Document of The World Bank Report No: ICR2220 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-43710) ON A CREDIT IN THE AMOUNT OF SDR16.4 MILLION (US$25 MILLION EQUIVALENT) TO BOSNIA AND HERZEGOVINA FOR A ROAD INFRASTRUCTURE AND SAFETY PROJECT December 27, 2012 Sustainable Development Department South East Europe Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective) Currency Unit = BAM (Convertible Mark) 1 BAM = US$ 1.55465 US$ 1.00 = 0.64323 BAM GOVERNMENT FISCAL YEAR January 1- December 31 ABBREVIATIONS AND ACRONYMS BAM Bosnia and Herzegovina IDA International Development Convertible Mark Association BH Bosnia and Herzegovina IFI International Financial Institution BIHAMK Bosnia and Herzegovina INT Integrity Vice Presidency Automobile Club IRI International Roughness Index BOQ Bill of Quantities ISR Implementation Status Report CAS Country Assistance Strategy MoF Ministry of Finance MoCT Ministry of Communications and CPFR Country Portfolio Financial Review Transport of Bosnia and CPS Country Partnership Strategy Herzegovina CMU Country Management Unit MTDS Medium Term Development DPL Development Policy Loan Strategy EBRD European Bank for Reconstruction and Development MTR Mid Term Review EIB European Investment Bank NPV Net Present Value EIRR Economic Internal Rate of Return OECD Organization of Economic Co- EMP Environmental Management Plan operation and Development EU European Union OPBM Output and Performance Based FA Financial Agreement Maintenance OPBRMC Output and Performance Based FBH Federation of Bosnia and Road Maintenance Contract Herzegovina PAD Project Appraisal Document FBHMTC Ministry of Transport and PDO Project Development Objectives Communications Federation of PEIR Public Expenditure and Institutional Bosnia and Herzegovina Review FBHRD Federation of Bosnia and PIT Project Implementation Team Herzegovina Public Company Road PM Project Management Directorate (“Javno preduzeće Direkcija cesta Federacije Bosne i PPP Public Private Partnership Hercegovineâ€?) QAG Quality Assessment Group FM Financial Management REBIS Regional Balkans Infrastructure FY Fiscal Year Study GDP Gross Domestic Product RISP Road Infrastructure and Safety HDM Highway Development and Project Management System RMSP Road Management and Safety IBRD International Bank for Project Reconstruction and Development RSMCR Road Safety Management Capacity ICB International Competitive Bidding Review ICR Implementation Completion Report RS Republika Srpska RSRD Republika Srpska Road Directorate SEETO South East Europe Transport (“Javno preduzeće Putevi Observatory Republike Srpske") TOR Terms of Reference SDR Special Drawing Rights TSA Traffic Safety Agency UN United Nations Vice President: Philippe LeHouérou Country Director: Gerard A. Byam Sector Manager: Juan Gaviria Project Team Leader: Carolina Monsalve ICR Team Leader: George Banjo BOSNIA AND HERZEGOVINA ROAD INFRASTRUCTURE AND SAFETY PROJECT CONTENTS DATA SHEET ..................................................................................................................... i A. Basic Information........................................................................................................ i B. Key Dates .................................................................................................................... i C. Ratings Summary ........................................................................................................ i D. Sector and Theme Codes ........................................................................................... ii E. Bank Staff ................................................................................................................... ii F. Results Framework Analysis ..................................................................................... iii G. Ratings of Project Performance in ISRs .................................................................... v H. Restructuring (if any) ................................................................................................. v I. Disbursement Profile ................................................................................................. vi 1. Project Context, Development Objectives and Design ................................................... 1 2. Key Factors Affecting Implementation and Outcomes .................................................. 5 3. Assessment of Outcomes .............................................................................................. 12 4. Assessment of Risk to Development Outcome ............................................................. 16 5. Assessment of Bank and Borrower Performance ......................................................... 17 6. Lessons Learned............................................................................................................ 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 20 Annex 1. Project Costs and Financing .............................................................................. 22 Annex 2. Outputs by Component...................................................................................... 23 Annex 3. Economic and Financial Analysis ..................................................................... 26 Annex 4. Bank Lending and Implementation Support/Supervision Processes................. 31 Annex 5. Beneficiary Survey Results ............................................................................... 33 Annex 6. Stakeholder Workshop Report and Results....................................................... 34 Annex 7. Borrower's ICR and Comments on Draft ICR ................................................. 35 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders .......................... 54 Annex 9. List of Supporting Documents .......................................................................... 55 BOSNIA AND HERZEGOVINA ROAD INFRASTRUCTURE AND SAFETY PROJECT DATA SHEET A. Basic Information ROAD Bosnia and INFRASTRUCTURE Country: Project Name: Herzegovina AND SAFETY PROJECT Project ID: P100792 L/C/TF Number(s): IDA-43710 ICR Date: 12/28/2012 ICR Type: Core ICR BOSNIA AND Lending Instrument: SIL Borrower: HERZEGOVINA Original Total XDR 16.40M Disbursed Amount: XDR 16.30M Commitment: Revised Amount: XDR 16.40M Environmental Category: B Implementing Agencies: Republika Srpska Road Directorate Federation Road Directorate Cofinanciers and Other External Partners: European Investment Bank European Bank for Reconstruction and Development (EBRD) B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 10/19/2006 Effectiveness: 09/19/2008 09/19/2008 09/16/2010 Appraisal: 09/10/2007 Restructuring(s): 07/06/2011 Approval: 12/13/2007 Mid-term Review: Closing: 12/31/2011 06/30/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory i Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 10 10 Roads and highways 90 90 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 100 100 E. Bank Staff Positions At ICR At Approval Vice President: Philippe H. Le Houerou Shigeo Katsu Country Director: Gerard A. Byam Orsalia Kalantzopoulos Sector Manager: Juan Gaviria Motoo Konishi Project Team Leader: Maria Carolina Monsalve Jacques Bure ICR Team Leader: George A. Banjo ICR Primary Author: George A. Banjo ii F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objectives are to reduce user costs on the priority sections of the trunk and regional road networks, to improve the institutional framework for road safety, and to modernize road maintenance practices. Revised Project Development Objectives (as approved by original approving authority) PDO was not revised. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Reduce by the end of the project road user costs by ten percent in road sections Indicator 1 : rehabilitated. US$0.25/km/vehicle US$0.339/km/vehicle Value 10% reduction (i.e. (2004, FBH) 0.208 (2012, FBH) quantitative or US$0.225/km/vehi US$0.381/km/vehicle 0.254 (2012, RS) Qualitative) cle) (2004, RS) 0.284 (2007, RS) Date achieved 01/01/2007 12/31/2011 06/30/2012 Comments Vehicle operating costs declined by 18.07% in the Federation and 11.22% in the (incl. % RS, which meet or exceed the target of 10%. achievement) Establish effective road safety office; prepare a road strategy; conduct pilot Indicator 2 : operation Value 1 national and 2 Road Traffic quantitative or none entity road safety Agency established Qualitative) offices established in RS Date achieved 06/02/2008 12/31/2011 06/30/2012 Safety agency est in RS, but not in FBH (existing road safety unit played active Comments role in promoting road safety). At natl level road safety desks exist within (incl. % MOI/MOTC. Road strategies prepared. Pilot operations conducted in both ent. achievement) Considered achieved. Indicator 3 : Complete a satisfactory pilot performance based road maintenance operation 2 pilots 1 pilot implemented Value implemented. in FBH and quantitative or none Quality and costs contract for one Qualitative) known. signed in RS. Date achieved 06/02/2008 12/31/2011 06/30/2012 Target achieved in FBH--survey results indicate 78% of respondents confirmed Comments partial improvement of OPBM over conventional method (no significant cost (incl. % difference between the two). In RS, only partially achieved as contract for pilot achievement) signed in 6/25/12. iii Indicator 4 : Length of roads rehabilitated Value quantitative or 0.00 240.00 293.00 Qualitative) Date achieved 06/02/2008 12/31/2011 06/30/2012 Comments (incl. % Target exceeded by about 22% achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Measure safety improvement (speed, seat-belt use, etc) 47% (RS, drivers) 47% (RS, drivers) use Value use seat belt; 36% seat belt; 36% (FBH, (quantitative 10% over baseline (FBH, front seat front seat passengers or Qualitative) passengers using using seat belts) seat belts) Date achieved 02/01/2012 02/13/2012 06/30/2012 Comments Due to delay in carrying out the pilot, baseline figures were established only in (incl. % February 2012 instead of 2008 as planned. Hence no 'target' to be achieved. achievement) Achievement has to be rated as partial in that the pilot was conducted Indicator 2 : Issue a road safety strategy Strategy prepared in Value each entity but not (quantitative None Strategy issued. yet formally or Qualitative) adopted by them. Date achieved 06/02/2008 12/31/2011 06/30/2012 Comments A road safety strategy was prepared by both FBH and RS in 2008 through own (incl. % efforts and these were to be updated under the project. Achievement rated partial achievement) as strategy yet to be adopted i.e. issued, by the entities. Indicator 3 : Road users satisfaction survey toward performance based road maintenance Value Survey Survey completed Completed in FBH (quantitative None conducted in in each entity but not RS or Qualitative) FBH. Date achieved 06/02/2008 02/14/2012 06/05/2012 06/30/2012 FBH survey results was non-conclusive on merit of performance based road Comments maintenance over traditional maintenance works--users found it difficult to (incl. % differentiate between pilot roads & those improved under other interventions. achievement) Achievement rated as partial Indicator 4 : Roads rehabilitated, Non-rural Value (quantitative 0.00 256.48 293.00 240.00 or Qualitative) Date achieved 12/09/2008 08/05/2011 06/11/2012 06/30/2012 iv Bank core indicator retrofitted into results framework that would have been Comments better placed as intermediate indicator. All roads rehabilitated under project are (incl. % non-rural. Actual length of roads rehabilitated is 293 km--greater than target of achievement) 240km by 22% Indicator 5 : Roads in good and fair condition as a share of total classified roads Value (quantitative 79.00 N/A 82.00 or Qualitative) Date achieved 12/06/2008 12/31/2011 06/30/2012 Bank core indicator retrofitted into results framework. No target set--objective to Comments measure change over project period. Roads figures under FBHRD/RSRD (incl. % responsibility. Increase of about 4% in roads in good/fair condition over project achievement) implementation period G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 05/30/2008 Satisfactory Satisfactory 0.00 2 11/14/2008 Satisfactory Satisfactory 0.00 3 06/30/2009 Satisfactory Satisfactory 0.00 4 01/13/2010 Satisfactory Satisfactory 8.84 5 06/08/2010 Satisfactory Satisfactory 12.82 6 12/29/2010 Satisfactory Moderately Satisfactory 18.95 7 04/05/2011 Satisfactory Moderately Satisfactory 20.69 8 12/13/2011 Satisfactory Moderately Satisfactory 24.49 9 03/25/2012 Satisfactory Satisfactory 24.49 10 06/24/2012 Moderately Satisfactory Moderately Satisfactory 24.81 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Reallocation of funds from components 2 and 3 to 1 mainly 09/16/2010 N S S 13.07 to increase funding for component 1. Reallocation of funds. Project closing date extension. To allow 07/06/2011 N S MS 21.86 completion of road safety component in RS. v I. Disbursement Profile vi 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Bosnia and Herzegovina (BH) is a state with a complex governance structure comprising two entities, each with a high degree of autonomy: the Federation of Bosnia and Hezegovina (FBH) which is further decentralized into 10 cantons, and the Republika Srpska (RS). The autonomous Brcko district was added to the structure in 1999. There are 137 municipalities in BH, of which 74 are located in the FBH, and 63 in the RS. At the time of appraisal, increased investment in infrastructure was seen as needed in order to support economic growth. The transport sector was at appraisal being administered and managed at the State level by the Ministry of Communications and Transaport (MoCT), and at the entity level, by separate Ministries of Transport and Communications. At the operational level, there were four road Directorates, two in each entity, responsible for motorways and magistral roads respectively; the Directorate in RS also has responsibility for regional roads. This fragmentation of responsibilities in the sector was seen as increasing complexity and transaction costs and eroding public sector capacity at all levels. Significant investments in the sector since the end of the war, including a considerable share of external financing, had helped to improve the overall condition of the road networks. Due to the severity of war damage however, only 11 percent of the network was at the time of appraisal in good condition with 40 percent in poor condition and requiring pavement strengthening or rehabilitation. Moreover, traffic was growing at about 5 percent calling for upgrading of road infrastructure in the medium term. Substantial opportunities were also seen as existing to consolidate sector policy making and operational responsibilities, but this required political commitment. The Government’s strategic sector focus at appraisal was: (i) developing a comprehensive transport sector policy and strategy framework with support from the World Bank (WB) and the European Bank for Reconstruction and Development (EBRD); (ii) clearing maintenance backlog and strengthening maintenance capabilities by increasing recurrent expenditure; and (iii) reducing the social and economic burden of road traffic accidents. The RISP, together with the parallel European Investment Bank (EIB) and EBRD operations, was seen as central to assisting the Government meet these strategic needs. The PAD stated three rationale for Bank assistance: (i) to build upon achievements of the Road Management and Safety Project (RMSP) then ongoing that had supported institutional and sectoral reforms, domestic contracting industry development, development of a road and bridge database for the magistral and regional roads which had been used to prioritize investments on these roads and a pilot project to improve road safety; (ii) the comparative advantage of the Bank particularly in introducing innovation in road maintenance and road safety, efficiency, and capacity building that should help to deepen the development of the roads sector in BH; and (iii) the strong positive dialogue 1 with government and the Bank’s ability to catalyze other donors. These reasons were all seen as essential for the development of the road sector. The higher level objectives relevant to the Project related to (i) the 2004 BH Medium Term Development Strategy (MTDS), (ii) the European Union (EU) policy on transport infrastructure (iii) the Bank Country Assistance Strategy (CAS) FY05-07 which respectively identified transport as a major sector vital to the economy, encouraged cooperation between IFIs, and prioritized private sector led growth and investment in key social and economic infrastructure. The Project would contribute to their achievement by financing rehabilitation of priority sections of the magistral and regional road networks, gaining government commitments to increase financing of routine and winter maintenance and piloting performance-based maintenance contracts all of which would increase private sector role in the sector. Planned road safety improvements also had social and economic benefits. The Country Partnership Strategy (CPS) for FY08-11 then under preparation highlighted the importance of infrastructure development. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The PDO was to reduce user costs on the priority sections of the magistral and regional road networks, to improve the institutional framework for road safety, and to modernize road maintenance practices 1. Key performance indicators were: (i) reduce road user costs by 10 percent on the road sections rehabilitated under the project (about 240 km 2); (ii) increase the quantity and quality of safety outputs (e.g. policing operations, promotional activities, systematic engineering treatment, and data collection) 3; and (iii) satisfactory piloting of output-based road maintenance (OPBM) contracts and comparison of the outcomes of these contracts with other regular maintenance contracts to assess whether the pilot operations could be scaled up. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO was not revised. 1.4 Main Beneficiaries Road users, including pedestrians, were expected to benefit from the road improvements as improved ride quality would lead to reduced vehicle operating costs, and sound structural roads would lead to lower life cycle costs of the road assets including sidewalks 1 This text of the PDO is the same as in the Legal Agreement but the text in the results framework contained very minor differences which did not affect the meaning or understanding of the PDO. There were 5 outcome indicators specified in the PAD and only 3 in the Legal Agreement as a result of three of the PAD outcome indicators being combined into one. 2 It is to be noted that the Procurement Plan in the PAD contained 319.88 km of roads in both entities from which the 240 kms to be rehabilitated were to be selected. 3 Indicators for capturing these attributes include improvements in compliance with speed limits, use of seat belts, computerization of vehicle and driver information and use of campaigns to promote road safety awareness. 2 provided. The road improvements represented about 80 percent of the Credit. Road users would also benefit from expected improvements to the road safety legislative framework, improvements to the information base for decision making on road safety through carrying out of planned road safety studies and pilot activities, and the training and public awareness campaigns which had been highlighted in the Road Safety Management Capacity Review (RSMCR) of March 2007 4. These project actions would also benefit agencies and personnel with road safety responsibilities, particularly the traffic police and municipalities, via increases in their competencies from participation in implementing the activities. Consultants and contractors who participated in the implementation of the Project or attended project organized workshops would also benefit by being exposed to international good practices. At a higher level, the general public was expected to benefit through more efficient and effective use of public resources arising from improved capacity for service delivery in the implementing agencies and their adoption of improved approaches to road maintenance. 