Document of The World Bank Report No: ICR3044 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-73980) ON A LOAN IN THE AMOUNT OF US$ 75.00 MILLION TO THE PROVINCE OF CORDOBA, ARGENTINA FOR A PROVINCIAL ROAD INFRASTRUCTURE PROJECT April 21, 2014 Sustainable Development Department Argentina, Paraguay and Uruguay Country Management Unit Latin America and Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective: April 21, 2014) Currency Unit= Argentine Peso (AR$) AR$ 1.00 = US$ 0.125 US$ 1.00 = AR$ 8.001 FISCAL YEAR [January 1 – December 31] ABBREVIATIONS AND ACRONYMS ACIF Cordoba’s Agency for Investment and Financing (Agencia Córdoba de Inversión y Financiamiento) CAS Country Assistance Strategy CREMA Performance-based Rehabilitation and Maintenance Contracts (Contrato de Rehabilitación y Mantenimiento por Resultados) DNV National Directorate of Highways (Dirección Nacional de Vialidad) DPAT Directorate of Road Accidents Prevention (Dirección de Prevención de Accidentes de Tránsito) DPV Provincial Directorate of Highways (Dirección Provincial de Vialidad) ERR Economic Rate of Return GDP Gross Domestic Product GoA Government of Argentina GoP Government of the Province HDM Highway Development and Management Model IBRD International Bank for Reconstruction and Development INDEC National Institute of Social and Population Statistics (Instituto Nacional de Estadísticas y Censos) IRI International Roughness Index ISR Implementation and Status and Results Report NPV Net Present Value NR National Road MOF Ministry of Finance (Ministerio de Finanzas) PAD Project Appraisal Document PDO Project Development Objective PFM Provincial Financial Management System PMCP Provincial Roads Improvement Program PMU Project Management Unit PC Province of Cordoba PR Provincial Road PRPII Provincial Road Project Phase II PMAyS Environmental and Social Management Plan REP Resettlement and Expropriation Plan SIAF Integrated Financial Management System (Sistema Integrado de Agregación Financiera) UTES Sectorial Implementation Technical Units (Unidades Técnicas Ejecutoras Sectoriales) Vice President: Hasan Tuluy Country Director: Sabine Hader (acting) Sector Manager: Aurelio Menendez Project Team Leader: Verónica I. Raffo ICR Team Leader: Verónica I. Raffo / Stephen Muzira ARGENTINA Cordoba Provincial Road Infrastructure Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 6 3. Assessment of Outcomes .......................................................................................... 17 4. Assessment of Risk to Development Outcome......................................................... 22 5. Assessment of Bank and Borrower Performance ..................................................... 23 6. Lessons Learned ....................................................................................................... 26 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 27 Annex 1. Project Costs and Financing .......................................................................... 28 Annex 2. Outputs by Component ................................................................................. 29 Annex 3. Economic and Financial Analysis ................................................................. 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 41 Annex 5. Beneficiary Survey Results ........................................................................... 43 Annex 6. Stakeholder Workshop Report and Results................................................... 45 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 50 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 71 Annex 9. List of Supporting Documents ...................................................................... 72 MAP .............................................................................................................................. 73 A. Basic Information AR Cordoba Road Country: Argentina Project Name: Infrastructure Project ID: P099585 L/C/TF Number(s): IBRD-73980 ICR Date: 04/15/2014 ICR Type: Core ICR PROVINCE OF Lending Instrument: SIL Borrower: CORDOBA Original Total USD 75.00M Disbursed Amount: USD 75.00M Commitment: Revised Amount: USD 75.00M Environmental Category: B Implementing Agencies: Agencia Cordoba de Inversion y Financiamiento Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 02/14/2006 Effectiveness: 12/13/2006 12/13/2006 12/23/2009 Appraisal: 05/17/2006 Restructuring(s): 09/04/2012 Approval: 07/11/2006 Mid-term Review: 07/31/2010 07/31/2010 Closing: 10/31/2012 10/31/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory 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: 1 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No Satisfactory at any time (Yes/No): (QEA): Problem Project at any Quality of No Satisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Rural and Inter-Urban Roads and Highways 97 97 Sub-national government administration 3 3 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 40 40 Injuries and non-communicable diseases 20 20 Municipal finance 20 20 Municipal governance and institution building 20 20 E. Bank Staff Positions At ICR At Approval Vice President: Hasan A. Tuluy Pamela Cox Country Director: Sabine Hader Axel van Trotsenburg Sector Manager: Aurelio Menendez Jose Luis Irigoyen Project Team Leader: Veronica Ines Raffo Pierre Graftieaux ICR Team Leader: Veronica Ines Raffo ICR Primary Author: Mirtha Susan S. De Pokorny Stephen Muzira F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) Improve the reliability of the Province's road sector assets and the efficiency of their management as a means to support the Province's competitiveness and economic growth, by building up institutional capacity to encourage efficient planning policies and adequate resource allocation for the rehabilitation and maintenance of the core provincial road network. 2 Revised Project Development Objectives (as approved by original approving authority) (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 Percentage of projects in ACIF's portfolio with financial, production and impact Indicator 1 : indicators defined and monitored Value quantitative or 50% 100% 95% Qualitative) Date achieved 10/02/2006 10/31/2012 10/31/2013 Comments Target largely met. ACIF's projects are monitored on the basis of a multiplicity (incl. % of indicators, including financial, production and impact indicators. achievement) Road assets preserved with acceptable average roughness (IRI) to avoid Indicator 2 : accumulation of future liabilities and reduce operational costs Value quantitative or 3.10 IRI below 3 2.8 Qualitative) Date achieved 10/02/2006 10/31/2012 10/31/2013 Comments Target met. Based on the latest DPV information the average IRI in the network (incl. % is below 3 (2.8). 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 : Strategic 5-year road program prepared and published Value Yes (revised (quantitative No Yes annually) or Qualitative) Date achieved 10/02/2006 10/31/2012 10/31/2013 Target partially met. A strategic 5 year program was prepared during the project's Comments 1st year. Currently, because of budgetary uncertainties the planning horizon was (incl. % reduced to 1 year, on the basis of network condition and performance surveys achievement) and indexes. Indicator 2 : ACIF Annual Performance Reports publicly disseminated Value No Yes Yes (quantitative 3 or Qualitative) Date achieved 10/02/2006 10/31/2012 10/31/2013 Comments Target met. The Agency prepares programs and budgets that, as is the case with (incl. % other government agencies, are included in the web site of the Ministry of achievement) Finance (www.cba.gov.ar). Indicator 3 : Ministry of Finance Annual Performance Reports publicly disseminated Value (quantitative No Yes Yes or Qualitative) Date achieved 10/02/2006 10/31/2012 10/31/2013 Target met. The Ministry made substantial inroads in the improvement of Comments transparency and governance through the dissemination of budgets and (incl. % provincial accounts and performance reports, publicly disseminated at achievement) www.cba.gov.ar. Strategy to address road safety management capacity strengthening priorities Indicator 4 : designed and road Safety Plan Implemented Value Road Safety Plan (quantitative No Plan implemented prepared and or Qualitative) implemented Date achieved 10/02/2006 10//31/2012 10/31/2013 Comments Target met. A comprehensive Road Safety Plan was prepared and successfully (incl. % implemented. The project is now also monitoring road safety indicators related to achievement) reduction in deaths caused by traffic accidents on provincial roads. Indicator 5 : Coverage of CREMA system in targeted network (i) 5% (under this (i) Without PRPII (i) Without project: 140km Value 10% PRPII 5% under CREMA 3) (quantitative 0 (ii) With PRPII (ii) With (ii) 12% (with other or Qualitative) 25% PRPII 10% CREMAs financed under the PRPII) Date achieved 10/02/2006 10/31/2012 12/23/2009 10/31/2013 Target partially met. A total of 542 km (with this project plus Provincial Roads Comments Project II) have been maintained under CREMA contracts. In addition, 4,040 km (incl. % of the paved network (with a total of 4,601 kms) are maintained under achievement) "Cobertura" contracts. Indicator 6 : 291 km of key productive roads rehabilitated Value (quantitative 0 km 291 km 140 km 140 km or Qualitative) Date achieved 10/02/2006 10/31/2012 12/23/2009 10/31/2013 Comments Target met, on the basis of the formally revised target. Original target of 291km (incl. % reduced to 140km given funding constraints. achievement) Indicator 7 : 174 km of key productive roads paved Value (quantitative 0 km 174 km 125 km 125 km or Qualitative) Date achieved 10/02/2006 10/31/2012 12/23/2009 10/31/2013 4 Comments Target substantially met. Original target of 174 km reduced to 125 km given (incl. % funding constraints. achievement) 596km km of roads maintained with no potholes, no edge break between the Indicator 8 : pavement and shoulders, horizontal marking and vertical signs restored Value (quantitative 0 km 596 km 424 km 542 km or Qualitative) Date achieved 10/02/2006 10/31/2012 12/23/2009 10/31/2013 Comments Target met. Target of number of Km rehabilitated, paved and maintained revised (incl. % due to cost escalations. Total extension of the network maintained is 542 km achievement) (with this project and 2nd Provincial Roads Project). G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 09/15/2006 Satisfactory Satisfactory 0.00 2 05/08/2007 Satisfactory Satisfactory 2.19 3 11/19/2007 Satisfactory Satisfactory 4.00 4 06/04/2008 Satisfactory Satisfactory 10.55 5 11/25/2008 Satisfactory Satisfactory 26.55 6 05/12/2009 Satisfactory Satisfactory 38.48 7 11/30/2009 Satisfactory Satisfactory 52.62 8 05/15/2010 Satisfactory Satisfactory 61.61 9 02/16/2011 Satisfactory Satisfactory 69.69 10 07/27/2011 Satisfactory Satisfactory 72.17 11 01/30/2012 Satisfactory Satisfactory 72.17 12 09/06/2012 Satisfactory Satisfactory 72.17 13 03/20/2013 Satisfactory Satisfactory 73.20 14 10/29/2013 Satisfactory Satisfactory 75.00 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 Revision of physical targets in the results frameworks due to cost increases. New targets 12/23/2009 N S S 54.39 agreed in Aides Memories and during negotiations of additional financing operation 5 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 (which was then dropped) and reflected in operations portal through processing of ISR. The reason for restructuring was a one year extension to : (i) further the major governance agenda by completing the procurement and installation of priority information technology equipment and systems related to the Province’s efforts for increased transparency, accountability, and citizen 09/04/2012 S S 72.17 responsiveness (SuperCentro initiative); (ii) further the road safety agenda that has been of high impact, and a model for other provinces by the procurement of priority road safety equipment; and (iii) enable the timely conclusion of the CREMA contract (which ends May 2013). 6 I. Disbursement Profile 7 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal At the time of project appraisal the economy of Argentina was moving away from the 2001 crisis and growing rapidly. Argentina’s annual growth rates between 2003 and 2007 were quite impressive, ranging between 8.8 percent to 9.2 percent of Gross Domestic Product (GDP). Concurrent improvements in the debt position were achieved with the Debt-to-GDP ratio falling from 126.4 percent in 2004 to 55.7 percent in 2007. However, this favorable macro-economic context was shadowed by persistently high inflation. INDEC, the national statistics institute, measured inflation at 6.1 percent in 2004, and 8.5 percent in 2007 with a peak of 12.3 percent in 2005. Moving more specifically to the construction sector, the Argentina Construction Chamber (Camara Argentina de La Construccion, CAC) noted significantly high levels of inflation in the road sector, ranging from 15.2 percent in 2005 to 20 percent in 2008. The province of Cordoba, with 8.5 % of the country’s population and 17.5% of its total surface area, was contributing to that rapid growth, particularly in the agriculture and tourism sectors. The relative importance of the agricultural sector in the economy of the Province almost doubled between the mid-90’s and the 2002-2004 triennium, from 7-8% to 15%. In particular: (i) 81% of the surface of the Province is dedicated to agricultural activities, mainly cereals and cattle; (ii) the sown surface had increased by 29% between 2000 and 2003 (adding up a seeded area of 7, 480,000 ha in 2012), and (iii) the total production of grains increased from 6 million tons in 1993 to 20 million in 2003 (and reached a peak of almost 27 million tons in 2008). 1 In addition, tourism is a fast-growing sector of Cordoba’s economy. While before the crisis in 2000 the Province received 3.5 million visitors, it received more than 6 million in 2004 and the most recent figures show an average and steady annual increase of 8%. In spite of this substantial economic growth little money had been dedicated to road maintenance and very little to the extension of the paved road network, which led to a severe maintenance backlog. 2 In 2003 DPV’s budget amounted to an estimated US$ 26 million while the minimum financial needs for the gradual rehabilitation and maintenance of the provincial network was estimated to be in the order of US$ 80 million. Addressing the most urgent needs in terms of rehabilitation and paving was expected to allow the Province to prevent road sector deficiencies from becoming a bottleneck to further growth. 1 Source: MAGyP (Ministerio de Agricultura, Ganadería y Pesca de la Nación). Crops included are cotton, bird seed, rice, oats, brewer barley, feeder barley, rye, corn, millet, grain sorghum, wheat, durum wheat, safflower, rapeseed, sunflower seed, line seed, groundnut and soybean. 2 Overall investment in Argentina from 2000 to 2003 fell over 54 percent from its average level in the 1993-2000 period. Investments in road rehabilitation and construction by DNV and DPVs followed this trend falling 35 percent from 2000 to 2003, relative to the average investment rate for the 1993-1999 period. Source: Project Appraisal Document, Report No: 36334 – AR, June 8 2006. 8 The World Bank has been engaged in the road sector in Argentina for a number of years, with its efforts fully aligned at the national and provincial levels with the issues of rehabilitation and maintenance of the road infrastructure as noted above. The Bank has worked as a partner to Government to enable important interventions on the infrastructural front (rehabilitation and maintenance on both national and provincial roads, especially through the use of the now widely renown performance based contracts (CREMA); as well as on the institutional front (road asset management, road economic prioritization, financial sustainability, road monitoring , road safety, and other road sector reform efforts). 3 In the province of Cordoba, Bank efforts continued in the same vein with the rehabilitation or paving of road segments of the provincial network identified as the main priority in the short run. In the longer run, it was deemed necessary to identify the reasons why the road network reached such unacceptable level of deterioration. The focus was on mitigating or eliminating the effects of a stop-and-go approach, whereby money was assigned to the provincial road agency, Dirección Provincial de Vialidad (DPV) only when the economic situation allowed it and funds were available, or whenever urgent interventions on the road sector couldn’t be postponed any more. Thus, it was agreed with the Ministry of Finance that the project, in addition to addressing urgent road works, was to (i) improve the quality of provincial expenditure through better project management, monitoring and evaluation, and (ii) monitor more closely fiscal space issues in order to identify potential problems early enough to avoid their consequences on the infrastructure investment program. In addition, the project would provide technical assistance to DPV to improve their capacity to prioritize and optimize investments through the definition of an efficient road network management strategy. The different activities under the Institutional Strengthening Component intended to address the above-mentioned issues, with the final objective of ensuring that through an appropriate fiscal space management strategy and adequate resource allocation for infrastructure investments, the Provincial Road Network would be kept in good condition and expanded thanks to the stability of the flows of funds dedicated to its management, which would prevent constraining the growth prospects of the Province. 1.2 Original Project Development Objectives (PDO) and Key Indicators The project development objective as stated in the PAD aimed “at improving the reliability of the Province’s road sector assets and the efficiency of their management as a means to support the province’s competitiveness and economic growth, by building up institutional capacity to encourage efficient planning policies and adequate resource allocation for the rehabilitation and maintenance of the core provincial road network.” The achievement of the Project’s development objective would be assessed through the following key and intermediate indicators: (i) percentage of projects in the ACIF’s 3 See documents for Bank Loans 3611-AR, 4295-Ar, 7242-AR, 7437-AR, 4093-AR and 7301-AR. 9 portfolio with financial, production, and impact indicators defined and monitored; (ii) strategic five-year road programs prepared and published; annual performance reports indicating results achieved by the Province of Córdoba’s agencies, prepared and publicly disseminated; (iii) road assets preserved with an acceptable roughness (IRI below 3): (iv) ACIF annual performance reports publicly disseminated; (v) percentage of total paved network under CREMA-type contracts and road paving contracts; (vi) indicators measuring road safety conditions (road accidents indices per 1,000 vehicles and mortality rates on targeted networks); (vii) implementation of a comprehensive road management program over a target network of 596 km of productive roads (including rehabilitation of 291km, paving of 174km and 424 km maintained under agreed standards) and (vii) Ministry of Finance’s annual performance reports prepared and publicly disseminated. Also, a Fiscal Framework was developed with the provincial authorities to assess the fiscal space for the implementation of the project. The framework, according to the PAD, was developed as a dynamic tool to ensure that the required fiscal resources were available to allow the successful implementation of priority infrastructure investments and asset maintenance, while key parameters to be monitored during project implementation, basically macro indices emphasizing a gradual reduction in the level of indebtedness of the province, would enable the detection of developments in the fiscal accounts that could affect the convergence of the province towards sustainable fiscal and debt indicators. 1.3 Revised PDO and Key Indicators, and reasons/justification The above development objectives and key indicators remained unchanged during the project execution period. 1.4 Main Beneficiaries Multiple stakeholders were expected to benefit from the Project. Defined broadly, the province as a whole 4 was expected to see indirect benefits, given the project’s positive impact on competitiveness, employment and economic growth. More specifically, road users and road transport services would directly benefit from the improvement in key links with decreased transport costs and upgraded road safety. By improving the condition of provincial roads, the project also targeted rural communities enhancing accessibility to social services and markets. 1.5 Original Components To meet the proposed Development Objective, the three main components as listed in the PAD were: Component 1 – Institutional Strengthening (estimated cost US$2.1 million, all Bank- financed). This component comprised three subcomponents: 4 Based on the last Census, 8.5 % of the country’s population, 3.304.825 habitants, lives in Cordoba (INDEC, 2010), and also the Province received twice that figure in tourist visits annually. 10 • Sub Component 1.1- Institutional strengthening of ACIF: The loan was to help strengthening ACIF in areas such as financial and debt management, project programming and monitoring, information reporting, etc. The project would finance design and implementation activities geared to developing a performance-based management system, connecting the ACIF’s M&E system with sector planning and budget decisions. • Sub Component 1.2- Institutional strengthening of the Ministry of Finance: This subcomponent was to involve activities related to coordination structures, information systems, monitoring and evaluation, and capacity building in the financial administration sector of the Ministry of Finance. This sub-component would include activities in three areas: (i) the financial aggregation of public expenditures; (ii) a methodology for evaluation of the fiscal impact of contingent liabilities resulting from claims against the Province in the administrative instance within the infrastructure sector, increasing the Ministry’s response capacity; and (iii) strengthening of the budget formulation process. • Sub Component 1.3- Institutional Strengthening of DPV and Road Safety: In line with the overarching objective of developing a more comprehensive road asset management strategy at the provincial level, this component was to support activities to strengthen the Provincial Road Agency to meet the demands imposed by the carrying out of the extended program of works to be funded by the loan and which requires a strong supervision capacity and additional technical staff that the Agency does not have at that time. The project was expected to make possible the hiring of road engineers, laboratory technicians, topographers for the construction period of the works to be financed under the loan. In addition, a subset of low-performing “Consorcios Camineros”, 5 located mostly on the economically disadvantaged northern parts of the Province, would receive training to improve their management and technical capacity, drawing lessons from the highly-rated “Consorcios”, most of which are located in the booming agricultural areas. A Road Safety Plan for the Directorate of Road Accidents Prevention (DPAT) and for technical staff from various municipalities would be implemented, focusing on the CREMA area and in the villages crossed by the road segments to be paved under this Project. This Road Safety Plan would include the following items: (i) improvements in the way road accidents statistical data were collected, monitored and evaluated; (ii) training of municipal and DPV's technical staff in geometric designs related to road safety; and (iii) road safety education in primary and secondary schools (train-the-trainer programs for teachers and awareness raising programs for students). 5 The "Consorcios Camineros" (created by Provincial Law No. 6,233) are responsible for the maintenance for primary and secondary non-paved network, and tertiary network. They are micro-cooperatives relying on the local workers, in charge of near 52,000 km of provincial roads. Their costs are covered by two specific fiduciary funds, one being the "tasa vial" (percentage of the rural real estate tax), the other being the "fondo de infraestructura vial" (contribution from the agro-businesses). 