares for engine over-haul of the three wagon fenies were procured Revitalize marine transport under the Increase the corporations capacity to handle An ol spill containment facility was procured railways component goods. and stored at Port Bell. Training of marine staff Improved efficiency management and cost 12 marine officers trained and the OSCAR effectiveness of the train loads. (Operational Simplified Costing Systems for African Railways) updated. End of project Reconstructed performance indicators - 18 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) ..... .. . .. .... .. .A. ,, ,,, ,, , ,.I... . ...... ..,.. I. Main Roads* 61.20 61.87 110 II. Rural Feeder Roads 13.20 13.77 104 Uganda Railway Corporation 2.60 2.17 83 Transport Planning 0.80 0.64 80 Project Preparation Funds 1.50 1.50 100 Total Baseline Cost 79.30 79.95 Physical Contingencies 7.80 0.00 Price Contingencies 12.00 0.00 Total Project Costs 99.10 79.95 Front-end fee Total Financing Required 99.10 79.95 Estimates based on disbursement data up to June 27, 2001, and are not final. The main road and feeder road components actual amount include expenses made for institutional strengthening activities. Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) : p itu. C'te ry l r e t; M et~...... ....... ....... ... . ... ... .. .. . - :. , . .. , : : . - -. : ......... ..... - -;,, ...... - --- . - - - .. ,~~~~~~~~~~~~~~~. . ... . ...... ... .. . 1. Works 53.70 21.60 2.50 0.00 77.80 __________________ (45.50) (13.60) (1.00) (0.00) (60.10) . ~ ~ ~ ~ ~ . .. .. .....:: : 2. Goods 3.20 0.00 1.40 0.00 4.60 (3.20) (0.00) (1.40) (0.00) (4.60) 3. Services 0.00 0.00 0.50 0.00 0.50 Incremental costs; repairs (0.00) (0.00) (0.20) (0.00) (0.20) 4. Miscellaneous 0.00 0.00 2.60 0.00 2.60 construction Supervision (0.00) (0.00) (2.50) (0.00) (2.50) 5. Miscellaneous 0.00 0.00 5.50 4.90 10.40 Institutional Strengthening (0.00) (0.00) (5.10) (0.00) (5.10) 6. Miscellaneous 0.00 0.00 2.70 0.00 2.70 Transport (0.00) (0.00) (2.30) (0.00) (2.30) Planning/Studies Total 56.90 21.60 15.20 4.90 98.60 (48.70) (13.60) (12.50) (0.00) (74.80) The appraisal project costs by procurement arrangement did not reflect the total project cost. It was slightly lower. - 19 - Project Costs by Procurement Arrangements (ActuallLatest Estimate) (US$ million equivalent) ., e ,* y , , , ,., ,. . . ........ , .............. . 1. Woriks 48.16 21.99 1.80 0.00 71.95 (40.29) (18.19) (0.90) (0.00) (59.38) 2. Goods 0.00 0.00 0.78 0.00 0.78 (0.00) (0.00) (0.78) (0.00) (0.78) 3. Services 0.00 0.00 0.00 0.00 0.00 Incremental costs; repairs (0.00) (0.00) (0.00) (0.00) (0.00) 4. Miscellaneous 0.00 0.00 1.51 0.00 1.51 construction Supervision (0.00) (0.00) (1.43) (0.00) (1.43) 5. Miscellaneous 0.00 0.00 0.00 5.02 5.02 Institutional Strengthening (0.00) (0.00) (0.00) (4.19) (4.19) 6. Miscellaneous 0.00 0.00 0.64 0.00 0.64 Transport (0.00) (0.00) (0.64) (0.00) (0.64) Planning/Studies=. |Total | 48.16 21.99 4.73 5.02 79.90 (029) (18.19) (3.75) (4.19) (66.42) ".Figures in parenthesis are the amounts to be financed by tile IDA Credit. All costs include contingencies. v Tncludes civil works anld goods to be procured through national shopping, consulting services, services of contracted staff of the project mnanagement office, training, technical assistance services, and incremnental operating costs related to (i) mnanaging the project, and (ii) re-lending project funds to local government units. Project Financing by Component (in US$ million equivalent) .Cbi-iiponezfl Apiasa Estit -ug--P g w a-e- AE--qgEallL-EateitEutm.r - --- - ..0-.,,,,.,,.,-,,,,,.,,.,,,,.,i,,,,,...,,,.,.,,,,.,.,,,..,,,,,-,,,,.,.-,,.,---0 -0.~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~......... . .. ......oP an ~ w. Cn. Bal~ w CF MAIN ROADS 45.66 13.58 0.00 42.07 15.70 0.00 92.1 115.6 0.0 Routine Maintenance 0.68 0.73 0.00 1.49 2.33 0.00 219.1 319.2 0.0 Periodic Maintenance 7.78 6.04 0.00 3.90 6.46 0.00 50.1 107.0 0.0 Netwvork Improvement 29.91 1.58 0.00 30.25 1.59 0.00 101.1 100.6 0.0 Institutional Strengthcn. 2.75 0.13 0.00 2.75 0.13 - ~0.00 100.0 100.0 0.0 FEEDER ROADS 8.79 4.39 4.89 7.30 1.50 4.50 83.0 34.2 92.0 Strengthen MOLG/ED 0.45 0.15 0.00 0.45 0.05 0.00 100.0 33.3 0.0 Rehabilitation 4.66 2.53 0.00 6.54 0.29 0.50 140.3 11.5 0.0 Maintenance 0.69 0.82 0.00 0.51 1.13 0.00 73.9 137.8 0.0 Training & TA 2.99 0.89 4.89 0.00 0.00 4.50 0.0 0.0 92.0 RAIllWAYS 2.45 0.13 0.00 2.17 0.00 0.00 88.6 0.0 0.0 TRLANSPORT PLAuN. 0.72 0.08 0.00 0.64 0.00 0.00 88.9 0.0 0.0 TOTAWL 57.62 18.18 4.86 52.17 17.18 5.00 90.5 94.5 102.9 - 20 - Annex 3. Economic Costs and Benefits Preface 1. The post-construction economic evaluation of the civil works components, in principle, covers the following: (a) Road maintenance; (b) Feeder road rehabilitation; and (c) Main roads: (i) Strengthening and improvement of the Kampala-Entebbe Road (27 km); and, (ii) Upgrading of Mbarar-lbanda Road (65.5 km); Summary of Results. 2. Road Maintenance. Experience has proven that the benefits from road maintenance in general to be very high relative than the discount rate of 12%. On this ground, the SAR has also not found it worth while to prove that economic viability by re-estimated. The ICR has followed this approach. 3. Feeder Roads. The feeder road rehabilitation program was prioritized on the basis of socioeconomic criteria. A base line survey done before and after construction of feeder roads showed an increase in disposable income of 20% due to farm gate price increases, indicating positive economic benefit. 