Document of The World Bank FOR OFFICIAL USE ONLY Report No. 17308 IMPLEMENTATION COMPLETION REPORT BANGLADESH RURAL ROADS AND MARKETS IMPROVEMENT AND MAINTENANCE PROJECT (CREDIT 1940-BD) January 22, 1998 Ifrastructure Sector Management Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. BANGLADESH CURRENCY EQUIVALENT US$1 = Tk (Taka) 31 (June 1988) Tk 1 = US$0.032 (June 1988) US$1 = Tk (Taka) 42 (June 1997) Tk 1 = US$0.023 (June 1997) MEASURES AND EQUIVALENTS I meter (m) = 3.28 feet 1 kilometre (Ian) = 0.625 miles 1 hectare (ha) = 2.47 acres (ac) 1 metric ton (m ton) = 2,205 pounds (Ibs) ABBREVIATIONS. ACRONYMS. AND GLOSSARY ADB - Asian Development Bank CCD - Credit Closing Date DANIDA - Danish International Development Agency DRDC - District Road Development Committee ECNEC - Executive Committee of the National Economic Council EEC - European Economic Commnunity EIRR - Economic Internal Rate of Return FRB - Feeder Road Type B 'uCM - Growth Centre Market HBB - Herringbone Bond (brick pavement) IDA - International Development Agency KfW - Kreditanstalt fuer Wiederaufbau LGD - Local Government Division (of the MLGRDC) LGED - Local Government Engineering Department MLGRDC - Ministry of Local Government, Rural Development and Cooperatives MIS - Management hiformation System MRR - Ministry of Relief and Rehabilitation NORAD - Norwegian Agency for Development Co-operation ODA - Overseas Development Administration PD - Project Director PIO - Project Implementation Office Vice President: Mieko Nishimizu Country Director: Pierre Landell-Mills Sector Manager: Frannie Hi ick Staff Members: Mohiuzzannan Quazi Thampil Panka; Jaswant Channe FOR OFFICIAL USE ONLY ABBREVIATIONS. ACRONYMS. AND GLOSSARY (Cont'd) RDP - Rural Development Project RIMC Rural Infrastructure Maintenance Cell RHD Roads and Highways Directorate of the Ministry of Communications RRMIMP - Rural Roads and Markets Inprovement and Maintenance Project SDC - Swiss Agency for Development and Cooperation SEM&E - Socio-econarnic Monitoring and Evaluation SIDA - Swedish International Development Authority SRD - Strategy for Rural Development SRR - Structures on Rural Road Upazila - Sub-district USAID United States Agency for Intemational Development WBM Water Bound Macadam (paving) WFP World Food Program Zila District This document has a restricted distrnbution and may. be used by recipients only in the performance of their official duties. Its contents may not oth'erwise be disclosed without tWorld Bank authorization. FOR OFFICUL USE ONLY IMPLEMENTATION COMPLETION REPORT BANGLADESH RURAL ROADS AND MARKETS IMPROVEMENT AND MAINTENANCE PROJECT (RRMIMP) (CREDIT 1940-BD) TABLE OF CONTENTS PREFACE i EVALUATION SUMMARY PART I: PROJECT IMPLEMENTATION ASSESSMENT A. Statement and Evaluation of Objectives 1 B. Achievement of Objectives 3 C. Major Factors Affecting the Project 6 D. Project Sustainability 7 E. Bank Perfonnance 8 F. Borrower Performance 9 G. Assessment of Outcome 10 H. Future Operations 12 I. Key Lessons Learned 12 PART II: STATISTICAL INFORMATION 14 Table 1: Summary of Assessments 15 Table 2: Related Bank Loans/Credits 16 Table 3: Project Timetable 16 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual 17 Table 5: Key Indicators for Project Implementation 17 Table 6: Key Indicators for Project Operation 18 Table 7: Studies Included in Project 18 Table 8A: Project Costs 19 Table 8B: Project Financing 20 Table 9A: Economic Costs and Benefits 20 Table 9B: Economic Costs and Benefits 21 Table 10: Status of Legal Covenants 22 Table 11: Compliance with Operational Manual Statements 24 Table 12: Bank Resources : Staff Inputs 24 Table 13: Bank Resources: Missions 25 This docunent has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorisation. TABLE OF CONTENTS (Cont'd) APPENDLXES A: Borrower's Contribution to the ICR B: Economic Re-evaluation C: Socio-Economic Monitoring and Evaluation Study D: ICR Mission's Aide-Memoire E: Map IBRD No: 29273 i IMPLEMENTATION COMPLETION REPORT BANGLADESH RURAL ROADS AND MARKETS IMPROVEMENT AND MAINTENANCE PROJECT (CREDIT 1940-BD) PREFACE This is the Implementation Completion Report (ICR) for the Rural Roads and Markets Improvement and Maintenance Project (RRM ) in Bangladesh, for which Credit 1940-BD in the amount of SDR 45 million (US$62.3 million equivalent) was approved on June 24, 1988 and made effective on May 5, 1989. The Credit was closed on June 30, 1997, after a one-year extension granted beyond the original closing date of June 30, 1996. Final disbursement took place on November 19, 1997, at which time there was a balance of SDR 3.79 million (US$5.15 million equivalent); this amount is being cancelled'. Co- financing for the project was provided by Kreditanstalt fuer Wiederaufbau (KfW) and Swiss Agency for Development and Cooperation (SDC); both these agencies have commented on this document, and their comments have been taken into account. The ICR was prepared by Mohiuzzaman Quazi, Transport Engineer/Task Manager (SACBF), Thampil Pankaj, Principal Transport Specialist (SASIN), Subhash Seth, Consultant Highway Engineer (AFiTr), Zahed H. Khan, Urban Specialist (SACBF) and Jaswant Channe, Highway Engineer (Consultant) (SASIN); and reviewed by Juan Gaviria, Sr. Transport Specialist (SASIN) and Arun Baneijee, Principal Operations Officer (SACBF). Roziah