11 Component 2 – Road Rehabilitation and Maintenance through performance based contracts (estimated cost US$39.5 million of which US$33.5 million would be financed by the Bank Loan, actual costs, respectively, US$ 45.8 million and US$38.9 million including contingencies). This component would focus on overcoming a backlog of deferred maintenance on prioritized sections of the provincial primary network, especially in the South-East part of the Province. The project would aim to cover a significant portion of high-priority roads that have not received adequate routine maintenance and/or the structure of which has reached the end of its useful life and needs to be fully reconstructed. This component included the execution of three performance- based contracts over approximately three sub-networks of provincial roads located in the province of Córdoba covering a total length of 437.94 km (representing 11.4% of the province total paved network). The rehabilitation works were expected to cover approximately 66% of the total length to be contracted and account in general for 80% of the total contract amount, the remaining 20% being assigned to maintenance operations. During Project implementation, the budget allocated to the maintenance strategy and the condition of the network that would be maintained with local funds would be monitored, in order to ensure that the level of service provided to the road users matched to a reasonable extent the standards achieved over the remaining part of the network that was to be improved and financed under the loan. It was agreed with the province within the PRP II framework, that the annual maintenance program as designed or executed would ensure, as a minimum, that during the Project implementation period no potholes remained open, no edge break occurred between the pavement and the shoulders and that all horizontal marking and vertical signs were adequately restored, in order to comply with the most critical road safety requirements. Suitable performance indicators were set in order to monitor compliance with agreed targets. Component 3 – Road Paving (estimated cost US$42.2 million of which US$29.5 million would be financed by the Bank Loan, actual costs, respectively, US$ 48.0 million and US$33.6 million including contingencies). Through this component, the Bank would continue supporting paving investments on selected segments of the Province’s road network that are crucial for provincial productivity. In these cases, the province would be required to design adequate maintenance strategies to ensure the sustainability of the proposed interventions. This component included the execution of works over a total length of 185.68 km. 1.6 Revised Components Project components remained unchanged during the execution of the project. 1.7 Other significant changes In 2009, physical targets were reduced to account for cost increases. These changes were agreed on aide memories as part of the supervision missions and preparation of an additional financing operation, which was then dropped due to lack of support by federal government. These modifications to the result framework were reflected in the operations portal. Late in 2012 the provincial authorities and the Bank agreed on a one year extension of the loan closing date, to October 31, 2013, in order to (i) further the major governance agenda supported by the project by completing the procurement and 12 installation of priority information technology equipment and systems related to the Province's efforts for increased transparency, accountability, and citizen responsiveness. This includes procurement of critical database servers for the Government’s SuperCentro initiative that is a pioneer government-citizen platform being advanced in the Province of Cordoba in collaboration with major technology partners; and (ii) further the road safety agenda that has been of high impact and a model for other provinces by the procurement of priority road safety equipment. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 6 At entry, the project preparation, design and quality was rated as satisfactory for the following reasons: (i) The project was fully in line with the Country Assistance Strategy (CAS) 7 discussed by the Board on April 15, 2004, which contemplated the improvement of infrastructure assets as key to sustained economic growth and mitigating the severity of poverty. The project was also in line with other then on-going projects in the infrastructure sector, including the road sector, aimed at preventing the deterioration of key infrastructure in Argentina, and improving infrastructure service delivery to enhance competitiveness and foster economic growth. (ii) Lessons learned from other projects were incorporated. In particular: (a) building on the experience accumulated through the Provincial Roads Projects I and II, the technical solutions and priorities of the civil works component were, with the use of the Highway Development and Management Model (HDM) optimized and justified from a network management perspective, taking into account existing resource constraints. 8 (b) The project financed road rehabilitation and maintenance works through CREMA contracts, a modality in which long-term payment obligations become legally binding on the Province and as a result, the budgetary process gives these contracts a higher priority than other expenditures. This approach reduced the risk of irregular resource allocation to the sector. (c) Project design recognized the key importance of 6 The Eighth Quality at Entry Assessment (QEA8) FY 2006-2007 rated the Overall Assessment as Satisfactory, and, in particular, project preparation and Bank inputs and processes as Highly Satisfactory, noting that project identification and preparation were done in record time and with cost-effectiveness. Source: QEA8 Final Report, dated May 17, 2007. The project was then again assessed by the Quality Assessment of Lending Portfolio (QALP 2) exercise in June 2010, giving the project a rating of Highly Satisfactory under Quality of Design. 7 Country Partnership Strategy for the Republic of Argentina 2004-2006, January 29, 2004 (Report. No.27340-AR). 8 Despite these achievements, provinces still have a propensity to continue relying on overlay design manuals (i.e., the AASHTO Guide) that sometimes result in overly conservative and costly solutions, as opposed to using the HDM Model for project overlay design with prioritization of solutions based on a solid economic indicator (i.e. maximizing NPV/Cost ratio). 13 routine maintenance on network condition and contemplated that in addition to minimum budget allocations, a series of results-oriented targets would be monitored during supervision to ensure that at least three critical variables that affect road safety were dealt with effectively: (i) potholes; (ii) horizontal and vertical signaling; and (iii) edge break between pavement and shoulders. (iii) Institutional arrangements for project execution were clearly defined. Possible conflicts between the implementing entity, the Agencia Córdoba de Inversión y Financiamento (ACIF), which administrates and executes all programs financed by multilateral agencies and the Dirección Provincial de Vialidad (DPV) with jurisdiction over the 58,000km of provincial roads, were avoided through a clear and comprehensive delimitation of each agency responsibility as follows: Project Roles and Accountability Line Function Accountable Promoter. Responsible for making the Governor of Cordoba investment decision Ownership. Strategic management of President of ACIF project, accountable for the success of the Project Project director/manager. Day to day Project Unit manager (from ACIF) management of the owner’s interest in the Project Procurement. Responsible for procurement Project Procurement Leader Chief (from under the project. ACIF) Supervision of consulting services under Ministry of Finance Sub Component 1.2 Contract supervisor (the Engineer). DPV Responsible for the supervision of contracts for construction works and technical adviser for the project road components. (iv) Adequate mechanisms to address the impact of inflation on project costs were established. In particular, past experience indicated that in anticipation of inflation, contractors presented higher bids to cover potential cost premiums that would otherwise not be paid. The eligibility for full price adjustment payments rested on surpassing a 10 percent threshold established in bidding documents at the time for any cost increases. Learning from these experiences the project included, among other modifications to the bidding documents, the elimination of the 10 percent threshold requirement. (v) Project design included the introduction of highly comprehensive mid-term and final impact surveys, in an attempt to bring extra depth to the assessment of the perceived needs of the communities served by the project and a stronger emphasis on results-focused project management. The less than highly satisfactory rating is due to the fact that the PAD emphasis on the project merits to be derived from the inclusion of fiscal space issues (PAD paras. 18, 19, 30) did not fully find its way into project components or the monitoring activities. The exception was the monitoring of a series of macroeconomic indicators (mostly related to 14 fiscal space and the reduction of debt). 9 This ICR finds that, with the benefit of hindsight, it would have been advisable to contemplate fiscal space issues more closely related to road sector financing and particularly to the sustainability of comprehensive performance based road maintenance efforts that, as we will be seen later, might be now jeopardized by lack of funds. 2.2 Implementation The Cordoba Provincial Road Infrastructure Project was approved by the Board of the Bank on July 11, 2006 and became effective on December 17, 2006. The original closing date was December 31, 2012. The main issues/aspects of project implementation that deserve attention are: (a) Civil Works Cost increases, financial gap and reduced project size. Project implementation took off rapidly but as the first few contracts were awarded, it was clear that the actual prices of civil works far exceeded original estimates and the financing gap would require a reduction of the civil works targets. This situation of cost overruns mirrored the high inflation that plagued the country with cumulative inflation in the road sector reaching 100 percent over the period 2006 to 2011. This in turn was reflected in a soaring of road construction prices as contractors priced in inflation risks in their unit prices when bidding for works. Many road works contracts almost doubled in price during this time, though ex-post analysis indicated that the Cordoba road project costs were at the lower bound of the price spectrum (even with the cost overruns). To achieve the original physical targets (i.e. number of kms of roads to be paved and rehabilitated), the project team started the process of obtaining additional financing in the amount US$97 million. The Concept Note for the proposed operation dated May 21, 2008 explained that the financing gap was caused by: “(a) an increase in subprojects’ costs due to an annual inflation rate of about 20% in the construction sector; (b) insufficient design detail in some subprojects and consequently weak cost estimations at appraisal resulting in an increase in the cost of those subprojects at tender; and (c) delays between the completion of the designs and actual tendering which resulted in further deterioration of the road networks to be rehabilitated, not least given the high traffic volumes driven in part by the commodities boom.” Also, a very important contributing factor to the underestimation of the costs can be attributed to Federal Government policies that resulted in (i) DPV using official price indexes for their cost estimates that were consistently below actual inflation; and (ii) the inflation rate of the peso was not followed by proportional changes in the prevailing exchange rate, thus increasing the dollar cost of the project. 9 These monitoring efforts responded to the fact that the National Government financial assistance programs to provinces were incorporated into the framework of the then recently enacted Federal Fiscal Responsibility Law (Ley Federal de Responsabilidad Fiscal No 25.917, FRL) which set general rules in terms of fiscal performance and public debt sustainability. The FRL was abolished in 2009. 15 Discussions for obtaining additional resources dragged from 2008 to 2011 with the proposed new operation experiencing during that period important changes both in size and scope. Meanwhile the fiscal situation of the country and of the province started to deteriorate. Finally the central government withdrew its support for the proposed additional financing and the civil works component could not be restored to its original size. The project ended up financing the paving of 124.98 km of provincial roads at a total cost of US$ 50.5 million as compared to the 174.26 km at a cost of US$ 42.2 million envisaged at appraisal. With respect to the maintenance works under the CREMA modality, the impact of the underestimated costs was even greater: the project covered the rehabilitation and maintenance of 136.93 km at a cost of US$ 42.4 million or only 32.3% of the 424km expected at appraisal at a cost of US$ 34.5 million. Paving works were executed at an average cost of US$ 0.40 million/km, as compared to the contracted US$ 0.33 million per km. The difference is mostly explained by, again, a local inflation rate that far exceeded the rate of devaluation of the peso vis a vis the dollar. Nevertheless, these costs are in general less than half the average cost of civil works carried out in other projects financed by international agencies in Argentina, which shows the commitment of the provincial government for ensuring the competitiveness of the bidding process. 10 Civil Works Highlights. For the purpose of this report it is worthwhile to single out from the civil works component the experiences related to the paving of the Los Rearte-Villa Berna road section because of its potential environmental and social impact. The paving of the 27.2 km road from Los Reartes to Villa Berna facilitated the access to the town of La Cumbrecita, one of the most cherished touristic attractions in the province. Tourism started in earnest in 1937 with the first visitors making their way to the hidden town. Around 1940, the first private homes were built and the town slowly acquired the Tyrol character that defines it today. Populated by central European immigrants, the town is focused on eco-tourism. The communal authorities declared the zone a protected environment and as of 1996 a "Pedestrian Town". Visitors must park their cars in the parking lot before the town entrance and then walk along the stone-paved streets. To a great extent the charm of the town was protected by the difficult terrain and poor state of its access roads. The improvement of the accessed road posed a real challenge to identify and mitigate the potential environmental and social impact caused by a dramatic increase in the inflow of tourists (which actually had an increase of 450%, with the number of visitors going from 80,000 in 2004 to 370,000 in 2011). The Government of Cordoba developed and implemented under the project the necessary safeguards to protect the town, which included very active community participation, strong coordination between the provincial environmental and tourism agencies, land use surveys and more recently a comprehensive urban development master plan. These activities were closely overviewed 10 Road Construction Costs in Argentina, V. Raffo & E. Travaglianti, LAC Transport Unit Working Paper, February 2014. 16 by the Bank, which provided specific technical support on social and environmental management during the entire process. The implementation of this project component could be a good example of “best practice.” (b) Institutional Development In general, the agreed activities under the institutional development components were promptly executed and completed early in the project implementation period, mostly with the government’s own financial resources and in house capabilities. In particular: Institutional Strengthening of the Ministry of Finance. Under this component the Ministry of Finance (MOF) with its own resources and regular staff strengthened information systems in the areas of financial aggregation of public expenditures and budget formulation, allowing for an enhanced monitoring of provincial fiscal indicators, as well as improved governance and transparency through the systematic dissemination and publication of budgetary and financial information and fiscal indicators. The Ministry implemented the Sistema Integrado de Agregacion Financiera which has been developed as part of a process of reform of the provincial financial administration system. This system, among other benefits, incorporates and coordinates various normative frameworks, improves the quality of financial information available, and provides timely and adequate information on the fiscal and budgetary indicators. 11 In 2010, the Ministry of Finance published its first Sustainability Report, 12 with validation from the Global Reporting Initiative, with a focus on transparency and citizen engagement for enhanced public expenditure performance. The Ministry of Finance has recently published its second Sustainability Report for the years 2011 and 2012. 13 Institutional Strengthening of ACIF. Activities agreed under this component were successfully completed at a total cost of about US$ 2.5 million of which about US$ 1.5 million were allocated to the purchase of the above mentioned servers for the SuperCentro. The component focused on strengthening through individual consultants the organizational and managerial capabilities of ACIF in the areas of project management, procurement and financial management. In particular the agency’s financial aggregation systems was improved through the implementation of the Sistema Integrado de Agregacion Financiera (SIAF) linked to the MOF's financial aggregation system, and its internal control systems and sub-project monitoring systems linking monitoring indicators and reports to results. The component also included training workshops for ACIF’s staff and for the Unidades Tecnicas Ejecutoras Sectoriales (UTES), the technical units from different sectors (e.g. education, roads, environment, etc.), and the acquisition of information equipment. 11 This information is readily available on the web: http://transparencia.cba.gov.ar/ 12 The Ministry of Finance of Cordoba is the first public entity in Argentina to publish this report. Available at http://transparencia.cba.gov.ar/Archivos/2.pdf. See also: http://prensa.cba.gov.ar/economia/elettore- presento-el-reporte-de-sustentabilidad-2010/ 13 Available at http://multimedia.cba.gov.ar/web/Reporte_Sustentabilidad_2011_2012_Finanzas.pdf 17 Institutional Strengthening of DPV. This component, which was completed at a total cost of about US$ 0.5 million, had two distinct elements. The first one, the strengthening of DPV’s supervision capacity for the implementation of the project financed the hiring of road engineers, laboratory technicians and topographers for the construction period of the works under the loan. In addition, a subset of low-performing “Consorcios Camineros”, located mostly on the economically disadvantaged northern parts of the Province received training with DPV own resources to improve their management and technical capacity, drawing lessons from the highly-rated “Consorcios”, most of which are located in the booming agricultural areas of the country. Road Safety: The second element of the assistance to DPV was in the area of road safety, which also involved engagement and cooperation with the Directorate of Road Accidents Prevention (DPAT) within the Ministry of Government. The dismal rate of traffic accidents in Argentina became a major public opinion issue. Strong pressure from the civil society prompted national and provincial authorities to try to address the problem through adequate engineering, education and enforcement policies. The Bank became a key partner in these efforts through road safety components in AR 7301 PCP II, AR 7398, AR 7861, and the subject project. Many Bank experts overlapped in the supervision of these projects, creating a productive synergy that helped the Province of Cordoba to develop and implement a successful road safety plan. Teams in these projects coordinated their activities (particularly with the PCPII project) to secure two grants from the Global Road Safety Facility to finance: (i) an iRAP (International Road Assessment Program) survey that took place in October 2008 and was presented to the provincial authorities, the academia and the private sector in a seminar that took place in March 2009; and (ii) a Capacity Assessment Review following a safe system approach and the WB Guidelines for Country Engagement. 14 As part of these activities, a group of international road safety experts conducted an assessment of the existing institutional capacity in the area of road safety in Cordoba and contributed to the design of the mentioned action plan in which specific activities/measures/investments were identified. In this context, the Province created in 2008 the Permanent Road Safety Working Group to design state policies and to coordinate future actions from provincial and municipal entities. The group comprises representatives from the de Defensoría del Pueblo, Ministerio de Gobierno, Dirección Provincial de Transito, Dirección de Defensa Civil, Policía de la Provincia de Córdoba, Dirección de Transito de la Municipalidad de Córdoba y Hospital de Urgencias. In addition to these measures, the Traffic Safety Law was enacted in 2009. These significant efforts on the road safety front led to important gains in reducing the mortality rate on provincial and national roads in Cordoba (with a 47% drop between 2008 and 2012 in the number of deaths per 100,000 vehicles). Project funds for this component were mostly directed to the purchase of alcohol breathalyzer for the 14 Improving global road safety: Towards equitable and sustainable development. Guidelines for country road safety engagement, Tony Bliss & Veronica Raffo, World Bank, 2014. 18 Provincial Highway Patrol (Policia Caminera), IT equipment for DPAT for the processing of road safety data and fines, and mobile weighbridges for DPV and the Highway Patrol for the control of traffic loads, a problem that has been identified as a major safety hazard. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The adequacy of design of the monitoring indicators to measure the project achievements was mixed. They were in general precise and easily measurable when related to the civil works component of the project and on the agreements on acceptable levels of road condition. That is not the case of most of the indicators related to institutional development. In particular the PDO indicator related to the quality of ACIF’s portfolio was misplaced since ACIF is basically an executing agency with little discretion on the merits of the projects they implement. It would have been more adequate to link the objective of efficient allocation of resources to the quality of the whole investment and maintenance program of the province under DPV. On the bright side, the financial indicators were periodically monitored. Most of them, particularly the important ones related to the rate of indebtedness of the Province, were consistently on target. The institutional development component was realistic in its expectations of consolidating the basic building blocks for a performance-based culture (e.g. measuring road conditions, using the HDM for network wide planning purposed, developing medium term investment and maintenance strategic plans, measuring the impact of traffic safety policies, incorporating performance based contracts for road maintenance, and increasing the transparency of the budgetary process). However, a more conservative approach would have helped to establish a clear distinction between what can be achieved during the life of the project and those outcomes that would materialize in the longer term. Both ACIF and DPV (as is the case of all the provincial administration) are now more responsive to transparency in budget reporting and information although still some steps away from performance based management. Responsibility for monitoring and evaluation rested on ACIF with the collaboration of the Ministry of Finance, the DPAT and DPV. Meticulous and informative progress reports were prepared on a semi-annual basis and a well-defined mid-term evaluation involving a comprehensive survey of the impact of the civil works component was carried out in 2010. Key principal findings of this mid-term evaluation were: (i) 100% of interviewees expressed a high level of satisfaction with the project; (ii) producers in the area of influence of the project have benefited from the project due to improved road conditions, with 100% noting positive economic impact, with reduced vehicle operating costs and more reliable access to market; (iii) employment generation opportunities have arisen with new local commercial and agro-industrial centers; (iv) increases in both residential and catering businesses, as well as in tourism were recorded in La Cumbrecita area; (v) increases in the price of land of between 100% and 200%; (vi) access to 23 health centers and 23 education centers has been improved with a more permanent presence of medical personnel in the former; (vii) improved mobility and access with traffic increase in the order of 130% especially in heavy goods vehicles and more frequent public transport, including those that provide leisure trips for local residents; (viii) improved road safety 19 conditions with vertical and horizontal markings, and better road surface riding conditions; and (ix) positive results in the maintenance regime under the CREMA modality. It should be noted that the inclusion of the survey in the monitoring and evaluation design provided a valuable contribution that was well appreciated by the Borrower. It is being considered a valuable piece of information that brings to light the beneficiaries’ perspectives and problems that cannot be captured by a quantitative analysis. Finally, the Bank supervision team regularly carried out technical and cost reviews to ensure efficiency in resources utilization. 15 Overall, the monitoring and evaluation aspects of the project are rated as satisfactory. 2.4 Safeguard and Fiduciary Compliance 2.4.1 Procurement The project had fully-comprehensive procurement supervision during the implementation through both, prior and post review. As a result of this supervision, the project kept a Satisfactory rating for procurement during the whole implementation. Post review missions were carried out on FY08, FY09, FY10 and FY14, based on the number of contracts signed during those periods. These revisions did not reveal any serious procurement issue and concluded that procurement processes and / or administration of contracts by the Borrower were performed with good quality, transparency and required minor corrective actions by the Bank. The reports also highlighted the appropriate use of standard bidding documents approved at the beginning of the project, the accomplishment of the provisions agreed on procurement in the Loan Agreement and the regular update of the Procurement Plan. Nevertheless, these reviews included observations oriented to reduce the length of the evaluation periods, strengthen the procurement function and improve the implementation of consultants’ selection procurement processes. Despite the proven record of efficiency in handling procurement matters, the OPRC decided to declare a miss-procurement in February 2009 for an ICB for "Las Caleras - Alpa Corral" Civil Works contract for which the project had requested to reject all the bids, arguing that they exceeded significantly the estimated budget. OPRC disagreed with the official argument about the estimated budget but granted an exception to the cancellation of the loan proceeds based on the Project’s background. 16 15 Road Construction Costs in Argentina, V. Raffo & E. Travaglianti, The World Bank, LAC Transport Unit Working Paper, February 2014. 16 It should be noted that bidding for the Las Caleras-Alpa Corral road works was carried out at a time in which the project funds were fully committed. The works were going to be financed under the additional financing operation that did not materialize. 20 2.4.2 Financial Management The project had in general a satisfactory FM arrangement in compliance with Bank requirements. However, a 2009 review identified moderate shortcomings such as: (i) significant delay in the submission to the Bank of the Interim Financial Reports; (ii) delay in the hiring process of the external auditor; (iii) turnover of key FM staff; (iv) time lag in the justification of withdrawals from the DA and in particular; in the justification of petty cash expenses; and (v) internal audit vacancies that had not been filled during the previous two years. Although these shortcomings did not refer to accountability issues and did not prevent the project FM system from providing reliable information for managing and monitoring the project implementation, ACIF’s was requested to fulfill an agreed action plan. Due to these findings, the FM performance for the project was downgraded to Moderately Satisfactory (MS) and returned to satisfactory once ACIF implemented the agreed action plan. Financial statements audits were mostly received by the Bank on time with audit opinions on Financial Statements and Special Opinions either Unqualified or Qualified-Exception, but with no significant issues. Audit reports were reviewed and found acceptable through the entire project implementation period. Final Project audit report for the period January to October 31, 2013 is not yet due and is expected to be received by the Bank on or before April 30, 2014 the due date provided in the Loan Agreement. 2.4.3 Safeguards Social Safeguards The Project has complied with the OP 4.12, the social safeguard triggered at the preparation phase. At that time (2006), a Land Acquisition Plan (Plan de Adquisición de Predios) was prepared, in order to address private land to be taken by the Project. That Plan acknowledged the voluntary donation of land in retribution for the road improvement, which has been the usual system applied by DPV at Cordoba Province. Land donors expressed satisfaction with the results of the projects and gains, in terms of improved access and connectivity, reduced travel times and vehicle operating costs, and expansion of regional productivity. It should be noted that (a) the landowners who donated land chose to do so. They had the option to request the expropriation of their property. In fact, one landowner did so and was compensated as part of an amicable agreement with the Government (avenimiento); 17 (b) a total of 102 properties were affected by RoW acquisition. The loss of land suffered by the landowners was minor. In all cases, the land taken represents less than 7% of the total area of the property affected. The affected properties were large (between 500 and 10,000 hectares); (c) landowners received compensation in kind (new fencing, improved entrances, etc.); and (d) RoW acquisition did not cause physical displacement (relocation). The only potential relocation case (the relocation of informal vendors operating near the bridge over Río Los Reartes) was avoided. In this case the project managed to avoid economic displacement of informal vendors, by means of changing the design and location of a new bridge over the river Los Reartes. 17 OP 4.12 does not apply to the land donations that took place in the context of this project, given their voluntary nature. The policy only applies to the single expropriation case. 21 BOX 1 - Summary of survey to assess the impact of the paving of the access road in La Cumbrecita La Cumbrecita is an alpine road in the Calamuchita valley accessed through a mountain road. The paving of the road brought about an important increase in residents and visitors. In October 2012 the Bank interviewed major stakeholders to evaluate the impact of the road paving. The interviews were carried on with several neighbors and residents and the following authorities: • The President and Director of Tourism of La Cumbrecita • The Director of the Health Center • The Head of the High School • The President of the Water and Electricity Cooperative • The Deputy Police Chief • The President of the Board of the Fire Department • Owners of developments of tourist bungalows • The President of the Development Association of Villa Berna There was unanimous coincidence on the benefits of the project not only for the touristic area of La Cumbrecita, but also for the area of influence of the road, which includes Villa Berna, Intiyaco and Villa Alpina. The paving project brought important development to the region as proved by the following statistics: • The number of visitors increased by 450%, from 80,000 in 2004 to 370,000 in 2011. The length of their permanence also increased • The number of beds increased by 100% in the same period, from 350 to 700, mostly in bungalows • The demand for electricity increased by 112,5% between 2005 and 2012 In addition there has been growth and improvements in the staffing of schools, health centers and police department because of the increased accessibility for members living outside of La Cumbrecita to access the town. For the local residents the project made possible to increase the frequency of trips to the city of Villa General Belgrano, previously limited to one trip per week for shopping. This also facilitated the derivation of accident victims and sick people to the larger health facilities. The dramatic increase in tourism required the adoption of different measures, including: • Changes in the Urban Code to restrict urbanization to 1450 meters above sea level and require minimum lots of 2000 m2 (5000m2 for bungalow developments) • Doubling the capacity for capturing and storing water • Introduction of solid waste management policies to increment waste separation at the origin plus transference to local plant before final transference to the city of Cordoba • Development of a car parking space outside of the town and implementation of a system of minibuses to take the tourists to town to reduce traffic congestion and other negative externalities • Together with the above changes La Cumbrecita also benefitted from (i) its pedestrian only character; (ii)its condition of Natural Reserve for Multiple Uses; and (iii) its condition of terminal destination (not through), which facilitates visitors control 22 Environmental Safeguards The Project included a series of environmental and social instruments that were developed during project preparation and implementation: Environmental and Social Management Framework, environmental evaluations of all sub-projects, and Pliego General de Especificaciones Técnicas Ambientales. The Project involved road improvements, rehabilitation and maintenance works along existing provincial road alignments. The Project has been qualified as “Category B”, following the Operational Bank Policy OP 4.01. The different project sites have none been close to natural habitats or environmentally sensitive areas. Only one, the bridge over the Intiyaco river in the Los Reartes-Villa Berna segment, was on a sensitive landscape, and required special issues of public participation and environmental restoration (including provision of drainage works, slope stabilization measures, proper disposal of spoil materials, and reforestation). These measures should continue to be monitored in the short and medium term to ensure their effective implementation. The PMAyS was developed in line with the Bank’s policies based in the following operational directives: OP 4.01 BM Environmental Evaluation, OP 4.04 BM on Natural Habitat, OP 4.12 BM de Involuntary Resettlements, and OP 17.5 BM on Public Disclosure. 2.5 Post-completion Operation/Next Phase No further operation is currently foreseen in the province of Cordoba, except for the completion of CREMA contracts under execution as part of the Provincial Roads Project II. CREMA contracts have the advantage of committing funds upfront for routine maintenance over an extended period of time instead of depending on stop-and-go funding for maintenance. The Cordoba Provincial Directorate of Highways has been vested in its own road maintenance contracts known as “contratos de cobertura”, area maintenance contracts awarded to contractors to provide maintenance services on a certain number of kms of road covering stretches of roads within a defined locality. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation The project objectives remain highly relevant to current priorities, also in line with the 2010–2012 Country Partnership Strategy, which continues to focus on the same three pillars of the previous CAS, particularly under its first pillar (Sustainable Growth with Equity), whose specific objectives include: (i) upgrading Argentina’s infrastructure to address potential bottlenecks to competitiveness, and underpin medium-term growth and poverty alleviation; (ii) improving competitiveness, quality, and exports of agriculture and livestock production; and (iii) addressing a growing problem of resource degradation. 3.2 Achievement of Project Development Objectives The project development objective as stated in the PAD aimed “at improving the reliability of the Province’s road sector assets and the efficiency of their management as a means to support the province’s competitiveness and economic growth, by building up institutional capacity to encourage efficient planning policies and adequate resource allocation for the rehabilitation and maintenance of the core provincial road network.” 23 Overall Rating: Satisfactory The project achieved the objective of improving the reliability of the road sector through the fulfilling the main PDO indicator: the Province having 100% of its network in a good or fair condition, with an IRI of less than 3. The second PDO indicator, related to the ACIF portfolio was also achieved, although as it been noted above, it did not bear direct relationship with planning process of the resource allocation management for the road network. In terms of the systematic strategic planning of road programs, the preparation and dissemination of performance based reports and the increase in the use of CREMA contracts were the linchpin of the project to “efficient planning policies and efficient resource allocations”. As required, a five-year road investment plan was developed at the initial stages of the project. However, in a context of high inflation long term planning became difficult and DPV is now preparing yearly plans. Both ACIF and DPV prepare budgets that are sent to the Ministry of Finance and published in the Ministry’s web page. With respect to the multi-year CREMA contracts, both the current difficulty in making long term commitments plus the institutional inertia for change has inclined the government in the direction of the use of the contratos de cobertura to ensure adequate maintenance levels and performance standards. With respect to the intermediate objectives, (i) both the road agencies (ACIF and DPV) disclose their activities to the control agencies and their budgets appear under the Ministry of Finance website which publicly disseminates all relevant information related to the budget and its execution; this represents a sound improvement in transparency and governance and an important step towards the implementation of a performance based culture (ii) a sound Road Safety Plan was developed and is being successfully implemented with an outstanding impact in the reduction of accidents and fatalities; and (iii) roads were rehabilitated and paved (albeit with a reduced length) and the rest of the network was maintained within agreed standards. These actions are having important positive social impacts in terms of reduction in transport costs, land values and increase in tourism. The Project Impact Evaluation works undertaken in 2010 as part of the mid-term review, and then again in 2013 as Final Impact Evaluation, noted the project as having significant benefits for end beneficiaries (agricultural producers, transporters, resident target populations, other local companies and businesses). It was stated that both producers from the intervened areas as well as neighboring producers that have chosen to use the roads as a consequence of the improvement and upgrading (the Impact Evaluation shows a 28 percent reduction in freight transport costs per ton/km). In similar vein, a significant number of local companies and industries have employed more workers in order to meet the increased demand for services (restaurants, tourism, and retailing). Land values have improved greatly in most of the intervened areas. The project has resulted in better and more fluent accessibility to hospitals, schools and other urban areas, thus improving the living conditions of the targeted population. Last but not least, road safety indicators have improved considerably as a result of project and provincial road safety agency implementation efforts. 24 Based on the above considerations the ICR rates the achievement of the project development objectives as satisfactory. 3.3 Efficiency The DPV has performed an estimated ex-post economic evaluation of the road rehabilitation and maintenance works (CREMA contract) and the paving works executed during the project life. The ex-post evaluation follows the same methodology used for the original evaluation at appraisal: both were done using the Highway Design and Maintenance Standards Model (HDM), which simulates life cycle conditions and costs and provides economic decision criteria for road construction and maintenance activities. HDM was used for estimating the net benefits of each project in terms of reductions in vehicle operating costs, passenger travel time, and road maintenance expenditures. DPV estimated maintenance and rehabilitation costs in financial and economic terms (net of taxes), economic costs being on average 70 percent of financial costs; and defined vehicle fleet characteristics and unit costs for six vehicle classes, economic road user costs being on average 70 percent of financial costs. Typical economic road user costs as a function of roughness (IRI), road user costs composition, and traffic composition are given below; as well as relationship between the average vehicle fleet economic road user costs and road roughness. The traffic growth rates are based on a study conducted by the DPV. For road paving projects, the traffic growth rates considered at appraisal were: 3-5 percent for light vehicles for the entire evaluation period; and 5 percent until 2008 and 3 percent thereafter for medium, heavy, and articulated trucks. For the CREMA projects, the traffic growth rate used at appraisal for the contract period (2007-2011) was 3 percent from the date of project start. This rate was based on the evolution of Gross Domestic Product (GDP) over the previous ten years and it is commonly used for the economic evaluation of road projects. For the ex-post evaluation, actual traffic counts carried out by DPV annually were used until 2013 traffic and a future growth rate of 3% per year was estimated for the remainder of the life of the projects. The ex-post economic evaluation of all road projects yielded a positive economic return. The road rehabilitation and maintenance project (CREMA) yields a Net Present Value of US$ 6.09 million at a discount rate of 12 percent and an Economic Rate of Return (ERR) of 18.24 percent as compared to the 16.35 percent expected at appraisal. In the case of the five paving contracts, the program yielded an estimated ex-post NPV of US$118.56 million and an EER of 43.30 percent, as compared to the 25.94 percent expected at appraisal. The higher than expected returns can be explained by actual traffic volumes that are well above those estimated at appraisal and that, as shown below, this impact was higher in the paving sub-projects than in the CREMA sub-project. All paving sections had rates of return above 12 percent. They ranged from 75.1 percent for the Despeñadero- Monte Ralo- Rio Tercero sub-project to 18.7 percent for the Los Zorros-La Playosa sub- project. In addition, the cost efficiency and cost effectiveness of the CREMAs when compared to conventional unit price contracts was demonstrated by a specific empirical study that 25 confirmed that the system as being both efficient and effective: efficiency gains were estimated to be in the order of 24 percent due to the following: (i) no cost overruns resulting from variation orders is possible under the CREMAs; (ii) the CREMA incorporates for the same lump price a number of additional features that are not contemplated in unit price contracts (or paid separately), such as the carrying out of the detailed engineering design by the Contractor with a comprehensive auto-quality control of the works, the implementation of a traffic and axle-load monitoring system during the entire contract period, etc; (iii) CREMA contracts improve effectiveness by committing maintenance funds over a longer and more sustainable time period (five years); and (iv) CREMA contracts are also more efficient than traditional contracts since the contractor is responsible for defects over a longer time frame, and hence road users benefit from better riding conditions over a long time, and road agencies end up with a more efficient use of scarce public resources. 18 The noted empirical study was further deepened using HDM Model runs that showed CREMAs as being effective and efficient alternatives that optimally address the project life cycle costs and benefits over a 20-years horizon (See more details on the comparison between CREMA contracts and contratos de cobertura in Cordoba in Annex 2). Finally, it should be noted that the increased in US dollar costs that affected the size of the project was mostly due to an inflation rate that exceeded the rate of devaluation of the peso vis-à-vis the dollar. However, the nominal increase of domestic prices had similar impact both in the costs and in the benefits of the investments, thus preserving the economic merits of the projects. The latter was in fact increased by the unexpected growth in traffic brought about by the high economic growth experienced by Argentina during the early years of the project. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory Based on the above, the overall outcome rating is considered as satisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The Project impact evaluation endeavored to look into the project impacts beyond the norm of pure cost-benefit economic analyses typically undertaken for road projects. However, the difficulties in undertaking such an exercise were constrained by the difficulties in establishing credible counterfactuals, and making the necessary attributions of project investments without the bias of selection/placement, and contamination effects. In principle, the 2010 household survey undertaken at the national level presents 18 Performance-Based Road Contracts (CREMA). A review of fifteen years experience. 1996-2010, M. Marcela Silva and Gerard Liautaud, The World Bank, Transport Paper 36, September 2011. 26 important results for comparison purposes at the Cordoba provincial level while the project impact evaluation provides results at the departmental level. According to the 2010 national household survey, the province of Cordoba is noted as having 8.2 percent of the Argentine population, with a 48.6 percent male and 51.4 percent female distribution by gender. The province made important gains on the key indicator of the percentage of household members with unmet basic needs, falling from 13 percent in 2001 to 8.7 percent in 2010; while similar numbers for the nation as a whole fell from 17.7 percent to 12.5 percent respectively. There were also gains in terms of reductions in illiteracy rates from 2.1 percent in 2001 to 1.5 percent in 2010, with national statistics falling from 2.6 percent to 1.9 percent in the two years respectively. Important benefits have been noted at the micro-level. For example, the paving of the road section Los Reartes-Villa Berna brought about significant benefits as demonstrated in the statistics below: • Visitors: Increase of over 360 percent, from 80,000 in 2004 to 370,000 in 2011. • Beds: Increase of 100 percent, from 350 to 700. • Electrical energy demand: grew 112.5 percent, between 2005 and 2012. (b) Institutional Change/Strengthening The Project collaboration has had important benefits in terms of driving institutional reform agenda for road asset management (including road inventory and condition data collection, road economic decision prioritization, monitoring of project costs, e- governance platform for citizen accountability and reporting, road maintenance practices, social and environmental management strengthening, axle load control and road safety). With regards to the latter, important benefits have been achieved with road fatalities reducing some 42 percent between 2008 and 2012. Other provinces are trying to learn from Cordoba about its institutional efforts in reducing road crash fatalities, and victims. These efforts are complementary to Bank work collaborating with the Argentina National Road Safety Agency under a separate road safety stand-alone project. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops As part of the Mid-Term and End-of-Project Impact Assessment study two surveys were carried out in the influence area of the project. An opinion poll to the beneficiaries of the projects was conducted on May 2013. A Stakeholder Consultation Workshop and public dissemination event was carried out in Cordoba City on July 10, 2013 to present the results of the End-of-Project Impact Assessment Study. Participants included authorities of the Government of Cordoba form the Ministry of Planning, Investment and Financing and the Secretary of Innovation and Management Monitoring; officials and staff of the Cordoba’s Agency for Investment and Financing; and officials from the Provincial Directorate of Highways and the Directorate of Road Accidents Prevention; and the team members of the World Bank. 27 During the workshop, the consultant and ACIF authorities presented the results of the impact assessment on direct and indirect beneficiaries and the impact achieved as a result of the implementation of the works component of the Provincial Roads Improvement Program (PMCP). At the request of the Bank, the ACIF assessed the institutional strengthening component and its impact on program execution and results, in a context of broader Government focus of performance-based objectives. The presentation compared the goals established in the original program design with the final achievements, evaluating the social and economic impact, updating mid-term assessment performed, and communicating main findings and conclusions of the study. Key principal findings of the beneficiary survey were: (i) 100% of interviewees expressed a high level of satisfaction with the project, (ii) producers in the area of influence of the project have benefited from the project due to improved road conditions, with 100% noting positive economic impact, with reduced vehicle operating costs and more reliable access to market, (iii) employment generation opportunities have arisen with new local commercial and agro-industrial centers, (iv) increases in both residential and catering businesses, as well as in tourism were recorded in La Cumbrecita area, (v) increases in the price of land of up to 300% (in La Cumbrecita), (vi) access to 20 health centers and 38 education centers has been improved with a more permanent presence of medical personnel in the former, (vii) improved mobility and access with traffic increase in the order of 120% especially in heavy goods vehicles and more frequent public transport, including those that provide leisure trips for local residents, (viii) improved road safety conditions with vertical and horizontal markings, and better road surface riding conditions, and (ix) positive results in the maintenance regime under the CREMA modality (see details in annex 5). 4. Assessment of Risk to Development Outcome Rating: Moderate Six critical risks were identified at appraisal as susceptible to have a negative effect on project implementation and outcome, namely: (i) Lack of counterpart funds and/or inadequate budget allocation during project implementation in case fiscal situation deteriorates as a result of unsustainability of revenue efforts and continued increase of capital expenditures; (ii) Non-tested, incipient centralized structure within the ACIF to carry out procurement activities, (iii) Concerns with respect to accountability for project management, (iv) Lack of technical capacity within the DPV to supervise and monitor performance-based contracts; (v) Delays in Project implementation due to complex institutional arrangements; and (vi) Gap that may materialize between project costs estimates at appraisal and real costs at bid presentation. Of those six critical risks, and as developed earlier, only the last one did materialize. Although no additional risk became apparent during project execution, the outlook for the future remains somewhat confused, as limited dialogue has yet taken place between the Bank and the Government of Argentina regarding follow-up operations in the transport sector for continuation of the CREMA program both at the national and provincial levels. 28 In this sense, the risk to development outcome is considered moderate: through persistent efforts and consistent programs, the Provincial Government has managed to improve the road network condition for the past 10 years; continued its gradual progress in strengthening road management; brought increased transparency and improved governance to the provincial finances; and put in place the right institutions and policies to secure continue inroads in road safety. There is, however a substantial risk linked to the country’s (and thus provincial) overall fiscal standing which, should it continue to deteriorate, could lead to decisions to tamper the 10 years past efforts to improve the efficiency of the sector. In particular lack of funding and difficulty in considering medium or long- term commitments for performance based contracts is prompting the provincial government to revert to less efficient alternatives. On the other hand, roads have been a priority for most provincial governments and it is unlikely that they would be left to deteriorate to an unacceptable standard due to ever increasing citizen and business pressures. Along this line, as a medium-term strategy, the Province of Cordoba is extending the Cobertura performance-based contracts (which require shorter planning cycles instead of multiyear budgeting as CREMAs), to cover its entire paved network, while negotiations on external financing for continuation of the CREMA program are held. In addition, in August 2012 the Provincial Government proactively approved the Law No. 10,081 establishing a fuel levy, consisting of AR$ 0.20 per liter for diesel oil and gasoil and AR$ 0.40 per liter of gas which is expected to bring in revenues of about US$ 100 million per year in 2014 and declining in real terms thereafter since the fixed fees per liter will be eroded by inflation. Taking all the above into account, the risk to development outcome is deemed to be moderate. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory The ICR finds the Bank performance in ensuring quality at entry as satisfactory. Most of the design issues deserve satisfactory ratings, as rated by a QAG-at-entry exercise in 2007. 19 These include: (i) the incorporation of most lessons learned; (ii) the clear and mostly well-defined development objective approach and the definition of the indicators related to the serviceability of the road network; (iii) the institutional arrangements 19 Quality of Entry Assessment for FY06-07, May 17, 2007 rated the Overall Assessment as satisfactory and, in particular, project preparation and Bank inputs and processes as Highly Satisfactory, noting that project identification and preparation was done in record time and cost effectiveness. 29 incorporating all the relevant players in ensuring sound public sector management; and (iv) strong attention to safeguards. The less than highly satisfactory rating is due to: (a) the lack of reliable costs because of the celerity of project preparation which resulted in insufficient engineering designs that did not take full account of site realities on ground and the rapidly growing heavy goods traffic levels related to the commodities boom; and (b) the recognition of the importance of fiscal space issues but with no specific link to the road sector finances. (b) Quality of Supervision Rating: Satisfactory The quality of supervision was satisfactory, as noted by QALP2 for the period 08-10. 20 The project supervision team provided appropriate Bank advice to the Borrower on issues that arose during implementation. Clear examples of this have been the advice provided by the Bank in two areas: (i) the Bank assistance in establishing the specifications for the CREMA contracts, using its knowledge and experience gained from similar contracts in other provinces and countries; and (ii) the advice and financing provided on road safety. 21 The Bank secured Grants and technical assistance from the Global Road Safety Facility to conduct an assessment of road safety issues in the province and to conduct an iRAP survey that was carried out by the Province in cooperation with an iRAP team. The action plan is under implementation and already produced a substantial drop in traffic casualties. Field based TTL and other team members had direct contact with the client and ensured timely responses to cropping issues. Continuity in the members of the team was maintained since project preparation. Supervision was not limited to missions only, and as such the project was singled out as one of the best performing in the Argentina portfolio (with extraordinarily quick preparation and approval times, high disbursements, and very good implementation progress). The Task Team possessed appropriate skills mix with staff and consultants with the technical, institutional, fiduciary and safeguards knowledge and experience to work effectively with the client, review documentation, check the quality of works and review and recommend new approaches in the implementation of institutional support components to the satisfaction and appreciation of the client. This resulted in an excellent integration of procurement supervision activities with the overall supervision effort, and for the consistency, clarity, and comprehensiveness of documentation of safeguards supervision. Finally, there was a strong cooperation between LCSTR staff and PREM PS staff in supervising political economy risks, fiscal space indicators, and activities related to the institutional strengthening of the Ministry of Finance. The less than highly satisfactory rating is due to what appears to be the bias towards the civil works component of the project (which, 20 Quality Assessment of Lending Portfolio (QALP-2), Panel Members: Miguel E. Martinez; Peter Ludwig; Tojoarofenitra Ramanankirahina, Moderator: John Redwood, Assessment Date June 22, 2010. 21 “On balance, the panel agrees that supervision of this project has been very satisfactory in numerous respects. The overall 2 rating, which also reflects the views of the fiduciary and safeguard reviewers is at the high end of the range”, QALP-2, 2010. 30 granted, presented intensive safeguards issues) and to road safety, at the expense of the other institutional development component. In particular, the supervision team could have been more proactive in identifying and modifying/rectifying those indicators that were not relevant and/or not realistic and did not contribute to monitor the achievements of the project. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory This rating is based on two distinct concepts. The first one brings in the Bank performance that, albeit some weakness in design, achieved the smooth implementation of a project with challenging safeguard features, a very active public opinion involvement and the need to manage a large multi-disciplinary team. The second concept is based on the fact that informally this project is linked to a series of operations in which the Bank team acquired the credibility and the confidence of the government to actively participate in key strategic policy advice. The synergy created by the work of the Bank on other operations introducing the CREMA concept to Argentina and, most importantly the highly successful and internationally recognized achievements in road safety at the national level (supported by the same Bank team working on the subject project) was instrumental in placing the Bank as a valuable interlocutor. Particularly, for a project in which key institutional development features (e.g. the Ministry of Finance component and the design and implementation of a sound and highly successful Road Safety Strategy) were carried out mostly with the government’s own resources and in-house know-how, the Bank played the role of a trusted “sounding board”, exchanged ideas, and contributed to bring outside international experts to review and confirm the merits of the policies being adopted. 5.2 Borrower Performance (a) Provincial Government Performance Rating: Satisfactory This rating reflects the following: (i) the successful Provincial Government participation in a project that acknowledged the macroeconomic linkages of the transport sector and the need to strengthen the capacity of the provincial Ministry of Finance for budget preparation and the quality of public investments; (ii) the important strides achieved in terms of improving the transparency and accountability of the administration; and (iii) the prompt attention and support to procurement matters that resulted in the implementation of civil works with average costs below the national benchmark. However, this ICR rates the Federal Government performance as moderately satisfactory because of their unwillingness to support the province in taking remedial measures to secure additional financing to address inflation pressures on ultimate project costs. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 31 This rating is based on the following: (i) ACIF for the most part showed decisive efforts to secure a smooth project implementation; (ii) initial shortcomings on financial management quality were promptly remedied in line with Bank’s recommendations; (iii) compliance with agreements on project monitoring and reporting was very good; and (iv) interface with DPV for project execution was problem-free. The performance of the provincial Ministry of Finance was excellent as its expected output was fully and efficiently delivered almost at the outset of project execution. So was the performance of the DPAT (road safety lead agency in the province) in the implementation of the Road Safety Plan. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory The overall Borrower (Provincial Government) performance is satisfactory. As for the Federal Government performance, it is rated as moderately satisfactory, based on their failure to restore the project to its original scope and impact by addressing the financial shortfall caused by inflation. However, considering that the Province of Cordoba is the Borrower, with the main responsibility for project execution, while the Federal Government is acting as Guarantor, this ICR rates the overall Borrower Performance as Satisfactory. 6. Lessons Learned 1. Projects that encourage and facilitate close, continuous and direct interaction with the Borrower have a better chance to succeed. In the case of this project, direct lending to a sub-national government, which obviated one layer of bureaucracy, coupled with a Bank field based supervision team providing continuous support to the implementing agencies was a key to the prompt execution of a project with a rather complex civil work component. 2. Projects aiming at securing adequate and timely resources to achieve a stable condition of the network should take a comprehensive view of issues related to fiscal space. This includes (i) a thorough assessment of the present and future needs to achieve an acceptable “steady state” for the roads and (ii) in line with the financial and institutional capabilities of the country, develop the right mix of instruments to create the fiscal space necessary to achieve the intended objective. These may include taxes, user fees, debt, the mobilization of private financing and, more importantly, the efficient use of scarce resources. 3. A sustainable shift in the “modus operandi” of a road agency to the CREMA system requires the continuity sufficient to break institutional inertia and internalize a new paradigm. The successful introduction of performance-based contracts in Argentina’s at the national level involved the participation of the Bank in a series of operations that made possible the full adoption of the idea. The same is true of the experience with other 32 countries now systematically using the CREMA approach. Continued support for the model hinges on further demonstration of its advantages over traditional approaches (explained in part in Efficiency section). 4. In countries with high inflation, operations should consider in particular the following actions: (i) carrying out specific and enhanced sensitivity analysis around the impact of changes in price on physical targets as part of the initial design of the project and at appraisal; (ii) including increased transparency measures with regards to analysis of unit costs of bids to be able to closely monitor impact of inflation on key bill of quantity items, such as open data mechanisms, to strengthen the governance framework around the project, and (iii) creating incentives for cost control by proactively addressing inflation concerns in bidding documents, and strict supervision and management control during implementation to ensure projects are finished on time and hence do not create cost burdens related to unanticipated price adjustments. 5. The focus placed on a multisectoral approach for road safety rooted in the safe system approach which lead the project to interact with the Ministry of Government on issues related to enforcement (strengthening the Highway Patrol, fine processing procedures, etc.), safe drivers (licensing system, education and awareness campaigns, etc.), and linking it to the lead agency at the national level, contributed to the good outcomes that the province of Cordoba has had in recent years. In this sense, this project showed the merits of improving road safety management based on performance and results, not just road safety interventions linked to infrastructure, but rather working with other sectors and strengthening road safety management more broadly for enhanced impact. 5. Maximizing the benefits of public participation and beneficiaries’ opinions while containing the potential costs of a small group of people hindering the implementation of valuable projects requires a well thought management of public information. This includes the timely release of high quality studies of different alternatives prepared by qualified and trusted professionals. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies In February 2014, the Borrower submitted its project closing report (summarized in Annex 7). 33 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate Estimate Appraisal (USD millions) (USD millions) 1. Institutional Strengthening 2.11 2.99 +41% 1.1 ACIF’s Institutional 0.668 2.47 +270% Strengthening 1.2 Institutional Strengthening of the 0.942 0.0 Ministry of Finance 1.3 DPV’s institutional strengthening 0.5 0.52 +4% and Road Safety 2. Road Rehabilitation and 39.46* 42.45* +7% Maintenance through CREMA contracts 3. Road Paving 42.21* 50.53* +20% 4. Operational Costs N.A 0.16 Total Baseline Cost 83.78 Physical and Price Contingencies 12.31 Total Project Cost 96.09 96.32 +0.2% Front end fee 0.19 0.19 +0% Total Project Cost 96.27* 96.52* +0.2% * Numbers are not readily comparable because of the changes in the size and scope of the civil works component. (b) Financing Appraisal Actual/Latest Type of Percentage at Source of Funds Estimate Estimate Co-financing Appraisal (USD millions) (USD millions) Borrower 21.27 21.52 101% International Bank for Reconstruction 75.00 75.00 100% and Development 34 Annex 2.Output by Component Component Output/Activity Comments 1.Institutional Strengthening 1.1. ACIF 100% of projects in portfolio Achieved with financial, production and impact indicators defined and monitored. Annual Performance Report ACIF present its program to the publicly disseminated Ministry of Finance; included in the Ministry web site -Development of operational -Consultants -Completed manual -Strengthening capacity for -Hiring of: executive coordinator, project management head of procurement department, legal advisor, consultants to support the areas of procurement and financial management -Training to Municipalities: -Individual consultant - Completed evaluation of the productive impact of the PMCP -Implementation of the software -Individual Consultant- Completed for financial management -Impact assessment of the PMCP -Individual consultant- Completed -Acquisition of Office and IT -Completed equipment -Acquisition of servers for the -Completed Provincial Data SuperCenter 1.2 DPV/PDTA Road assets preserved with Achieved acceptable average roughness (IRI below 3) Strategic 5-year road program Initial five -year program was prepared and published. followed by annual programs because economic conditions have an impact on the planning horizon. Training on CREMAs Carried out as part of dialogue with management Bank’s staff 35 Coverage of CREMA system in Achieved, in conjunction with targeted network (424 km) Provincial Roads Project. Due to lack of funds for new CREMA contracts, coverage of this network will be done with Cobertura contracts in the future.* (see table below for further detail) Reduction in freight rates along Fully achieved. the rehabilitated roads km of key productive roads Completed according to revised rehabilitated program km of key productive roads paved km of roads maintained with 0 Fully achieved percent potholes, no edge break between the pavement and the shoulders and all horizontal marking and vertical signs restored -Training on environmental -Carried out with own resources as assessments part of systematic efforts by environmental agencies. -Training on road safety: -Achieved with Global Road Safety revision of transit forms Facility grants (Capacity Assessment, iRAP surveys, training on design of safety barriers, etc.) -Training of “consorcios -Carried out with own resources by camineros” PDV staff Strategy to address road safety Fully achieved through institutional, management capacity regulatory and enforcement efforts strengthening priorities and that had a substantial impact in the implementation of a Road Safety reduction of road accidents Plan -Acquisition of alcohol detectors -Completed (breathalyzers) for DPTA -Acquisition of dynamic weigh scales for vehicle control and -Completed training on their use 1.3 Ministry of Annual performance report The Ministry publishes its finance public disseminated activities/programs in its web site. 36 -Staffing of working group for -All the activities related to the the aggregation of public institutional strengthening of the expenditures Ministry of Finance were carried out -Consultancies on budget with the Ministry in-house staff. formulation and aggregation of public expenditures; conceptual framework, design, implementation, procedure manuals and training -IT for budget preparation -Cancelled -Consultancy on the -Cancelled management of contingent liabilities 2. Road CREMA 1 (127.09km) Cancelled rehabilitation and maintenance Cancelled CREMA 2 (159.91km) Completed CREMA 3 (136.94 km) 3. Road Paving -Despenaderos -Monte Ralo-Rio -Completed Tercero -Completed -Los Reartes-Villa Berna -Completed -Carrilobo-Pozo del Mollo -Cancelled -Canada de Alvarez-Alpa Corral -Completed -San Vicente-Los Cerrillos -Completed -Los Zorros-La Playosa 37 * Table comparing the CREMA model against the Contratos de Cobertura de Mantenimiento model Contratos CREMA Model Contratos de Cobertura de Mantenimiento Model General aspects General aspects • Generally applied to road sections between • In Cordoba, these contracts are grouped in 8 80 km and 250 km in length zones with each zone contract covering • The province designed a CREMA contracts between 500 to 600 km program of 792 km but due to cost overruns • Total coverage in the province is 4600 km only implemented 542km: 405.8km for with 4040 km falling under the paved Provincial Roads 13 and 17 rehabilitated primary road network, and 560km under the under the Provincial Roads program, and paved secondary road network). 