4. Main Roads. The post construction Economic Rates of Return and Net Present Value is estimated for (a) Kampala-Entebbe and (b) Mbarara-lbanda Roads. Result of Post Construction EIRR & NPV Estimates for Kampala-Entebbe Road and Mbarara-lBanda Roads. The Net Present Value (NPV) of both Kampala-Entebbe Road and Mbarara-lbanda Road are positive. Their respective EIRRs are also above the 12% discount rate. Given that their actual construction costs has increased over the tender amounts by 39.5% and 55.8 % respectively, the EIRRs are assessed as robust. Summary of Economic Indicators (US$'000) Kampala-Entebbe Road Mbarara-Ibanda Road Increase in agency costs 5,440 10,850 Maintenance cost savings 20 -320 MT VOC Savings 5,710 13,380 Savings in MT travel time costs 210 Saving in NMT travel & operating 2,130 costs NPV 290 4,550 IRR 12.7 17.4 Part I: Economic Evaluation of (a) Kampala-Entebbe Road and (b) Mbarara-lBanda Road - 21 - A. Common Assumptions 5. The following are common assumptions used in the Project. * Traffic - base year data and new traffic counts for 2000; Costs - The actual construction cost and actual and planned maintenance costs derived from 'Road Network Management and Policy Study' of 1999. Road Roughness measure- Base year condition and new roughness measures for 2000. Vehicle Operating Cost (VOC)- based on Road Network Management and Policy Study' of 1999. Capital investment and maintenance costs were revised to reflect 2000 prices and are included in the cost stream; Benefits stream consists of savings in vehicle operating costs was also updated to reflect 2000 prices; Project life of 10 years has been assumed. - 22 - POST CONSTRUCTION ECONOMIC INTERNAL RATE OF RETURN ESTIMATES FOR M BARARA-IBANADA AND KAMPALA-ENTEBBE ROADS. PARAMETERS FOR ECONOMIC ANALYSIS KAMPALA - ENTEBBE ROAD Commencement 1996 ......I............................................................. .......... .......... ............................................................................................................................................ E Completion 1997 o , _ , ............... -----------------------,, ----, , , , , , , ,-, ,,, ,,-,-,,,-,,. ,,,,.,, _ ,, I Completion Cost US$8.43 million Bae 1'''' ''''''' '''' '''''''''' -- -993- - Analysis Period 15 yrs. (short analysis period chosen because the life of project is expected to be limited to a few years after opening i.e. approximately 10 years) Discount Rate 12% .............................. ............................................................................................................................. ........................................ .......................... Salvage value I 10% Base Option: Do Minimum Base Option Maintenance Policies (1993 - 2008) > Pothole patching & Crack sealing , AlternativeOption . Altemative Option MintenanceRehabilitation Policies > Maintain rad before improvement (1993 - 1996) Pothole patching & Crack sealing > Strengthening & Improvement (1996-1997) Base repair Edge repairs Pothole patching Crack sealing SBST DBST > Maintain road after improwement (1998 - 2008) Pothole patching & Crack sealing ILast rehabilitation 1989 .......... .................................................................. ....................... ................................................................................................................................ Traffic growth until 1996 5.5% (as estimated by appraisal Consultant) ------ ... --- ------ --------- ----- ,...,,, .......... -,1 - ,, , ...................... .--..-..-.-----. .... . I Traffic growth after 1996 3.5% (as forecast by appraisal Consultant) ...................................................................................... ............................................................................................................................................ Initial traffic in 1993 4450 Vpd .................... ......................................... ......... ....... ...............,........ ..., ....,, ...,.............................................................. Traffc in 2000 Zana.- KaUansi, 55 Km Kaj,ans be.2. Km -23 - Traffic Composition Vehicle Traffic Composition in Actual AADT for 2000 Actual MDT for 2000 1993 (Zana-Kaijansi) (Kajansi-Entebbe) Cars 34.3 2894 2340 Pickups 20 983 586 4WD 8 1456 1181 Mini-buses 24.1 2508 1890 Buses 0.3 24 25 Medium Trucks 10.1 1276 855 Heavy Trucks 0.7 26 5 Motor-cycles 2.5 449 324 Motor-cycles .. .. .. .... . . .~~~~~~--------- -------- - - - ----- -- ------ ........................................................ ...................................................... ................................................................................. .......................................................... MBARARA - IBANDA ROAD ........ ..... ............................................................. ...................................................................... ............................................................................ Commencement 1997 Completion 1999 Completion Cost $ 24.87 million IBase 1992 .......................................... ...........-..... ................................... ............. .................................:.............. ....................................................... ... Analysis Penod 22 yrs (because economic pavement life is approximately 15 yrs afer opening) Di ount Rate 1-- -----X2%/0- --- -------- - ------- Salvage value 10% ................I......-.......... .... ............ ... .... ........... ..................................... .................. .................. ............................. ......................-......... ............... Base Opton Base option Gravel Road Maintenance Policies (1992 - 2014) > Heavy grading (once every 2 years), > Medium grading (2 times a year) - Light grading (4 times a year) > Spot re-gravelling (once a year) > erveig(eey5years). Alternative Opton Alternative option policies - Maintenance of gravel road before upgrading (1992 - 1996) * Medium grading > Upgrading of gravel road to bitumen standard (1997 - 1999) - Maintenance of paved road (2000 - 2014) * Pothole patching and crack sealing * Reseal when damaged area > 20% * Overlay ............... . ........ .......................................................................... . ........... ..................24...... - 24 - MAINTENANCE COSTS ~~~~~~~~~~~. ...... ........ ................... ................. ........................ ...................... ..... ... ......................................... ......................... Acivity Economic Cost (US$) Grading 1650/Km Spot re-gravelling Re-gravelling .13:5/m3 ..... .... ........... . ..... ... ..... .. .... .. ...... ... .. .. Patching 4.415/rn2 Crack sealing . .5.796/n2 .....................:......................... ................................................................................................................ Edge repair 3.2/M2 Reseai 3.973/M2 .... . Overlay (AC) 33.1/m2 2 VOC INPUT COSTS (Economic costs in US $) IVehicle type New Vehicle Replacement tyre Maintenance labour Cars 4000 75 3 Pickups 12000 75 3 (Crew wages of US$ 2) 4WD i 25000 100 3 Minibuses 15000 100 3 (Crew wages of US$ 4) Buses 65000 325 . 3 (Crew wagesofUS$ 6) ~~~~~~~~~~~~~~~~~~. ... .. .. ...... .............. ........... .................. .. ............................................. E Medium Trucks 35000 325 3 (Crew wages of US$ 4) Heavy Trucks 75000 325 3(Crewwagesof U$6) Motor-cycles 2000 50 1.5 I Bicycles (NMT) . 1001 -25 - 3. VOC INPUT COSTS(Economiccostsin US$) Vehicle type INew Vehiicle IReplacement tyre Maintenance tabour , Cars 4000 75 3 Pickups 12000 75 3 (Crew wages of USS 2) , 4WD I 25000 100 ..3 Mini-buses I 15000 100 3 (Crew wages of US$4) Buses.65000 325 . .............. . ; 3 (Crewwages of US$ 6) Medium Trucks I 35000 325 3 (Crew wages of US$ 4) Heavy Trucks 75000 325 3 (Crew wages of US$ 6) Motor-cycles 2000 50 1.5 ... .. ... . .. .. .. ... .. . .. . ...................................................... .. .. .. .. . ..... .. . . . .. . ... .. ... . .. .. .. .. .. . .. .. . . Bicycles (NMT) 100 -26 - 1. Benefit Cost Ratios Mbarara-lbanda Road and Kampala - Entebbe Road .H D M . 4: .Benefit Cost Ratdos ........................ ......................................................................... ....................... ...... ................ ...................... ...................... ......................... ........................ ........................................................................ ....................... ....................... .............................................. ....................... .......................... ......................................................................... ....................... ...................... ............................................... .................. .......................I .......................... .............................................. ....................... ....................... ......................I....................... ....................... * t 9 ag d ea - te ",, ,.n, ,,,,, ,,e ,~........................................................................ ....................... ................... .........I... *HIGHWAY DEVELOPMENT & MANAGEMENT: BENEFIT COST RATIO ANALYSIS ,DotRS t,.... ..... .... ................. .. ... ... . .... .... . ......... ..... . . ........... ................. Run DO: 0SW-122 .. ... ..... . ..... . . .. . . ... ,..... ..'.'.,.,., - . CurrencyH Dolla.PWrq.Uo 'ta,,,,,,,,,,,,,,,........ ... . ... ... .... .. ,,,,,.sh ee ,, ...... ..... . ............t heC .,1 e. ........... .......... ,.,,, ' w tt,,C,,X,,, ,.U ............ C t! , B 8 Z "? . ,,,,,, ... - ,,,,,,,, ... , .. , ,, ,,,d,,,,,M......,.......... :Memadve hicmsasein Dereaose hini E-ieo NtPuei1NPIi]htmlRt Agec CateU.rCo . Benefts VaWe Ribo of Rita. (C) (B) (E) NPV=I+E-C] (NPWC) (IRR) Bm opon: Cirwl Road Mtce 0000 0000 0w000 0.000 0.000 OJ.OQ Pbrinvs: temsl Rd1o Bluion itd 10.97 1934 0.00 8.37 J .76 2J O ...................... ...................................................... ........... ............. ................ .. ...... ............. ....................... ............................................... ............. .... ..... ..... .. .... .I..... .... .. :..................... ............ .. .... ...... .... ............. ......................... . ..... . ......... ..... . ..................... 114en1''''' ,.1i .................... ;-u H D 14 - 4: -Benefit Cost Ratios ...... .................. ... ..... .. .. ... ...... ..... ... ... ... . ... .... . ...... ... ................ ............... ... ......... ... ........... ............... migUit ngr ow 1irosee at -zele(et1 HIGW,AY DEVELOPMENT & MANAGEMENT BENEFIT COST RATIO,, ..AL.S . . . . . . . . . . . . . . . . . . . . . . . . . . ................................p....................... .. . . .... I . .....,,Cd,UsrecBb................................. .. .. .. .. .. . .,, ...............,Pib, ,,,,d : k R i I M A w8 ... .Wo E C ...... ...f .Mernade asame In Dcease Oi PM" E.OOO Net 0e80 I i 0.rr0 Ro .Abrr*e: Slth b l nueDDWat 5t43 6.71 .00 029 0.063 127 1) Fltie in bradw~ is rsater i [RR nAois in rawg -so to-s .................... .................I.......................... ................ ...... ...... ... ,,. , , ,,Eerb,,,,,dIR ....................... ........ ................. ............ . ........................ .. , HD-4WKlmn 1.1 Pap - o I -27 - 2. Economic Analysis Summaries Kampala - Entebbe Road H D M - 4 Economic Analysis Summary Study Name: Upgrading of Mbarara - ibanda to Bitumen Standard HJHAYC£EwEN i MAlAEMVr...................................... .... ...... .......... . . ..... ........... ........................ . ............... . ........... ............... 144WAY DEVE1~.1MENT &MANAGEMEN.T a E Run Date: 115-0220111 JTis. report "qos.