Baba provided active support in completing the report. The borrower's comments are also included as Appendix to the ICR. Preparation of the ICR began during the Bank's Supervision Mission conducted in March 1997. It is based on material in the project files. The borrower contributed to the preparation of the ICR by preparing its own evaluation of the project's execution and commenting on the draft ICR. At present the undisbursed balance is SDR 3,786,716.84. However, the Loan Departnent (LOAAS) confirms that there is a balance of US$55,576.97 in the special account that needs to be refunded by the Government of Bangladesh (GOB). When this amount is recovered, it will be converted to SDRs and the present undisbursed balance of SDR 3,786,716.84 will be increased by this amount. ii EVALUATION SUMMARY Introduction i. Banglades's population is largely rural with over 80% of the population living in rural areas. The modernisation and maintenance of the country's rural infrastructre remains a critical factor in the economc developmnent of Bangladesh. It is one of the poorest countries in the world with a per capita income of about US$240. Its economy is affected by major tranwsportation constraints caused by a cobinaton of geography, nature and clmate, with cyclones and floods a conmmon occurrence. In Bangladesh, where poverty is pervasive particularly in the rural areas, and where the bulk of the population lives, improving rural ifrastructure is an important strategy of the Government of Bangladesh (GOB) for increasing and diversifying farm production, for raising incomes and living standard, and for reducing poverty. Under recent and ongoing projects, with considerable IDA and other donor support, GOB has started strengthening infrastructure related institutions and policies, and is making good progress in improving its rural uifratructure, but there is still a long way to go to meet the massive investment needs in the sector of rural development. ii. GOB's rural infrastructure improvement projects, funded by different agencies including IDA, form part of a well-articulated rural development strategy focused on rural growth centres selected on the basis of socioa-conomic importance and potential; the RRMIMP is one of such projects. GOB issued its Strategy for Rural Development (SRD) in 1984, which guided its rural infrastructure investments for the period 1985-95; a recent review by GOB/IDA of the working of this strategy has found that the strategy is sound and has resulted in good regional development, and with minor changes and fine-tuning, should be continued to guide further investments in the sector during the next ten years. In view of the success of the strategy and the first round of projects, various international agencies are now funding follow-up projects. IDA has funded a Second Rural Roads and Markets Improvement and Maintenance project (RRMIMP-2), which was approved by the Board in December 1996. iii. The Rural Roads and Markets Improvement and Maintenance Project (RRMIMP), was the first major investment in the sector of rural infrastructure developmerLt and the project financed the rural road and market improvements with co-financing from Kreditanstalt fuer Wiederaufbau (KfW) and Swiss Agency for Development and Cooperation (SDC). The project, successfully completed on June 30 1997, assisted GOB in the following: (a) provide improved rural infrastructure in eight districts in Northwest Bangladesh; and (b) develop institutional and financial arrangements to ensure better infrastructure maintenance consistent with the Government's decentralisation policies. The project also succeeded in the rehabilitation of existing roads and bridges, which were damaged during the floods of 1987 and 1988. Project Objectives and Description iv. The project comprised of: (a) improvement of 500 km of feeder roads type 'B' (FRB) to bitumen- surfaced standards and road side tree plantation; (b) construction of improved public facilities - internal roads, paved areas, raised and covered selling areas, drainage, potable water supply and latrines - at 65 growth centre markets (GCMs); (c) construction of 4,000 meters of structures on rural roads (SRR); (d) maintenance of the improved roads; (e) institutional development activities of LGED including construction of a new LGED headquarters building, district offices and laboratories, training, contractor development; and (f) socio-economic monitoring and evaluation of the completed projects. GOB requested, and IDA agreed, to include rehabilitation of works damaged during 1988 floods in addition to 1987 floods. In view of the need to introduce modern systems, standards and procedures, improve local capacity of LGED, contactors and consultants in planning and implementing rural infrastructure projects on a sustainable basis, this project was designed and approved as an experimental project, with an implementation penod of seven years, which was subsequently extended to eight years (para. .29). -C iii Implem tation Experience and Results v. The project was successful in achievig its principal objectives within the original cost estimates, hough there were initial delays in appoting supervision consultants and disruptions caused by two major floods in the project area. RRMIMP fully achieved all its physical objectives (para. 15) The works completed (Table 5) were: (a) improvement of 1FRB (496 kn); upgrading of FRB (495 Iam); bridges on FRB (1,079 metres); SRR (4,041 metres); periodic maintenance (150 In); routine maintenance (650 in); and GCM (65 no.), and created a direct employment (18,600 person-years) for the construction and maintenance of rural infrastructure. The quality of the completed works was highly satisfictory and passed the test of 1995 floods. The institutional objectives for LGED were also substantially achieved considering: (a) strengtheing of maitenance management of completed rural ifrastructure; (b) establishment of good qualhty standards for road construction with local materials and expertise through trial programs; (c) GOB staff training; and (c) enhanced capacity of LGED and local consultants and contractors. However the financial objectives, i.e. to enhance resource mobilisation for the local bodies (Union Parishads) (UPs) were partially achieved. The financial capacity of UPs is still indequate to support maintenance activities of completed rural infrtructure, which is currently fimded friom GOB budget. Although not direcdy targeted under the project, RRMIMP made contributions in achieving the objecives of poverty reduction (para. 22), and also focused on gender concems by providing employment opportunities for the destitute women (para. 24). vi. Besides significantly reducing the transportation costs on improved and upgraded roads, the project also contributed in reducing travel time and providing good riding quality both for the motorised and non- motorised traffic. The construction of SRR showed a remarkable achievement in improving accessibility because ffie rural roads were initially constructed under the food for work program without the culverts which could not be constructed due to lack of resources. The gaps so created were a major constraint for accessibility on the rural roads. Both motonsed traffic and non-motorised traffic, significantly increased on improved roads, fivouring among others the poor rickshaw pullers in terms of financial income as well less physical fatigue. Due to improvement of GCMs, spoilage in marketing of perishable goods was substantially reduced. Roadside tree plantation along the improved roads and bituminous surfacing of the unpaved roads, reduced creation of dust and improved the environment in the project area. vii. The project investments showed high economic returns for the components of rural roads and GCM (para. 41). The average economic internal rate of return (EIRR) for the completed feeder road component is estimated at 26% (Table 9A), compared with 25% estimated at appraisal, and EIRR for the completed GCMs component is estimated at 31% (Table 9B), compared with 10% estimated at appraisal. The econonic re-evaluation was based on findings of the Socio-Economic Monitoring and Evaluation (SEM&E) study carried out under the project, and completed in May 1997. The key objective of this study was to monitor and evaluate socio-economic effects of the rural infrastructure (47 FRBs and 65 GCMs), which was developed under RRMIMP in the eight districts. The SEM&E study evaluated the effects of selected 40 FRBs and 10 GCMs through estimating EIRR by comparing pre-development and post- development status of the rural roads and markets along with a series of other specific indicators. The SEM&E study concluded that the development of rural roads and markets has generated. several positive impacts (para. 40), which can be easily reflected in the following general pattem: (a) on improved roads transport charges for goods and passengers decreased substantially; (b) generated significant new employment for the rural poor; (c) losses due to spoilage or quality deterioration for perishable items such as fish, meat, eggs, milk, and vegetables decreased significantly; (d) the lease value (bid price) and rentals (toll collection) of the markets went up significantly; and (e) the cost of land near the markets increased significantly. Given the substantial achievement of all the physical targets both in terms of quantity and quality, the overall assessment of the project outcome is satisfactory. iv viii. Since most of the civil works covered under RRMIMP included improvement of existig FRBs, construction of drainage structures on feeder roads and rural 1roads, construction of GCMs and penodic maitenance on exiting FRBs, no formal plan of operation was required. However to ensure routine and periodic maintenance of the improved roads is appropriately undertaken, LGED is curreny implementing IDA financed RRMIMP-2, which includes, inter-alia, a substantial component on road maintenance and capacity building. LGED's mtmance budget for all roacds has been increased progressively from US$7.5 million in 1992/93 to US$22.5 million in 1997/98. Thi resource base for Union Council has also been expanded by giving them 1% of Land transfer fee which will increase their financial capability to improve and maintain rual infrstructure. About 50% of the lease value of markets is now going to UPs instead of 40% previously. LGED has made all necessary arrangements including technical planning and budgetary provisions to carry out the maintenance of roads, SFtRs and GCMs, and the follow-up project RRMIMP-2 is addressing to a