136.9km under the present Project (CREMA • Typically contracts awarded to private 3). contractors for a period of 2 years • Typically contracts awarded to private • Flexible system that does not require detailed contractors for a total period of 5 years with engineering designs. They are based on the the initial rehabilitation works in the first 12 need to maintain certain road performance to 18 months, and maintenance for the whole standards linked to specific maintenance 5 year period. activities similar to km-month systems. • The CREMA contracts principally cover the Some prior minor rehabilitation works are provincial Roads with the highest traffic undertaken (edge repairs, pothole patching, levels, and at the end of the Maintenance milling, minor asphalt overlays) to bring period road Maintenance is undertaken under contract network to desired condition (about the contratos de cobertura model. 80 percent on average) with the rest of the • Work activities typically include the price allocated to routine maintenance (grass rehabilitation of specific road sections, and cutting, shoulder shaping and refilling, the routine maintenance of these and other maintaining road marking both vertical and road sections with control done based on set horizontal, and maintaining drainage results (performance standards) linked to the structures). rehabilitation component and maintenance • Smaller contract prices typically in the order component activities. of US$15 million, which works out at about • Payments are made based on a global US$ 14,500 per km-year. contract price with the initial rehabilitation • Contract Execution is driven primarily at noted to range between 70 to 90 percent, and preventive maintenance and is thus cheaper maintenance costs taking up the balance. than CREMA contracts which typically • Contract prices have typically been in the include full rehabilitation. order of US$30 to US$40 million. • Payments based on module equivalents of • Contractors are in charge of their quality work items (like a highly flexible unit based control and supervision concentrates on contract) checking compliance with performance • Quality control is undertaken via supervision standards, and not necessarily the inputs. by inspectors from the Provincial Roads • Incorporates axle overload control and traffic department. Calculations are made of measurements physical quantities for the module equivalent • A field investigation report is prepared that activities, and also records are taken of the includes measurements for roughness (IRI), quality indicators. deflections, road conditions, and available • Axle load control and traffic measurements traffic studies. are not included as part of the contracts, but • On the basis of the investigation report, the are rather separately undertaken by the Client prepares a “Basic Project”, which is Provincial roads department the minimum that the contractors must offer • To complement these contracts, separate road to deliver, and comply with the performance safety area contracts have been launched to standards set in the bidding documents. cover other road sections given the Contractors cannot bid for inferior structural challenges that exist in this regard. 38 packages to those indicated in the bidding documents. • The official budget estimate is based on the “basic Project” requirements. • The contractors undertake a field visit, and thus gain further information that enables them to best quote prices for the work to be undertaken (initial rehabilitation of specific road sections), and Maintenance of all road sections in the Bidding documents. • Contractors make a bid with two global sums: one for the rehabilitation component, and one for the maintenance component. They have to prepare an executive project design within 60 days of contract signature. • Quarterly work plan compliance is undertaken • Interventions incorporate aspects like road safety for both the initial rehabilitation, and maintenance phases. Strengths of CREMA model: Strengths of Contratos de Cobertura model: • Can cover larger contract road lengths (up to • Performance based control related to quality 600 km) and not merely inputs • It is a more flexible system that can enable • Auto-control by contractor reduces changes in work items as deemed necessary supervision costs while not compromising as per ground realities under the modular quality equivalent system • Bidding can be undertaken using ‘basic • Does not require detailed engineering project” information without the need for designs detailed engineering designs • The short contract duration (two years) • Contract modifications are not permitted enables the monitoring of contractor • The contract guarantees that the roads are performance, and thus enables the possibility maintained to a good level of service over an for non-renewal or extension of the contract extended time period which favors the road depending on the performance users • Separate road safety area contracts are seen as a positive step to give priority and focus to this major issue. 39 Weaknesses of the CREMA model Weaknesses of the Contratos de Cobertura • The CREMA contracts are sustainable in the model contract execution time frame. Outside these, • Contemplates less expensive interventions further financing is needed to ensure concentrating on minor rehabilitation, and continuous Maintenance in a second focusing on maintenance hence road sections CREMA phase requiring greater budgets for rehabilitation • Multi-annual budgeting, and allocation of are not ideal candidates for the model resources to CREMA contracts is necessary • In the modular systems model, there is a to ensure continued success with the model challenge to still ensure that the maintenance • CREMA contracts work best in contracts efforts are not overlooked in favor of more with little price variation, or need to include intensive works, hence a greater balance price adjustment clauses. The latter option needs to be made has worked best in the Cordoba contracts. • Requires the intervention of the provincial roads department to carry out inspections, modular equivalent measurements and results measurements • There is no specific work program control based on clear time milestones. Possible considerations to improve the model: Possible considerations to improve the model: • There needs to be greater follow-up on other • Further study is needed to see if some aspects included in the bidding documents benefits and efficiencies from the CREMA but not captured by the performance model can be incorporated into the Contratos indicators de Cobertura model. • Axle load control, traffic counts, and speed control are aspects that need greater attention in the zones of influence of the contracts • Greater capacity building and awareness among both supervisors and contractors as to how the model works exactly since many are accustomed to the traditional ad- measurement unit based contracts • Possibility of pre-bid meeting with interested contractors if procurement deems this a viable option in the context, including encouraging them to undertake field visits prior to submitting bids. 40 Annex 3. Economic and Financial Analysis The DPV has performed an estimated ex-post economic evaluation of the road rehabilitation and maintenance works (CREMA contract) and the paving works executed during the project life. The ex-post evaluation follows the same methodology used for the original evaluation at appraisal: both were done using the Highway Design and Maintenance Standards Model (HDM), which simulates life cycle conditions and costs and provides economic decision criteria for road construction and maintenance activities. HDM was used for estimating the net benefits of each project in terms of reductions in vehicle operating costs, passenger travel time, and road maintenance expenditures. DPV estimated maintenance and rehabilitation costs in financial and economic terms (net of taxes), economic costs being on average 70 percent of financial costs; and defined vehicle fleet characteristics and unit costs for six vehicle classes, economic road user costs being on average 70 percent of financial costs. Typical economic road user costs as a function of roughness (IRI), road user costs composition, and traffic composition are given below; as well as relationship between the average vehicle fleet economic road user costs and road roughness. The traffic growth rates are based on a study conducted by the DPV. For road paving projects, the traffic growth rates considered at appraisal were: 3-5 percent for light vehicles for the entire evaluation period; and 5 percent until 2008 and 3 percent thereafter for medium, heavy, and articulated trucks. For the CREMA projects, the traffic growth rate used at appraisal for the contract period (2007-2011) is 3 percent from the date of project start. This rate was based on the evolution of Gross Domestic Product (GDP) over the previous ten years and it is commonly used for the economic evaluation of road projects. For the ex-post evaluation actual traffic counts carried out by DPV annually were used until 2013 traffic and a future growth rate of 3% per year was estimated for the remainder of the life of the projects. The discount rate used in the analysis is 12 percent. The value of time for car passengers and for bus passengers is US$2.2 per hour based on the consideration that 75 percent of car passengers and 75 percent of bus passengers earn income and are on work trips, and the value on non-working time is zero. The “with” project alternative in the case of rehabilitation and maintenance includes routine maintenance, 100 percent patching, crack sealing, 4-10 cm overlay and reconstruction in the first two years of the project and was compared to a “without” project alternative consisting of routine maintenance, 100 percent patching, crack sealing and a reconstruction when roughness reaches 6 IRI. For the paving projects the alternative includes routine maintenance, 100 percent patching and paving and was compared to a “without” project alternative consisting of routine maintenance, grading three times a year and re-gravelling when loss of thickness reaches 30 percent or 100 mm. The estimated ex-post evaluation (scenario 3) compares the latest estimated economic returns of the civil works component with (a) the original PAD estimate (scenario 1) and (b) the revised estimates once the higher than expected costs prompted the revision of the project component (scenario 2). The results of these exercises are summarized below. 41 Comparison of returns derived from the different scenarios - May 2013 Scenario 1 a): Program initial global assessment (all works included in the PAD) NPV NPV ERR (Mill. AR$) (Mill. U$S) (%) Road Paving 91.45 17.48 16.35 Malla CREMA 241.65 46.18 25.94 TOTAL 333.11 63.65 20.56 Scenario 1 b): Ex-ante assessment (PAD), only executed works NPV NPV ERR (Mill. AR$) (Mill. U$S) (%) Road Paving 90.18 17.23 18.00 Malla CREMA 34.02 6.50 20.80 TOTAL 124.20 23.73 18.8 Scenario 2: Ex-ante assessment (revised for specific projects ), only executed works NPV NPV ERR (Mill. AR$) (Mill. U$S) (%) Road Paving 116.21 22.21 19.50 Malla CREMA 42.37 8.10 13.30 TOTAL 158.57 30.30 17.84 Scenario 3 a) : Ex-post assessment, executed works (Mid-Term) NPV NPV ERR (Mill. AR$) (Mill. U$S) (%) Road Paving 280.14 53.53 30.70 Malla CREMA 23.63 4.51 15.40 TOTAL 303.76 58.05 23.9 Scenario 3 b) : Ex-post assessment, executed works (Final) NPV NPV ERR (Mill. AR$) (Mill. U$S) (%) Road Paving 620.41 118.56 43.30 Malla CREMA 31.85 6.09 18.24 TOTAL 652.26 124.64 36.4 The ex-post economic evaluation of all road projects yielded a positive economic return. The road rehabilitation and maintenance project (CREMA) yields a Net Present Value of US$ 6.09 million at a discount rate of 12 % and an Economic Rate of Return (ERR) of 18.24% as compared to the 16.35% expected at appraisal. In the case of paving, the program yielded an estimated ex-post NPV of 124.64 US million and an EER of 43.30% as compared to the 25,94% expected at appraisal. The higher than expected returns can be explained by actual traffic volumes that are well above those estimated at appraisal and that, as shown below, this impact was higher in the paving works that in the CREMA one. All paving sections had rates of return above 12%. They ranged from 75.1% for the 42 Despenadero-Monte Ralo- Rio Tercero road to 18.7% for the Los Zorros-La Playosa section. A more detailed comparison of the ex-antes economic evaluation versus the ex-post economic evaluation is presented in the table below. It is worth noting that the project actually exhibited stronger economic viability in the ex-post evaluation compared to the ex-antes scenario with the global comparisons being NPV of US$ 10.74 million and Economic Rate of Return (ERR) of 15.65% for the ex-antes case compared to NPV of US$ 124.64 million and Economic Rate of Return (ERR) of 36.4% for the ex-post case. This is attributed in great part to the higher than expected traffic volumes in the ex-post case, and the updates of higher prevailing unit input prices (for the benefits tabs) in the HDM-4 model for 2013. Finally, it should be noted that the increased in US dollar costs that affected the size of the project was mostly due to an inflation rate that exceeded the rate of devaluation of the peso vis-à-vis the dollar. However, the nominal increase of domestic prices had similar impact both in the costs and in the benefits of the investments does preserving the economic merits of the projects. 43 Economic evaluations ex-post (using HDM-4 model), compared to the same sections evaluated ex-ante. SCENARIO EX-ANTE – PAD MAY SCENARIO EX-POST - 2006 MAY 2013 Initial Evaluation – Paving Contract Implemented Projects Project Appraisal Document (PAD) Length Cost ERR NPV NPV Cost ERR NPV NPV Road Section (km) (mill US$) (%) (mill AR$) (mill US$) (mill US$) (%) (mill AR$) (mill US$) 1- Despeñaderos - S- 253 Monte Ralo – Rio 38.9 7.93 16.5 5.670 1.890 7.15 75.1 333.63 63.75 Tercero S-210 y 2- Los Reartes – Villa 27.2 8.01 22.9 13.830 4.610 13.38 34.2 123.15 23.53 S-273 Berna 3- Carrilobo - Pozo E-52 23.75 5.24 18.4 5.05 1.683 5.60 38.5 82.59 15.78 del Molle E-91 y S- 5- San Vicente-Los 17.83 5.16 16.0 3.240 1.080 7.48 30.3 60.06 11.48 212 Cerrillos S-388 y 6- Los Zorros-La 17.63 3.70 12.9 0.52 0.173 7.20 18.7 20.97 4.01 T106-10 Playosa Total 125.31 30.04 18.0 28.310 9.437 40.82 43.3 620.41 118.56 Initial work costs date: Oct-05 Updated cost date: May-13 US$ exchange rate: 3.0 US$ exchange rate: 5.233 44 SCENARIO EX-ANTE - PRICE SCENARIO EX-POST - MAY 2013 ADJUSTED (*) CREMA adjusted. January 2007 – CREMA contract N. 3 Implemented Projects Project Ex-ante adjusted (*) Length Cost ERR NPV NPV Cost (mill NPV NPV Road Section ERR (%) (km) (mill US$) (%) (mill AR$) (mill US$) US$) (mill AR$) (mill US$) E-59 Noetinger - Leones 30.93 7.14 15.9 1.70 0.56 7.72 13.2 1.15 0.22 Marcos Juárez – Int. RP 12 27.97 6.46 11.8 -0.18 -0.06 6.98 30.2 22.15 4.23 N° 6 (Inriville) Int. RP N° 6 (Inriville) - 12 18.26 4.21 13.8 0.84 0.28 4.56 14.4 2.17 0.41 Camilo Aldao Camilo Aldao – Int. RP 12 17.48 2.83 14.1 0.70 0.23 4.36 18.6 3.80 0.73 N° 11 12 Int. RP N° 11 - Cavanagh 23.89 5.51 12.2 0.14 0.04 5.96 14.9 2.59 0.50 12 Cavanagh - Int. RN N° 8 18.4 4.25 13.5 0.77 0.25 4.59 15.1 3.13 0.60 Total CREMA 3 136.93 30.39 13.3 3.97 1.30 34.17 18.2 31.855 6.087 (*) Note: In the CREMA 3, some adjustments were made Initial work including reducing contract length and removing specific costs date: Jan-07 Updated cost date: May-13 items. As such the ex-ante scenario has been adapted to suit the adjusted context. US$ exchange rate: 3.05 US$ exchange rate: 5.233 Global Program Global Program ERR NPV NPV ERR NPV NPV (%) (mill AR$) (mill US$) (%) (mill AR$) (mill US$) 15.65 32.28 10.74 36.40 652.26 124.64 45 Ex-post evaluation (2013) Update of work prices (at base prices of the ex-post assessment, May 2007) Road Paving adopted Index Base (month 0) Index months (i) index variation variation reference reference reference capitalized Amount variation Base Base variation Month variation CAC correcti amount Route Section executed ($) CAC CAC (DNV- Avg. 1 y 4 month month (DNV- "i" (DNV- (1) on executed - (base month) INDEC) INDEC) INDEC) factor May 2007 (4) 1- Despeñaderos - Aug- Aug- May- S- 253 Monte Ralo – Rio 22,005,265 367.2 2.8130 406.6 2.9997 10.7% 6.6% 8.7% 1.087 23,916,080 06 06 07 Tercero S-210 y 2- Los Reartes – May- Jul-07 41,496,790 Jul-07 422.7 3.1450 406.6 2.9997 -3.8% -4.6% -4.2% 0.958 39,747,933 S-273 Villa Berna 07 3- Carrilobo - Sep- Sep- May- E-52 17,343,456 372.6 2.8495 406.6 2.9997 9.1% 5.3% 7.2% 1.072 18,591,853 Pozo del Molle 06 06 07 E-91 y 4- San Vicente- May- May- May- 23,006,311 406.6 2.9997 406.6 2.9997 0.0% 0.0% 0.0% 1.000 23,006,311 S-212 Los Cerrillos 07 07 07 S-388 y 5- Los Zorros-La May- May- May- T106- 22,141,996 406.6 2.9997 406.6 2.9997 0.0% 0.0% 0.0% 1.000 22,141,996 Playosa 07 07 07 10 Total 125,993,818 127,404,173 CREMA Contract N. 3 adopted Index Base (month 0) Index months (i) index variation variation reference reference reference update Amount variation accumu Base Base variation Month variation CAC contract Route Section executed ($) CAC CAC (DNV- Avg. 1 y 4 lation month month (DNV- "i" (DNV- (1) amount - (base month) INDEC) factor INDEC) INDEC) May 2007 (4) E59 - 104,682,037. May- CREMA 3 Jun-07 Jun-07 410.3 3.0401 406.6 2.9997 -0.9% -1.3% -1.12% 0.989 103,999,633 R12 270 07 46 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Pierre Graftieaux Senior Transport Specialist LCSFT Jose Alonso-Biarge Lead Highway Engineer LCSFT Cesar Queiroz Lead Highway Engineer ECSIE Antonio Leonardo Blasco Sr Financial Management Specialist LCSFM Fernando J. Brunstein Environmental Consultant LCSEN Juan Manuel Campana Highway Consultant LCSTR Fernando Rojas Institutional Development Consultant LCSPS Xiomara Morel Sr. Finance Officer LOAGI Juan Gaviria Sector Leader LCSFP Claudio Luis Daniele Consultant LCSEN Ana Maria Grofsmacht Procurement Specialist LCSPT Aurelio Menendez Senior Transport Economist EASTR Jose Luis Irigoyen Sector Manager LCSFT Reynaldo F. Pastor Chief Counsel LEGLE Luis Enrique Pinilla Procurement Consultant CN2S7 Paul Procee Lead Urban Specialist EASCS Veronica Ines Raffo Senior Infrastructure Specialist LCSTR Juan Luis Sanguinetti Fiscal Consultant LCSHH Zeinab Partow Country Economist LCSPE Alejandro Roger Solanot Sr. Financial Management Specialist LCSFM Supervision/ICR Marcelo Hector Acerbi Senior Environmental Specialist LCSEN Jose Alonso-Biarge Consultant LCSTR Natalia Cecilia Bavio Finance Analyst CTRLN Antonio Leonardo Blasco Sr. Financial Management Specialist LCSFM Fernando J. Brunstein Consultant LCSEN Juan Manuel Campana Consultant LCSTR Jasmin Chakeri Senior Economist OPSPQ Daniel Chalupowicz Financial Management Specialist LCSFM Vickram Cuttaree Senior Infrastructure Economist MNSTI Claudio Luis Daniele Consultant LCSEN Ana Maria Grofsmacht Procurement Specialist LCSPT Gabriel Luongo Caselli Consultant LCSTR Xiomara A. Morel Sr. Financial Management Specialist LCSFM Reynaldo F. Pastor Chief Counsel LEGLE Luis Enrique Pinilla Consultant CN2S7 Paul Procee Lead Urban Specialist EASCS 47 Veronica Ines Raffo Senior Infrastructure Specialist LCSTR Juan Luis Sanguinetti Consultant LCSHH Ricardo Schusterman Consultant LCSSO Alejandro Roger Solanot Sr. Financial Management Specialist LCSFM (a) Staff Time and Cost Staff Time and Cost (Bank Budget Only) USD Thousands Stage of Project Cycle No. of staff weeks (including travel and consultant costs) Lending FY06 157.90 FY07 31.49 Total: 189.39 Supervision/ICR FY06 0.00 FY07 20.33 FY08 57.16 FY09 83.43 FY10 43.84 FY11 38.85 FY12 64.11 FY13 21.02 Total: 328.74 48 Annex 5. Beneficiary Survey Results All surveys carried out as part of the Mid-Term and End-of-Project Impact Assessment study have been filed in the project file, including video interviews of main stakeholders and project beneficiaries. A closing survey to the beneficiaries of the projects was conducted on May 2013. The opinion poll was elaborated gathering groups of questions by the type of effect on the context. These questions were grouped into the following groups sequentially and then associated with value of each indicator. • Indicators of indirect impact: 15 questions. • Indicators of direct impact: 6 questions. • Indicators of the results of the product: 10 questions. • Overall assessment and identified problems: 3 questions. A total of 14 interviews were conducted on focus groups of stakeholders associated with the six projects of the program: • Municipality of Camino Aldo (government sector). • Municipality of Cavanagh (social groups and government sector). • Municipality of Los Zorros (public works, health and government sector). • Municipality of Pozo del Molle (government sector). • Municipality of Carrillobo (government sector). • Municipality of Corralito (government sector). • Municipality of Monte Ralo (government sector). • Municipality of Despeñaderos (government sector). • Athos Pampa, Manuel Belgrano School (education sector, school). • Commune of Los Reartes (government sector, tourism). • Commune of La Cumbrecita (government sector tourism). • Dídimo Argañarás, rural school near San Vicente (education sector, school). • Municipality of Los Cerrillos (government sector). • Municipality of San Vicente (health, education and government sector). The interviews to the beneficiaries updated the information related to the impacts on production, employment and consumption, tourism, real estate (increased value of the land ), transport and accessibility of educational and health centers, transit service and maintenance, bus lines, freight, road safety, environmental aspects, and general assessments, grade of satisfaction and problems or actions to be considered in the future. A summary of survey results is included below: i. 100% of interviewees expressed a high level of satisfaction with the project, with 49 positive effects in all the analyzed indicators; ii. producers in the area of influence of the project have benefited from the project due to improved road conditions, with 100% noting positive economic impact, with reduced vehicle operating costs and more reliable access to market; iii. employment generation opportunities have arisen with new local commercial and agro-industrial centers; iv. increases in both residential and catering businesses, as well as in tourism were recorded in La Cumbrecita area; v. increases in the price of land (up to 300% in La Cumbrecita); vi. access to 20 health centers has been improved with a more permanent presence of medical personnel; vii. access to 38 education centers has been improved, with a strong impact in the rural schools served by the roads; viii. improved mobility and access with traffic increase in the order of 120% especially in heavy goods vehicles, including those that provide leisure trips for local residents. In some specific sections, such us Rio Tercero- Despeñaderos, the level of traffic was multiplied by five and also a significant increase was detected in the CREMA project related with the high harvest of the lasts years; ix. more frequent public transport, crucial to access schools and to connect to near urban centers; x. improved road safety conditions with vertical and horizontal markings, and better road surface riding conditions (in rural unpaved roads the IRI improved from 8 to 2,5) ; and xi. positive results in the maintenance regime under the CREMA project. 