~q ecqpqri~c benefts usn t.IlMg T i reorshrIr l,ecer mc eneitsus9. he r !owa:.................... .. ...... ...... .......... , ......... .. ,......... ......... ................. ............ ........ ............. -...................... ........-- a~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Currenry: US Dollar (millions@.. ~~~~~~~~~~~~~~~~............ ............. ................................... .................................................................. ... ............................................ Discount rate: 12DD. . . Analysis Mode: AnaMlysisby-ProJect ''''' ''' ''' L ........... , . E .....................................................~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~............. 'Altemative: With Project Upgrade Grawel Rdto Btumen Std VS Aternative: Without Project Gravel Road lAtce E . ~~~~~~~~~~~~~~~Rontd Usera Benefits Increase In Road Agency CostsIRodUeBeeis _________ Ne ________ . . MTcle#e in Road Agency CostsSa vin gs In T Savings In NUT Reduction Net Economic ........................ p R S al Travel Time TraVel A Operating In Accident Exogenous Benefits 0 Ca~~~~~~~~~~pit Re curre nt Sp ecia I o VOCCosts CosIs Cost HenefUst (HP\I) Undiscounted 1674 -0.14 D.OD 34.80 0.00 71.97 0.00 0.00 19.1B b Discounted 1066 0.31 0.00 6.85 0.00 12.49 0.O0 0.00 .37 Economic Internal Rate of Return (EIRl} - 20.% (Heo. of solutions -2) HDM-4 Version 1.1 . Page liof .................................. ........................................................ .............. ............. ................... ................................................ -H D M - 4 : Economic Analysis Summary Study Namne: Strengthening & Imprverment of Kampala-Entebbe (Sect ) ..... ... .... ... .. :. ... .. .I........................ ... ... ....... ...... ..... .... ..... . ... . ...... ....... ......... ......... . .......... ........... . . ......... .. ......... .. ... ......... . . . . . . . . . . . . . . . . :HS-rwAY DEv9~?EPlOF a MiANAENENT Run Date: 05,-2,(01 :This report shows total economic benefits using the following: i ., . ....... .. : . . . ........ ... .. .. . . . . ... .. . . . .. .. . ' .. ... ... . . ... .. .... - .. ... .. ... ... ..... .. ... ... .. ... .. ... ... .. ... .. Currency: US Dollar (mill.on . . - .. . . . . ...... Discount rat'e: 1'2 - .. Analysis Mode: Analysis-by-Project ............. ............. .... .. .. . i. .. . . .. . . ......... ......... .. ~~~~~~~ .. ......................................... Alternative: Alternative: Strengthening & Improvement VS Alternative: Base Option: Do Minimum mtce : Road User Benefits Increase in Road Agency Costs ._ . IncreaseinReadAgencyCosts Savins in IFT Savings in NT Savings in NMT Reduction Net Economic ......................... ....... gs Travel Time Travel & Operatng In Accident Exogenous Benefits ......... ...... . ....... . ...... CapitRer r et. .S.ea O Costs Costs C osX8neflts. (NPV Undiscounted 7.69 -0.06 0.00 21.73 0.00 Q.a 0.00 0 0 0 14.20 Discounted 5.44 -002 000 5.71 0.00 0.00 0.00 a.00 0.29 . Economic Internal Rate of Retum 5EIRR)- 12 7% (No. of solutions - HDM4 Version 1.1 .Pae-1 oft -28 - Annex 4. Bank Inputs a) Missions: Stage of Project Cycle. NG. of Persons and Specialty. Performiiance Raig Month/Year . ...._.-..(e.g. 2 Economists,- 1 FMS, etc.) Implementation .Development- -_ .- _Month/Year :Count -Specialty Progress Objective Identification/Preparation 04/26/91 7 Economist, Highway engineer Identification (3), Railway Engineer, Financial Analyst, Transport Econornist 10/31/91 5 Operation officer, Highway Preparation Engineer(3), Railway Engineer, Transport Economist, Financial Analyst 07/18/93 1 Operation Officer Preparation 09/11/92 2 Highway Engineer, Transport Preparation Economist 12/24/92 1 Highway Engineer Appraisal/Negotiation 03/18/93 Pre- 6 Operation Officer, lighway appraisal Engineer, Financial Analyst, Transport Economist, Division Chief 10/02/93 1 H-ighway Engineer Pre-appraisal Supervision 07/21/94 4 Highway Engineer, Railway Pre-luanch Engineer, Program Officer, mission and Chief of Division 02/01/95 5 Highway Engineer (3), Transport S HS Supervision Economist, Railway Engineer 04/10/95 3 Highway Engineer (2) Railway S HS Supervision Engineer 07/22/95 1 Highway Engineer S HS Supervision 11/12/95 3 Highway Engineer (2), Railway S HS Supervision Engineer 02/19/96 3 Highway Engineer (2), Railway S S Supervision Engineer 10/21/96 4 Highway Engineer (3), Railway S S Supervision Engineer U S 12/22/98 3 Highway Engineer (2), Operation S S Supervision Analyst 03/12/99 4 Highway Engineers (2), Rural S S Road Engineers (2) -29 - ICR 10/16/00 2 Transport Economist, S S lHighway Engineer (b) Staff: [i-i9 kStage of EProject Cycle -:i E lii : i; S-0 if P Actual/Latest Estimate il-70i-i :0}i:i0 0 04-00 0 j;0; 4 t ; 0- 0i 00 -; : :;:: No. Staff weeks 0 : ;;A US$SCOO) A ; : Identification/Preparation 190.9 504.2 Appraisal/Negotiation 66.9 195.1 Supervision 191.9 657.4 ICR 10.0 20.0 Total 459.7 1376.7 Data 1999 included. -30 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies O H O SU * M O N O NA ZSector Policies O H *SUOM O N O NA M Physical O H OSUOM O N O NA Z Financial O H OSUOM O N O NA Institutional Development 0 H O SU O M 0 N 0 NA [3 Environmental O H OSUOM O N O NA Social M PovertyReduction O H * SU O M ON O NA 3 Gender O H * SU O M O N O NA M Other (Please specfy) O H O SU O M ON * NA AIDS F Private sector development 0 H 0 SU O M 0 N 0 NA F Public sector management 0 H O SU O M 0 N 0 NA El Other (Please specify) O H O SU O M O N O NA - 31- Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Safisfactory, U=Unsatisfactory, HU=Iiighly Unsatisfactoy) 6.1 Bank performance Rating El Lending OHS * s O u OHU El Supervision OHS eS OLU OBHU O Overall 0 HS OS OU 0 U 6.2 Borrowerperformance Rating O Preparation OHS s O U