large extent concerns regarding the sustainability of the project. The Bank performance was satisfactory in the identification and preparation phase. During project implementation, the Bank-Borrower relationship was beneficial and productive. The Bank performance in the supervision of the project was highly satisfactory in both quality and quantity. The borrower's performance has been rated as highly satisfactory for the implementation of both the rural infrastructure component and the flood rehabilitation component. Key Lessons Learned: xi. As noted in the report "Bangladesh Rural Infrastructure Strategy Study (1996)," jointly prepared by the World Bank and the Ministry of Local Government, Rural Development and Cooperatives, and widely discussed with various stakeholders, the key lessons learned from the project are as follows: * Start bidding process for civil works before project starts, and appoint design and supervision consultants prior to Credit approval so as to avoid delays; * more local community participation in priority setting, design and implementation of the project; * need to place greater emphasis on the rural road structures; * New emphasis on developing river jetties to better integrate inland water transport and road transport; * need to continue with training and equipment support to small contractors, but at the same time pushing to increase contract sizes to enhance contractor output and efficiency; * early action on land acquisition with suitable compensation procedures; * greater emphasis on field-level training and implementation oiF maintenance programs; * need to overhaul rural market management and leasing systems with greater user participation to improve efficiency and increase revenue; and * need to strengthen the financial status of local bodies (Unionl Parishads) in ensuring sustainability of infrastructure maiintece. x. All these important lessons have already been incorporated into the preparation and design of the Second Rural Roads and Markets Improvement and Maintenance Project (RRMIMP-II), which has been approved by IDA in December 1996 as a follow-up project, and is currently under implementation. This follow-up project is jointly financed with the Swiss Agency for Development and Cooperation (SDC). * ~~~1 PART I - PROJECT IMPLEMENTATION ASSESSMENT A. STATEMENT AND EVALUATION OF OBJECTIVES Background 1. Bangladesh's population is 80% rural and the agriculture sector employs round 69% of its labour force directly or indirectdy. Land is the main productive asset in rural areas. Infrastructure plays a vital role in supporting economic growth in the rural areas of Bangladesh. Currently, Bangladesh has a stock of 5,200 km of National and Regional Highways, 10,500 km of sub-regional roads (feeder Road type A), 16,400 kn of rural Feeder roads Type B, and 102,000 km of rural roads (RI and R2 types). The condition of these roads, particularly of the feeder and rural road network, is very poor, as most of these roads are earth-roads aching in drainage structures and open to traffic only in the fair season. 2. The Government of Bangladesh (GOB) has followed a consistent strategy in recent years to improve rural infrastructure on a selective basis while also improving its highway network, with emphasis on better itegration of the transport sector investments and policy, and better coordination among transport agencies, such as the Roads and Highways Department (RHD) dealing with highways, and the Local Government Engineering Department (LGED) dealing with rural roads. GOB issued a "Strategy for Rural Development" (SRD) in 1984, which enunciated a ten-year strategy (1985-95) based on focusing resources to develop "growth centers" with maximum potential for growth in rural areas, selected on the basis of clearly defined criteria of socio-economic importance and development potential. The SRD also defined Government's rural infrastructure strategy, directed to help growth-center development as its main focus. The rural infrastructure strategy as defined in the five-year plns, in line with the above Rural Development Strategy, has been to focus on improving: (a) Type B feeder roads (FRBs) (also called growth-center-necting roads) which, by definition, connect selected "growth centers" in sub-districts (Thana) to thana headquarters or the nearest all-weather road; there were 1,400 "growth centers" in the country in 1984, selected from among 8,000 rural market centers; (b) selected other rural roads (RI, R2), which connect villages with growth centers or feeder roads; (c) provision of drainage structures (culverts/bridges) on important rural roads; and -(d) market structures and facilities in the growth centers. The "growth-cr-connecting roads" is a good concept in selectivity, this being treated as the core of rural roads; though classified as FRBs, tiey are mostly earth roads and need upgrading into reasonable minimum quality stuadards to provide expected service. The ten-year program set physical targets for various rural infiastructure improvements, sought to be achieved through a series of well-coordinated Rural Development Projects (RDPs). There were about 8 different RDPs focused on rural infrastructure (some dealing with needs in particular regions/districts, and others dealing with national and institutional aspects) funded by different international agencies, including the RRMIMP (called RDP-7) funded by IDA, SDC and KfW. Most of these projects have been completed, and many agencies (including IDA) have funded follow-up projects, in view of the growing needs in the sector and the good strategy being followed and good implementation progress overall, and good performance of the implementation agency, LGED. IDA Board approved RRMIMP-2 (co-funded with SDC) in December 1996, which is a larger project to be completed in a shorter time-period reflecting confidence gained through the first RRMIMP. 