1.5 Original Components (as approved) The Credit for the RISP was of value SDR 16.4 million equivalent to US$ 25 million. 5 Component I: Rehabilitation of Selected Roads (US$ 24 million equivalent, Bank financed share US$I9 million equivalent). This component, linked to the outcome indicator ‘reduce user costs on the priority sections of the magistral and regional road networks’, financed civil works to rehabilitate and repair 240 km of the magistral and regional road network in both entities during 2008- 11. Component 2: Road Safety (US$ 5 million equivalent, Bank Financed Share US$5 million equivalent). There were two subcomponents linked to achieving the outcome indicator ‘improve the institutional framework for road safety’. The first of US$2.60 million equivalent would build capacity to address road safety issues and provide support to the preparation of action plans at each entity level, including cost-effective interventions to address key road safety issues and establish a harmonized monitoring framework for road safety activities in the entities. The second subcomponent of US$2.40 million equivalent was aimed at conducting pilot activities along high-risks sections, to measure the effectiveness of stakeholder co-ordination and the impact of road safety interventions. Component 3: Technical assistance and capacity building (US$1 million equivalent Bank Financed Share US$l million equivalent). This component, linked to achieving the outcome indicator ‘modernize road maintenance practices’, comprised consulting services: (i) to provide technical guidance on introducing output and performance-based maintenance (OPBM) in each entity; and (ii) to build capacity based on the recommendations of the Transport Sector (TransSec) study (the activities under this category were to be defined by the Road Directorates during implementation). The $0.5 million allocated to each entity was seen as provisional and could be reallocated to other 4 Funded by the Global Road Safety Facility managed by the World Bank. 5 Due to changes in the exchange rate, the US dollar amount disbursed was US$25.62 million. 3 categories during implementation. Only the technical assistance related to the setup of the OPBM was identified in detail at an estimated cost of about $100,000 per entity. The RISP was the sixth Bank transport operation since 1996 and part of a larger collaborative program by IFIs, of about S$210 million, to rehabilitate about 2,200 km of the magistral and regional roads in BH. This was based on work financed under the earlier RMSP. The program financing included: (i) US$25 million from IDA; (ii) US$5 million from the entity budgets; (iii) US$75 million from the EBRD; and (iv) Euro 80 million - US$l05 million equivalent- from the EIB. The EBRD and EIB also contributed respectively to activities for the introduction of the OPBM, and technical assistance for the preparation and design of the roads to be financed by the IFIs. 1.6 Revised Components The Project went through two ‘Level 2’ restructurings that were approved in September 16, 2010 and July 6, 2011, respectively. There was no cancellation of funds. The first restructuring reallocated additional financing for component 1 to allow completion of the planned 240km of roads. The second restructuring entailed the extension of the closing date of the Project by six months to June 30 2012 and reallocation of funds from component 3 to 2 in the RS. The revised allocations from the restructuring are shown in the table below. One of the effects of the allocations is that credit proceeds were not used for component 3. FBH RS Componen Origina After first After second Origina After first After second t l restructurin restructurin l restructurin restructurin g g g g 1 6.2 7.4 7.4 7.4 7.4 6.99 2 1.6 0.8 0.8 0.6 0.8 1.21 3 0.4 0.0 0.0 0.2 0.0 0.00 Total 8.200 8.2 8.200 8.200 8.20 8.200 1.7 Other significant changes These related to the scope, financing and implementation of the Project as follows: (i) component 1- funding from outside of the Project (from EIB, EBRD and FBH budget) of some road sections and bridges initially planned to be rehabilitated using credit proceeds. 6 This was due to cost overruns without which more roads and bridges could in fact have been rehabilitated under the project.; (ii) component 2 - decrease in the scope of the pilot road safety activities, a result of reallocation of funds from this component to component 1 which reduced the amount available for pilot activities. In the RS, delays in the procurement of the road safety consultancy required extension of the Project closing date by six months with time only for a few scaled down pilot activities. These changes 6 At appraisal, the project envisaged the rehabilitation of bridges in the FBH. These were kept in the project, but some of these were financed with funds from outside the project,--one bridge needed major repairs to the foundations, requiring much more funds than envisaged at appraisal. The Results Framework did not include specific indicators for the bridges, and the economic analysis for Component 1 excluded the bridges. 4 were effected through Level 2 restructuring of the Project on September 16, 2010 and July 06, 2011; and (iii) component 3 - the initially planned form of the OPBM contract, performance based, changed to a hybrid consisting of traditional works measurement and performance based related to achievement of specified road serviceability standards. These changes were technically acceptable. None of the above changes required Board approval. There were no changes to the implementation arrangements. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Preparation of the Project was supported by relevant lessons from the RSMP and valuable information on the sector from ongoing major studies particularly the 2007 draft Transport Sector Review study (TranSec) which recommended increased road maintenance as a priority for the sector. Bank dialogue with government, EBRD and EIB on the findings of the studies resulted in consensus on the need to continue efforts under the RSMP to reduce the backlog of maintenance on the magistral and regional roads and to improve road safety based on the recommendations of the RSMCR. This consensus formed the foundation for the design of Project. There was also a desire within FBHRD and RSRD to improve quality and reduce the unit cost of maintenance works. This led to agreement to include pilot testing of the OPBM approach, in conjunction with the EBRD. This resulted in a simple three component design for the Project focused on rehabilitation of roads and bridges (only in FBH), road safety improvements and pilot testing of an OPBM approach. Selection of roads to be rehabilitated was based entirely on the economic assessment of the magistral and regional road network carried out under the RMSP, with those with the highest benefits selected first until all funds were expended. However, the bridges in FBH were not included in the economic assessment notwithstanding the statement in the PAD (p40, para 101) that ‘studies and economic analysis were prepared for the 150 km and for the bridges …….â€?. Though the location of the road sections were geographically scattered, this was acceptable as both the Bank and the road directorates had experience from the RSMP in managing needed site supervisions. The road safety component was designed to implement recommendations of the RSMCR that was completed in March 2007. To facilitate exchange of regional experience in OPBM, the Bank organized a workshop in Serbia on international experience in its implementation. The RISP was designed to be implemented by the same agencies in the entities that had capably implemented the RSMP. The PDO specified for the Project was well focused and identifiable with each component. The performance indicators were relevant, realistic and easily measurable. The three outcome indicators specified in the PAD in reality were five as the second indicator had three elements needing to be measured which introduced some complexity to their tracking and application. For the outcome indicator ‘reduction in road user costs’, it would appear that it was specified in the wrong currency, United State dollar, instead of the Euro. None of the performance indicators related to the rehabilitation of bridges in the FBH, perhaps because at appraisal their estimated cost was a small proportion (about 10 5 percent) of planned road rehabilitation. The cost of Project preparation was borne mainly by the FBHRD and RSRD, a sign of their commitment to the Project. An additional sign of the commitment of the entities was their willingness to accept as a project covenant an increase in their expenditure on road maintenance by five percent annually in real terms during the implementation of the Project (but see 2.2). This covenant proved difficult to be achieved during implementation, particularly by the FBH, due deteriorated macro- economic situation and changes in and decrease in the value added tax 7. At Project pre- appraisal in March of 2007, agreement was reached with other IFIs and the government that Bank procurement and financial management procedures would apply regardless of source of funds. This was welcomed by counterparts as it would reduce their transaction costs. As with earlier Bank operations, designs and bid documents for roads and bridges to be rehabilitated were based on visual surveys and not available for review during preparation. Costing of the road works were therefore carried out by the Bank team based on rough cost estimates provided by the road directorates and engineering judgments based on review of those designs that were available. For the bridges, preparation did not include their inspection and nominal estimates were used in costing needed repairs. Inherent in the above is the risk of underestimation of costs. However, for the roads, the team considered the risk well mitigated by the high economic rate of return calculated for the potential Project roads implying that a significant increase in the estimated costs would still yield rates of returns higher than the Bank norm of 12 percent. Underlying this position is the assumption that the target length of roads would still be reached notwithstanding a significant cost increase. Significant cost increases were experienced during implementation (see 2.2 below for a discussion of this) but the target length of roads to be rehabilitated was met reflecting perhaps a conservative target. Documentation of the Project in the PAD could have been improved. For example, description of component 1 in the main part of the PAD omitted the length of roads to be rehabilitated in each entity, did not indicate that bridges would be rehabilitated in FBH. Description of component 3 did not indicate the need for implementation of the pilot OPBM as specified in the results framework. Some differences also existed between the cost of roads to be rehabilitated in the RS stated in the PAD under project description (Euro11.095 million) and the procurement plan (Euro11.707 million) which contributed to a misunderstanding of the amount available for road rehabilitation in the RS leading to procurement delays during implementation. These errors were however well addressed during implementation through intensive engagement and follow up on the part of the Bank team and aggressive seeking of additional funding from other sources (see 1.7) by the implementing agencies when it became clear that project funds would not be sufficient to complete road and bridge works planned under the project. More information could also have been provided in annex 4 of the PAD on the approach to cost estimation, particularly the possible impact of the still prevalent post conflict situation in the country which introduced an element of uncertainty to the estimation of costs. 7 The revenue allocation in the FBH for road maintenance is directly linked to value added tax and changes in the allocation of this between different expenditure heads led a decrease in the amount going to road maintenance. 6 Safeguards, financial and procurement assessments followed standard Bank guidelines. The design provided for all civil works to take place within existing road rights of way thus triggering no land acquisition. No Resettlement and Land Acquisition Framework (RLAF) was prepared for the Project. The engineering designs used appropriate good engineering practices to ensure that works would be carried out without adverse environmental impact. Issues raised by the financial and procurement assessments were mitigated using standard Bank instruments (see discussion under risk assessment below). The road directorates were encouraged to increase their then existing procurement staff to cater for the additional duties related to the implementation of the overall program (PAD p55). According to the staff of the RSRD, it would have been good to see clauses relating to safety of works in the bid documents given more emphasis in the assessment of bids. The objective in this would be to ensure that adequate provision is made for undertaking this activity in during the civil works 8 . An agreement was reached between the implementing agencies, the Bank, EBRD and EIB for a common format to be used for project progress reports. The Bank team at appraisal rated the Project risk as low largely because the Project built on the earlier successful RMSP whose implementation mechanisms and organizational structure would be used for the RISP. The team however identified three risks: (i) bidders charging a large premium for the OPBM contracts; (ii) inadequate coordination and cooperation among all relevant agencies in the implementation of the road safety interventions; and (iii) misuse of project funds. Mitigation measures, which proved effective, were: (i) involvement of contractors and road agencies in awareness raising activities on the OPBM; (ii) obtaining strong political commitment to addressing road safety issues which came with the passage of the State level Road Safety Law; and (iii) inclusion in the Financial Management Manual of an appropriate internal control framework, enforcement of funds flow mechanisms, auditing of project accounts by independent auditors and conduct of regular financial management supervision and procurement prior and post reviews. Two additional risks could have been flagged: (i) dilution of the capacity of the implementing agencies through staff departures given that in design, the Project placed a high premium on the capacity of the implementing agency; and (ii) potential under estimation of the costs of civil works and cost inflation given the approach to civil works cost estimation, the scale of the planned investments under RISP and by EBRD, EIB and the still prevalent post conflict situation which created uncertainty. Dilution of the capacity of the RSRD occurred during pre-appraisal of the Project with its experienced head departing and both the financial and procurement management positions vacant. It is a standard requirement that key project staff changes be notified to the Bank before being implemented. Had this been done, it would have availed the Bank team at least an opportunity to prevent and or influence the timing of the staff changes that took place. The procurement position was not filled in a timely fashion leading to delay in implementing the procurement plan The cost overruns in relation to the rehabilitation of roads that emerged during implementation would perhaps not have been so problematic, had physical and price contingencies been stated as unallocated in 8 By the time of the ICR mission, all civil works had been completed so it is not possible to make an observation on this issue directly in relation to the Project. However, during the field visit related to the ICR mission, the mission witnessed very bad practices by contractors with regard to safety of works. 7 the project costing. Given the impact of these two risks during implementation, the Project risk assessment at appraisal may more correctly have been moderate. There was no Quality at Entry assessment of the Project done by QAG. 2.2 Implementation Implementation of the Project was rated in the ISR as satisfactory up to the time of its mid-term review. Subsequently, the rating was downgraded to moderately satisfactory up to Project closing except for one occasion when the rating was satisfactory. Implementation of the project experienced some delays which could not be fully recovered leading to extension of the Project closing date by six months. Effectiveness of the Project was delayed by about nine months due to the complex administrative approval process at the State and entity levels. Significant delays were experienced in launching procurement due to the late effectiveness of the Project. In the RS, additional delays arose due to their use of a road design approach lower in standard than agreed during preparation which meant that they would be less safe and durable. The RS made an error in trying to deal with higher than estimated bid prices they had launched under other IFI projects. High international oil prices contributing to these higher costs, raising the price of civil works inputs such as asphalt. Dealing with the cost overruns led to significant delays in the procurement of the civil works. It also led to the curtailment of other planned activities under the Project, particularly the road safety pilot. Given these difficulties, it is commendable that the civil works were able to be completed within the initial project closing date: it was completion of the road safety activities and signing of the OPBM contract in the RS that necessitated extension of the project closing date. This recovery of lost time in implementing component 1 was due to good technical guidance provided by the Bank team to ensure that roads rehabilitated would be safe and of good quality, good project management evidenced by timely restructuring of the Project and subsequent effective follow up. The entities and the road directorates contributed to this achievement also by their willingness to adhere to the full rehabilitation of roads as agreed during preparation and timely action in sourcing additional funds from the EBRD (in the case of RS for three road sections) and in the case of FBH from own funds and the EIB. That these IFIs agreed to the requests demonstrated good cooperation between the government and the IFIs in implementing the overall program. A total of eight Bank supervision missions were carried out during implementation of the Project in line with the regional norm of two supervision missions per fiscal year. There were however notable gaps in their timing with the first twelve months after negotiation and ten months after approval. It was during this period that errors occurred in the design approach applied in the RS to road rehabilitation under component 1. Project supervision consultants did not accompany the Bank team and counterpart staff during field visits. This is a good practice that would allow the consultants to make direct contributions to discussions on issues discovered during such visits and allow the Bank team to assess their competence. The Project experienced late submission of progress and financial audit reports. However, improved Bank team monitoring of this issue led to their more timely 8 submission later. Outcome of supervision missions were well documented in the aide memoire and related ISR with key issues highlighted. Within the ISR, the Bank team was provided guidance by sector and country management particularly in relation to ensuring that project progress reports were provided timely by the implementing agencies. The Bank project team flagged timely to management that the project covenant relating to road maintenance was unlikely to be met by the FBH. There is no documented evidence that the option of waiver of this covenant was suggested for inclusion in the first or second restructuring. This suggestion could have come from the Bank, given the economic downturn, the deteriorated financial situation of the State and thus of the entities since appraisal: moreover discussions on a development policy loan (DPL) operation had been initiated by the Bank. In the end, this covenant was not enforced by the Bank. The agreement during project preparation to have common formats for project reports would appear not to have been followed up, particularly since the implementing agencies had the information readily available. This was a missed opportunity for the Bank team to obtain information on cost of contracts being financed by EIB and EBRD which could have been useful to the Bank in dealing with cost overruns. There is no documented evidence of coordination between the Bank and EBRD in regard to the covenant on maintenance funding which was also a covenant in the Loan agreement of EBRD. The Minister of Communications and Transport in the RS complained about the quality of road rehabilitation works being carried out. The May 17, 2010 mission of the Bank undertook a thorough review of the works completed and ongoing and could not find clear evidence on this. Subsequent missions including for the ICR have confirmed the good quality of works carried out under the Project. The Project Mid Term Review (MTR), initially planned for January 2010, was conducted in October 2010 due to delayed effectiveness of the Project. By the MTR, progress with implementation was good with disbursement at about sixty percent, a sign that the initial delays had been recovered. The MTR included field visits to four project sites in the RS where contract amendments had been made to correct road design deficiencies and the quality of works were considered good and of correct scope. Bank participation in a follow on project focusing on upgrading and reconstruction of tunnels and bridges with some road rehabilitation was requested during the mission. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The results framework for the Project was adequate and had indicators appropriate for monitoring the achievement of the PDO. There was some element of complexity in defining some of the outcome indicators with some reflecting two discrete activities or outputs. The outcome indicator relating to road safety had three parts – establishing road safety offices, preparing road safety strategies and conducting pilots - which made it somewhat complex. Some baseline data relating to road safety were not available during appraisal and were to be measured during the first year of implementation. No specific arrangement was however put in place to ensure their timely measurement. As earlier noted, there was no indicator to measure achievements in relation to the bridge works in FBH. 9 The FBHRD and RSRD had a good database on their road network from the asset management system created under the RMSP which facilitated calculation of user benefits using HDM-4. They also collected data in relation to the condition of the road network (e.g. roughness index) although this was not included in the results framework. The consultants that carried out the road safety studies were able to help these directorates establish the values of the road safety outcome indicators. In particular, the road safety studies led to the establishment of the socio-economic cost of road accidents in both entities. Thus the road directorates and the Bank team were able to adequately report on achieving the PDO. Monitoring of the indicators in the ISR was good with both sector and country management units providing clear guidance to the team on issues raised with the notable exception of the possible waiver of the covenant relating to funding of maintenance by the entities when, particularly in the FBH, compliance was proving difficult. (see 2.2) The initial ISR contained the PAD indicators (5 outcome indicators and 8 intermediate indicators). However, in the fourth ISR, the outcome indicators were reduced to 3 to reflect the FA by combining to one three indicators relating to road safety. In addition, one indicator, length of roads rehabilitated, was put as an outcome indicator and the intermediate indicators reduced to 3 by combining some specified singly in the PAD into a single indicator. While it was possible to still identify within the ‘composite’ outcome and intermediate indicators their PAD identify, these changes had the effect of reducing the clarity of reporting on the different elements of the indicators. During the above mentioned amendment, two Bank core indicator ‘roads rehabilitated, non-rural’ and ‘roads in good and fair condition as a share of total classified roads (%)’ were introduced in line with new Bank guidelines. It is noted that the ISR reflected the indicator relating to the OPBM as ‘complete a satisfactory OPBM’ with no indication of the definition of ‘satisfactory’. The FA text suggests that ‘satisfactory’ could mean ‘lessons drawn’. During the Project, from the survey carried on the pilot in FBH, lessons were however drawn. The entities have found the indicators useful in reporting on the impact of their efforts to improve the condition of the magistral and regional road network. This should help them going forward in making the case for undertaking interventions similar to those carried out under the RISP. The road safety indicators would also help the entities better design their awareness raising campaigns and measure their impact. Determination of the socio- economic cost of road accidents, the first time it has been done in the entities, has been helpful in drawing attention to the macro-economic dimension of road safety. For example, according to the Ministry of Finance of RS, they now appreciate the positive impact of a focus on road safety in a road project. 2.4 Safeguard and Fiduciary Compliance Compliance with safeguards policy is rated satisfactory. Environmental safeguards. The RISP was implemented in full compliance with the relevant environmental safeguards policy of the Bank for an Environmental Category B project (the Project triggered only OP 4.01 on Environmental Assessment). The Environmental Assessment, carried out during project pre-appraisal, was thorough, with disclosure and public consultations carried out prior to Project Appraisal. Typical sites 10 were visited in both entities and discussions held with staff of the environmental units of FBHRD and RSRD to assess their experience in implementing the ongoing RMSP project. The site specific Environmental Management Plans (EMPs) were developed for each of the Project sites, with adequate public disclosure and consultations. From experience in implementing the RSMP EMP, some monitoring functions in the EMP for the RMSP were agreed to be transferred to the supervision engineers in the EMP for the RISP. All of the identified potential environmental impacts within the EMPs (dust generation, noise, waste management, and traffic disruptions) were mitigated through standard practices of good engineering and EMP forms were included in the tender documents and contracts for subcontractors. No changes to the runoff patterns were made in the rehabilitation activities. In addition, there have been no incidences of non- compliance with the EMP, nor have there been any formal or informal complaints. Social safeguards. The Project did not finance activities that involved any form of land acquisition or restriction of access to sources of livelihoods. All works were conducted within existing publicly owned right-of-way. In a case when a design proposal required some acquisition of land, the Bank team encouraged revision of the design to avoid land take. It is noted that had a RLAF existed, its application would have allowed accommodation of the proposed design. The FBHRD and RSRD were required to prepare community surveys to assess the impact of the (i) road and bridge rehabilitations; (ii) road safety pilots; and (iii) user perceptions of the OPBM contract. These were carried out only in the FBH due procurement delays and the results from these are reported under section 3. Fiduciary Compliance with fiduciary requirements is rated as moderately satisfactory. Financial risk mitigation measures put in place proved adequate during implementation. This is notwithstanding staffing issues encountered in the RSRD. Financial management performance is rated as satisfactory. There were material delays in carrying out procurement tasks in the directorates, particularly RSRD. Deficiencies in documenting the procurement plan in the PAD also contributed to observed delays during implementation. The procurement threshold for International Competitive Bidding (ICB) was US$500,000 potentially restricting participation of domestic contractors or increasing their transaction costs: in Moldova, the threshold at the time of appraisal of the RISP was US$1,000,000. These elements contributed to overall implementation delays as a result of which procurement performance is rated moderately satisfactory. A Country Portfolio Fiduciary Review (CPFR) was carried out between December 7 and 18, 2009 found the RISP marginally satisfactory regarding procurement and satisfactory regarding financial management. The findings of the CPFR were discussed by the team with counterparts with follow on remedial measures proposed concerning financial and procurement management. As of December 2012, the revised amount of the credit was US$25.62 million against the original US$25.00 million. The difference is due to changes in the exchange rate. There was no cancellation but an amount of US$0.15 million was undisbursed. 11 2.5 Post-completion Operation/Next Phase Both entities are continuing with actions for the adoption of the road safety strategies. The OPBM contract was signed on June 25, 2012 in the RS and under execution and its impacts are planned to be monitored. FBHRD and RSRD were preparing a new program of investments on their magistral and regional road networks at the time of the ICR mission. There was as yet no State level sector policy but the mission was informed by FBHRD that FBH’s spatial policy had a key component on policy toward magistral and regional roads. The final draft of this policy is with Parliament for approval. Road sector management and financing is still an issue especially regarding financing of maintenance particularly in the FBH whose regional road network, being under the cantons, did not benefit from the RISP. Conduct of the reclassification of the road network in both FBH and RS, leading to reallocation of responsibilities between jurisdictions could be part of the solution. The RISP has been successful in increasing awareness of the need to address road safety issues at both the political and technical levels. The action plans on road safety prepared under the RISP, the improved legal and institutional framework and the increased capacity in the entities provide a good basis for further program of activities to address road safety. There is as yet no future plan by any IFI for a follow up operation similar to the RISP. However, discussion was recently initiated regarding a possible follow up to the RISP. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation The PDO remains quite relevant to the FBH and RS objectives of continued improvement of their magistral and regional road network evidenced by their preparation of new projects focused on this part of the network for which they sought Bank assistance during the mid-term review of the RISP and during the ICR mission. The achievement of the Project in relation to road safety has provided the much needed policy, institutional and legal frameworks for the two entities to be able to intensify actions to improve road safety consistent with the UN Decade of Action on Road Safety. The State now needs to consolidate the entity level strategies into a national strategy. The road safety activities have also increased technical competencies and public awareness, laying the foundations for achievement of the objectives of the Decade in the two entities, particularly given the increased awareness at high policy level of the importance to prioritize addressing road safety issues. The pilot OPBM contracts, being hybrid contracts, remain relevant to the entities attempt to improve their approaches to road maintenance because they provide useful lessons on the comparative advantages of conventional and performance based approaches and when it would be appropriate to use either of the approaches. The design approach employed in the road rehabilitation works of a combination of pavement overlays and spot improvements remain valid simply because it allows interventions to be tailored to the conditions of specific road sections, increasing the cost effectiveness of such interventions. The mix of technical studies and pilot implementation employed in relation to the road safety activities is an approach which remains relevant as the two entities in future seek to update the baseline data that have been collected and validate perhaps the currently estimated value of the socio-economic costs of road accidents. The 12 implementation arrangements remain relevant with the capacity of both FBHRD and RSRD increased from implementation of the Project. The competitiveness pillar of the current CPS (FY12-15) sees continuation of investment in regional transport and opportunities for the IFC to promote PPP in infrastructure services. While this could be interpreted as implying a shift away from support of further assistance to improving the magistral and regional road network, it is noted that there is an emerging understanding between the sector and the CMU that the Bank should continue its support to the government in its efforts to eliminate all maintenance backlogs and improve road safety on its magistral and regional road network. 3.2 Achievement of Project Development Objectives The achievement of the PDO is rated as moderately satisfactory. The PDO for the RISP was concise with a good link between the project outcome indicators and related intermediate outcome indicators. The Project was implemented in a very complex institutional arrangement of State and entity level agencies. It nevertheless was successful based on good sector work, clear understanding between the government, Bank, EBRD and EIB and achievements under the earlier RSMP. The solid efforts of the project teams (Bank and Borrower) and their proactive working also contributed to the success of the project. Of the eight intermediate outcome indicators stated in the PAD, all were achieved by Project closing except two: (i) adoption of new road safety strategies by the entities; and (ii) implementation of an OPBM contract in the RS. The strategies have been prepared, approved by the Road Safety Council and waiting formal adoption by the government while the contract for the OPBM was signed just before the Project closed. At project closing, project achievements in relation to the three key outcome indicators were as follows: (i) Regarding the outcome indicator ‘reduce road user costs on the priority road sections rehabilitated under the project’ the target length of roads to be rehabilitated was 240 kms for its achievement. This target was exceeded with 121 km in FBH and 172 km in RS rehabilitated respectively, a total 293 km. Road user costs were reduced by 18.07 percent for the nine road sections funded from the credit in the FBH and by 11.22 percent in the RS, achievements which exceeded or met the target of 10 percent. Achievement of this indicator is regarded as satisfactory; (ii) for the indicator ‘improve the institutional framework for road safety’, all the intermediate indicators were achieved except that relating to adoption of new road strategies by each entity: the strategies were prepared but yet to be formally adopted by the government. Harmonization of these policies and strategies was important and achieved through due diligence by the consultants responsible for their preparation. The studies also led to the determination of baseline values for important parameters such as wearing of seatbelts and the socio-economic cost of road accidents which provide the entities micro and macro level benchmarks for policy making and implementation. The achievement of this indicator is rated as satisfactory. 13 (iii) The third outcome indicator modernize road maintenance practice required that one pilot OPBM contract be signed and implemented in each entity with their quality and costs known. While each entity did sign a contract, implementation only took place in FBH and this only for one year. Results from user surveys and measurements carried out on the FBH pilot suggest that the quality of roads maintained under OPBM contracts were perceived as better than for conventional contracts there was no noticeable difference in cost between the two approaches. These results do not provide enough evidence for reasonable conclusions to be formed on the efficacy of the pilot particularly as it was implemented for only one year which coincided with a severe winter which made maintenance activities and costs atypical. Given this and the fact that implementation took place in only the FBH, achievement of this outcome indicator has to be rated as moderately unsatisfactory. 3.3 Efficiency Efficiency is rated as satisfactory. The overall ex-post Economic Internal Rate of Return (EIRR) for the civil works under the Project has been determined as 59%, well above the 12 percent threshold, but below the appraisal estimate of 73%. This overall EIRR demonstrates the robustness of the economic justification for the Project. Individual values for the various road sections range from 10 to 129 percent. The ex-post economic analysis, like the ex-ante, did not include an assessment of the benefits of the road safety improvements or rehabilitation of the bridges. It did not also include the costs of rehabilitating road sections eventually funded from outside of the project as these were not included in the calculation of the length of roads rehabilitated under the project. The repairs to the bridges have clearly increased their structural integrity thus contributing to smooth flow of traffic (hence reduced travel time and costs) and road safety. From the user surveys carried out relating to road safety, public awareness has been increased creating greater receptivity of police enforcement actions which contributes to decreasing the socio-economic costs of road accidents. The economic analysis at appraisal was for the rehabilitation of about 354 km of magistral and regional roads in FBH and RS, a figure more than the 240 km planned for financing under the RISP. The analysis established the EIRR at 73 percent. All sections yielded positive NPV with the minimum EIRR per section of 25 percent which is significantly higher than the discount rate assumed thus indicating viability of the project. The PAD did not contain an economic analysis for the bridges rehabilitated in FBH. The difference between the ex-ante and ex-post EIRR of 73 and 59 percent respectively is attributable mainly to the difference between estimated and actual construction costs. As earlier discussed, there were cost overruns arising from poor cost estimates during preparation which led to funding from components 2 and 3 being significantly reduced to accommodate the needs of component 1. The three rehabilitated road sections with the lowest calculated ex-post EIRR (10, 14 and 17 percent respectively) had the highest ratios of actual to estimated constructions costs at 2.4, 2.8 and 2.9 respectively. 14 Other indicators of efficiency. Despite delays experienced early in implementation, the rehabilitation of roads under the Project was completed within schedule. A comparison of estimated and actual costs of these works show an increase of about 40% (see annex 3, table 2). This is not an unusual degree of cost increase for the type of road works carried out under the project, the high cost increases during the project period in international oil prices which feeds into the cost of bitumen and the post conflict situation in the country which still affected perception of the country by international contractors. The technical assistance associated with components 2 and 3 were less efficiently implemented arising from a combination of delays due to the need to achieve common understanding of terms of references (for the road safety studies) and approaches (for the OPBM pilots). While these led to procurement delays and partial achievement of their objectives, exchanges and clarifications which contributed to the delays did lead to an increased understanding of the technical issues by the implementing agencies and other stakeholders and, ultimately, their ownership of the process and the results. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory This rating reflects: (i) relevance of the PDO to the priority needs of the sector, (ii) the moderately satisfactory achievement with regard to the PDO; and (iii) the satisfactory achievement with regard to efficiency in relation to the EIRR and other indicators of efficiency. Overall, activities under the Project have resulted in improved road conditions leading to reduced road user charges and improved road safety. 9 This rating represents an upgrade when compared to the last ISR, reflecting the EIRR, which was not available at the time, as well as the signing of the OPBM contract by the RS. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The Project did not collect data on poverty impact and gender analysis was not carried out. The Project is likely to have contributed to poverty reduction however, through creation of jobs and improved access to economic opportunities within the project areas which could be expected to benefit both men and women. The socio-economic cost of road accidents now established for the two entities should help provide a more rational basis for discussions on road safety and the benefits of remedial actions. (b) Institutional Change/Strengthening The Project enhanced the institutional capacity for road maintenance and the legal and institutional basis at the State and entity levels. The institutional capacity for addressing road maintenance has been enhanced in both FBH and RS as a result of experiences gained in procuring the OPBM and this will deepen as the pilots are implemented and 9 The rating of the last ISR was moderately satisfactory because at that time the road safety activities in the RS were yet to be completed and there was uncertainty as to whether the OPBM contract in the RS would be signed before project closing. The road safety activities were successfully completed and the OPBM signed. 15 monitored and emerging lessons incorporated into local practice. The threat to this assessment is that financing of road maintenance may reduce and or become unstable and thus frustrate full scale adoption of the OPBM which is best employed under a stable and regular funding scenario. It is noticeable in both Entities that the concern of their MOTC is now more on developing the motorways. It is important that for this not to be at the expense of continuing focus in improving the magistral and regional roads which could demotivate staff of FBHRD and RSRD. Regarding road safety, the road safety Laws enacted at the State level and the strategies at entity levels have provided a good legal and institutional basis for addressing road safety issues. In the RS, there is now a Traffic Safety Agency (TSA) responsible for overall coordination and guidance of road safety activities. The TSA however has no budget to directly fund road safety activities, such funds being spread across individual units with road safety responsibilities. This dilutes the coordinating powers of the TSA. This is an issue that the RS MOTC is reviewing. The existing road safety unit in FBH benefitted from interaction with and oversight of the work of the road safety consultants. (c) Other Unintended Outcomes and Impacts (positive or negative) A potential negative impact of the project is that its relative success in contributing to improving the condition of the magistral and regional road networks of FBH and RS could convey the impression that not much more needs to be done. This is far from being the case. A significant portion of these roads still need rehabilitation. Perhaps more importantly, traffic is growing and periodic maintenance of this network will be required and for some, this will need to involve improvements to their geometric alignment. Indeed, the experience of the implementing agencies in successfully carrying out the Project has positioned them to undertake similar works on the magistral and regional road networks. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops This is a core ICR for which a beneficiary survey is not required. The Project design provided however for the conduct of user surveys in relation to the road safety and OPBM pilots. Regarding road safety, the surveys in four cities in the FBH indicated that measures relating to seat belt wearing had limited impact. The reason adduced for this included police enforcement practice which was regarded as inadequate. On the OPBM, only in FBH was there implementation and that for only one year. From the user survey carried out, no clear conclusions could be drawn 4. Assessment of Risk to Development Outcome Rating: This risk is rated as moderate. Potential risk to the PDO is due principally to factors external to the Project such as the economic and financial crises in the region. This has reduced public expenditure thus affecting public investment programs and commitments and jeopardizing replication of the type of interventions carried out under the Project on the rest of the magistral and regional road network. This negative impact will be moderated however by the expected 16 increased access of the entities to EU resources for the main corridors which could increase their ability to focus expenditure on the magistral and regional road network including maintenance. However, EBRD plans to reduce its funding to the road sector and EIB may shift its future assistance to the development of the motorways. Road safety improvement actions may be neglected and fragmented. In any case, without good and well maintained roads, road safety will reduce all else being equal. Maintenance allocation needs to be maintained and results of the OPBM pilot utilized to optimize the approach to road maintenance. There is high awareness of the need to prioritize road maintenance. The main constraint is inadequate financing. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory. The Project was technically well prepared, focused on priority needs of the sector as reflected by consensus emerging on the results of ongoing studies and enjoyed good support from the government. Its design also built on the experience from the then ongoing RMSP. The deficiencies in documentation in the PAD, while contributing some delays during implementation did not in the end adversely affect the project outcome. As mentioned earlier, one of the outcome indicators had some element of complexity which could have been avoided but this did not affect its monitoring during implementation. The covenant relating to the level of road maintenance expenditure was perhaps too optimistic and should more correctly have been an indicator with set targets. This said, even as a covenant, a decision to waive it could have been taken during implementation as part of one of the project restructuring carried out. (b) Quality of Supervision Rating: Satisfactory The project was well supervised. The frequency of missions overall was appropriate after the initial hiatus after project approval. Most of the missions included field visits notwithstanding their logistical complexity. Frequency of inputs from safeguards specialists was adequate given that the Project contained no major environmental or social safeguards issues. The Task Team Leader from Washington was well supported by experienced operational and fiduciary staff based in the Country Office, and related well with counterparts. There was no road safety expert (Bank or consultant) on the Bank project team to provide technical oversight in this area. This would have been helpful given that the Project included a relatively complex road safety component. The team was quick in confirming the adequacy of the quality of works in the RS through field inspections when the Minister for Communication and Transport expressed concern. The mid-term review was comprehensive and covered the main pressing issues. The aide memoires and ISR were detailed and realistic and management guidance sought as appropriate. The two restructuring carried out reflected good project management 17 practice and helped in the achievement of key project objectives. The Bank’s project team held discussions with representatives of EBRD during most of their missions. The implementing agencies were proactive in coordinating information flow between the IFIs. The team was firm and constructive in dealing with cost overruns that were experienced during implementation without compromising achievement of the PDO. This resulted in the completion of the civil works well before the original project closing date with their quality assessed as good by the ICR mission. The proactiveness of the Bank team significantly contributed to the eventual completion of the road safety and OPBM activities in the RS. The team was also persistent in reminding the road directorates on the need for timely submission of project reports which finally resulted in more timely submission of these reports. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory This is as a result of the satisfactory rating for quality at entry and the satisfactory rating for Project supervision. The diligence and pro-activeness of Bank’s team during preparation and implementation, good cooperation with other IFIs and flexibility displayed in responding to changing government request greatly contributed to the achievement of most of the project objectives. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory The Borrower represented by the two entities FBH and RS and their respective Ministries of Transport and Finance, made good faith efforts to comply with the somewhat onerous covenant relating to the level of increase to be achieved to the allocation to maintenance. The respective entity ministries of Finance and Transport and Communication were proactive in helping the implementing agencies resolve implementation issues through intervention with the Bank team (e.g. in RS regarding potential poor quality of road works). Initial seeming indifference to the road safety component changed during implementation to a more supportive role which helped the project to accomplish much in this area despite initial constraints. (b) Implementing Agency or Agencies Performance Rating: Satisfactory. The agencies team made good efforts to ensure the project achieved its objectives, timely responding to request for information and participating in a prepared way to Bank missions. The main project activity, road rehabilitation, was completed ahead of schedule denoting good recovery from the initial delays with the target exceeded arising from efforts made by the agencies to raise additional financing from EIB and EBRD. However, significant delays were experienced in the submission of progress reports and project financial audit. In the RS, project procurement and financial management staff were 18 recruited late which created delay in the launching of some of the procurement leading to revision of the procurement plan early in project implementation. As indicated above, the time lost was later recovered. Project reports were generally quite detailed and useful for project monitoring. The Borrower’s project completion report was adequate and was in the form of an expanded progress report. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory This rating is principally due to the delays in the implementation of components 2 (road safety) and 3 (technical assistance) which led to their objectives not being fully achieved under the Project. Staffing issues delayed implementation in the RS and reallocation to component 1 (road rehabilitation) principally from component 2 significantly reduced the scope of the road safety pilot in both FBH and RS. The OPBM activities could also have been given greater attention during implementation. 6. Lessons Learned i. There are important benefits from ensuring that project sites are visited before completing appraisal. The bridges to be rehabilitated should have been visited. This could have led to a more correct assessment of needed repairs and better estimation of associated costs. ii. It is important to have separate provisions for physical and price contingencies in costing of projects as a tool for dealing with cost variations during implementation. iii. Need for timely review of procurement thresholds. The threshold for ICBs at time of appraisal was US$500,000 and still was during the ICR mission. Low thresholds for ICB can limit the participation of domestic contractors in tenders. It can lead also to increased transaction costs for counterparts and contractors arising from using the more onerous bidding criteria for ICB instead of those for NCB even when the tenders are eventually won by local contractors as happened under the RISP; iv. Programmatic/Repeater projects help to sustain institutional strengthening efforts. The road asset management system developed under the Bank financed RMSP proved useful in demonstrating the need for further investment on the maintenance of the road network and for priorities to be on the basis of calculated economic and social benefits. The road directorates in both FBH and RS have acquired the ability to use the system in their decision making. A follow-on Bank project to the RISP would help to build on experiences relating to road safety and the OPBM pilots under RISP; v. Promotional activities/ public campaigns are important components of road safety activities. Mentioned by FBHRD, these make people more aware of the impact of their actions, why certain actions are promoted by government and the need for behavior change within society; vi. Exposure to international good practices beneficial. The study tours and attendance of regional workshops and exposure to international consultants 19 proved useful in building local knowledge. In the RS, they helped to bring new perspectives to the Prime Minister’s Office and the Ministry of Finance who now see more than before the need to improve road safety and reduce maintenance costs; and vii. Relevance of covenants if not implemented. In retrospect the covenant to increase annual real expenditures on maintenance by 5 percent was onerous in light of the economic downturn. The Bank also did not enforce the covenant—in the future it would make sense to find other mechanisms to ensure changes in the pattern of expenditure. viii. Baseline indicators need to be established in a timely fashion. Where baseline values are to be determined during implementation and then used to set targets to be achieved, related activities should be designed to be able to be carried out early in implementation. For RISP, some baseline values under the road safety component were to be defined under the pilots to be carried out. Delays in carrying out the pilot activities meant that no targets could be set. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The implementing agency in the RS had no comments on the draft ICR. The implementing agency for the FBH had several comments on the draft ICR. The first related to the need to reflect the comments in the draft ICR relating to documentation of the PAD and on Bank supervision of the Project in the justification of overall Bank performance. The second was the wish to have reflected that FBHRD completed all contracts within initial project closing date due to good project management, that the Bank team had no adverse comments on the quality of civil work undertaken in the FBH and of the intention in the FBH to carry out further works using the OPBM approach but for contract of four years duration. This has been incorporated into the final ICR. A third comment was that the IFIs did not request the implementing agencies to prepare consolidated project reports including all financing (EIB, EBRD and WB). This has been incorporated into the final ICR. A fourth comment related to comment in the draft ICR relating to the procurement threshold which they took to mean that procurement delays were not entirely the fault of the implementing agencies. Finally, they considered as severe rating of the Borrowers Performance as ‘moderately satisfactory’. At the review meeting, this rating had actually been upgraded to ‘satisfactory’. In addition to these comments, they provided some minor clarification on the content of Annex 2. The full comments from FBH are included in Annex 7. (b) Co-financiers EBRD and EIB provided parallel financing. Their comments were sought on the draft ICR but none were received. (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) 20 N/A 21 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Component1: Road Rehabilitation 24.00 22.64 94.33 Component2: Road Safety 5.00 2.48 49.60 Component3: Technical 1.00 0.00 0.00 Assistance and Capacity Building Total Baseline Cost 30.00 25.10 83.67 Physical Contingencies 10% included in above amounts 0.00 Physical Contingencies 10% included in above amounts 0.00 Total Project Costs 0.00 0.00 Front-end fee PPF 0.00 0.00 .00 Front-end fee IBRD 0.00 0.00 .00 Total Financing Required 30.00 25.10 83.67 (b) Financing Appraisal Actual/Latest Type of Co- Estimate Estimate Percentage of Source of Funds financing (USD (USD Appraisal millions) millions) Borrower 5.00 2.48 49.60 International Development 25.00 22.64 94.33 Association (IDA) 22 Annex 2. Outputs by Component PAD estimate Actual (output) Actual as % of Component EUR estimate Remarks km EUR Km million based on cost/km Component 1: Rehabilitation of selected roads – FBH M17 - Gnojnice - DraÄ?evo 36.15 2.963 135.0 Completed in 2011 28.42 1.700 No variation order. M5 - Jajce - Jajce jug 8.90 0.178 94.4 Completed in 2010 5.18 0.356 (0.014) Delay due bad weather in winter. No variation order. M17 - Ostrožac - Jablanica 10.20 0.741 95.7 Completed in 2010 1 11.79 0.813 Delayed for summer holiday season. Municipal works M4 - Stanić Rijeka - 14.20 0.792 100.0 Completed in 2009 12.50 0.862 GraÄ?anica No contract variation order. M4 - GraÄ?anica - Donja 7.90 1.211 Completed in 2009 9.50 0.655 Orahovica M15 - KamiÄ?ak - KljuÄ? From Completed with national 10.00 0.690 10.00 FBHRD budget funds M15 - Sanski Most 1 - 5.00 0.457 99.9 Completed in 2009 4.76 0.328 Sanski Most 3 No variation order. M5 - Å ećerhajin most - 3.33 0.416 87.6 Completed in 2010 3.33 0.230 Korija No variation order M5 - PraÄ?a - Renovica 7.13 0.972 Completed in 2012 under EIB 7.22 0.498 cr 23924 M17 - Stup 3 – Blažuj 6.60 0.477 99.8 Completed in 2009 Remedial works done on sub- 6.22 0.429 base before main works. No variation order. M17 - Blažuj - Hadžići 3.95 0.753 Completed in 2010 9.50 0.701 No variation order. M17 - Blažuj - Stup 2 Completed from 6.10 0.421 6.10 EIB CR.23942 M5 - Jajce jug - Donji 21.15 Plan for 2012 from EIB cr 9.80 0.676 Vakuf 1 23942 M4.2 - Grahovo - Skokovi 11.25 1.265 Completed in 2011 from EIB 7.80 0.538 cr 23942 M4.2 - Skokovi - Cazin 16.50 1.755 100.0 Completed in 2011 15.98 1.102 No variation order. 