50 Annex 6. Stakeholder Workshop Report and Results On July 10, 2013, a Stakeholder Consultation Workshop and public dissemination event was carried out in Cordoba City to present the results of the End-of-Project Impact Assessment Study conducted by Eng. Esteban Travaglianti, an independent consultant. Participants included authorities of the Government of Cordoba form the Ministry of Planning, Investment and Financing (Ministro de Planificación, Inversión y Financiamiento) and the Secretary of Innovation and Management Monitoring (Secretario de Innovación y Monitoreo de la Gestión); officials and staff of the Cordoba’s Agency for Investment and Financing (Agencia Córdoba de Inversión y Financiamiento, ACIF S.E.M.); officials from the Provincial Directorate of Highways (Dirección Provincial de Vialidad, DPV) and the Directorate of Road Accidents Prevention (Dirección de Prevención de Accidentes viales); and the team members of the World Bank. During the workshop, the consultant and ACIF authorities presented the results of the impact assessment on direct and indirect beneficiaries and the impact achieved as a result of the implementation of the works component of the Provincial Roads Improvement Program (PMCP). At the request of the Bank, the ACIF assessed the institutional strengthening component and its impact on program execution and results, in a context of broader Government focus of performance-based objectives. The presentation compared the goals established in the original program design with the final achievements, evaluating the social and economic impact, updating mid-term assessment performed, and communicating main findings and conclusions of the study. List of participants: - Dr. Gimeno Balaguer, Eugenio - Ministro de Planificación, Inversión y Financiamiento - Cr. Gauna, Eduardo - Presidente ACIF -Coordinador General PMCP - Cr. Musicante, Saul - Director titular ACIF - Coordinador Ejecutivo PMCP - Cra. Bustos Fierro, Dolores - Director titular ACIF - Responsable Administración Financiera PMCP - Ing. Ledesma, Miguel - Director DPAT - Ing. Pardo, Damián - Secretario de Innovación y Monitoreo de la Gestión - Ing. Gei, Ignacio - Subsecretario de Tecnología Informática y Telecomunicaciones - Inf. Bergero, Pablo - Director de Tecnología - Subs, de Tecnología Informática y Telecomunicaciones - Ing. Rahmane, Isaac - Secretario de Obras Públicas - Ing. Bértola, Raúl - Presidente DPV - Ing. Bejerman, Norberto Jorge - Jefe Unidad Ambiental de la DPV - Lic. Jaimes, Jorge - Secretario de Planificación- Ministerio de Planificación, Inversión y Financiamiento 51 - Ab. Gallo, Nancy - Directora General de Asuntos Legales - Ministerio de Planificación, Inversión y Financiamiento - Lic. Pagan, Soledad - Directora General de Administración- Ministerio de Planificación - Lic. Garrido, Lucas - Asesor del Ministerio de Planificación, Inversión y Financiamiento - Lic. Gimeno Balaguer, Eugenia - Asesora del Ministerio de Planificación, Inversión y Financiamiento - Lic. Montanchini, Cristina - Proyectos Especiales- Ministerio de Planificación, Inversión y Financiamiento - Lic. Anselma, Juan Pablo - Capacitacion y Seguimiento- Ministerio de Planificación, Inversión y Financiamiento - Cr. De León, Ignacio - Tesorero - Ministerio de Planificación, Inversión y Financiamiento - Cr. Amichi, Pablo - Jefe Control de Gestión ACIF - PMCP - Ab. Avellaneda, Carolina - Asesora Juridica PMCP - Lic. Roma, Franco - Consultor en Adquisiciones - SEPA - PMCP - Torres, Natalia - Consultor soporte SIAF PMCP - Ab. Mooney, - Adriana Jefa Departamento Jurídico ACIF - Ab. Brito, Noel - Asesora Juridica ACIF - Ab. Funes Rius, Ernesto - Asesor Jurídico ACIF - Lic. Vásquez, Hilda - Coordinadora U.CO.PRO, - ACIF - Cr. Suarez, Victor - Departamento Contable ACIF - Cr. Rustan, Oscar - Departamento Contable ACIF - Cra. Carrascul, Eleanor - Departamento Contable ACIF - Cra. De Luca, Karina - Departamento Contable ACIF - Cr. Oliveri, Sebastián - Departamento Contable ACIF - Ing. Heredia, Vicente - Departamento Técnico ACIF - Arq. Marchese, Graciela - Departamento Técnico ACIF - Cr. Puentes Diaz, Roberto - Referente Informático ACIF - Lic. Torres Lima, Emanuel - Control de Gestión ACIF - Llorens, Pablo - Despacho ACIF - Suarez, Alejandro - Despacho ACIF - Ab. Araya, Romina - Contrataciones ACIF - Pereyra, Natalia - Administración ACIF - Ferreyra, Cecilia - Administración ACIF - Bustos, Veronica - Secretaría Privada ACIF - Bracamonte, Milagros - Secretaría Privada ACIF 52 Presentation delivered during Workshop (selected slides). Impact Evaluation: 53 54 55 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR I. INTRODUCTION A) Background Information As stated in the Project Appraisal Document (PAD), the project calls for an analysis according to its formulation framework. In this regard, the Project Document sets forth a series of sectoral issues in Argentina and in Cordoba province which are hereunder summarized: The role of transport in the Argentine economy. In view of the nature of productive activities in Argentina, with agriculture and industry accounting for a significant percentage of total Gross Domestic Product (GDP), the role of the transport sector is essential for the country’s economy. The transport sector became even more important after the 2002 devaluation since the new exchange rate created favourable conditions for Argentina’s commodities: changes in relative prices gave rise to a change in GDP composition, through an exchange between goods and services markets that emphasized the production of goods and increased the demand for transport services. 22 The growth in exports, 23 together with a remarkable recovery in domestic consumption, exerted pressure on the transport sector and thus the National Government needed to ensure an appropriate supply of transport services, in support of a potential increase in production and improvement in the country’s overall competitiveness. The road sector in Argentina and the provincial network within the general context. Roads are the main means of transport in the country, accounting for close to 81% of the total freight volumes. Around the year 2004, the Argentine road network was 630,000 km long (11% paved), and divided into three administrative levels: national, provincial and municipal. Over 70% of total traffic drove along the provincial and national paved roads (the tertiary network under municipal jurisdiction consists of unpaved roads, access to farms and roads with little traffic). Provincial road networks encompassed approximately 191,000 km, under the jurisdiction of 23 provincial road agencies (DPVs in the Spanish acronym), representing 30% of the total length of the country’s roads. Cordoba province had 3,066,000 inhabitants in 2001 (8.5% of Argentina’s population) and an area of 165,231 Km2 (17.1% of Argentina’s total productive area, with consumption centres, processing plants, ports and other export outlets along national paved roads in the Province, approximately 2,600 km), managed by the National Directorate of Highways. Around 2004, the conditions of the road network gave rise to 22 FIEL. Abel Vignone Presentation at the 13th Conference on Logistics, Infrastructure Logistics and Economic Development, 2004. 23 In 2004 and 2005, exports accounted for 25% of GDP (measured at current prices) which entails a remarkable increase with regard to the 9% recorded in the 1990s. 56 significant costs in logistics which could impede any future expansion of agricultural production. Growth of Cordoba’s economy, particularly in the tourism and agricultural sectors, led the province to facing the most urgent needs as regards rehabilitation and paving, so as to avoid such deficiencies in the road sector from turning into a bottleneck and hindering short-term growth. The road network in Cordoba Province. Its function and how it is managed. The Road Network in Cordoba Province covers 99% of passenger transport and 85% of goods transport. The Provincial Directorate of Highways, within the Infrastructure Ministry, is in charge of the network that bears 50% of total road traffic and is an essential element of the transport system. As from mid-2002 important variations took place in the volume of transported people and goods. Such variations were mainly due to two factors: (i) the constant increase in farming production; and ii) the greater demand from users in the tourist sector. These significant variations required increasing budgetary efforts to pave new roads, rehabilitate existing ones, and maintain the Provincial Road Network. Important progress was made in the institutional strengthening of the Provincial Road Network, through provincial road programmes funded by the World Bank (Provincial Road Programmes PCP I – IBRD Loan 4093-AR, and PCP II - IBRD Loan 7301-AR), which helped to consolidate planning capabilities and prioritize road works through comprehensive analyses of the provincial networks using instruments such as HDM, the economic, social and environmental assessment of projects, the design of routine maintenance programmes, works supervision via the completion of the Routine Maintenance Management System (SGCR, in the Spanish acronym). A potential new loan is in the pipeline to supplement the achievements obtained so far through PCPs and the management of Provincial Treasury Funds, in the quest for a continuous improvement of the provincial network, correcting the main lags in the network’s maintenance programme through reconstruction and rehabilitation works, and expansion of the paved network, particularly in the farming and tourist attraction areas. Cordoba Province’s fiscal situation. As a result of the devaluation brought about by the deep national crisis of 2001-2002, the overall fiscal performance of Corboba province was affected and, particularly its public debt indicators. A subsequent general review of the province’s fiscal situation indicated that provincial finances had improved significantly since then; and the economic recovery produced a significant revenue increase which, together with a tight expenditure control in 2003 and 2004, gave rise to an overall improvement in indicators, thus showing that the province had gradually consolidated its budgetary balance and achieved primary surpluses in current revenue. By 2005, debt stocks had declined to 110% of net revenue. This recovery was also supported by financial assistance programmes of the National Ministry of Economy called “Structured Financing Programmes”. The Government’s financial assistance to the Provinces was included in Federal Fiscal Responsibility Law No. 25,917 (LRF in the Spanish acronym), which sets forth general rules on fiscal performance and public debt sustainability for the Argentine Public Sector, including the provincial governments. Córdoba Province adopted LRF in June 2005, through Provincial Law No. 9,237. Negotiations with the Ministry of Finance focused on this topic led to an agreement on the need to: (i) improve the quality of provincial expenditure by means of better project 57 management, monitoring and evaluation; and (ii) closely monitor fiscal matters so as to identify potential problems well in advance to mitigate or even avoid their consequences on an infrastructure investment programme. B) Programme for Improving Provincial Roads (P.M.C.P. In the Spanish acronym) Within this context, Cordoba province started negotiations to sign a loan agreement with the World Bank to fund an infrastructure rehabilitation and maintenance programme. C) Programme’s General and Specific Objectives Based on the achievements of other programmes funded by the World Bank – such as the Provincial Roads Programme (IBRD 4093-AR) and the Provincial Road Infrastructure Programme (IBRD 7301-AR)- the overall project objectives of the Programme for Improving Provincial Roads in Cordoba (P.M.C.P. – IBRD Loan 7398-AR) are the following: (i) to increase efficiency in road management so as to improve the conditions of the provincial road network for facilitating transport of goods along the productive corridors and of people in tourist areas; and (ii) to strengthen the institutional capacity of the province with a view to optimizing the design and implementation of key Public Investment programmes, within a framework of fiscal sustainability, by introducing management practices based on performance, greater coordination of the information systems and integrated financial management. The specific objectives are: (i) To solve a measurable part of the lag in the maintenance of the provincial road network; (ii) To contribute to extending the paved network, focusing on the network segments that have historically lagged behind, and the paving of which would support growth in tourism and in agriculture-based industries. (iii) To extend the use of performance-based contracts as a key step towards the implementation of a sustainable and cost-effective road management strategy; (iv) To support incipient initiatives aimed at quality assurance in provincial expenditure, the creation of a fiscal space and fiscal sustainability assurance in the medium run; (v) To strengthen the Agencia Córdoba de Inversión y Financiamiento S.E.M. (Cordoba’s Investment and Financing Agency) in its financial planning process and project management capabilities; and (vi) To further strengthen the management capacity of the Provincial Directorate of Highways as regards the provincial road network. 58 D) Components PMCP includes four (4) Components: 1) Component I – Institutional strengthening, with interventions in three priority agencies for the project’s development: i) Ministry of Finance: This sub-component involves activities related to coordination structures, information, monitoring and evaluation systems, and training in the financial management sector of the Ministry of Finance. It will encompass activities in three different areas or modules; ii) Agencia Córdoba de Inversión y Financiamiento S.E.M. (Córdoba’s Agency for Investment and Financing - A.C.I.F.): The loan would help to strengthen A.C.I.F. S.E.M. at the functional level, in areas such as financial management and debt management, project programming and monitoring, as well as support to information systems, among others. The project would fund the design and implementation of activities targeted to developing a performance-based management system, connecting the monitoring and evaluation system of A.C.I.F. S.E.M. with sector-based planning and budgetary decisions. The sub-component was divided into three modules, namely: (i) Module 2.1: Comprehensive Management Model A.C.I.F. S.E.M., the purpose of which is to create installed capacity at the Agency for the Programme, as well as to provide it with an organizational structure based on the implementation of organizational changes in line with its role in the modern State, and the review and drafting of manuals on critical processes for the proper functioning of the new structure. (ii) Module 2.2: Sector-Based Technical Executing Units (UTES by the Spanish acronym). The purpose of this module is to provide UTES with comprehensive training to standardize the sending of reports and information to this Agency. (iii) Module 2.3: Information System. This module is meant to make an IT system available to ACIF SEM so that, through the necessary material, procedural (software and procedures manuals) and human resources, it can obtain timely information for decision-making. iii) Provincial Directorate of Highways (DPV by the Spanish acronym). This is a body placed within the structure of the Provincial Ministry of Infrastructure with a view to providing support to the human and material resources of DPV for it to be able to act as Works Manager, the task it has been appointed to perform. This would translate into a strengthening of the areas of road safety, social and environmental management, works supervision, strategic planning, budget delivery and performance-based management. In this regard, a road safety plan would be implemented for 59 DPV across the whole province, with special emphasis on the CREMA area and the towns crossed by the stretches of road to be paved under this project. Additionally, training would be provided to a sub-group of low-performing road consortia, with the purpose of improving their technical and managerial capabilities. On the other hand, another two actors not originally envisaged in the PAD participated in this sub-component: the Directorate of Road Accidents Prevention (DPAT) and the Secretariat for Innovation and Management Monitoring. DPAT is in charge of issuing road safety standards in the province. It is trying out training options among the inhabitants of the towns covered by the paving initiative under the Programme, as well as of the urban areas under CREMA The purpose is to provide DPAT with resources for carrying out specific actions on the targeted roads and improving the information system on road accidents. The Secretariat for Innovation and Management Monitoring is in charge of defining and implementing strategic plans for innovation, streamlining and technological development of the Provincial Government. 2) Component II — Rehabilitation and Maintenance Contracts The idea of this component was to carry out rehab works (such as base reconstruction, resurfacing or asphalt paving) and routine maintenance works along three priority roads of the provincial network, through the so-called CREMA Contracts. The component intends to carry out rehabilitation and maintenance works along approximately 424 km, in three sub-networks, through three CREMA performance-based contracts. The basic estimated cost for implementing these contracts throughout their duration is 39.46 million US dollars. 3) Component III – Paving Works This component is targeted to financing road paving in six provincial road sections of priority roads, which are key routes in the productive fabric of the Province. The paving programme consists of six priority contracts for a total length of 174.26 km. Works under each contract include paving of a stretch with important traffic volumes. This paving programme will design and implement appropriate maintenance strategies to ensure the sustainability of the works. 4) Component IV – Operating Expenses Different external Programme audits would be hired under this component. II. IMPLEMENTATION A) Implementation Structure a.1) Córdoba’s Agency for Investment and Financing Sociedad de Economía Mixta (A.C.I.F. S.E.M.) 60 On 13 November 2006, a Subsidiary Agreement was entered into by the Government of Cordoba Province and Agencia Córdoba de Inversión y Financiamiento Sociedad de Economía Mixta (Cordoba’s Agency for Investment and Financing) by which the Province ratifies the delegation of powers conferred upon the latter by Law No. 9050, in its capacity as Provincial Executing Unit, to perform the duties related to coordination and implementation of the “Programme for Improving Provincial Roads in Cordoba Province”, IBRD Loan 7398-AR. Agencia Córdoba de Inversión y Financiamiento Sociedad de Economía Mixta (A.C.I.F. – S.E.M.), was created by Law No. 9050. It is a mixed-economy company in which the Cordoba provincial government owns 99% and Córdoba Bursátil S.A. the remaining one percent. Since it is partly privately-owned, it must meet the provisions of Law 19,550 on corporations as regards the submission and contents of its reports. Additionally, it must fulfill State regulations. Provincial Law 9050 provided it with jurisdiction for centralizing all activities as regards planning, management, coordination, implementation, follow-up and evaluation of programmes and projects receiving international and national technical assistance, financing and/or subsidies. In fulfillment of its mission, A.C.I.F. – S.E.M. is the Provincial Executing Unit for all public investment programmes that receive external funding from the Inter-American Development Bank (IDB), the International Bank for Reconstruction and Development (IBRD) and other international financing agencies, such as the International Fund for Agricultural Development (IFAD) or the Andean Development Corporation (CAF in the Spanish acronym). It also manages loan transactions with the Federal Fiduciary Fund for Regional Infrastructure to build important works located in the province. ACIF’s Capacity. Staff, facilities and equipment. As regards its capacity to implement the Project, it is worth mentioning that, since 2002, ACIF has managed the implementation of several World Bank-funded projects, as well as projects financed by other agencies. ACIF has a Financial Management and Contracts Unit for the above-mentioned programmes, with specialized staff experienced in the matter. Staff is increased according to each project’s needs. The working team works in close cooperation with the Agency’s Legal and Technical Departments. In turn, ACIF works with external Technical Executing Units (TEUs) which are the government agencies in charge of processing the requests for contracting works, purchasing goods and procuring services in a centralized manner through A.C.I.F. S.E.M. a.2) Project sub-executing agencies Within the implementation framework of the Programme for Improving Provincial Roads, three institutions were originally foreseen to participate: • Cordoba’s Agency for Investment and Financing (A.C.I.F. S.E.M.). 61 • The former Ministry of Public Works and Services, Cordoba Province (currently the Infrastructure Ministry), through the Provincial Directorate of Highways (DPV). • Ministry of Finance, Cordoba Province (MoF). Subsequently, the programme required the participation of two other institutions: - The Directorate of Road Accidents Prevention (D.P.A.T.), within the Ministry of Security, and - The Secretariat for Innovation and Management Monitoring, within the Ministry of Management. B) Amendments to the Original Project This Programme originally envisaged project completion by 31 October 2012. Project authorities then requested an extension given the need to complete procurement included in the last Procurement Plan for reallocating the remaining amounts. The Bank approved project extension until 31 October 2013 in a letter dated 6 September that attached a “Restructuring Paper” with the approved Project amendments. Cordoba Province then submitted to the Bank a request for fund reallocation in the Programme Financing Matrix, so as to increase financing of the Institutional Strengthening Component in the amount of USD 800,000 and the Rehabilitation and Maintenance Works Component in the amount of USD 1,250,000, diminishing funding for Paving Works (Component 3) in the amount of USD 2,050,000. C) Implementation by Component: Delivered vs. Foreseen c.1) Institutional Strengthening Component As regards Institutional Strengthening, the project worked continuously with the targeted agencies on the identified weaknesses and an important element was added, i.e., road safety on the Cordoba roads, thanks to the fact that the Ministry of Finance and the Provincial Directorate of Highways worked side-by-side and with their own funds to improve the structure of IT systems and indicators for civil society on provincial resources and expenditure, as well as to reinforce the necessary human and material resources to ensure its proper functioning as a guiding agency for road policies in the province. In view of the above, action policies using local funds to further priority needs based on the normal development of these agencies were adopted thanks to the momentum generated by the Programme, when jointly analyzing the identified weaknesses in each of the provincial government sectors for project implementation. This prompt action allowed the release of programme funds for reinforcing the road safety policy across Cordoba province, through the Directorate of Road Accidents Prevention. c.1.a) Ministry of Finance Sub-component 62 We can state that the Ministry of Finance accepted the criticism of experts from the World Bank Governance Area and, while awaiting the Programme to become effective, started working on the mitigation of the weaknesses in budget formulation as well as in financial aggregation in Cordoba Province. Processes foreseen in the original Procurement Plan of the programme for this Subcomponent were the following: (i) Module 1.1. Financial Aggregation of Public Expenditure (ii) Module 1.2. Plan of Action for Contingent Liabilities (iii) Module 1.3. Strengthening of the Budget Process All processes foreseen under the modules of this Sub-component were cancelled because they were implemented with local funds. - To date the Ministry of Finance has a Financial Aggregation system installed for all the government’s administrative services. System re-engineering was not only based on the adjustment of procedures, processes, document templates and IT systems but also translated into a norm-based rearrangement of all the sector’s activities. Furthermore, within the framework of a policy of continuous update based on new technologies, the Ministry allocates its own resources, both human and financial, with a view to improving productivity and the outcomes of information processes. - With regard to Contingent Liabilities, at the end of 2007, the political sector of the Province decided to cancel this objective since a decision was made to prioritize a more detailed analysis of all Contingent Liabilities, not only out-of-the-court but also court- related liabilities and all activities in which the State is a party to. Therefore, the scope set forth was not within the programme’s responsibility. - On the other hand, using Ministry of Finance funds and pursuant to the recommendations set forth by World Bank consultants, progress was made in creating a Budget Management System which was completed in mid-August 2007, with the development of software as well as the training of each of the reference persons at the different Ministries, Agencies and other offices that are part of the Provincial Government. In this regard, the actions of the General Directorate for Public Investment and Budget that carried out joint activities with the IT Manager’s Office of the Ministry of Finance were impeccable and decisive for quickly starting up the implementation of the system. As planned, this allowed the drawing up of the 2008 budget and that for the following years in a timely and proper manner, without any major difficulties, which showed the level of commitment undertaken by each of the participants in this process and the soundness of the Budget Management System. Budget statements were generated on the basis of the above systems. 