3. A recent review by GOBIIDA of the working of this rural development strategy during 1985-95 (see Bangladesh Rural fastructure Strategy Study, published for the World Bank, Dhaka, in 1996) found that while there was considerable shortfill in reaching the original physical targets of the 10-year program, the combined achievemet of the projects validated the soundness of the growth center sategy judged fromn actual results and related regional development data. The review also endorsed the continuation of the strategy over the next ten years (1996-2005), with minor changes in emphasis or fine-tuning, in order to mee the revised new and higher targets for rural infrastructure development reflecting additional 2 population and regonal conomc growth. The Government is now continuing with this rural infiaucture strategy into the future, dutough the Perspective Development Plan for the Country (1995-2010) recently formulated by the National Planning Commission. 4. Transport demand in Bangladesh has grown at a much faster rate than GDP since the mid 1970s; more than 8% per annum for passengers and 6% per annum for freight traffic. A special feature of the country's traffic pattern is that more than half of it is carried by traditional non-motorised modes, such as country boats, and nckshaws and riekshaw vans; the road project designs in Bangladesh take account of this traffic composition. 5. The Rural Roads and Markets Inprovement and Maintenance Project (RRMIMP) is IDA's first major investment for the improvement of rural roads with cofinancing from KfW and SDC and implemented by the Local Government Engineering Department (LGED). The project aimed at improving rural infrasucture conditions in eight districts of the Northwest region of Bangladesh and strengthening the institutional capacity of LGED. The project was completed on June 30, 1997 and has been very successful in meeting all its physical targets, in establishing good quality standards for road construction and mntenance which are replicated nationally through cther follow-up projects, in improvig maintenance systems, in generating good social and economic impact from the investments, in using local matenals and expertise, and in enhancing the capacity of LGED and local consultants and contractors. The project investmts have made significant economic impact in removing rural mobility and marketing constraints. Objectives 6. The objectives of the Project, as stated in the Staff Appraisal Report (SAR), were to: (a) promote rural development through the reconstruction, upgrading, and mnainenance of feeder roads, growth centre markets (GCM) and the construction of structures on rural roads (SRR) in the project area; (b) improve resource mobilisation to support Zila and Upazila maintenance activities; (c) strengthen the institutions concerned with the development and maintenance of feeder and rural roads and markets; and (d) rehabilitate roads and associated structures damaged by the 1987 floods while improving standards to minimise future flood damage. 7. The project comprised of the following: (a) improvements, upgrading and maintenance of 500 kn of FRBs in eight districts of Northwest Bangladesh; (b) construction of bndges and culverts on about 650 kn of rural roads; (c) plannig and improvement of infrastructure (including roads and walkways, drainage, potable water supply, sales platforms and sheds) in 65 (GCM; (d) a new Dhaka headquarters building for the LGED; (e) rehabilitation of about 650 kn of flood-damaged roads and about 27 km of related bridges, drainage works, and retaining walls; and (f) project support, including: (i) consultancy services for design and supervision, monitoring, a mral transport study, fonnulatng a financial plan to enable districts and sub-disticts to fulfil their maintenance responsibilities, and a study to prepare an action plan to reduce damage from future floods; (ii) construction equipment and vehicles; (iii) offices, laboratories and equipment sheds in eight distict headquarters; (iv) incremental administrative expenditures (salaries, operating expenses of project offices and equipment) for project execution; and (v) taining of GOB and contctor staff. 3 8. A special feature of the project was that it mvolved systematic experimntation with differet technical options, careful monitoring, fecding project experience onto later components, and, most importantly definition and implementation of institutional arrangements. This was because of the absence of good standards and specifications existing earlier, and this feature provided good results and nationally replicable standards which are being used in subsequent projects. 