9.761 of Total 148.10 9.999 168.36 which WB 7.808 Component 1: Rehabilitation of selected bridges - FBH M17 - Overpass Blažuj, 0.300 National Plan 2012 section Stup 3 – Blažuj, km budget Rehab financed from national 6+494 budget M17 - Overpass on km National 2+100, section Blažuj - Stup 0.350 budget Completed in 2009 2 M18 - Bridge over river 1.653of 100.0 Bosna and railway Å iÄ?ki which 0.350 0.195 a Completed in 2010 Brod – Sarajevo, km 108+400 variation 23 PAD estimate Actual (output) Actual as % of Component EUR estimate Remarks km EUR Km million based on cost/km M18 - Bridge over BrloÅ¡ki 0.180 99.2 potok, Å iÄ?ki Brod – 0.150 Completed in 2010 Sarajevo, km 34+268 M5 Viaduct Komar Donji Nbf Vakuf - Travnik, km 0.300 Completed in 2011 49+812 M5 Viaduct Komar Donji Nbf Planed for 2012 Vakuf – Travnik, km 0.300 Funding from national budget 50+660 M18 - Overpass across 0.239 100.0 railway in Å iÄ?ki Brod, km 0.350 Completed in 2010 1+004 Total 2.100 2.072 Component 1: Rehabilitation of selected roads - RS M1.8 Lepenica - Loncari - Completed 17.49 1.418 0.863 Blazevac R462a/463/464 Å amac - Completed Grebnice - Obudovac – 25.17 2.339 1.486 LonÄ?ari R480 DerviÅ¡i – KlaÅ¡nice Completed 9.23 0.748 0.542 road R406 Prijedor (Tukovi) – 12.00 Completed 12.00 0.576 0.717 Ljubija road R448 Podkozara – ÄŒajniÄ?e – 25.01 Completed. Addendum issued 20.63 1.151 1.148 Metaljka 30.40 No interventions from km1 to 4 due bypass to be constructed in future. Also, 3km through 30.40 1.898 1.575 town of Janja not done as it M14.1Bijeljina – Å epak would involve utilities road relocation. About 70% of works subcontracted to a losing 9.32 0.608 0.804 bidder who in separate tender M19.2 Vlasenica – Tišća is responsible of 340km of road roads including this section. EBRD funded. Pavement M15 Kozarska Dubica – 15.60 0.969 1.872 works limited to 8.6 km of the Prijedor road section. EBRD funded. No drainage works included though much 8.13 0.500 1,431 M20 KopaÄ?i – UstipraÄ?a needed. Planned pavement road works also seen as limited. EBRD funded. Significant length of guardrails needed 23.81 1.500 3.375 along riverside but not M15 Prijedor - Koprivna included in contract. Total 11.707 13.813 Component 2: Road safety (FBH) Create a results focus for 0.906 0.787 Completed road safety Test pilot measures in high- 0.280 Scope reduced due budget risk sections constraint. Total 1.620 24 PAD estimate Actual (output) Actual as % of Component EUR estimate Remarks km EUR Km million based on cost/km Component 2: Road safety – RS Creating a results focus for 0.300 1,358 Completed with delay and road safety reduced scope. Road safety Law of RS Gazetted June 21, 2011 Test pilot measures in high- Completed with delay and risk sections reduced scope. Component 3: Technical assistance and capacity building - FBH Introduction of one pilot 10.253 First year implementation of OPBM contract pilot hybrid of 184.66 km. EBRD financing supervision of works. FBH funding of works. Component 3: Technical assistance and capacity building – RS Introduction of one pilot OPBM contract. Engage Contract signed for a hybrid supervision consultant for OPBM. OPBM Individual consultant for Draft bid docs and training of prepare OPBM contract staff. 25 Annex 3. Economic and Financial Analysis 1. The appraisal economic analysis was conducted for the rehabilitation of about 354 km of magistral and regional roads in FBH and RS, which was more than what could be financed (about 240km) under the Credit. The rehabilitation works were aimed at improving (i) the ride quality leading to lower operating costs, in terms of time and money, for road users; and (ii) to guarantee structural soundness of the roads for a prolonged period and prevent collapse, leading to lower life-cycle maintenance costs of the road assets. The evaluation was done using the Highway Development and Management Model (HDM-4), which simulates life cycle conditions and costs and provides economic decision criteria for road construction and maintenance activities. 2. The ex-post economic analysis was conducted with the same methodology and model used at the appraisal economic analysis, considering actual rehabilitation costs and actual annual traffic growth rates observed over the 2006-2011 period. The appraisal period was defined at 10 years, which best account for the economic life of the rehabilitation activities under the project and the “do minimumâ€? scenario. The adopted discount rate was 12 percent and financial costs (market prices of materials, labor and equipment including taxes) were converted to economic costs, net of all transfer payments, using a financial to economic costs factor of 0.80. 3. The project road sections and their respective length and width at appraisal are given in Table 1. Thirteen projects in FBH and ten projects in RS were included on the ex-post economic evaluation with total length of 303.7 km and an average length of 13.2 km per rehabilitated section. All roads are two lane Asphalt Concrete roads with carriageway width varying from 5.5 to 11.0 meters. Table 1: Description of Project Road Sections at Appraisal FBH RS Road Road Road Length Width Road Road Road Length Width Section Section No Name Type (km) (m) No Name Type (km) (m) Lepnica - Loncari - Gnojnice - Bla2evac F1 M-17 Dracevo Magistral 28.40 7.2 R1 M1.8 (1) Magistral 17.49 7.0 Jajce - Jajce Bijeljina- F2 M-5 Jug Magistral 5.20 6.1 R3 M14.l Sepak Magistral 30.40 6.0 Kozarska Ostrozac - Dubica - F3 M-17 Jablanica 1 Magistral 11.80 6.1 R4 MI5 Prijedor Magistral 15.60 6.0 Granica RS/FBH (Stanic Rijeka) - Prijedor - F4 M-4 Gracanica Magistral 12.50 7.2 R5 M15 Koprivna (I) Magistral 23.80 6.0 Gracanica - Donja Vlasenica - F5 M-4 Orahovica Magistral 9.50 7.2 R6 M19.2 TiSCa Magistral 9.30 6.2 Sanski Most KopaEi - 1 - Sanski UstipraEa F7 M-15 Most 3 Magistral 4.80 7.2 R7 M20 (1) Magistral 8.10 6.6 Sehercehajin Prijedor most - (Tukovi) - F8 M-5 Korija Magistral 3.30 11.0 R8 R406 Ljubija (3) Regional 12.00 5.5 26 FBH RS Road Road Road Length Width Road Road Road Length Width Section Section No Name Type (km) (m) No Name Type (km) (m) Granica RS/FBH Podkozara - (Praca) - CajniEe - F9 M-5 Renovica Magistral 7.20 6.1 R9 R448 Metaljka Regional 20.60 5.5 Samac - Grebnice - Stup3 - Obudovac - F10 M-17 Blazuj Magistral 6.20 7.5 R10 R463 Loncari (1) Regional 25.10 5.5 DerviSi - Blazuj - KlaSnice F11 M-17 Hadzici Magistral 9.50 7.0 R11 R480 (1) Regional 9.20 6.5 Jajce Jug - F13 M-5 Donji Vakuf Magistral 9.80 6.0 Grahovo - F14 M-4.2 Skokovi Magistral 7.80 6.1 Skokovi - F15 M-4.2 Cazin Magistral 16.00 6.6 Sub- Total 132.00 7.0 171.60 6.1 Overall Program 303.60 6.6 4. The rehabilitation works typically included pavement rehabilitation, milling of the damaged pavement and placing 40 or 50 mm Asphalt Concrete surface layer, rehabilitation of drainage system, repair of all pathways and guardrails on bridges, traffic signalization and road markings. Table 2 gives the rehabilitation costs estimated at appraisal and the actual costs. On average the actual costs are 30 percent higher in FHB and 40 percent in RS. The ratio between actual costs and appraisal costs varies between 0.5 and 2.9. Table 2: Road Works Costs – Appraisal and Actual FBH RS Appraisal Actual Appraisal Actual Road (Euro (Euro Actual/ Road (Euro (Euro Actual/ No million) million) Appraisal No million) million) Appraisal F2 0.357 0.700 2.0 R1 1.134 0.873 0.8 F3 0.813 1.100 1.4 R3 1.518 1.159 0.8 F4 0.862 0.874 1.0 R4 0.775 1.872 2.4 F5 0.655 0.337 0.5 R5 1.200 3.375 2.8 F7 0.328 0.457 1.4 R6 0.486 0.804 1.7 F8 0.230 0.365 1.6 R7 0.400 1.164 2.9 F9 0.498 0.598 1.2 R8 0.461 0.717 1.6 F10 0.429 0.478 1.1 R9 0.921 1.148 1.2 F11 0.701 0.735 1.0 R10 1.871 1.486 0.8 F13 0.676 0.791 1.2 R11 0.598 0.515 0.9 F14 0.538 0.757 1.4 Total 9.364 13.112 1.4 F15 1.102 1.755 1.6 Total 8.889 11.882 1.3 Overall Program 18.253 24.994 1.4 27 5. The average rehabilitation cost per km estimated at appraisal was Euro 67,341 per km in FBH and Euro 54,540 per km in RS. The actual cost per km increased to Euro 121,264 in FBH and Euro 76,372 in RS. The average actual costs per km of the overall program are 40 percent higher than the appraisal estimates. Table 3 gives the road works costs per km. Table 3: Road Works Costs/Km FBH RS Road Apprais Roa Apprais No. Appr al Actu Actual Actual/ d Apprais al Actu Actual Actual/ aisal (Euro/k al (Euro/k Apprais No. al (Euro/k al (Euro/k Apprais (km) m) (km) m) al (km) m) (km) m) al F1 28.4 59,859 20.5 143,110 2.4 R1 17.5 64,837 17.5 49,932 0.8 F2 5.2 68,654 4.3 162,892 2.4 R3 30.4 49,934 30.4 38,111 0.8 F3 11.8 68,898 7.0 157,870 2.3 R4 15.6 49,679 15.6 120,000 2.4 F4 12.5 68,960 9.3 94,093 1.4 R5 23.8 50,420 23.8 141,828 2.8 F5 9.5 68,947 3.9 86,167 1.2 R6 9.3 52,258 9.3 86,421 1.7 F7 4.8 68,333 3.5 130,702 1.9 R7 8.1 49,383 8.1 143,660 2.9 F8 3.3 69,697 3.1 119,342 1.7 R8 12.0 38,417 12.0 59,740 1.6 F9 7.2 69,167 7.2 83,056 1.2 R9 20.6 44,709 20.6 55,709 1.2 F10 6.2 69,194 4.1 116,297 1.7 R10 25.2 74,335 25.2 59,029 0.8 F11 9.5 73,789 9.5 77,381 1.0 R11 9.2 64,789 9.2 55,805 0.9 Tot F13 9.8 68,980 9.8 80,760 1.2 al 171.7 54,540 171.7 76,371 1.4 F14 7.8 68,974 5.4 140,157 2.0 F15 16.0 68,875 10.5 167,965 2.4 Total 132.0 67,341 98.0 121,264 1.8 Overall Program 303.7 60,104 269.7 92,682 1.4 6. The appraisal economic evaluation was done based on 2004 traffic data and assumed that the rehabilitation work would start in 2007. An annual 4.0 percent increase in traffic has been assumed at appraisal for all vehicle types in the economic analysis. The average actual annual increase in traffic on the project road during the 2006 to 2011 period was 3.8 percent in FBH and 1.6 percent ion RS. The overall average actual annual traffic increase was 2.8 percent. Table 4 gives the available traffic data from 2004 to 2011 on the project roads. Table 4: Daily Traffic Road Average Annual Daily Traffic (vehicles per day) Annual Growth Network No 2004 2006 2007 2008 2009 2010 2011 (%) FBH F1 6,547 12,800 13,696 14,107 12,265 13,715 1.7% FBH F2 3,596 2,900 3,032 3,264 3,356 3,218 2.6% FBH F3 6,044 6,600 7,062 7,274 7,121 7,477 7,926 3.7% FBH F4 7,479 6,700 6,931 8,910 8,543 8,563 8,539 5.0% FBH F5 6,173 6,700 6,931 8,910 8,543 8,563 8,539 5.0% FBH F7 1,383 3,000 3,000 3,000 2,800 2,549 3,314 2.0% FBH F8 5,091 FBH F9 1,407 FBH F10 14,924 18,146 3.3% FBH F11 9,443 14,162 6.0% FBH F13 2,957 2,900 3,032 3,264 3,356 3,218 2.6% FBH F14 2,739 2,600 2,812 2,844 2,841 2,732 1.2% FBH F15 2,739 2,600 4,303 4,523 4,286 4,097 5,011 9.0% FBH Total 3.8% 28 Road Average Annual Daily Traffic (vehicles per day) Annual Growth Network No 2004 2006 2007 2008 2009 2010 2011 (%) RS R1 5,335 4,770 -2.2% RS R3 7,394 7,494 0.3% RS R4 1,700 2,215 5.4% RS R5 3,451 3,550 0.6% RS R6 1,486 1,553 0.9% RS R7 3,394 3,794 2.3% RS R8 1,365 1,214 -2.3% RS R9 769 1,087 7.2% RS R10 3,852 3,818 -0.2% RS R11 7,013 8,588 4.1% RS Total 1.6% Overall Program 2.8% 7. The average roughness of the project roads was 3.9 IRI, m/km, in 2004, before the rehabilitation works. With the project, the average roughness decreased by 1.8 IRI, m/km, as expected for rehabilitation works of Asphalt Concrete works. Table 5 gives the roughness in 2004 and 2011 at the project roads. Table 5: Road Roughness FBH RS Road Roughness (IRI) Decrease Road No. Roughness (IRI) Decrease No 2004 2011 (IRI) 2004 2011 (IRI) F1 4.5 1.7 2.9 R1 2.5 1.7 0.8 F2 3.9 2.5 1.4 R3 3.1 2.0 1.1 F3 6.0 2.7 3.3 R4 3.1 1.6 1.5 F4 3.2 1.7 1.4 R5 6.1 2.1 4.0 F5 3.0 1.6 1.4 R6 4.6 2.3 2.3 F7 4.7 1.9 2.8 R7 3.0 1.6 1.4 F8 3.7 1.9 1.8 R8 4.3 2.0 2.3 F9 4.3 4.0 0.4 R9 4.8 2.5 2.3 F10 4.3 R10 3.1 1.8 1.3 F11 4.3 2.1 2.2 R11 3.5 1.9 1.6 F13 3.8 Total 3.8 2.0 1.9 F14 3.0 2.4 0.6 F15 3.1 2.3 0.9 Total 4.0 2.3 1.7 Overall Program 3.9 2.1 1.8 8. The ex-post economic analysis adopts the actual rehabilitation costs per km and the actual annual traffic increase observed from 2006 to 2011 per project road. All other assumptions adopted at appraisal remain the same at the ex-post analysis. The ex-post economic analysis shows that the actual rehabilitation costs per km reduced the Economic Internal Rate of Return (EIRR) of most project roads, with only four roads yielding an ex-post EIRR higher than the appraisal estimate due to the higher observed annual traffic increase. The overall ex-post EIRR of the project is 59 percent, compared to the 86 percent EIRR estimated at appraisal. Despite the 30 percent decrease in the overall project EIRR, the project still has a robust economic justification, as expected for rehabilitation of pavements on high traffic roads, confirming the suitability of the project. Table 6 gives the ex-post economic evaluation summary. 29 Table 6: Ex-Post Economic Evaluation Summary FBH RS Appraisal Ex-Post Appraisal Ex-Post Road EIRR EIRR Ex-Post/ Road EIRR EIRR Ex-Post/ No (%) (%) Appraisal No (%) (%) Appraisal F2 50% 31% 0.6 R3 112% 129% 1.2 F3 191% 103% 0.5 R4 25% 10% 0.4 F4 125% 106% 0.9 R5 128% 62% 0.5 F5 110% 99% 0.9 R6 25% 17% 0.7 F7 38% 23% 0.6 R7 33% 14% 0.4 F8 48% 34% 0.7 R8 44% 34% 0.8 F9 36% 31% 0.9 R9 29% 23% 0.8 F10 258% 182% 0.7 R10 42% 46% 1.1 F11 153% 150% 1.0 R11 146% 159% 1.1 F13 86% 79% 0.9 Total 72% 53% 0.7 F14 81% 52% 0.6 F15 32% 16% 0.5 Total 100% 67% 0.7 Overall Program 86% 59% 0.7 30 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Highway Jacques Bure Task Team Leader ECSSD engineering Richard Martin Humphreys Program Team Leader ECSSD Oversight Bernard Baratz Consultant Specialist EASCS Environment Danielle Malek Senior Counsel LEGEC Legal Elena Y. Chesheva Operations Officer SASDT Operations Lorraine McCann Kosinski Program Assistant ECSSD Nicholay Chistyakov Senior Finance Officer LOAFC Nikola Kerleta Procurement Specialist ECSO2 Procurement Sr. Financial Management Financial Olav Rex Christensen ECSPS Specialist Management Plamen Stoyanov Kirov Procurement Specialist ECSPS Procurement Social Radhika Srinivasan Senior Social Scientist OPCFC Development Senad Sacic Team Assistant ECCBA Vesna Francic Operations Officer ECSSD Operations Ziad Nakat Transport Specialist ECSSD Transportation Ahmet Gokce Consultant ECSO2 Procurement Henry G. R. Kerali Sector Manager ECSS5 Sector Manager Sanjay N. Vani Lead Financial Management Spec OPCFM Finance Mark Walker Chief Counsel LEGES Legal Supervision/ICR Vesna Francic Senior Operations Officer ECSS6 Operations Jacques Bure Senior Highway Engineer ECSSD TTL until 11/23/09 Richard Martin Humphreys Program Team Leader AFTTR Oversight Esma Kreso Environmental Specialist ECSS3 Environment Lamija Marijanovic Financial Management Specialist ECSO3 Finance Maria Carolina Monsalve Senior Transport Economist ECSS5 TTL from 11/24/09 Jung Eun Oh Transport Economist ECSS5 Transport Specialist Social Chukwudi H. Okafor Senior Social Development Spec ECSS4 Development Social Helen Z. Shahriari Senior Social Scientist AFTCS Development Nikola Kerleta Procurement Specialist ECSO2 Procurement Senad Sacic Team Assistant ECCBA Henry G. R. Kerali Sector Manager ECSS5 Sector Manager Juan Gaviria Sector Manager ECSS5 Sector Manager Sara Gonzalez Flavell Senior Counsel LEGES Legal Baher-El-Hefnawi Program Team Leader ECSS5 Oversight Naima Hasci Senior Social Scientist ECSS4 Social 31 Development Jean-Marie Braun Consultant EASVS Highway Engineer Coral Bird Program Assistant ECSSD (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY06 4.58 22.92 FY07 31.15 151.97 FY08 17.47 78.84 Total: 53.20 253.73 Supervision/ICR FY08 0.18 00.13 FY09 15.85 92.51 FY10 20.83 92.94 FY11 23.99 87.44 FY12 15.22 61.49 Total: 76.07 334.51 32 Annex 5. Beneficiary Survey Results (if any) N/A 33 Annex 6. Stakeholder Workshop Report and Results (if any) N/A 34 Annex 7. Borrower's ICR and Comments on Draft ICR 10 1. Introduction Background. The Project builds on the results of the Road Management and Safety Project (RMSP), which was closed in June 2007. The RMSP supported institutional and sectoral reform, domestic contracting industry development, a road and bridge database for the main and regional roads, and a pilot project to improve road safety that financed advocacy campaigns and road safety equipment. The successful implementation of the RMSP, particularly the network analysis that objectively prioritized network rehabilitation needs, led EIB and EBRD to contribute significant parallel financing to the Project as indicated in Table 1 below. Table 1: Source of financing RS mil. FBH mil. Total Planned road EUR EUR (EUR rehabilitation (km) & Million) bridge rehabilitation (No.) FBH RS Own funds 5.70 2.44 8.14 150 + 15 206 WB loan * (equivalent 8.20 8.48 8.48 16.96 bridges mill SDR) EIB loan 40.00 50.00 90.00 581 505 EBRD loan 30.00 45.00 75.00 460 394 TOTAL 84.18 105.92 1,105 * Source: exchange rate Central Bank of BH on 22.05.2008: (i) 1 SDR=1. 62798 US$; (ii) 1 US$= 1. 24156 BAM and (iii) 1 EUR= 1. 95583 BAM Financing Agreement. This was signed between BIH and IDA on 22nd May 2008. The Loan became effective on 22 October, 2008. The closing date for the project was initially December 30, 2011 but later extended to June 30, 2012. Under Federation Subsidiary Credit Agreement, 8.20 million SDR (12.50 mill US$ equivalent) were on-lent to the FBIH and JP Ceste FBIH to carry out Part A and C of the Project. Under Republika Srpska Subsidiary Credit Agreement 8.20 million SDR (12.50 mill US$ equivalent) are on-lent to RS and JP RSP to carry out Part B and C of the Project. The breakdowns of the credit amount between different activities were as shown in Table 2 below. Table 2: Initial allocation of funds 11 Amount of financing Allocated Percentage of Category expressed in expenditures to SDR EUR be financed Federation of BH 1) Works for Part 1A of the Project 6,200,000.00 6,412,000.00 80% 2) Goods, works and consultants 1,600,000.00 1,655,000.00 100% services for Part 1B of the Project 10 The Report was submitted in the format of the Project’s Progress Report. The text of this annex excludes those which were not relevant to a Borrower’s Report. This annex has been reviewed and accepted by the FBHRD and RSRD. 11 Reallocation of funds entailing project restructuring took place during implementation as detailed later in this annex. 35 3) Consultant services for Part 1C of 400,000.00 413,000.00 100% the Project TOTAL 8,200,000.00 8,480,000.00 Republic Srpska 1) Works for Part 2A of the Project 6,200,000.00 6,412,000.00 80% 2) Goods, works and consultants 1,600,000.00 1,655,000.00 100% services for Part 2B of the Project 3) Consultant services for Part 2C of 400,000.00 413,000.00 100% the Project TOTAL 8,2000.00 8,480,000.00 Implementation arrangements. These were as follows: in the FBH, by the international projects unit and in the RS by a Project Implementation Team (PIT) under the Public Company RS Roads and headed by a Project Manager provided by the Public Company RS Roads. For both FBH and RS, the arrangements were same as for the implementation of the RMSP with their staff already involved in similar functions. The international projects unit in FBH and PIT in RS were responsible for carrying out procurement, loan management and reporting functions in a manner satisfactory to the Bank. They also coordinated project management for the various beneficiaries, prepared terms of reference, hired consultants, and contracted for services, training, goods, and civil works as necessary for the implementation of the project and ensured good implementation of the Environmental Management Plan (EMP). 