O HU OL Government implementation performance OHS OS 0 U 0 HU O Implementation agency performance OHS * S 0 U 0 HU Ol Overall OHS es Ou 0 Hu -32 - Annex 7. List of Supporting Documents IDA, Staff Appraisal Report, Transport Rehabilitation Project (No. 12579-UG), March 8, 1994. Ministry of Works, Housing and Communications, Transport Rehabilitation Project, Progress Report 24, September 2000. Road Agency Formation Unit, Guide to Planning Budgeting & Monitoring of Projects & Studies, Number 5, October, 2000. Ministry of Works, Housing and Communications, Road Management and Financing Study, Executive Summary, Volume 1, August 2000. Louis Berger International, Inc. Ten Year Road Sector Development program 1996/97-20005/06 Update, Technical Assistance to the Ministry of Works, Housing, Housing and Communications, 1999. IDA, Uganda Ex-post Procurement Audit, July 5, 2000. Ministry of Works, Housing & Communications & DANIDA, Baseline Survey on Use of Labour-based Methods in District Road Works (draft), May 2000. Uganda Railways Corporation, Annual Business Reportfor 1999 (draft), not dated. Ministry of Works, Housing and Communications, Road Sector Programme Support: Financial and Engineering Audit of Main Road Maintenance, Preliminary Findings, August 2000. Louis Berger International, Inc. Ministry of Works, Housing & Communications Road Agency Unit, Procedural Guide to the Economic Aspects of conducting Roadfeasibility Studies in Uganda, October 1999. WARDROP Engineering Inc. In Associations with Mutenga Batumbya Consulting Engineers Ltd., November 1998. Gary Taylor & Moses Bekabye, An Opportunity for Employment Creation, Labour-based technology in Road Works: The macro-economic Dimension, Support to the labour Based Policy Promotion Initiative, June 2000. - 33 - Additional Annex 8. Full text of the Borrower's Contribution THE REPUBLIC OF UGANDA MINISTRY OF WORKS, HOUSING AND COMMUNICATIONS TRANSPORT REHABILITATION PROJECT (CREDIT NO. 2587 - UG) IMPLEMENTATION COMPLETION REPORT PERMANENT SECRETARY MINISTRY OF WORKS, HOUSING & COMMUNICATIONS P.O. BOX 10 ENTEBBE E-mail: twins@infocom.co.ug DECEMBER, 2000 - 34 - TABLE OF CONTENTS PREFACE A. STATEMENT OF OBJECTIVES B. ACHIEVEMENT OF OBJECTIVES B.1 Main Roads B.2 Feeder and rural roads B.3 Transport Planning B.4 Railways C. MAJOR FACTORS AFFECTING THE PROJECT D. PROJECT SUSTAINABILITY E. BANK PERFORMANCE E.1 Project Identification E.2 Project Preparation E.3 Project Appraisal E.4 Project Monitoring/Supervision G. PERFORMANCE OF CO-FINANCIERS H. FUTURE OPERATIONS I. KEY LESSONS LEARNT ANNEXES - 35- IMPLEMENTATION COMPLETION REPORT UGANDA - TRANSPORT REHABILITATION PROJECT PREFACE This is the Implementation Completion Report (ICR) for the Transport Rehabilitation Project for which an IDA Credit in the amount of SDR 54.5 million (US$ 75 million equivalent) was signed on May 03, 1994 and became effective on November 29, 1994. The credit closes on December 31, 2000. This project was the first of its kind where its full implementation and management was done by the Ministry's in-house staff. Due to the nature of the project complexity to the implementing agencies at that time, a number of mistakes were made and out of these mistakes, lesson were leamt and now the ministry has built up satisfactory capacity to effectively and efficiently manage the country's transport infrastructure. This report is the borrowers contribution to the Implementation Completion Report (ICR) for the Transport Rehabilitation Project. The report gives an overall view of the project achievements and failures and details are given shown under the appendices.. A. STATEMENT OF OBJECTIVES The Project Objectives were to assist the Government in providing basic road and rail infrastructure to the economy, and ensuring that the infrastructure would be well maintained and effectively managed on a sustainable level, with private sector involvement wherever practicable. B. ACHIEVEMENT OF OBJECTIVES Despite delayed commencement resulting in loss of time coupled with constraints experienced at implementation, the project achieved most of its physical, development and capacity building objectives. These achievements can be generally summarised below;- B.1 Main Roads The rehabilitation, improvement and maintenance of the road infrastructure has resulted in the reduction of travel times and this has enhanced the growth in economic activities resulting in improved standard of living for the local population. Strengthening and Widening of Kampala-Entebbe road was successfully completed and this intervention has greatly increased the service life of the road. Travel time has been reduced by 30% and the traffic volume has tremendously increased. The Mbrara-lbanda road was upgraded to bitumen standards and this has led to increase in traffic and reduction in travel times. -36- A total of 1,746 Km of the main roads have been receiving adequate mechanised and manual maintenance and 484 Km of feeder roads were rehabilitated. The improved maintenance levels and road conditions has led to improved accessibility to social services, increased traffic volumes, reduced travel times and vehicle operating costs. Unfortunately, the improvement has not led to a corresponding decline in accidents. Through the project, regular annual maintenance programmes were developed and these have since been adopted for entire country road maintenance programmes. In order to improve on planning and monitoring of road maintenance operations, a Road Maintenance Management System was developed. There was a very big time lag between the commencement of the project and the commencement of technical assistance activities. The ministry in this case procured most of the maintenance contracts and got the activities started using in-house capacity. The Twinning arrangement allowed the