9. The project area was situated in Rajshahi Division in the north west part of Bangladesh (see Map 29273). It comprised of the three greater districts of Rajshahi, Pabna and Bogra, which are subdivided into the eight districts of Bogra, Joypurhat, Pabna, Sirajgang, Rajshahi, Nawabganj, Naogaon and Natore. The project districts covered an area of 17,500 square kilometres in 65 Thanas (previously called Upazlas), with a combined population of approximately 13.5 million (mid-1985) and an average density of 750 per square km. The project area is typically a riverine alluvial plain covered by silty and clayey sediments. In view of the need to evolve new systems, technical standards, procedures and lcal capacity of LGED, contractors and consulants in planning and implementing rural infrastructure projects on a sustainable basis, this project was designed, approved and implemented as an experimental project with an implementation period of seven years, which was subsequently extended to eight years. Evaluation of Objectives 10. All the objectives were appropriate, realistic and relevant to support rural development in the eight districts of Bangladesh. The objectives were consistent with the Government's policy and in line with the 1984 Strategy for Rural Development (SRD). The SRD was designed to achieve its objectives through a series of rural development projects (RDP), each of which covered at least one or more of the three following rnain elements: (a) rural infrastructure; (b) minor irrigation drainage and flood control; and/or (c) production and employment generation components with emphasis on improving opportunities for the rural poor and destitute women. The project placed emphasis on systematic experimentation with different technical options, careful monitoring, feeding project experience into design of later project activities and most importantly defined institutional arrangement for selection criteria for all project activities. Though the project focused on improving rural infrastructure on a selective basis, it also helped in developing the country's road network to ensure better integraion of the trnport seor investments and policies. 11. As notd, all the project components were designed in accordance with GOB's 10-year (1985-95) infrastructure improvement program under GOB's "Strategy for Rural Development," (see para. 2 above). This national program was implemented through a series of coordinated projects, of which RRMIMP was part, and as it turned out, a leading part and trend-setter in new standards and approaches. B. ACHIEVEMENT OF OBJECTIVES 12. The project concept and design were appropriate for achieving all the agreed objectives, although some objectives were substantially achieved and others only partially. The project's major objective of promoting rural development was substantially achieved as the project exceeded all physical targets expected and agreed at appraisal (pam. 15). The physical objectives were aimed at upgrading and maintenance of feeder roads, GCMs and SRRs. The objective of implementing cost effective approaches to design, construction and maintenance was also substantially achieved because the quality of completed works was found to be very satisfactory and the maintenance management system was improved significantly. 13. RRMIMP succeeded to: (a) introduce consistent engineering standards and methodologies for both project and non-project activities in the project area; (b) build cost-effective road pavements, bituinous surfacing and resels on existing pavements; and (c) provide drainage structures to fill gaps on feeder and 4 rural roads. The objective of rehabilitating the roads and bridges damaged by the 1987 flood, was significantly achieved because; (a) rehabilitation of damaged roads and bridges were added after the project started, and to this effect the development credit agreement was amended on May 24, 1989; (b) all the agreed works were completed to a satisfactory standard and these works withstood the more severe floods of 1995. The objective of improving resource mobilisation to support district and sub-district maintenance activities was partally achieved (para. 19) because the Union Parishads (UP), which are the lowest level of elected Government in the country, have a weak financial base and were unable to find adequate funding for mainting the infrastructures under their jurisdiction otn a sustainable basis. At the start of the project, markets were leased through open auctioning which resulted in low rates due to the influence and parficipation local muscle men. During the project implementation period, the introduction of standard tendering system resulted in the increase of market lease rates suibstantially. Under 'this project, community participation at local level took place partally in the planning and implementation stage of the project; however, based on this experience the ongoing second rural roads project is being implemented through active local community participation at all stages of the project. 