2. Project Development Objectives and Indicators The Project Development Objectives were to reduce user costs on the priority sections of the trunk and regional road networks, to improve the institutional framework for road safety, and to modernize road maintenance practices. Progress towards the attainment of the Project Development Objective (PDO) was to be assessed through the following priority indicators: Outcome indicators. (i) Reduce user costs by at least 10 percent on roads rehabilitated under project; (ii) Establish effective road safety office at RS level and prepare a strategy and action plan; conduct pilot operations; and (iii) Satisfactory piloting of an output and performance based maintenance contract. Intermediate outcome indicators. (a) Component One: Number of kilometers of trunk and regional roads rehabilitation. (b) Component Two: (i) Percentage of vehicle and driver registries computerized; (ii) Socio-economist cost of road accidents is established; (iii) Proportion of vehicles driving at or below speed limits on pilot sections; (iv) Proportion of drivers using safety belts on pilot sections; and (v) Road safety strategy and action plan completed. (c) Component Three: (i) One pilot performance-based maintenance contract is to be signed; and (ii) Road user satisfaction is not measured via road user survey for section maintained under the output-based road maintenance sections yet. 36 3. Project Implementation, Outputs and Outcomes 3.1 Compliance with Legal Covenants The Loan had four covenants 12 and the first three covenants have been fully met by both FBH and RS. Concerning the fourth covenant, requiring the Borrower to ‘increase the resources available for maintenance works on public roads by five percent (5%) annually in real terms, starting from the budget for the year 2008, and to use such additional resources for maintenance of public works’, the outcome was as follows: Republika Srpska. This covenant has been met by the RS. This is demonstrated by the fact that RS Roads has raised funds for road maintenance considerably over the Project period (see table below). Regular maintenance increased by 95.6 percent over 2007-08, and over the first three quarters of 2010 rose by 8.6 percent compared to the same period in 2009. Cumulatively, the RS Roads exceeded the target of an annual 5 percent real rise in maintenance expenditures. % % % % change, change, change, change, Activity 2007 2008 2009 2010 2011 2007-08 2008-09 2009-10 2010-11 Regular 23.1 45.1 45.5 44.6 43.4 95.2 0.9 -2.0 -2.7 Winter 8.2 11.8 11.5 22.8 22.6 43.9 -2.5 98.3 -0.9 Total 31.2 56.9 57.0 67.4 66.0 82.4 0.2 18.2 -2.1 Federation of BH. The FBH has not being able to achieve this covenant. In JP Ceste FBIH, expenditure on regular maintenance has not risen over 2007-2011, in part due to the impact of the financial crises on its revenue sources. The main source of funding for the JP Ceste FBIH is the fuel fee, collected by the Indirect Tax Administration. The revenues from the fuel fee go to a single account, 65 percent of which go to FBH, 32 percent to the RS, and remainder to Brcko Administrative District. Out of this, 4.9 percent of FBH revenues were earmarked to roads, but it was changed to 3.9 percent in 2007. This meant that the total amount of funds earmarked for roads became a function of the total revenues, and not directly related to the revenue collected from the fuel fee. It became therefore practically impossible to plan company budgets with the same degree of certainty as when there was direct allocation of revenue from the fuel fee. 13 This said, during the period 2008 12 The Financing Agreement for the credit specifies four implementation covenants under Schedule 2, Section 1, B: (i) The Recipient shall cause the Entities to maintain the FRD and the RSRD, as the case may be, at all times during Project implementation, with terms of reference and resources satisfactory to the Association, and with competent staff in adequate terms; (ii) Recipient shall cause the Entities, through the FRD and RSRD, as the case may be: (a) to take all measures necessary to perform their respective obligations under the FM Manuals and the EMP in a timely manner and in accordance with their respective terms, and apply and implement, as the case may be, the actions, criteria, policies, procedures, and arrangements therein set forth; and (b) not amend or wave, or permit to be amended ot waived the FM Manuals or the EMP or any provisions of any one thereof, except with the prior written approval of the Association; (iii) The Recipient shall cause the Entities to ensure that no change is made to the Priority Program of Rehabilitation Works, except with the prior written approval of the Association; and (iv) The Recipient shall cause the Entities, during implementation of the Project, to increase the resources available for maintenance works on public roads by five percent (5%) annually in real terms, starting from the budget for the year 2008, and to use such additional resources for maintenance of public works. 13 Aide Memorie, March 3-8, 2011. 37 – 2010, road rehabilitation works were carried out on over 900 km of main road network with financing by the IFI’s and this significantly improved the overall condition of roads. These works included periodic maintenance, pavement repairs and traffic signalization (horizontal and vertical) as well as road equipment, the most expensive items within road maintenance costs. All previously mentioned activities are regular part of road rehabilitation projects and this accounted for the lower increase in the nominal expenditures on road maintenance costs on annual basis. The table below shows the nominal expenditures on road maintenance costs over the Project period. It indicates a ‘’slight’’ increase in routine maintenance expenditures and significant decrease in periodic maintenance expenditures. From the last column of the table below however, it will be seen that the budget plan for 2012 will see an increase of 5.35 percent in the total allocation for both routine and periodic maintenance. Table 3. FBH - Road maintenance expenditures on main road network 2007/20011 (BAM) Description Actual Actual Index Actual Index Actual Index Actual Index Plan 2007 2008 4/3 2009 6/4 2010 8/6 2011 10/8 2012 2 3 4 5 6 7 8 9 10 11 Routine 34 maintenance 30,994,609 32,993,487 106.44 33,573,331 101.75 32,857,150 97.86 32,219,742 98.06 million Periodic 12,841,267 14,298,295 111.35 4,563,528 31.92 4,713,624 103..29 6.113.216 129.69 6.35 maintenance million 43,835,876 47,291,782 107.88 38,136,859 80.64 37,570,774 98.52 38,332,958 102.02 40.35 million 3.2 Implementation of Components - Federation of BH Component 1: Rehabilitation of about 148 km selected sections of main roads and 7 bridges. The road sections rehabilitated under this component were distributed throughout the FBIH, selected on the basis of economic and other social benefits and were aimed at clearing the backlog of road maintenance. The works typically comprised pavement strengthening with asphalt overlays, shoulder stabilization, culvert and ditch rehabilitation, repair of existing or installation of new guard rails, bridge rehabilitation, minor structures repair, road marking and signing including traffic calming and safety measures within localities. Design and supervision of the road rehabilitation works were carried out from funds provided by EIB and FBIH. The sections and bridges rehabilitated under the Project were the same as indicated in the PAD (p45, Tables 4.2 and 4.3). However, due to cost overruns, only ten of the fifteen road sections of total length 112.73 km and three bridges were able to be funded from the Loan. The following remaining road sections and bridges were rehabilitated using EIB and FBIH own funds: FBH own funds. Road sections - (i) Road M-17 section: Stup 3 – Blažuj, (ii) Road M-5 Donji Vakuf - Travnik ,Viaduct Komar, km 49+812, section Jajce – Travnik –LaÅ¡va. Bridges: (i) Road M-17 Overpass on km 2+100, section Blažuj-Stup 2; (ii) Overpass in Blažuj chainage km 6+494, (Estimated cost: EUR 0.330 million); and Road M-5 Donji Vakuf – Travnik, Viaduct Komar chainage km 50+660, (Estimated cost: EUR0.320 million). EIB funds. Road sections: (i) Road M-4.2 section: Grahovo – Skokovi, km 21+500 – km 32+750, l=11.25 km (Contract value: 1,480,264.67 KM); (ii) Road M-5 section: PraÄ?a – Hrenovica, km 46+270 - km 53+400, l=7.2 km (Contract value: EUR 0.51 million); (iii) Road M-5, section: Jajce jug – Donji Vakuf 1, l=9.5 km (Contract value: EUR 1.11 million); and M17 Blazej-Stup 2. 38 For most of the roads and bridge rehabilitation works, delays were experienced due to: (i) postponed work commencement; (ii) inadequate engagement of the Contractor after starting work; and (iii) mistakes in the design. Time extensions were approved for the Contractors when submitted. Component 2: Road Safety. The objective of this component was to assist in improving road safety in BiH through a coordinated and integrated package of cost-effective, multi-sector road safety interventions designed on the basis of international best practice. First, focusing on building the appropriate institutional framework and institutional capacity; second, the implementation of policies and techniques directly in the field, through pilot operations in high- risk areas. The consultant to assist with this component was contracted on 29 November 2010 and commenced its assignment on 6 December 2010 with a duration of 12 months. The availability of supporting information such as comprehensive and accurate statistics on traffic accidents was a very serious problem in undertaking the assignment. The existing data system produced data that was either incomplete or inaccurate. The Consultant also drew attention to the insufficiency of funds under the contract allocated for the implementation of the pilot road safety project. FBHRD made efforts to obtain additional funds from WB sources (grants) or other sources of financing but these were unsuccessful. But it is important to point out that all the implemented road rehabilitation interventions had included road safety actions. Before preparation of detailed design road safety inspection checklist had to be prepared in order to include necessary interventions in the detailed design for road rehabilitation. The following main stakeholders have been involved in the road safety project: (i) JP Ceste FBIH and Road Directorates at Cantonal level (responsible for roads and road conditions); (ii) Traffic Police both at Federal and Cantonal level (responsible for traffic safety and accident reporting); (iii) Ministries (Ministry of Transportation and Communication, Internal Affairs, Health and Education) on Federal and Cantonal level; (iv) Ministry of Transportation and Communications at State level; (v) Hospitals and Health organizations (responsible for post-accident treatment); (vi) Rescue centers and Fire brigade (responsible for ambulance service and extinguishing fires); (vii) Automobile clubs (working among others with information issues like public traffic safety awareness campaigns); (viii) Insurance companies and their umbrella Insurance Association; (ix) Protection Fund (involved in payouts to 3rd parties injured by uninsured drivers); (x) Driving schools (responsible for driver education and training); (xi) Licensed Vehicle testing garages and their organization. The Consultant, through workshops and seminars, has presented and discussed best international practices in each road safety sector and with help and input of local experts, identified sectors considered to be most relevant and appropriate for BIH needs and its current stage of road safety development. The Consultant has held or participated in the following activities: 7 Seminars, 19 Workshops, 2 training courses, 2 classes at University in Faculty of Transport and Communication. In total, more than 600 persons have participated in these seminars, workshops and training and, at the university classes were held attended by over 100 students. 14 The following are the most important activities carried out by Consultant during implementation and their outputs: 1. Strengthening the Institutional Framework for Road Safety. Existing management and coordination structures for road safety in FBIH have been examined and found to be either 14 The Borrower’s Report provided detailed information on these activities. 39 nonexistent or totally ineffective. Recommendations have been made on how management, coordination and funding of road safety can be improved in FBIH. 2. Selection, planning and assisting implementation of road safety measures in pilot area. JP Ceste FBIH staff and consulting engineers’ staff have been trained in methods for Black Spot identification, analyses and treatment and Comprehensive Guidelines for Black Spot identification and treatment have also been developed. Five Black Spots were identified and mitigation measures for these spots developed. Surveys were also carried out on the “beforeâ€? situation in terms of speed and traffic behavior at these locations so that the effects of the remedial action could be evaluated once the mitigation measures implemented. 3. Review/upgrade existing road crash database and access to licensing/vehicle registration database. The existing accident database was reviewed and discussions (followed by a workshop) held with road safety department of JP Ceste FBIH, other key stakeholders and State MoTC about the problems identified with the database. The existing accident database system is managed by Federal Ministry of Internal Affairs. The problems with existing data base have been divided into four groups: organizational problems, database problems, problems with the accident summary form and general problems. The existing police database is not providing the information needed for road safety remedial work or even to providing Ministries of Internal Affairs with administrative statistics on death and injures. Because of the many problems detected in the existing database and in order to have an internationally high quality base a new accident crash database system, the Consultant recommended a procurement of a new accident crash database system which should be used to identify trends, hazardous locations etc. in order to develop countermeasures. The advantage with buying a new system will be that many of the detected database problems will be automatically solved. A new system would also include a powerful analysis module. However organizational problems will not be solved simply by buying a new data base and it has been recommended that multi-sectoral working group be formed in order to make improvements in this area. The police need to be an integrated partner in the discussion about improving or updating the database. To implement the Action Plan for Road Safety (2011-2020), Eur320,000 has been allocated by FBIH to create a new database system for road accidents which would be linked to other data bases related to road safety. This will allow the MoTC and cantons to collect, store, analyze and disclose road safety data in an effective way. The responsible authorities are the Ministry of Internal affairs (federal and Cantonal) and the Ministry of Transport and Communications of BIH. The first activity is the updating of the existing database by the Ministry of Internal Affairs who is responsible for recording accidents with possible co-financing of other stakeholders. JP Ceste BIH in its budget for 2012 of JP Ceste FBIH has not provided co-financing for this purpose, due to the budget constraints. 4. Establishing socio-economic costs of road accidents. A suitable methodology for assessing socio economic costs of road accidents in FBIH has been developed. Cost has been derived for a single accident with dead, seriously injured and slightly injured persons to be used in cost estimation and justification of Road Safety actions. The total annual losses to the FBIH economy were estimated. It is estimated that FBiH is now losing over KM 780 million each year (Euro 400 million) per year, and based on 2010 these annual losses amount to around 5.8% of the annual Gross Domestic Product (GDP) of FBiH. 5. Provide support in development of intermediate indicators of road safety performance on the network and performance monitoring. The Consultant carried out initial surveys of the main 40 indicators speed and seat-belt use both in Sarajevo and Mostar and in rural areas and later more comprehensive “beforeâ€? and after surveys were undertaken of seat belt use in Tuzla, Mostar, Sarajevo and Bihac. Local academics /researchers (7) and some students were selected and trained to do indicator surveys: the first surveys were concentrated on seat-belt use before and after a seat-belt campaign. In order to get a more complete picture of the level of road safety and to be able to focus on the most effective countermeasures, the following Safety Performance Indicators were suggested for FBiH apart from the obvious indicators of the number of fatalities, injuries and accidents: (i) Daytime wearing rates of seat belts: in front seats (passenger cars + vans under 3.5 tons), in rear seats (passenger cars + vans under 3.5 tons), by children under 12 years old (restraint systems use in passenger cars) and in front seats (Heavy Goods Vehicles + coaches above 3.5 tons); (ii) percentage exceeding the speed limit on urban and rural roads; (iii) The number and percentage of killed and severely injured car drivers or motorcycle riders that were impaired by alcohol or drug above the permitted level according to the law; (iv) number and percentage of all fatal and severe accidents that are alcohol or drug related, i.e. one of the active road users in the accident were impaired by alcohol or drugs above the permitted level according to the law; (v) reduction in the number of killed and severely injured in treated black spots; (vi) total number of killed and injured on different road types on each road authorities’ network; (vii) percentage of pedestrians among the fatalities and severely injured in road traffic accidents; (viii) daytime usage rates of safety helmet by cyclists, moped riders and motorcyclists. It was also recommended to complement these with a speed index be produced and regularly updated using data from the traffic counter on FBIH network and Police speed cameras in urban areas. Police data on the number of traffic violations were also suggested to be used as complementary information in order to follow the development of the indicators with information related to the indicators available in the accident database used. 6. Proposals on publicity programs and research development. A working group of key stakeholders (BIHAMK Automobile Association, insurance companies, police expert group, JP Ceste FBIH, insurance companies and Ministry of Transport) were established to implement a national road safety campaign on seatbelt wearing during the autumn 2011. Advices were provided to BIHAMK on a nationwide seatbelt campaign and films from overseas were acquired and broadcasted with Bosnian voiceovers. Four films on to promote use of seatbelts were received free of charge (3 from Georgia and 1 from Australia) and broadcasted on three TV channels in BIH in December 2011. JP Ceste FBIH procured 5 films (2 speeding and 3 seatbelt) from Australia and paid royalty fees for one year broadcasting in BIH. Broadcasting of these films will started in early 2012. In association with Automobile Association BIHAMK, around 1000 CDs of these films will be distributed to driving schools and large fleet operators for use in driver training and re training courses, markedly increasing the knowledge and awareness of seatbelt and speeding issues among existing and future drivers. 