Ministry staff to carry out most of the activities with the TA playing an advisory role. A total of 48 domestic contractors were supported and developed to undertake road maintenance works and the continued support and growth of this industry will be through the availability of continuous and steady flow of work. This scheme was successful as evidenced by the increased number of construction equipment now available in the country. B.2 Feeder and rural roads On the whole the districts were able to meet their target routine maintenance objectives and succeeded in establishing a reasonable road maintenance organisation. Effective work programmes, budget and tendering systems were put in place. Contract documents for both rehabilitation and routine maintenance works were developed and are now in use. Computer based systems for efficient compiling of bills of quantities for new contracts and also processing of data from the site 'take off" measurements to produce prompt monthly payment certificates were installed in the districts of Tororo, Mbale, Pallisa and Tororo. District Engineers and Supervisors of Works were trained to use the system for contract preparations. The criteria for compiling road inventory and condition data including prioritisation methods developed under the Transport Planners Contract are being applied. Specifically the improvement of the transport infrastructure contributed to increased economic activities and the standard of living of the rural population. Based on the baseline survey conducted in 1994 before and in 1997 during the project implementation, there was a percentage increase in disposable incomes of 20% as a result of increased farm gate prices. A total of 20 contractors were trained to undertake rehabilitation works and another 28 were trained to undertake medium sized maintenance contracts. Sufficient database for feeder roads planning established under the contract of the Transport Planner was transferred to MOWHC following the realignment of Government Ministries in may, 1998. The database is now managed by the local staff. Thirteen manuals were developed under the project and harmonised with those produced under other programmes to assist District Engineers in the planing and implementation of road rehabilitation and maintenance programme using standardised reporting and budgeting formats. - 37 - B.3 Transport Planning Monitoring and evaluation of four trunk road feasibility studies was done using the World Bank's HDM model. With the introduction of the HDM programme, the Ministry is now capable of carrying out economic analysis of different road projects. B.4 Railways The project has greatly contributed to the current status whereby Uganda Railways Corporation has now moved towards a commercially oriented and less dependent on financial subsides from the Govemment. C. MAJOR FACTORS AFFECTING THE PROJECT The delay from the project identification stage (1991) to actual execution of the major project (1995) and the extremely low estimated costs had an adverse effect especially in respect of the main roads contracts. Other set-backs were due to the slow process in procuring road equipment for the feeder roads component. Training of the labour-based contractors could start only after completion of the rehabilitation of the Training Centre. This in itself affected the commencement of civil works in that the contractors had to undergo training before being qualified for participation in the programme. Local Contracting CaDacity At the time of project implementation, there were no competent and reliable Local contractors capable of executing both mechanised and labour based operations. This was generally due to past practices where most maintenance works were undertaken through direct labour. Consequently, the first two years of project implementation was devoted to training. Poor performance by some contractors resulted in some contracts being dropped at the trial stage mainly under the Feeder roads component. Procurement of Contractor's eguiDment: Contractors received road rehabilitation equipment three years into project implementation due to delays in procurement. This affected project implementation in that trial contracts could not be executed. In addition all lease payments by all the contractors were scheduled to end by December 2000, however, current indications are that this will not be possible. Procurement of Civil Works contract Procurement of civil works contracts took longer than planned. The process took an average of 5 months to between invitations to bid and award of contracts. These delays were due to the Bank's requirement for a review of all documents before giving a "No Objection". In addition large scale contracting was generally new to all the maintenance stations and as a result contract supervision was generally poor. Fundina Untimely availability of funds under the Feeder roads component resulted in delays in payments and this resulted in low productivity because contractors could not meet their cashflow requirements. Chanaes in costs. Procurement delays caused changes in scope of works due to the fast deterioration of the roads. To mitigate possible cost overruns due to increased scope of works, a number of roads were dropped. The - 38 - cost of upgrading of Mbarara-lbanda road costs rose from the SAR estimate of US$ 14.01 million to US$ 24.9 million. This was generally due to insufficient design. Costs on Kampala-Entebbe road from the SAR US$ 5.5 million to US$ 8.43 million, and this was due rapid increase in traffic volumes. D. PROJECT SUSTAINABILITY The sustainability of the structures and systems built by the project is likely. The is evidenced by Govemment's commitment to continually increase the road maintenance budget and also to ensure the timely availability of resources for