14. An overview of the achievement of objectives (summarised in Table 1), is provided below under the following headings: (i) physical objectives; (ii) institutional development; (iii) financial objectives; (iv) sector policies; (v) private sector development; (vi) poverty redluction; (vii) environmental objectives and (vii) gender concerns. The project objectives under items (i) to (iii) were directly targeted under RRMIMP operation; however the other objectives under (iv) to (vii), although directly not targeted, contributed to some extent and can be considered as partally achieved. To monitor and evaluate socio-economic impact of the rural infastructure developed under RRMIMP, a Socio-economic Monitoring and Evaluation (SEM&E) study was carried out under the project and its findings (para. 40) has clearly demonstrated that the project area was substantially benefited in terms of its economic development and RRMIMP significantly contributed to improve the living standards of the rural poor in the project area. Although substantial number of structures (4,041 meters) on rural roads were constructed under the project, huge number of gaps still remain on rural roads which need to be bridged in future. Some of the markets improved under the project were located on river front but jetties were not constructed to improve the integration of inland water transport with road transport. 15. Physical Objectives: All the physical objectives were substantially achieved. 497 kms of FRBs were improved to bituminous standards, compared with 500 km agreed at appraisal. 495 Ian FRB were upgraded, compared with 200 km agreed at appraisal and 35 (1,079 meters) of bridges were constructed on FRBs compared with 1,223 meters agreed at appraisal. All the agreed 65 number of GCM were improved and 4,041 meters of SRR were constructed, compared with 3,705 meters agreed at appraisal. Under the flood rehabilitation component physical objectives were substantially achieved in all the 28 districts including: (a) 428 km of road rehabilitation, compared with 399 km agreed at appraisal; and (b) 2,374 meters of bridges rehabilitated compared with 1,798 meters agreed at appraisal. The other physical objectives, which were achieved are shown in Table 5. 16. Institutional Development: nstitutional development objectives were substantially achieved on account of the following remarkable improvements in the functioning of LGED: (i) a computerised financial mangemnnt system was developed in LGED at its headcluarters and district offices to streamline its accou and financial management the project activities; (ii) a SEM&E unit was established and later in 1992, it was integrated into the project; and (iii) during the first half of the project, audit reports were not prepared on time and the quality of the reports produced were generally inadequate, and raised a number of queries when submitted to the office of the Auditor CGeneral. Therefore during the mid-term review it was decided to appoint private auditors in addition to GOBs regular audit, and their report concluded that different accounting systems were being followed in different field offices. To overcome this problem, the auditing and accounting guidelines have been prepared and 149 accounting personnel were tained, which has resulted in a marked improvement in the accountng system of LGED. 5 17. Training: The training unit of LGED at headquarters was responsible for co-ordination and implementation of the traiing programs nation-wide through its 25 regional training centres. The project contributed to the national training program of LGED by providing funding for all local and foreign training programs. The variety of courses designed for the staff of LGED focused on road construction, field surveying, material testing, project monitoring, computerised financial management, and computer applications. In addition, the project supported the implementation of some project specific training programs for all levels of LGED staff and contractors. The project also sponsored overseas training courses, study tours, workshops, and seminars for LGED engineers. In all, the project implemented local training for 7,837 staff-days and overseas training for 677 staff-days. It helped LGED staff to improve their technical and managerial skills, which had a positive effect on the quality of work in the field. 18. LGED has built an I 1-storied headquarters building (WED Bhaban), construction of 6 stories of which was jointly financed by GOB, IDA, KfW and ADB. The LGED HQ buiding provides office space for all its headquarters staff and most of its project offices. At the time of project start in 1989, the LGED headquarters staff were spread through five rented buildings, which were originally designed as upper income apartments, and caused LGED tremendous office accommodation and communication problems until they moved to the new building in late 1996. The project also financed construction of eight district offices with ancillary facilities such as soils and material testing laboratories, training units, workshops and garages. Most of these office complexes now have ample space available, which can be used for other purposes in future if necessary. The other key institutional improvements are: (a) development of a comprehensive database on Geographical Information System (GIS) for all the 464 thanas in the country; (b) development of standardised tender documents and specifications which are now being used in other rural infrastructure projects; and (c) the methodology followed in the SEM&E study is now being used for other projects. 