63 In brief, the processes were cancelled because the objectives were fulfilled without the need for any financing from the programme. c.1.b) Cordoba’s Agency for Investment and Financing S.E.M. Sub-component As regards the institutional strengthening of Cordoba’s Agency for Investment and Financing S.E.M., we can divide activities into four areas: a) Human Resources, with the hiring of consultants for the programme; b) Software, through the implementation of UEPEX and other provincial systems such as SGO (objective-based management system), and STRATEGOS, based on the analysis of goals achieved and qualitative and quantitative information; c) Basic Equipment, mainly referred to the streamlining of the Agency’s IT equipment; and d) Training in the quest for ensuring staff remains updated as per the technical needs. The following was funded under this component: • PMCP Consulting Services (Executive Coordinator + Head of Procurement Dept. + Senior Consultant + Road Facilitator + Legal Advisor), Tickets and Per diem for the Working Team: • Services of PMCP Operations Manual Consultant • Desk Computers and printers • Institutional video on the Programme for Improving Provincial Roads in Cordoba Province (PMCP – IBRD Loan 7398 AR) • ACIF SEM IT Equipment. Hardware and Software Update for Strengthening ACIF SEM. • Procurement of critical IT Equipment (database) for the Processing Supercenter of Cordoba Province: This process was included within the framework of a series of acquisitions and investments being carried out by Cordoba Province Government, with a view to ensuring the technological re-engineering, consolidation and enhancement of the Data Processing Supercenter’s capability, to provide the necessary resources in support of current and foreseen applications for the next five years, thus warranting a better and greater use of IT resources in the Province. Consulting services on the Management Model and implementation of a changes follow- up system at ACIF; Consulting services on the Design of the Organizational Structure and implementation of organizational changes; critical process manuals for ACIF, Development of software for Financial Administration at ACIF; Desktops and printers at ACIF: the above was foreseen in the programme, and carried out with ACIF resources and staff. The same happened with the consulting services for training UTES. The scope of the consultancy to train the Sector-Based Technical Executing Units 24 which are 24 UTES are the government’s technical bodies such as the Directorate of Highways, the Provincial Directorate of Architecture, the Ministry of Government, Ministry of Education, etc. 64 directly or indirectly linked to the Agency, with regard to proprietary procedures set forth in each of the Programmes with International Loan Organizations, has been reduced since many of the technical players (UTES) have consolidated their processes through cooperation agreements. Therefore, the group to be trained has shrunk and the purpose of procurement is to create the necessary tools so that the technical and administrative areas of ACIF and UTES can manage the projects under ACIF’s responsibility. c.1.c) Provincial Directorate of Highways Sub-component (DPV - Dirección Provincial de Vialidad) The loan funded the following activities: • T.A. for CREMA supervision (2 civil engineers + 2 road engineers + 2 topographers and training in CREMA for DPV): In 2007, the Provincial Directorate of Highways took on noteworthy professionals who allowed an orderly and detailed execution of the works, and thus hired staff was discharged. Furthermore, thanks to the World Bank’s collaboration, DPV staff received training within the framework of a strategy organized by this financing institution which led to the termination of consulting resources. • Training on PMCP’s productive impact on the Municipalities: In the second half of 2010, the final report was submitted on Assessment of the Project’s Medium-Term Impact. Report conclusions appear in Exhibit III.A.1. • IT Equipment at DPAT – Road Safety: The process was completed for providing the necessary IT equipment (Computers and printers) to DPAT for its application to the RePAT project (Provincial Registry of Traffic Records). This is used as an information base for the interprovincial modular system of driving licenses called ReNAT (National Registry of Traffic Records). • Dynamic weigh scales and ticketing machines for controlling Vehicle weight: the process originated within the Road Safety Programme and was promoted by the Cordoba Provincial government. Sixteen (16) mobile scales and weighbridges were initially under the custody of the Directorate of Road Accidents Prevention (DPAT) so as to be distributed by the Provincial Traffic Police Forces across the province, with a view to carrying out random checks. Currently, DPAT has delegated the responsibility of these checks to DPV, through agreements with different municipalities across the province. • Breathalyzers for DPAT: Breathalyzers have been successfully used at Traffic Police check points. • Hiring of an Individual consultant’s services to carry out the Final Impact Assessment of the Programme for Improving Provincial Roads in Cordoba Province – IBRD Loan 7398 AR • Purchase of IT and Technological Equipment for the Traffic and Road Safety Commission, RePAT, Road Observatory and Data Processing Supercenter of Cordoba Province: Within the framework of the last Bank Supervision Mission (July 2013), ACIF mentioned the existence of a remaining unallocated balance already disbursed by the Bank. It thus committed itself to submitting a procurement proposal to the Bank for the Programme’s Institutional 65 Strengthening Component. Having met with the different Programme components, different needs were identified to be covered with the remaining loan funds. In this regard, DPAT stated the need to reinforce road safety management in Cordoba Province, for which it would be necessary to equip three key agencies, namely: a) the Provincial Traffic Commission which includes all the Province’s Municipalities and Towns, to coordinate and implement road safety policies in urban areas, consistent with the Province’s policies. Among its duties are the auditing of driving license issuance centres and of misdemeanour courts, and the follow-up of accidents at the Province’s departmental levels, through single Protocols but in a decentralized manner; b) RePAT (National Registry of Traffic Records) which is the IT system recording all traffic-related activities, managing traffic fines, trying of fines, driver disqualification, driving license issuance, fine collection and driving tests; c) the Road Observatory which forces to generate “Accident Reports” that must be entered into the computer so as to draw up a geo- referenced map and apply the Accident Analysis Method. • On the other hand, a technological update process is being carried out by the Government of Cordoba Province which started with the purchase of integrated data servers in a cluster solution ensuring high availability of the operating system, funded by P.M.C.P. The following activities foreseen to be funded under the loan were either implemented by DPV technical staff with the Directorate’s own resources or cancelled: • Training of Road Consortia (ticket and per diem): from 2006 to date, DPV qualified technical staff taught intensive courses on an annual or semi-annual basis, according to different needs and topics. • Training on Road Safety; readjustment of traffic templates: vis-à-vis the impossibility of carrying out this readjustment process before the programme’s closing date, the activity was dropped and the pertinent amount was reallocated to another process within the same Institutional Strengthening component. • Road Safety Training (tickets and per diems): DPAT has delivered and continues to deliver courses not only in the urban and rural areas in which the Programme supports works but also in other provincial localities. • DPV Training in Environmental Assessments: With the support of the National Roads Directorate, the National Environment Secretariat or the Provincial Environment Secretariat, DPV staff has participated in several courses on environmental assessment formulation so the process was already eliminated from the previous Procurement Plan. • Printing of Manuals and Printing services overall. • Awareness-raising ads campaign: it is being carried out through DPAT, an agency under the Ministry of Government and Security, so this resource was also dropped from the programme. • Facilities – Furniture and IT Equipment for the Provincial Directorate of Highways. Renewal of Hardware and Software for the works manager’s office: Technical specifications were to be sent by targeted components. In view of the above, and given the Borrower’s decision to allocate the greatest amount possible 66 of funds to the project on “Procurement of Integrated Data Servers in a cluster solution ensuring high availability of the operating system and information back- up for the Cordoba Province Processing Supercenter”, the decision was made to drop these processes and reallocate the pertinent amount to the above-mentioned new project. These amendments were maintained until the end of the programme. c.2) Rehabilitation and Maintenance Component (CREMA) - CREMA 1 (Rehabilitation and Maintenance Contract No. 1. Works: Provincial Route No 4 - Section: Int. PR No. 2; Etruria; Santa Eufemia; La Carlota; Provincial Route No. 11 Section: Chazón; Pascanas): Process was cancelled because of a lack of sufficient funding. - CREMA 2 (Rehabilitation and Maintenance Contract No. 2. Works: Provincial Route No. 4 - Section: La Carlota; Laboulaye; Int. NR No. 7; Melo; PR No. 27; Bouchardo): Process cancelled due to a lack of sufficient funding. - CREMA 3. Rehabilitation and Maintenance Contract No. 3. Works: Provincial Route No. 12 Section: Marcos Juárez – Int. National Route No. 8. Provincial Route E-59 Stretch: Crossroads Provincial Route No. 2 (Noetinger) - Crossroads National Route No. 9 (Leones). On 02 November 2012 a “Certificate confirming Works Defects” was issued stating that three months after the “Completion certificate for recovery works and other mandatory interventions” the works showed no defects to be corrected. In May 2013, works maintenance activities were completed. c.3) Paving Component - Paving of Provincial Route No. 23. Section: Crossroads at access to Caleras – Entry Arch to Alpa Corral: Process Cancelled. Bidding Process: 1959/2008. Bids were opened on 27 May 2008. The Evaluation Committee decided that the lowest price was over 20% higher than the official budget. This call for bids was dropped because of an inconvenient price and the World Bank informed the Programme would not be able to fund this process. - Construction of Provincial Route S-253. Section: Despeñaderos – Monte Ralo – Corralito - Río Tercero: The purpose of executing these works was to avoid people along this corridor from having to use National Route No. 36 for traveling to Rio Tercero and the provincial Capital city, and consequently reduce transport costs and time, thus strongly promoting the economy in one of the most productive regions of the Province. The works faced certain difficulties due to lack of foresight. Anyhow, the Works Inspection Unit of the Provincial Directorate of Highways was able to organize tasks and the works were completed within a reasonable period, with good quality execution. - Paving of Provincial Routes S-210 and S-273. Section: Crossroads at access to Los Reartes – Crossroads at access to Villa Berna: The execution of these works aimed at 67 producing a high impact on the region’s tourist development, supplemented with a big private sector investment in hotels, cottages, gastronomy, etc. This tourist circuit that connects Villa General Belgrano-Los Reartes-Villa Berna and La Cumbrecita is one of the most important in the region – characterized by big pine forests and central-European buildings in the towns -, and has achieved a remarkable level of development with a 235% growth from 1990 to 2004. On 28 April 2009, the Contractor submitted to D.P.V.’s consideration, Request No. 27 containing Works Amendment No 1 consisting of the replacement of the proposed bridge and of 700 meters of road with steep slopes and sharp curves, for a 30-meter high, 240-km long “mega bridge”. On 23 November 2010, D.P.V.’s decision to go back to a readjusted and improved original project was submitted to Project Manager Dr. Verónica Raffo, together with the supporting information. On 17 February 2011, by Letter No. 104/2001 “Amendment No. 1” was submitted to the World Bank for its No Objection. Also attached was the full file for information and analysis purposes. A letter dated 18 April 2011 provided the World Bank’s No Objection to the proposed Works Amendment No. 1. On 15 June 2012, the partial final acceptance certificates were issued for the works contract between chainages 4,000 and 23,500 and chainages 25,375 and 30,930. Resolution A.C.I.F. No. 057 of 21 May 2012 approved two previous final acceptance certificates. - Paving of Provincial Route E-52. Section: Carrilobo – Pozo del Molle: the main purpose was to link a broad soy producing area thru the main provincial road corridors to the port, comprising provincial and national routes, such as PR No. 13, PR No. 3 and NR No. 9. It is located in the Río Segundo department which is a part of the so-called “Zone 2” farming area. The works faced many difficulties essentially because of delays in the contractor’s execution term but thanks to the knowledge and leadership of the Works Inspection Unit, Provincial Directorate of Highways, and the negotiation capabilities of the Programme’s authorities, the works were completed without need for terminating the contract. - Paving of Provincial Routes S-388 and T-106-10. Section: Los Zorros – NR No. 158 (La Playosa): This area is characterized by a significant level of farming activities. The works were organized normally during the first nine months, and were even over and above the foreseen progress curve. Works were carried out with the appropriate equipment and staff despite the fact that the equipment suffered frequent and unusual breakdowns. As from the tenth month and until the thirteenth month there was a delay in the works as a result of rainfall in the area, which was also worsened by the economic crisis, scarcity of material and roadblocks which did not allow a normal supply of inputs. As from the fourteenth month and until completion of the works on 7 May 2009, the works resumed their normal pace and made up for the delays given the favourable climate conditions and the fact that the Company added an important amount of equipment to complete the tasks, given the pressure exerted by the D.P.V. Inspection 68 Unit and the A.C.I.F. Coordination Office. The works were executed according to the drawings, bidding specs and instructions provided by the D.P.V. Inspection Unit. - Paving of Provincial Routes E-91 and S-212. Section: San Vicente – Los Cerrillos – on the border with San Luis province: This route is located in the West of the Province between the San Alberto and San Javier Departments. It is a potato growing area, the second in importance at national level after Balcarce. It therefore needs to be accessible all year round, mainly in the rainy season, which is the potato harvest season, so as to be able to send production via PR E-91 and NR No. 20 to Villa Dolores, for its distribution to the rest of the Province and country. It is worth highlighting that the contract amounts for each of the above-mentioned works, under the Rehabilitation and Maintenance Component, as well as under the Paving Component, were increased in view of the monthly adjustments due to redetermination of prices in each of the works, pursuant to the methodology of the International Bank for Reconstruction and Development (IBRD), reflected in the formulae and parameters established in the pertinent bidding conditions and specifications. III) IMPLEMENTATION PROBLEMS AND PROGRAM WEAKNESSES As mentioned above, the Program underwent several evaluations and audits which allowed the identification of some implementation and project design problems. 1) Institutional Strengthening Component ACIF Subcomponent Although the Loan Agreement required the strengthening of ACIF’s initial structure with the participation of consultants hired using programme funds, and this allowed a significant improvement in the processes, it is also true that –especially towards the end of the programme- the number of consultants decreased and transfer of knowledge and of the project’s history was not always appropriate. This fact, and successive changes in the authorities of provincial organizations and ACIF, caused some difficulties –particularly when sharing information about the programme-; nonetheless the ACIF team was able to overcome those difficulties through the revision of Aide Memoirs or the consultation with Bank professional staff. On the other hand, when analyzing the implementation of the Programme, World Bank consultants had noted that the IT system then in place at the Agency for the registration and processing of data had flaws and/or deficiencies, both in its methodological and security aspects. Therefore an adaption or migration to a more stable platform was requested which would allow working in an environment that was more consistent with a World Bank Direct Loan (Programme). 69 The UEPEX system was implemented satisfactorily and is currently operational: it contains information from the programme’s inception. However, in order to maintain the “pari-passu” ratio in U.S. dollars duly agreed upon with the Bank in the loan agreement, the UEPEX system requires conversion of payments, contributions and investments made with provincial funds and with other funding sources (source 22). But since UEPEX uses a different conversion system, it is necessary to adjust the amount of contributions and investments made, which will be equivalent to the total amount of investments by local and external sources (data extracted from UEPEX) plus the balance converted into dollars of the bank account associated with the programme. On the other hand, although significant progress was made in the registration of processes in the Procurement Plans Execution System (SEPA) required by the Bank, a complete coordination in the UEPEX – SEPA interface was never achieved, mainly due to the different criteria used by the two systems to group expenditure categories and to carry out the conversion into U.S. dollars. This required entering data twice. DPV Sub-component Although a diagnosis was carried out regarding institutional capacity, which detected needs in training, institutional strengthening in planning and in data collection processes of the road network (traffic, roughness, deflections), as well as the need to receive technical assistance in load control in order to implement a permanent system, and also to provide for the integral planning of the road networks using technical-economic evaluation models for road projects and procurement of goods, and although the original procurement plan envisaged a series of processes in order to address those needs, few actions were taken to strengthen the Provincial Directorate of Highways. However, local funds were used to that end. 2) Paving, Rehabilitation and Maintenance Works Components Initially the Programme for Improving Provincial Roads (PMCP in the Spanish acronym) was prepared on the basis of an assessment of the specific projects identified, which gave rise to the Project Document (PROJECT APPRAISAL DOCUMENT) dated 24 May 2006. The projects assessed at the time were defined at profile level (drafts). Works costs were calculated as at October 2005 and adjusted afterwards as at March 2006, and for the purpose of economic appraisal, the standard vehicle fleet type was defined using the operating costs for vehicles from COSTOP of that year (Costs of Operation published by the National Road Agency). This initial programme included 6 paving works and 3 CREMA contracts. Later, based on engineering studies, the initial projects were adjusted in order to submit the specific paving projects and basic projects for CREMA contracts to the World Bank for its “no objection”, and instead of implementing six paving works only five were implemented, whereas of the three CREMA Contracts, only one was implemented. The reduction in the number of projects was due to price increases for the works and to the adjustment of projects in order to fulfill the feasibility stage. 70 As already pointed out when describing processes executed and completed, in some paving works 25 there were difficulties in connection with execution deadlines –either due to reasons related to the respective contractors or due to changes in Project execution– which led to extending the deadlines in order to finish them with the least degree of conflict. IV. THE WORLD BANK AND SUPERVISION TEAM A) Supervision Teams and Degree of Engagement with the Project Once the Loan Agreement IBRD 7398-AR was signed, for financing the Provincial Roads Improvement Project, the Bank appointed a team to support the Provincial Executing Agency (A.C.I.F. S.E.M.) throughout project execution. During Supervision Missions, the World Bank TTL provided support together with a team of experts in the following areas: roads, procurement, financial, social and environmental aspects, among others. Furthermore, the disbursements team in Brasilia rendered support. Both the TTL and the team of experts of the Bank were very knowledgeable about programme details and their engagement with the Project was high. This aspect is very important because such thorough knowledge allowed them to more efficiently address the problems encountered by the Project. Regarding knowledge of public sector aspects in Argentina and in Cordoba province, the experts showed broad knowledge as well as understanding vis-à-vis changes of authorities and flexibility as regards changes in local rules which affected the programme either directly or indirectly. B) Performance In the first place, it is worth mentioning that Supervision Missions took place generally twice a year, including field visits and meetings with authorities and consultants linked to the Project. Frequency of Supervision Missions is rated as adequate and their quality and contributions are evaluated as good for the development and success of the Project. TTL’s performance was rated high, since the thoroughness of her follow-up actions contributed to the Project’s development, and at all times she showed willingness to support ACIF, as well as a proactive attitude to address any difficulties that arose. 