maintenance. Increased private sector participation and the related financial incentives will further enhance the sustainability of the programmes. Further to ensure sustainability, the following have been established:- The Uganda Highways Maintenance Management System and a road data base have been developed and are currently operational at the ministry headquarters. This will ensure effective and timely planning, budgeting and programming. Special Road Maintenance Accounts have been established and are now fully operational. In order to enhance proper budgeting and monitoring, a planning model namely; the Transport Sector Investment and Recurrent Expenditure Programme (TSIREP) has been established and is now fully operational A road maintenance policy strategy is in place. All the road network policies are now managed under one ministry. The training school, Kyambogo is adequately equipped with the essential training equipment and that in Mbale was rehabilitated and is now fully operational. A number of local contractors have been trained and developed and are now adequately equipped to undertake road maintenance works. The Ministry's Technical Staff had acquired the necessary skills to effectively supervise contract works. Uganda Railways is now operating on a commercial basis without government subsidies. E. BANK PERFORMANCE The Performance of the bank during project identification, preparation and appraisal was generally satisfactory. The Bank's performance is summarised below; E.1 Project Identification The Identification Mission collaborated closely with Government and District Officials during project identification. This resulted into well conceived project concepts. Failure to meet some project targets was a result of factors that emerged during project implementation and could not have been reasonably foreseen. The Bank's performance on identification can be rated as satisfactory. Due to delays in project commencement, some operations recommended for some roads, were not appropriate at time of implementation. Therefore, in future works identification should seriously considered the time frame between project identification and implementation. - 39- E.2 Project Preparation Labour-based technology was a new concept in Uganda at the time, there was lack of sufficient knowledge on the part of Government staff to prepare a project of that nature. The Bank therefore provided government with PPF to commission expertise from the International labour Organisation to carry-out project preparation and the national staff were encouraged to get involved in project implementation. Costing of the operations under the main roads was based on extremely low rates which were subsequently taken over by time as reflected in the big bid variance with contractors rates. On the feeder roads component, categorising of contractors into full rehabilitation, spot improvement and culverting contractors to respond to scope of works later became irrelevant. This was due to change in scope resulting form procurement delays. The equipment packages proposed for the contractors during project preparations appeared to be overcapitalised. The packages were subsequently reviewed downwards by the implementing Consultant and based on the individual contractor's performance, some equipment was re-allocated resulting in 15 instead of the planned 12 contractors being equipped. E.3 Project Appraisal * There was a risk of inadequate counterpart funding. This was however overcome by Government effective control over the budget which resulted in the establishment of Special Road Maintenance Accounts that are now fully operational. There has been a continuation of Public Expenditure Reviews and this has enable government strengthen its commitment to road maintenance. In order to improve on Government's management of public investments, the Transport Sector Investment and Expenditure Programme planning model has been established and is now operational. This has greatly enhanced government's ability to plan, budget and monitor road maintenance programmes. There was a risk that URC would make insufficient progress in transforming itself into a commercial enterprises. The Corporation has been restructured and despite some problems, the corporation is now operating without government subsidies. E.4 Project Monitoring/Supervision The World Bank' monitoring/supervision was satisfactory. In order to enhance the operation efforts, the Bank has included in their transport team a locally based Engineer. This fact greatly enhanced communication and effectiveness of the continuity of the operations. F. BORROWERS PERFORMANCE The Project was supervised and monitored by Ministry of Works, Housing and Communications for the Main Roads and Transport Planning components, Ministry of Local Government for the Feeder and Rural roads component and Uganda Railways Corporation for the railways component. In general the Borrowers performance was satisfactory and counterpart funding though poor at project commencement, has now improved with the introduction of TSIREP. The preparations were done in reasonable time and chronological order is as follows:- The Ministry of Works, Housing and Communication (MOWCH) was responsible for the overall supervision and implementation of the agreements spelt out in the Development Credit Agreement - 40 - (DCA) for the main roads. - Project identification : 1991 - Project Launch - (Main roads component) July 01, 1994 - Project Launch - (Feeder roads component) January 27, 1995 - Credit Effectiveness Date November 29, 1994 - Date of Credit Closure December 31, 2000 The Ministry of Local Government (MOLG) was responsible for the overall supervision, until restructuring of government departments in 1998, and implementation of the agreements spelt out in the Development Credit Agreement (DCA) for the Feeder and Rural road component while the participating Districts took responsibility for Routine Road Maintenance. However, following the ministerial; reforms of May 1998, the Engineering Department in the Ministry of Local Govemment which was responsible for the project implementation was transferred to the Ministry of Works, Housing and Communications (MOWHC). Project activities were then transferred to MOWHC accordingly. The preparation of the project can be considered to be satisfactory especially in terms of meeting the objectives for which the project was intended. However, as the project and its complexity was the first of its kind, the borrower did not have adequate capacity to effectively mange it in the early stages. Mistakes were made and lessons learnt and now the ministry has built capacity to effectively and efficiently mange the transport infrastructure. The borrowers performance in setting up the institutional arrangement to enable smooth implementation of the project was satisfactory. Each component had a Co-ordinator with overall responsibility of co-ordinating the various activities under the respective project components. All the co-ordination centres were centrally located thus enabling easy communication between the responsible parties. Furthermore, the borrower managed to appoint capable and qualified personnel to manage the respect project components and this resulted in the relatively successful implementation of most of the project activities. Under the Transport Planning Component, the Borrower failed to provide counterpart personnel on phase two of the project and phase 2 of the programme could therefore not commence. This component was later transferred to RAFU. G. PERFORMANCE OF CO-FINANCIERS Under the feeder Roads Component, part of the funding amounting to US$ 4.86 million was provided by the Nordic Development Fund (NDF). Releases by NDF were prompt and timely and this resulted in the implementation and completion of the training programme on schedule. The performance was very successful. - 41 - H. FUTURE OPERATIONS For the Main and Feeder roads, Government is committed to ensuring the timely and adequate availability of resources for road maintenance and the programme will continue running under full government funding. Furthermore, the ministry's policy is to increasingly engage the private sector in the execution of most road works and this will definitely sustain the local industry while at the same time ensuring the road network is efficiently and effectively maintained. The Management of the railways will increasingly be operated on a commercial basis so as to realise better profits and meeting customer satisfacton. Future programmes under the Transport Planning component will be economic analysis of studies funded by other donors, setting up and operating an integrated and consistent traffic and road data base. 1. KEY LESSONS LEARNT At the Project Identification stage, account should be taken on the time frame between project preparation and project execution when specifying the type of intervention method. This Ume lag results in tremendous change in scope of works as was the case on some roads that were identified for routine maintenance but at execution intervention called for rehabilitation. Involvement of the stakeholders right from project design is a key factor in the smooth implementation of the project and a fertile ground for future sustainability of the project. Adequate and timely availability of funding is an indispensable condition for successful project implementation and sustainable maintenance. The project under the feeder roads component, was unable to achieve its rehabilitation target partly because of cashflow shortages caused by long replenishment cycle. The equipment packages proposed were too big for new evolving contractors under the feeder roads component and contractor development program should consider provision of basic minimum set with option to expand on business growth and construction industry demands. Medium size mechanised contractors should also be supported by way of providing a facility for acquiring equipment on a loan basis as was done on the feeder road component. Though the road maintenance contracts were considered to be short term, they way not subject to price adjustments. However, experience has shown that the changes in the dollar value have be affecting cost of operations and it is therefore inevitable that such contracts are subject to price adjustment. Procurement delays were experienced during at the early stages of project implementation. This was made in order to put the necessary facilities before commencement of actual works, and the had an effect on the overall project duration. Therefore in future, a possibility of incorporating an inception period should be considered before the project effective commences. Such an arrangement who help reduce time loss during the preparation phase. The twinning arrangement did not fully meet its intended objectives mainly due to way its was developed. It is recommended that such arrangements should be of a specialised nature where the - 42 - input would introduce skills that would help improve the respective system The expenditure thresholds should be carefully considered. As a way of developing the industry, the local contractors should be given an opportunity to engage in big value contracts where they would be able to bigger capital returns. - 43 - - 44 - MAP SECTION IBRD 25487 UGANDA TRANSPORT REHABILITATION PROJECT A N // TRANSPORT NETWORK i Proiew R-&ds (S"t.e g9eg Upr' d,MCY - bh- -)Y) ~ ~ ~ .'- - -, bt Koo.o-g Rp-. gd I A - r ', -. _ _ P.,n,or grovel r-1 -,YDJ i \ oc __ Scordory gr | f-- >S _ 7 ..K5S,\~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.d 4 N~~~~~~~~~4/. ~~~~~~~~~~~~- ;_