7. Assistance in the development of road safety intervention plans and comprehensive result- focused entity strategy. The consultant’s various experts reviewed activities in each sector and, in consultation with local experts, identified the deficiencies and the improvements needed. These recommendations were consolidated into the prepared Action Plan for FBIH. A short outline Entity level Strategy 2011-2020 was also prepared for FBIH. This Strategy provides the vision and direction for FBIH stakeholders and the framework for a FBIH specific comprehensive Road Safety Action Plan until a more comprehensive State wide Strategy can be developed. The parallel project in Republica Srpska is expected to also produce an Entity level Strategy and a comprehensive Action Plan. These two Entity level Action Plans and the interim Strategies will then form the basis for consolidated Strategy and Action plans on the State level. The developed Strategic Action Plan 2011-2020 has the five pillars of the UN Decade of Action recommendations: (i) Pillar 1: Safety Management - to strengthen Institutional capacity to 41 further Road safety efforts; (ii) Pillar 2: Safer roads and Mobility - to improve the safety of road networks for the benefit of all road users, especially the most vulnerable: Pedestrians, cyclists and motor cyclists; (iii) Pillar 3: Safer Vehicles – to improve vehicle safety by encouraging harmonization of relevant global standards and mechanisms in order to accelerate the uptake of new technologies that have an impact on safety; (iv) Pillar 4 : Safer Road Users - develop comprehensive programs to improve road user behavior; and (v) Pillar 5 : Post Crash Response - promote the improvement of health and other systems to provide appropriate emergency treatment and longer term rehabilitation for crash victims. The Road Safety Action Plan has been designed around these 5 pillars and provides more detailed information on the specific interventions, actions and capacity building required in FBIH to deliver the casualty reductions required and to introduce best international practices. Before project implementation data regarding driver license holders were kept in digital registers. The practical handling and supervision of the vehicle inspection system up to 2000 was a task for the police who still handle the registration of vehicles in digital registers. In 2000 federal Ministry of Transport and Communications delegate vehicle inspection system to IPI-Institut za privredni inžinjering Zenica as expert institution. IPI has also developed a unique IT system binding together all inspection stations and introduced identification of all inspected vehicles by video cameras. In 2011 there is in FBH 157 authorized inspection stations, whereof 55% is operated by individual owners, and these decentralized organizations require a quite comprehensive supervision system. The regular supervision by IPI is financed by a levy of 8% of the inspection fees, VAT deducted. The Consultant recommend that administrative data on activities and actors should be kept in digital registers and data bases not only concerning license holders, but also examiners, driving schools, certified supervisors. The contract of the consultant was extended to June 30th 2012 to allow them be able to harmonize the outcomes in the FBH with road safety legislative changes and activities in the RS when completed. The extension was at no additional cost. Component 3: Technical assistance and capacity building in FBH. Procurement for works for this approach of undertaking routine maintenance on pilot region was done based on local regulation (Law on Public Procurement). Hercegbosna Canton (Canton 10) with 345.20 km of main roads was selected as the pilot region in FBH. The pilot area is mountainous, with altitudes in range from 500m up to 1400 m. There are five mountain saddles: Koprivica, Borova Glava, PloÄ?a, MliniÅ¡ta and Privala where the traffic is significantly heavy during the winter and very often the winter maintenance in the region extends up to 45 days more than the planned period for winter maintenance. The road conditions on the main roads in this region are almost the same and is easier to define maintenance criteria for whole network instead partially by road sections. The selected pilot hybrid OPBM contract covers a total of 184.66 km of roads. The contract with contractor JP ‘’Cesteâ€? Mostar has a duration of three (3) years and works started at the beginning of winter season 2010 (15th November, 2010). The output and performance-based maintenance works as well as supervision services on pilot territories are financed by JP Ceste FBIH. Perfomance based maintanance contract is 'hybrid' due to the fact that regular maintanace is combination of previously used clasic method and perfomance based method, but winter maintenance is completly perfomance based method. Contractor is in charge to regularly collect data regarding OPBM contract to provide information concerning annual costs per km of maintenance and review of quality interventions, comparing to traditional contracts. However, initial analysis by the Road Maintanace and Safety Department of FBHRD were: (i) in the Contractor's Bids the prices for maintenance works items which will be perfomed by perfomance based method are increased and maintanace works items which will be perfomed on clasic method (quantities and unit price) are decreased. This price increase could be Contractor's intention to protect itself from higher risk which it will bear in this new contract; (ii) The contract 42 value for routine maintenance and winter maintenace for clasic and perfomanced based method is given in the table given below. (in BAM) Routine Winter Total maintenance maintenance Contract 2009/10 2.923.497 2.120.103 5.043.600 (standard method) Contract 2010/11 2.891.862 2.236.645 5.128.507 ( hybrid) Contract 2011/12 2.848.624 2.279.375 5.127.999 The economic benefit and savings for FBHRD is not clear from these findings. It is also difficult to evaluate what could be done to have lower bid prices for maintanance due to the limited number of the bids. Beside economic benefits, the quality of the maintenance works, maintaing of the current road conditions or their improvement and road safety are priorities of JP Ceste FBIH. In the last two years using new type of the maintenance contract, based on the supervision reports and upon examination on the site, it is noted that road conditions have improved. Advantages of a new maintenance contract (hybrid) are the following: (i) Procurment of the salt and spreading material for winter maintenance is Contractor's obligation, so saving in the procurment of the salt is approx 0,35-0,40 mill.BAM. The quantity for procurment of the salt in the classic method was approx.2100 t per anum; (ii) Supervision is monitoring road conditions which are base for payments to the Contractor but the Contractor make decision about organization for interventions on the roads; (iii) grass mowing and removal of branches include the whole road side, not only 2 m as it was the case in the clasic method, so better visibility is reached. Disadvantage of the perfomance based maintenance is that due to the less influence of the Supervisor in making decision for carring out the works, the Contractor tend to perform as soon as possible items which bring better earnings for Contractor, and not taking into consideration the needs and traffic safety on the road. Some changes in the perfomanced based maintenance contracts should be included in the further period such as: (i) Bill of quantity for winter maintenance should be divided in fixed costs of the winter maintenance and actual work costs on the snow and ice removal. Actual Work costs on the snow and ice removal depends of the winter season, precipitations, temperature. (ii) Changes in routine maintennace works like roadway cleaning, removing spreading material from shoulders and kerbs, settling the shoulders and kerbs etc. after winter period in order to improve road safety. (iii) limtation in some extent the Contractor's independence in setting up priority works and sequence for carring out the maintanace works. (iv) Enforchment of the penalities for the Contractor in case of omissions and non fulfillment of the contract obligations. The practice has shown that penalities are small and could not be considered as severe punishment for the Contractor. The limited experience of the FBHRD with OPBM so far would seem to confirm that benefits of OPBM contracts are obtained when they are of long duration (five or more than five years). Perfomance based contracts-survey carried out in July 2012 and several important conclusions can be drawn looking at the results of the survey: • That 55% of respondents were familiar with the methods applied, which is a satisfactory result considering that the introduction of new method has not been announced through mass media • That 78% of respondents confirmed significant or partial improvement over the conventional method of maintaining • 59% of respondents noticed that the works are executed well and with less delay, and that the works are carried out with minimal disruption of traffic (76%) 43 • 90% of all respondents confirmed that the condition of main roads is better than it was before using the new method of road maintenance • 81% of respondents said that the winter service works are performed on time or with a small delay 3.3 Implementation of Components - Republic Srpska Component 1: Rehabilitation of selected road sections. According to the original project description, civil works to be implemented under component 1 included pavement strengthening with asphalt concrete wearing and leveling courses, shoulder stabilization, culvert and ditch cleaning and rehabilitation, repair of existing or installation of new guard rails, bridge rehabilitation, minor structures repair, road marking and signing including traffic calming and safety measure within localities. For all road sections designers received terms of reference (TOR) which requested them to provide designs under two scenarios for each road: (i) a scenario including all items needed for full rehabilitation, and (ii) a scenario taking into account budget constraints. Fearing that bids from contractors would exceed the budget, the designers were requested by RS Roads to propose works not exceeding 80 percent of the cost estimated in the project appraisal document (PAD). Unfortunately, the second scenario with budget constraints was the one applied by the designers for all the ten road sections. During the May 2010 World Bank mission, the team conducted a global review of the designs on the basis of full rehabilitation scenario and concluded that the design proposals did not comply with a full rehabilitation as agreed at appraisal with cost reductions achieved by the designers through cancelling or diminishing thickness of pavement layers and implementing less guardrails, if any; cancellation of overlays except for badly deteriorated sections and instead providing only for treatment of potholes and cracks; replacing only damaged guardrails were replaced; drainage interventions were excluded—other than cleaning of ditches; and excluded rehabilitation of bridges along the road sections. As a result, the contracts that had been signed did not include all the works under road rehabilitation as detailed in the PAD. On the other hand, for the road sections where works had been completed, the Bank team found that: (i) water remains on the pavement, damaging the pavement structure, as drainage had not been properly considered or addressed; (ii) various obstacles along the roads were not correctly protected by guardrails and additional guardrails were needed; (iii) horizontal markings were fading quickly, which could be due to inappropriate technical specification of the paint or paint not being applied in accordance with technical specifications; and (iv) road surface looked slippery and it was recommended that friction coefficients be assessed for completed sections. In addition, bus stops had not been rehabilitated, nor had sidewalks, although the latter were not the responsibility of the RS Roads, but of the municipalities. 15 As remedy, the following actions were undertaken: (i) drainage of underground and superficial waters has to be properly addressed in all road sections 16 ; (ii) pavement structure has to be strengthened in order to increase the life period of assets; (iii) additional guardrails have to be added in order to protect vehicles from obstacles; (iv) traffic calming devices have to be introduced in town crossings; and (v) bus stops and bridges have to be rehabilitated where needed. Given the unallocated funds available under component 1, it is expected that these additional works can be financed from this component. 15 This required good coordination between RS Roads and municipalities which was not always be achieved. 16 In BIH, a general problem exists of people encroaching on the draining system, particular using the system for disposal of household water waste and blocking of water flows. The problems appear in numerous places; they have been present for a long time and have not been dealt with properly. Restoring proper drainage for both underground and superficial water should be implemented prior to any road rehabilitation. 44 Given the above deficiencies, the RS Roads suspended the four ongoing road contracts in June 2010 and revised the designs and bills of quantities (BOQs) to ensure that full rehabilitation would achieved. By September 2010, all RS road sections included in the Project had been tendered, contracts signed in December 2010 (??) and works were completed in August 2011 (???). There were concerns as to whether funds available from the Loan would be enough to fully rehabilitate all road sections included in the project. As a result, additional works were approved on the completed three road sections only after the tender on the other seven road sections (launched in September 2010) had been completed and their contract values known. In the event, these three sections did not have sufficient funds under the Loan to full pay the contractor. The outstanding amount of about EUR 3.2 million which remained to be paid to the Contractors even though the works have been completed was sourced from the EBRD. Component 2: Status of Road Safety. The objective of the component was to create a results focus for road safety interventions consistent with best international practice. Procurement of this component started late due to delays in finalizing the terms of reference and reaching agreement with the Bank on the shortlist for the assignment. The contract was eventually signed on August 2011 for completion by the revised closing project date of June 30, 2012. The contract was concluded on time with the following tasks completed: (i) supporting the establishment of the Road Safety Agency; (ii) review of all existing database and propose monitoring indicators, procedure for collection, storage, and dissemination with interconnectivity between various databases; (iii) review and propose improvements to the current road safety strategy and Law to harmonize with best practice and enhance results focus; (iv) establish the socio-economic costs of road accidents; and (v) after discussion with counterparts, select, plan and assist in implementation of pilot road safety measures in collaboration with six key stakeholders in the RS (RSA, MTC, MOI, MHS and local authority/ies) and support the creation of monitoring framework for these pilot projects. The above outputs were largely achieved as presented in Attachment 1. It was however not possible to procure police equipment, or other required equipment, under this component as planned. Outside of the activities of the project, there was significant progress on moving the road safety agenda forward: the Road Safety Law on the Republic of Srpska roads was approved by the RS National Assembly and published in Official Gazette of Republic of Srpska on Jun 21, 2011, No 063 and the Traffic Safety Agency created and its head appointed. Component 3: Introduction of output and performance - based road maintenance contracts. This component provided consulting services for the introduction of output and performance- based road maintenance contracts (OPBM) for routine and winter maintenance. A TA was engaged for the preparation of bidding documents and workshop on the approach was held for contractors on March 18, 2008. This workshop was financed from the Bank team’s preparation budget due to delay in the project becoming effective. Draft bidding documents prepared by the consultant was for a pilot hybrid OPBM of 184.66 km with a contract commencement date of November 15, 2010. However, detailed comments provided by the Bank on June 16, 2010 revealed significant flaws in the draft document which led the RSRD to engage a new consultant (individual) with funding from EBRD to (i) respond to the comments of the Bank and finalize the draft document; (ii) assist in preparing the terms of reference and bidding documents for the OPBM supervision consultancy and (iii) provide further training to RSRD staff on OPBM contracts. The initial one year contract of the consultant was later extended another year to assist in the oversight of the first year of the OPBM contract. 45 The contract is a hybrid as it consist of the normal "on order" routine summer maintenance and a performance based element limited to winter maintenance activities. The reason for this approach is that 60% the pilot network consist of recently rehabilitated road sections which were unlikely to need routine maintenance (e.g. filing potholes, repairing cracks, etc) and their inclusion in a ‘performance arrangement’ could result in paying for services not required. In addition, the RSRD was of the view that implementing a full Performance Based Contract for all Routine Maintenance Services would be too complex to go for in the first instance. A Hybrid would be more manageable for RSRD, understandable and attractive for the contractors, and would also stand more of a chance of success, in both attracting local contractors to bid and also in its operation and management. 17 A number of changes were made to the deliverables contained in the original TOR for the individual as a result of adopting the hybrid approach. The key revision was to change the task ‘preparation of bidding documents’ to training RSRD staff to carry out the supervision and monitoring of the Pilot Contract’. It was decided to make this change for a number of reasons. First the hybrid form of contract meant any supervising consultant would only be required during the winter period. Because of this it was felt that employing a Supervisory Consultant would not be good value for money for RSRD. Secondly, and more importantly, it was felt that it would be more beneficial to RSRD if its own supervisory staff were trained to undertake the supervision especially given that they would be carrying out the supervision of the routine and summer maintenance of this contract in any event. This training was provided before which discussions were held with the RSRD staff to be trained to establish their current maintenance practices to allow the procedures proposed in the training to fit, as much as possible, with those current practices. To date, training conducted has consisted of a workshop with these staff into the principles behind performance based maintenance and also what they should do when supervising the contractor. The consultant will provide additional guidance to the supervisors throughout the first winter period of the contract. The OPBM Contract will be procured according t the Public Procurement Law of BiH. The project outcome indicator for this component is to complete a satisfactory pilot of an OPBRMC. Intermediate outcome indicators include: (i) Selection of contractor and contract is implemented; (ii) measurement of annual costs per km for maintenance; (iii) review of the quality interventions; and (iv) road user satisfaction measured via road user survey. The contract was signed on June 25, 2012. 3.4 Changes made during implementation to project scope, approach and financing The most significant change were the reallocation of funds to provide additional funds for component 1 in order to allow for full rehabilitation of the road sections financed by the project. In addition, there were significant changes to the time frame for implementing the project due to delays to the planned procurement as a result of need to revise the designs for the roads to be rehabilitated. The approach to the OPBM was also changed to become a ‘hybrid’. Changed also were the proposed network of roads to be included in the Pilot project. 17 RSRD maintenance department is preparing Bidding Documents for maintenance for the next 4 years. They proposed 1 of 13 areas of network to be maintain in pilot project taking into account that selected sections pass through 3 areas what will cause more expensive costs for other sections in this areas. This network for OPBM Contract consists of 8 sections of which 77.6 km are trunk roads and 122.66 km are regional roads. 