25 For example, the paper “Construcción Ruta Provincial S-253. Tramo: Despeñaderos – Monte Ralo – Corralito – Río Tercero”, and “Pavimentación Rutas Provinciales S-210 y S-273. Tramo: Intersección con acceso a Los Reartes – Intersección con acceso a Villa Berna” 71 Moreover, it should be stressed that communications between ACIF and the TTL, as well as Bank experts, were smooth during Project execution, and they were always willing to support the processes throughout the different stages, and to help address different situations as these cropped up. V. CONCLUSIONS A) Project Achievements 1) Institutional Strengthening Component Ministry of Finance Sub-component The programme’s contribution as a triggering mechanism and catalyst agent of actions carried out internally within the Ministry of Finance was very important in view of the weaknesses identified by the Bank’s experts. Although the need to improve the budgetary formulation process and the need to have access to a system which would allow the aggregation and consolidation of financial data from all organizations within the Provincial non-Financial Public Sector was already latent, the decision to move ahead in a sustainable manner towards the achievement of both objectives arose from the recommendations and the structuring of the Project. The development and successful implementation of both components –budgetary formulation and financial aggregation– carried out entirely by the Ministry’s own staff, has been perhaps the main strength of the project and ensured that changes became institutional practices. It has also ensured installed capacity to carry out the necessary adjustments in order to provide for constant evolution. The result of the work undertaken by the Ministry of Finance since the inception of the programme has been to achieve a public finance policy open to civil society on the origin and the application of provincial resources and the provincial investment plan embodied in each of the budgetary laws in force, which can be accessed at the government’s webpage (www.cba.gov.ar). Within this context and under the Social Responsibility approach –reflecting the intent of organizations to incorporate social and environmental considerations into their decision- making processes and to be accountable for their impact– the Ministry of Finance of Cordoba Province issued the First Sustainability Report, which was validated by the Global Reporting Initiative (G.R.I), the only international organization which validates the methodological framework used to evaluate an organization’s sustainability. Thus, the above-mentioned Ministry became the First Public Organization in Argentina to prepare a report with a GRI-validated framework. Through the Sustainability Report, the Ministry of Finance presents actions carried out on the basis of the Social Responsibility approach, reporting matters intrinsic to its identity as an organization and to its role in society, connecting the sustainable development 72 objective with actions taken in Transparency, Organizational Evolution, links with Citizens and matters related to Care of the Environment. ACIF Sub component Prior to the implementation of the Project, ACIF was already operational and was managing a large number of projects with different sources of financing. Diversity of systems used for data recording from different projects, the amount of information to be displayed in different degrees of detail and the variety of individual applicants to which the information was made available, rendered the review and interactions required to carry out any project especially complex. The requirements of the PMCP included, among others, one related to the fact that ACIF should implement a system which would allow it to centralize, analyze and use the physical and financial information available in the proper manner. This was achieved thanks to the use of the UEPEX system. Training of ACIF staff in the use of this managing system allowed improvement in the transfer of information between the planning and execution phases. Although as already mentioned, an adequate running of the interface with SEPA was not always achieved; the data entry process is constant, which allows for regular and adequate follow-up of payments, contributions and investments made. UEPEX also provided most of the data necessary to feed into the SEPA system regarding each of the processes and their management, and thus access by civil society to information in connection with programmes financed by international organizations was made public and transparent through government management actions. Implementation of PMCP brought about, as required by the Loan Agreement, the appointment of a team made up of fully qualified professionals to carry out the tasks assigned to A.C.I.F. S.E.M., who joined the staff that worked there prior to the project, and thus managed to disseminate the knowledge of World Bank rules and procedures. At present, A.C.I.F. has a trained team of professionals and the overlap of functions has been avoided, by prioritizing well-defined responsibilities. Additionally, through the purchase of IT equipment for ACIF offices, remarkable progress has been made in the availability of material resources appropriate for the operational needs imposed by different processes being carried out by ACIF, while the contribution from programme funds to technological re-engineering undertaken by the Provincial Government through the extension and modernization of the Data Processing Supercenter has resulted in an improvement in the use of information systems. Although both the Project Appraisal Document (PAD) and the Loan Agreement IBRD 7398 -AR envisaged that the loan should support A.C.I.F. S.E.M. to strengthen, among other fields, the project programming and monitoring area, no specific projects were executed within the framework of the P.M.C.P. for the implementation of this objective, due to the fact that at that time a strategy was put into operation at the provincial government level, with funds from another loan (Loan IBD1765/OC AR), called 73 Objective-based Management System (SGO). The software Strategos was adopted and work on the government’s annual planning was started. When the first SGO activities commenced, the provincial Executive Branch was organized into twenty jurisdictions which managed their projects independently. Every time the Governor or a minister needed to be informed on the progress or result of a Project, he had to get in touch with the person in charge who knew the details, outputs, goals and the execution schedule. In turn, each ministry reported progress to the Governor in different formats, which hindered consolidation of the information necessary to have a global vision of the provincial management. On the other hand, lack of centralized planning prevented inter-ministry coordination and made the allocation of resources according to expected results difficult. In this context, management follow-up and monitoring, and the possibility of carrying out readjustments in order to achieve objectives when deviations were detected was a task impossible to achieve. In view of the above, the Objective-Based Management System (S.G.O) was implemented. The SGO development component was designed to improve agency management through a system which required the organizations to plan and set goals for their projects. The committed outputs consisted of integrating twenty organizations (among them A.C.I.F.) into the S.G.O and into the development of a management system. Throughout its implementation, P.M.C.P. was aligned with the general policies of the Provincial government and was able to respond consistently and systematically to the information requirements for the proper operation of the system. . For the past three years, planning has started to be linked to budget. In the preparation of the fiscal year 2013 budget, work on detailed budgeting of activities for some projects was undertaken. Currently, it is not possible to request a budget line if the request is not linked to planning and if no associated indicators are available. Publishing of government plans is carried out annually and it is integrated with the budget. They can be accessed at the website of the Cordoba Province Government www.cba.gov.ar, Ministry of Finance, “Budget” link. Moreover, it is important to stress that the process of integration with the budget is automated within the cycle of request and annual budget approval. That is to say, if a new organization is created, this new agency cannot request its budget line without first drawing up a plan to support it. At present, all organizations from the Provincial Executive Branch (PEB), including A.C.I.F., have defined action plans. If agencies do not outline their plan, no budget is allocated to them as the planning and budgeting functions are integrated with one another. Although in 2012 the SGO computer tool was not used, all the ministries of the Provincial Executive Branch carried out their planning in 2013. They have 151 defined strategic objectives, 168 results indicators, 546 initiatives and 653 output indicators. However, the planning is not integrated into a provincial plan for the medium-long term. 74 DPV – DPAT Sub-component In the period 2008-2012, deaths resulting from accidents in the province of Cordoba were reduced by 42%, representing 151 less deaths a year due to accidents (down from 360 to 209 deaths a year). The mortality rate, considered as deaths per 100,000 vehicles in intercity zones, was reduced from 64 in the year 2008 to 31 in the year 2012, very close to the provincial target level (to have less than 30 deaths per 100,000 vehicles during a calendar year). This reduction is mainly due to reinforced controls carried out by Traffic Police under the jurisdiction of DPAT, and particularly to blood alcohol-level measurements. Breathalyzers purchased with programme funds were used for this purpose. 2) Paving, Rehabilitation and Maintenance Components According to the project’s final Impact Assessment Report, 26 after consolidating the different indicator appraisals, the Programme for Improving Provincial Roads has had a satisfactory performance. In this regard, based on the processing of the surveys, the report shows that 100% of respondents expressed a high degree of satisfaction regarding the works carried out, indicating positive effects in all aspects related to the indirect and direct impact indicators concerning improvement in outbound-production transport and reduction in transport costs, an increase in tourism in La Cumbrecita tourist zone, improved access to hospitals and schools, improved bus frequency, substantial improvement of the roughness index, improvement of the transport service –this entailed a corresponding decrease in vehicle operation costs and travel time and increased regular traffic, increased land value, among others. Some weaknesses were also pointed out in the opinion of users which will require improvements at a later stage, and are mainly connected to the need for reinforcing cargo control, speed control and routine maintenance of the roads involved. Additionally, the analysis of the impact indicators of specific projects provides, among others, the following results: a benefited population of 332,246 inhabitants from municipalities and communities in the project’s area of influence, and 96,832 inhabitants at a distance of less than 2 km from the road’s layout in the projects’ area of influence, improvement in GGP: 30.9 % increase in the Province’s Geographical Gross Product at 1993 constant values, between 2006 and 2011; 6.8 million tons of production a year estimated ex post in the area of influence of the projects, that is shipped using the executed roads; reduction in the cost of tons per km of transport by 0.455 $/tn.km for the Paving Programme (reduction of 28%) and 0,034 $/tn.km for the CREMA Contract (reduction of 4.8%), at April 2013 values; 20 hospitals benefitting from accessibility; an average of 3,000 hospital referrals using the roads improved under six projects; 38 26 The executive summary of this assessment is included in an Annex to this report, since it provides details of the project’s direct and indirect impacts. 75 education centers benefited from accessibility in order to provide educational services to children and teenagers, improved access conditions for 456 farm entrances and 144 accesses to local roads, for all the works under the Programme; substantial growth of average traffic by 184%; reduction of the IRI at an average of 79%; reduction of routine maintenance costs in approximately USD 470 thousand a year; increase in the number of tourists in the area of La Cumbrecita, from 41,000 a year to 60,000 tourists a year, with a resulting increase in their spending, totaling 6,250,000 USD/year. On the other hand, analysis of the programme’s physical and financial management indicators demonstrate that initial disbursement expectations have been met since the total disbursed amount as at 13 June 2013 represents 100 % of the loan amount. Regarding the total number of kilometers originally identified (598.2 km), finally 262 km were executed (5 works from the paving program + 1 under CREMA) accounting for a 44% compliance with the original physical goal, due to the effects of the project’s update during the loan’s execution, supply and demand conditions and price re-determination, among others. Paving works within the Programme for Improving Provincial Roads in Cordoba Province had an average equivalent cost updated as of March 2013 of USD 0.56 million/km; this cost is considered efficient when compared to other paving road works financed by IBRD and IDB. The report also points out that based on the indicators related to road network management, it appears that the paved network in Cordoba in “good” conditions increased from 38.5 km in 2007 to 1,182.6 km in 2009, representing a growth from 2% to 39%, which is an important improvement of the road network’s maintenance global management indicator. B) Lessons Learned and Challenges Despite the above-mentioned achievements, there are still several issues that need to be addressed in order to reach sustainability over time of the actions and works carried out within the framework of the programme. Also, there are a series of lessons learned that will prove useful for future projects. • It is important to take into account, at the time of formulating project documents and procurement plans, that the execution of the projects is consistent with the programme objectives, and there must also be an appropriate planning methodology. Furthermore, price contingencies should be foreseen for future programmes being designed, values should be in accordance with the variation of dollar-denominated prices, in order to calculate the quantities in physical goals. • It is necessary to continue in-house training at ACIF to ensure that World Bank policies, practices and procedures are internalized by staff, in order to avoid concentration of “expertise” in one programme or specific persons, as well as to prevent political changes from affecting reconstruction of the history of a programme or continuation thereof, and to maintain the same level of efficiency, and also to avoid loss of knowledge which could be useful for future programmes. 76 • From the point of view of institutional strengthening, it is necessary to continue reinforcing the Government's institutional capacity and that of ACIF in particular, to foster efficient planning policies, adequate allocation of resources and the improvement of coordination mechanisms with the National Government, the ultimate goal of which is the establishment of a sound government system. • There is also a need to continue monitoring and evaluating projects, through the implementation of more efficient management schemes in order to ensure the sustainability of interventions, as well as to encourage the continuous use of systems already implemented for the planning and follow-up of projects, so that they become daily consultation tools. • For those projects that do not include maintenance as an obligation arising from the contract entered into by the contractor, the need to improve maintenance of the road zone in certain segments and to replace signs and improve the shoulders is perceived; in brief, to strengthen actions for routine maintenance in order to comply with the goals established in the loan agreement: i.e. 100% of the potholes covered, without any section break between the road and the shoulder and 100% of horizontal marking and vertical road signs in place for the paved road network. • The need to carry out a comprehensive planning of the road network has been identified, with a planning model of the HDM-4 type or similar, in such a way so as to obtain the road network's multiannual plan of investments, since there is updated information available on the road network, it is also necessary to have complete and systematic annual measurements of the road network, in order to reach coverage of 100% of the paved road network. These actions should be supported by institutional strengthening components and the purchase of modern measuring instruments and by training in their use (roughness, traffic, deflections). • On the other hand, expansion of the paved network lags far behind the growth rate of agri-businesses and tourism, and there are still significant problems for the maintenance of roads once the programme ends. The condition of the road network is essential to support the process of economic recovery along with the dynamic growth shown by local and rural economies in Argentina, which depend on high rates of mobility and on a trustworthy transport network. • An agenda to increase the efficiency of the road sector needs to continue to be developed with levels of investment close to growth rates in the medium term; it is also necessary to continue implementing a comprehensive road network programme, following the steps of projects PCP I, PCP II and PMCP. In this regard, it is necessary to have access to new sources of financing which will enable the system to be sustainable. • It is also of great importance to reinforce road safety controls for circulating vehicles, since there is a substantial increase in circulation speed. This was the main concern raised by rural schools in view of the increase in speeds. 77 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A 78 Annex 9. List of Supporting Documents The following documents have been used as sources for the preparation of this ICR, and can be found in the Project File. • ACIF’s Progress Reports, 2007-2013 • Análisis de la Capacidad de Gestión para la Seguridad Vial (Road Safety Capacity Assessment for the Province of Cordoba), E. Howard & N. Rockcliffe, May 2009 • Country Partnership Strategy for the Republic of Argentina 2004-2006, January 29, 2004 (Report. No.27340-AR) • Evaluación de Impacto Mitad de Término PMPC, E. Travaglianti, Junio 2010 • Evaluación Final de Impacto del Proyecto PMPC, E. Travaglianti, Julio 2013 • Implementation Status and Results Reports, series 1 through 13 • Improving global road safety: Towards equitable and sustainable development. Guidelines for country road safety engagement. Tony Bliss & Veronica Raffo. World Bank, (2014) • iRAP (International Road Assessment Program) Report for Province of Cordoba, G. Speier et. al., March 2009 • Loan Agreement, Loan N 7398-AR, November 16, 2006 • Performance-Based Road Contracts (CREMA). A review of fifteen years experience. 1996- 2010, M. Marcela Silva and Gerard Liautaud, The World Bank, Transport Paper 36, September 2011 • Public Financial Management Assessment, Province of Cordoba, Report Nº: 72402 –AR, led by A. Arrobbio and M. Deme, World Bank, July 2012 • Project Appraisal Document, Report No: 36334 – AR, June 8 2006 • Project Concept Note, January 2, 2006 • Project’s Aide Memoires, 2006 -2013 • Quality at Entry Assessment for FY06-07 (QEA8). Panel members: Maryvonne Plessis- Fraissard and Peter Ludwig,, Moderator: Miguel E. Martinez. Observer: Jonas Hermanson, Assessment date: May 17, 2007 • Quality Assessment of Lending Portfolio (QALP-2), Panel Members: Miguel E. Martinez; Peter Ludwig; Tojoarofenitra Ramanankirahina, Moderator: John Redwood, Assessment Date June 22, 2010.Quality Assessment of Lending Portfolio • Reporte de Sostenibilidad 2010, Ministry of Finance of the Prov. Of Cordoba, Available at http://transparencia.cba.gov.ar/Archivos/2.pdf. See also, media coverage at: http://comunicarseweb.com.ar/?page=ampliada&id=8724; http://prensa.cba.gov.ar/economia/elettore-presento-el-reporte-de-sustentabilidad-2010/ • Reporte de Sostenibilidad 2011-2012, Ministry of Finance of the Prov. of Cordoba, Available at: http://multimedia.cba.gov.ar/web/Reporte_Sustentabilidad_2011_2012_Finanzas.pdf • Restructuring Project Paper, Report No: 72299-AR, September 4, 2012 • Road Construction Costs in Argentina, V. Raffo & E. Travaglianti, LAC Transport Unit Working Paper, February 2014. • Province of Cordoba (ACIF, Min. of Finance, Min. of Government, DPV and DPAT), Completion Report for the PMCP Program (Loan BIRF 7398-AR), February 14, 2014. 79 MAP 80 20° 70° 60° 50° 20° BOLIVIA JU ARGENTINA CHILE JU Y FO PARAGUAY BRAZIL RM PROVINCIAL ROAD INFRASTRUCTURE PROJECT OS SALTA A CA TA TUCUMÁN CHACO MISIONES M AR SANTIAGO CA DEL ESTERO LA CORRIENTES RIOJA SANTA PROJECT: EXISTING ROADS: 30° SAN Córdoba FE 30° JUAN ENTRE RIOS ROAD PAVING FEDERAL NETWORK CÓRDOBA OCEAN SAN LUIS URUGUAY SUB-NETWORK REHABILITATION AND PRIMARY PROVINCIAL NETWORK Buenos Aires MAINTENANCE CONTRACT 1 (Malla CReMa 1) MENDOZA SECONDARY PROVINCIAL NETWORK BUENOS LA PA C I F I C SUB-NETWORK REHABILITATION AND AIRES PAMPA MAINTENANCE CONTRACT 2 (Malla CReMa 2) TOWNS AND VILLAGES NEUQUÉN SUB-NETWORK REHABILITATION AND PROVINCE CAPITAL RIO 40° NEGRO 40° MAINTENANCE CONTRACT 3 (Malla CReMa 3) RIVERS A T L A N T I C PROVINCE BOUNDARIES CHUBUT O C E A N SANTA CRUZ FALKLAND ISLANDS (ISLAS MALVINAS) 50° 50° A DISPUTE CONCERNING SOVEREIGNTY OVER THE ISLANDS EXISTS BETWEEN ARGENTINA WHICH CLAIMS THIS SOVEREIGNTY AND THE U.K. WHICH ADMINISTERS THE ISLANDS. TIERRA DEL SANTIAGO 70° FUEGO 60° 50° DEL ESTERO CATAMARCA Luciov. San Francisco Mansilla del Chañar Villade María San José Delassalinas San Pedro North Sebastian El Cano Quilino Villa Tulumba Las Arrias San José de la Dormida Deánfunes Las Peñas Laguna Mar Chiquita LA RIOJA Serrezuela V. del Totoral Cañada Deluque Obispo Morteros Cruz del Eje Trejo San Marcos Sarmiento C. Vignaud Capilla Sierra La Para Brinkmann Villa de Soto del Monte La Puerta Miramar Seeber San Esteban Marull La Cumbre Jesús María Jesús La Higuera La Granja Santa Rosa Balnearia Porteña Huerta Grande Agua de Oro Toro Pujo Río Primero de Río Salsipuedes Freyre San Carlos Minas Unquillo Cosquín Cosquín Juárez Celman Piqullin Est. Juárez La Tordilla Mendiolaza Río Primero Salsacate Tanti Santiago CÓRDOBA ÓRDOBA Monte Cristo Temple El Tío La Francia Devoto Malvinas V. Carlos Paz Argentinas Arroyito San Francisco Malagueño Malagueño Toledo V. del Rosario Lozada ío Segundo Río Luque Calchín Sacanta Col. Prosperidad Alta Gracia Costa Sacate Cura Brochero Pilar Ma Torrales El Arañado Saturnno Mina Clavero La Gunalarga Despeñaderos Despeñaderos María Laspiur Nono Las Junturas San Vicente Carrilobo Manfredi Los Reates Monteralo Las Varillas San Pedro José San Jos Villa Dolores Villa Berna San Agustín Agust ín Oncativo Colazo Alica El Fortin SANTA FE Los Cerrillos San Javier Pozo del Molle Santa Rosa Corralito Oliva Los Zorros de Calamuchita La Playosa James Craik San Antonio Villa Yacanto V. del Dique Río Tercero Villa Ascasubi Delitín La Paz Villa Rumipal Almafuerte Embalse Tancacha Pampayasta Tío Pujio Sur Cintra Los Condores Noetinger Cañada de Cañada Chilibroste Saira Álvarez Alto Alegre Hernando Villa Neuva Berrotarán Acabral Ballesteros Río de los Morrison Elena Sauces Punta del Agua D. Velezs Leones Marcos Bell Ville Juárez Juárez Alpa Corral Tioano Ausona General Deheza Las Perdices SAN LUIS Alcira Pasco La Laguna Ordoñez Justiniano General Roca Gral. Cabrera Posse Coronel Baigorria Etruria Inriville Carnerillo Los Surgentes Ucacha Charras Chazón Cruz Alta Bengolea Pascanas La Borde Río Cuarto W. Escalante Camilo Aldao Santa Eufemia Corral Santa Catalina de Bustos Achiras Las Acequas Sampacho Alejandro La Carlota Roca Los Asnes San Basilio Guatimozín Cavanagh Chaján Bulnes Adelia Monte de María Canals los Gauchos Benjamín Coronel Moldes Huanchilla Gould Arias Viamonte Tosquita Vicuña Pueblo Mackenna La Cesira Italiano La Cautiva General Le Valie La Boulaye Rosales Melo Villa Rossi Villa Valeria Del Campillo Mattaldi Serrano Jovita BUENOS AIRES Hipolito Bouchard Italó ARGENTINA Villa Hudobro 0 25 50 75 100 Kilometers Huinca Renancó This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information IBRD 34797 LA PAMPA shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any JUNE 2006 endorsement or acceptance of such boundaries.