46 Reallocation of Loan funds RS: The credit allocations per component as a result of a request by the RS to change the allocations to take into account changes during project implementation. Considerable progress was made in implementing many of the planned road safety outside of the Project The Republika Srpska approved a road safety strategy in December 2008, "Republika Srpska Road Safety Strategy (2009-2013)". Road Safety Law on the Republic of Srpska roads was approved by the RS National Assembly and published in Official Gazette of Republic of Srpska on Jun 21, 2011, No 063. Meanwhile, the Federation passed the "Basis of the Road Transport Safety Strategy (2008-2013)" in September 2008 and had developed an Action Plan for implementing its strategy. The scope of works for the road safety consultancy services could therefore be reduced. Due to delays in project effectiveness, the World Bank decided to finance technical assistance for the introduction of output and performance based road maintenance contracts (OPBRMC) through Bank budget, instead of through the Technical Assistance and Capacity Building component of the project. This has reduced the need for financing for this component. For financing of technical assistance for OPBM Contract EBRD loan is used. As a result the above development, the RSRD asked the RS Ministry of Finance to request a reallocation of funds for this project, reallocating 50 percent of project funds from component 2 and 3 to component 1. The additional fund for component 1 was used to finance the remaining road sections under the rehabilitation of roads component of the project as rehabilitation costs had been higher than estimated during project preparation, and the additional funds helped to complete the program of road rehabilitation. The reallocation of funds was approved by World Bank management on September 17, 2010 and the amount of funding available per component became: (1) Works for Part 2.A of the 80 % expenditures to be 7,400,000 Project financed (2) Goods, works and 100 % expenditures to be consultants’ services for Part 600,000 financed 2.B of the Project (3) Consultants’ services for 100 % expenditures to be 200,000 Part 2.C of the Project financed TOTAL 8,200,000 As Component 3 is to be financed by EBRD funds and as a result the RS Roads asked the RS Ministry of Finance to request another reallocation of funds for this project which was approved by World Bank management on July 7, 2011 the amount of funding (in SDR) available per component became: Item Category First Second % of expenditures to restructuring restructuring be financed 1 Works for Part 2.A of the 7.40 6.99 80 Project 2 Goods, works & 0.60 1.21 100 consultants’ services for Part 2B of the Project 3 Consultants’ services for 0.20 0.00 100 Part 2C of the Project Total 8.20 8.20 47 The RSRD also requested extension of the project to allow the road safety consultancy to be completed. The duration of implementation of the project was extended to June 30, 2012. FBH: JP Ceste FBIH asked for reallocation of funds due to lack of funds for rehabilitation works. The requested reallocation of 1,200,000 SDR were from consultant’s services category (800,000 SDR from Part 1B and 400,000 SDR from Part 1C) to work category. After approval by the Bank, the amounts allocated to each of the categories became as shown in the table below: Amount of Financing % of expenditures to Category Allocated in SDR) be financed A. Part 1 of the Project 7,400,000.00 80% 1) Works for Part 1A of the Project 2) Goods, works and consultants services 800,000.00 100% for Part 1B of the Project 3) Consultant services for Part 1C of the 0.00 100% Project Total Amount 8,200,000.00 4. Project Outputs and Performance Indicators 18 5. Compliance with Environmental and Social Safeguard and Fiduciary Environment and Social Safeguards Management The project involved implementation of physical investments that consist of minor civil works, mostly repaving and reconstructive interventions of existing secondary and local roads and bridges within the existing right-of-way. No long lasting environmental impacts were expected or arose. The major environmental issues identified within the EMPs were: (i) dust generation and fumes during works and during supply of materials to be used; (ii) exhaust fumes from machinery and leaks; (iii) disruptions to traffic; and (iv) construction waste management. Since the project encompasses already existing roads, no changes to runoff patterns are likely. All of the identified environmental impacts within the EMPs were mitigated through standard practices of good engineering. EMP forms were included in the tender documents and contracts for subcontractors. The site supervisors conducted regular checks on the implementation of mitigation measures, as set forth in the EMP document. The majority of waste generated on site was the scraped asphalt from the former road paving and some municipal waste generated by the workers on site. The scraped asphalt was either provided to the local population (individual home or business owners which would use this material to cover their gravel parking lots or macadam access roads) or was disposed of at the site designated for such use by the local municipality. Old guard rails and other metal scrap will either be reused or recycled and are currently stored at the material supply location described above. Concerning environmental monitoring, permits for material supply were submitted to the RS Roads prior to the start of works, while covered truck loads were verified by the site supervisor visually. Generation of dust and noise were not monitored but no complaints were received. No leakage into the soil was observed during works or at the storage site. The project did not fund activities that would cause any form of land acquisition or restriction of access to sources of livelihoods in the RS. Road rehabilitation was conducted within existing publicly owned right-of-way. The project appraisal document required the RS Roads 18 These are as discussed in main ICR, particularly in Annex 2 for the outputs and not detailed here. 48 Directorate to prepare community surveys to assess the impact of (i) road and bridge rehabilitation; (ii) road safety pilots; and (iii) output and performance based road maintenance contract (OPBRMC). These community surveys are yet to be prepared and conducted by the RSRD. The surveys were carried out in cooperation with the entity Motor Club Association. Surveys concerning the impact of the pilot road safety projects were made once the pilot road safety projects were decided by the RS Roads, while surveys to assess the impact of OPBRMC will be conducted to assess the impact of the introduction of these contracts. Fiduciary Project financial management arrangements were reviewed in the context of the BH Portfolio Fiduciary Review in February 2010, including project accounting and reporting, staffing, internal control procedures, and flow of funds. In order to further strengthen internal controls in the RS Roads the World Bank team elaborated recommendations, namely: (i) timely submission of unaudited interim financial reports (IFRs), 45 days after the end of the quarter; (ii) use of proper eligibility percentages; and (iii) monitoring the uploading of prior review contracts in the World Bank’s systems. The quarterly IFRs are submitted for regular review to the Bank. There are no overdue audits for the project and a temporary audit waiver was granted for FY 2009 in order to combine this audit with the one for FY 2010, which is due on June 30, 2011. Relevance of Project Development Objectives FBH With the exception of the item noted below, the project objectives and goals are still relevant. Application period of the PBMC is very short (2 years), which is not sufficient for final evaluation of the success and expansion of method to other areas. Also, since the absence of financial effect - savings in applying method, JP Ceste FBIH intend to apply method on the same field and to follow results in the period of next 4 years, after which final outputs of method application would be issued. RS The Project Development Objectives are to reduce user costs on the priority sections of the trunk and regional road networks, to improve the institutional framework for road safety, and to modernize road maintenance practices. By the World Bank Loan 240 kilometers of trunk and regional road are rehabilitated. As per Report on Intermediate Indicators the percentage of savings for road users in starting time interval (year 2011) covers area from above 6% to below 38 %. Overall savings represented through calculated Road User Costs per km vehicle are 10.5 %. Road safety Agency in Republic of Srpska is established. Road safety strategy and action plan are completed. Please find attached Report on Intermediate Indicators. Pilot performance-based maintenance contract is signed. Winter 2012 will be first winter with this kind of maintenance and relevance will be seen in next few years. 49 The road safety component is finished by the June 30, 2012. Final Report is sent to the WB office in Sarajevo. 6. Performance of the Borrower and the Bank Both FBH and RS were appreciative of the very good cooperation between them and the Bank team. They were made particular note of the support from the CO which helped to quickly resolve problems particularly in relation to procurement. COMMENTS ON DRAFT ICR The RSRD in their response to the request for comments on the draft ICR stated that they had no comments. The comments below were received from the FBHRD. We have studied BH ICR draft and our comments are the following: Page 6 para 2.1 Project Preparation, Design and Quality at Entry „ As with earlier Bank operations, designs and bid documents for roads and bridges to be rehabilitated were based on visual surveys and not available for review during preparation.“ We could not agree with mentioned due to the fact that project preparation was based on the study for priority interventions on main roads in FBH which used date from Road and Bridge Data Base established in FB and updated data of AADT and visual survey. Page 6. „Documentation of the Project in the PAD could have been improved. For example, description of component 1 in the main part of the PAD omitted the length of roads to be rehabilitated in each entity, did not indicate that bridges would be rehabilitated in FBH. More information could also have been provided in annex 4 of the PAD on the approach to cost estimation, particularly the possible impact of the still prevalent post conflict situation in the country which introduced an element of uncertainty to the estimation of costs. „ These recommandation have not been included in Justification of Rating for Overall Bank Performance. Page 8. Para 2.2 implementation “Implementation of the Project was rated in the ISR as satisfactory up to the time of its mid-term review. Subsequently, the rating was downgraded to moderately satisfactory up to Project closing except for one occasion when the rating was satisfactory.â€? Main delays in implementation described in this paragraph related to RS (procurement, road design approach lower in standard than agreed, trying to deal with higher than estimated bid prices they had launched under other IFI projects etc) and part of them to the complex administrative approval process at the State and entity levels for effectiveness of 50 the Credit which is out of control of implementing agency, leading to extension of the Project closing date by six months. It is not stated in this paragraph that FBH completed all procurement and implemented all contracts within initial project closing date due to the good project management. Also it is not mentioned that Bank team have no remarks on the technical standards used for road and bridge rehabilitation works such as the quality of the works which is set forth in the Aide –Memoire during supervision Missions. FBH implemented PBMC but point out that application period of the PBMC is very short (2 years), which is not sufficient for final evaluation of the success and expansion of method to other areas. Also, since the absence of financial effect - savings in applying method, JP Ceste FBIH intend to apply method on the same field and to follow results in the period of next 4 years, after which final outputs of method application would be issued. „ A total of eight Bank supervision missions were carried out during implementation of the Project in line with the regional norm of two supervision missions per fiscal year. There were however notable gaps in their timing with the first twelve months after negotiation and ten months after approval. It was during this period that errors occurred in the design approach applied in the RS to road rehabilitation under component 1. Project supervision consultants did not accompany the Bank team and counterpart staff during field visits.“ Above mentioned is not taken into consideration for Justification of Rating for Overall Bank Performance. Page 9. Para 2.Implementation „The ageement during project preparation to have common formats for project reports would appear not to have been followed up. This was a missed opportunity for the Bank team to obtain information on cost of contracts being financed by EIB and EBRD which could have been useful to the Bank in dealing with cost overruns.“ Cost of contracts being financed by EIB and EBRD could be obtained from implementing agency by request of the Bank Team at any time during the implementation of the Project, beside the fact that no IfI's asked implementing agaencies to prepare consolidated project reports including all financing (EIB,EBRD,WB). Page 11. Para 2.4 Safeguard and Fiduciary Compliance Fiduciary „There were material delays in carrying out procurement tasks in the directorates, particularly RSRD. Deficiencies in documenting the procurement plan in the PAD also contributed to observed delays during implementation. The procurement threshold for International Competitive Bidding (ICB) was US$500,000 potentially restricting participation of domestic contractors or increasing their transaction costs: in Moldova, the threshold at the time of appraisal of the RISP was US$1,000,000. These elements contributed to overall implementation delays as a result of which procurement performance is rated moderately satisfactory.“ Above mentioned indicate that overall implementation delays as a result of which procurement performance is rated moderately satisfactory is not only responsibility of the implementing agency. 51 page 17. Para 5.1 Bank Perfomance Justification of Rating for Overall Bank Performance Rating: Satisfactory „This is as a result of the satisfactory rating for quality at entry and the satisfactory rating for Project supervision. The diligence and pro-activeness of Bank’s team during preparation and implementation, good cooperation with other IFIs and flexibility displayed in responding to changing government request greatly contributed to the achievement of most of the project objectives. „ We could not agree about pro-activeness of the Bank team during preparation and begining of the implementation due to the statements mentioned in para 2.2 page 8 and para 2.4 page 11 mentioned above. Page 18.Para 5.2 Borrower Performance (b) Implementing Agency or Agencies Performance Rating: Moderately satisfactory. „The agencies team made good efforts to ensure the project achieved its objectives, timely responding to request for information and participating in a prepared way to Bank missions. However, significant delays were experienced in the submission of progress reports and project financial audit which hampered monitoring of project performance. In the RS, project procurement and financial management staff were recruited late which created delay in the launching of some of the procurement leading to revision of the procurement plan early in project implementation. Project reports were generally quite detailed and useful for project monitoring. The Borrower’s project completion report was adequate and was in the form of an expanded progress report.“ We regard that this rating is severe. In the Annex 2 we indicated in blue completed projects and actual cost so the total could be adjusted and from this table is evident that in FBH actually more kilometers are rehabilitated of estimated. Annex 2. Outputs by Component PAD Actual as % Actual (output) estimate of estimate Component Remarks EUR based on km EUR Km million cost/km Component 1: Rehabilitation of selected roads - FBH M17 - Gnojnice - 135.0 Completed in 2011 28.42 1.700 DraÄ?evo 36.15 2.963 No variation order. M5 - Jajce - Jajce jug Completed in 2010 0.178 94.4 Delay due bad 5.18 0.356 8.90 (0.014) weather in winter. No variation order. M17 - Ostrožac - 0.741 95.7 Completed in 2010 Jablanica 1 10.20 Delayed for summer 11.79 0.813 holiday season. Municipal works M4 - Stanić Rijeka - 0.792 100.0 Completed in 2009 GraÄ?anica 12.50 0.862 14.20 No contract variation order. M4 - GraÄ?anica - Donja 9.50 0.655 7.90 1.211 Completed in 2009 52 PAD Actual as % Actual (output) estimate of estimate Component Remarks EUR based on km EUR Km million cost/km Orahovica M15 - KamiÄ?ak - KljuÄ? From Completed with 10.00 0.690 10.00 FBHRD national budget funds M15 - Sanski Most 1 - 5.00 0.457 99.9 Completed in 2009 4.76 0.328 Sanski Most 3 No variation order. M5 - Å ećerhajin most - 3.33 0.416 87.6 Completed in 2010 3.33 0.230 Korija No variation order M5 - PraÄ?a - Renovica 7.13 0,972 Completed in 7.22 0.498 2012,EIB cr.23924 M17 - Stup 3 – Blažuj 6.60 0.477 99.8 Completed in 2009 Remedial works done 6.22 0.429 on sub-base before main works. No variation order. M17 - Blažuj - Hadžići 3.95 0.753 Completed in 2010 9.50 0.701 No variation order. M17 - Blažuj - Stup 2 Completed from 6.10 0.421 6.10 EIB CR.23942 M5 - Jajce jug - Donji 21.15 Plan for 2012 from 9.80 0.676 Vakuf 1 EIB cr 23942 M4.2 - Grahovo - 11.25 1,265 Completed in 2011 7.80 0.538 Skokovi from EIB cr 23942 M4.2 - Skokovi - Cazin 16.50 1.755 100.0 Completed in 2011 15.98 1.102 No variation order. 9.761 of Total 148.10 9.999 168.36 which WB 7.808 Component 1: Rehabilitation of selected bridges - FBH M17 - Overpass Blažuj, 0.300 National Plan 2012 section Stup 3 – Blažuj, Rehab financed from km 6+494 national budget M17 - Overpass on km nbf 2+100, section Blažuj - 0.350 Completed in 2009 Stup 2 M18 - Bridge over river 1.653of 100.0 Bosna and railway Å iÄ?ki which 0.195 0.350 a variation Completed in 2010 Brod – Sarajevo, km 108+400 M18 - Bridge over 0.180 99.2 BrloÅ¡ki potok, Å iÄ?ki Brod 0.150 Completed in 2010 – Sarajevo, km 34+268 M5 Viaduct Komar Donji Nbf Vakuf - Travnik, km 0.300 Completed in 2011 49+812 M5 Viaduct Komar Donji Nbf Plan 2012 Vakuf – Travnik, km 0.300 Funding from 50+660 national budget M18 - Overpass across 0.239 100.0 railway in Å iÄ?ki Brod, km 0.350 Completed in 2010 1+004 53 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders No comments were received from either of EBRD or EIB although requested. 54 Annex 9. List of Supporting Documents 1. Project Appraisal Document (40381-BA) 2. Loan Agreement (LN IDA - 43710) 3. Implementation Completion and Results Report (ICR 0000536) 4. Project aide memoires, Back-to-Office Reports, Implementation Status Reports 5. Country Portfolio Fiduciary Review Report, OPCS, ECA Region, September 2010. 6. Restructuring Papers (Nos. 56034-BA and 62724-BA) 7. Country Partnership Strategy for Bosnia and Herzegovina, FY08-11) 8. Country Partnership Strategy for Bosnia and Herzegovina, FY012-15) 9. Progress report for RSIP – Republic of Srpska, March 2012 10. Semestral Report for RISP – Federation of Bosnia and Herzegovina, February, 2012 11. Road Safety Management Capacity Review, May, 2007 12. Various reports from the road safety studies in the FBH and RS. 55 RUSSIAN RUSSIAN FED. FED. BELARUS BOSNIA AND HERZEGOVINA NETH. GERMANY POLAND ROAD INFRASTRUCTURE AND SAFETY PROJECT 50° LUX. CZECH UKRAINE FRANCE REP. VAK REP. SLO MOLDOVA AUSTRIA SWITZ. HUNGARY PROJECT ROAD SEGMENTS TO BE REHABILITATED SLOVENIA ROMANIA RAILROADS CROATIA PRIMARY ROADS BOSNIA DAYTON AGREEMENT LINES AND HERZ. SECONDARY ROADS ITALY SERBIA Black INTERNATIONAL BOUNDARIES Adriatic BULGARIA Sea Sea SELECTED TOWNS MONTE- FYR MACEDONIA Tyrrhenian NEGRO NATIONAL CAPITAL ALBANIA 40° Sea 40° MAIN RIVERS GREECE Aegean TURKEY Sea 10° 20° To Zagreb 16°E 17°E To Bjelovar 18°E 19°E To Osijek CROATIA To U na Karlovac ˇ Bosanska Gradiska Sa Bosanski Brod Bosanska Novi ˇ (Srp. Gradiska) v a (Srp.Brod) To Belgrade (Novi Grad) as 45°N Prijedor De Dervent rventa Derventaa 45°N Vbr Cazin sna Sava Bo Bosanska ˇ Brcko Bihac´ Krupa Banja a Sanski Most Luka Bijeljina Drin Gracanica ˇ To Belgrade To S Sveti Rok U an na a Bosanski Varos Kotor Varos ˇ ´ Teslic Teslic Petrovac Maglaj Tuzla Tuzla ˇ Kljuc REPUBLIKA SRPSKA CROATIA ˆ Spreca To Medak D rvar rva Drvarr ´ M Vlasic ts. Mts. Kri va ja To Valjevo Jajce Travnik Travnik Zenica SERBIA D To Obrovac Kladanj Vlasenica Vareˇ s Vares i Vr s Bosna ba Srebrenica n Bugojno Visoko Visoko REPUBLIKA a 44°N D ri 44°N na FEDERATION OF SRPSKA r To Kraljevo i To Zadar BOSNIA AND SARAJEVO c Livno Pale HERZEGOVINA ˆ Visegrad Visegrad Jablanicko jezero A Gorazde ˇ Jablanica Konjic im l L To Sjenica Ne p ˇ Foca retv (Srbinje) s a Mostar Ta ra Gacko Piv Stolac a 43°N 43°N Bileca ´ MONTENEGRO Trebinje Trebinje To Podgorica Adriatic Sea To Shkodër 0 10 20 30 40 50 Kilometers This map was produced by the Map Design Unit of The World Bank. ALBANIA SEPTEMBER 2007 The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank 0 10 20 30 Miles IBRD 35620 Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 16°E 17°E 18°E 19°E