19. Financial objectives: The financial objectives were partially achieved. To mobilise financial resources of UPs, a study was carried out on "Upazila Financial Planning" with an objective to come up with recommendations to enhance their capability for financing development and maintenance programmes from their own resources. Its findings and recommendations are being reviewed and implemented under RRMIMP-2. The market toll rates were increased effective from April 15, 1996, for eight districts within the range 11% to 18%, but they were still not sufficient to cover maintenance costs in full. 20. Sector-Policies: Though the achievement of sector-policy objectives were not specifically targeted under RRMIMP, the project succeeded to achieve them partially because LGED implemented the following main policy actions: (a) establishment of a maintenance cell to plan, design, and implement a priority routine and periodic maintenance program prepared at the Thana level; (b) enhanced co-ordination between the LGED's proposed Management Information System (MIS) and activities of SEM&E study carried out under the project; and (c) adoption of consistent engineering standards and technical specifications for both project and non-project activities in order to ensure adequatq quality control in carrying out bituminous surfice dressing, resealing of existing pavements, and construction of drainage structures on feeder and rural roads. 21. Private Sector Development: Although the objectives of private sector development were not directly targeted under RRMIMP, the project succeeded in achieving this partially because tramiing was provided to the contractors in the preparation of item-wise bidding and methodical execution of different items of road works to improve quality. The work of periodic maintenance was carried out through contractors and routine maintenance was carried out either through small contracts or by 'lengthman' system. This provided a good opportunity for the contractors to learn modern techniques and to gain experience in the construction and maintenance of road works. During the project implementation period, sizes of road contracts were gradually increased from one km to three km based on contractor's output and efficiency. With strong remmendations from IDA supervision missions, LGED improved its payment 6 procedures and the time-lag in maing payments to contraors was signficantly reduced from tbree months to three weeks. However, labour contracting societies did not benefit as much sice their financial position was found very weak. 22. Poverty Reduction: Altugh RRMIMP was not designed as a direct poverty-targeted intervention, the improved roads and GCMs under the project contributed to a great extent as a complementary input in delivering transportation services for the poor. The roads helped the rural poor in the project area in availing the market facilities, schools, health clinics, and other social services. It also provided benefits to the poor communities in tenns of savings in transportation costs, reduced travel tine and increased revenue from the users of improved markets. Th-, impact of RRMIMP on employment was creation of jobs (18,600 person-years) for construction and maintenance of infrastructure, compared with 12,000 person-years anticipated at appraisal. 23. Environmental Objectives: The Project succeeded im achieving the environmental objectives partially as the improved road works and GCMs were able to provide significant improvements in the road drainage and adequate sanitation of markets. The trees planted along the embankaments of improved roads further enhanced the environment of the project area. 24. Gender Concerns: The objectives relating to gender concerns were not directly targeted under RRMIMP; however, the employment of destitute women on road maintenance and in tree plantation provided a good opportunity for poor women to earn wages and security of continuous paid employment on future road maintenance works. C. MAJOR FACTORS AFFECTING THE PROJECT 25. Factors not generally Subject to Government Control: (a) The devastating floods of 1995 damaged some roads and structures which were completed under the project. However the losses were not major, because the good quality of completed works were able tD withstad the effects of the flood. The Banglabazar GCM improved under the project was completely washed away by the Jamuna River during the flood; and (b) the construction season in Bangladesh is limited to about eight months, from mid-October ton mid-May. This short season makes it expensive for small scale contractors to maintain permanent staff with technical skills or to acquire and maintain construction equipment. 26. Factors Generally Subject to Government Control: (a) delays in the appointment of design and supervision consultants; and (b) delays in dealing with land acquiisition. 27. Factors Generally Subject to Implementing Agency Control: (a) delays in contractor payment; and (b) no well defined policy in the selection of trainees, particularly for overseas training program. 28. Cost Changes: The project achieved all its physical and institutional objectives within the appraisal estimtes and allocated amounts. However there were some cost changes in the sub-components of land acquisition, improvement of feeder roads, FRB maintenance, GCMs, equipment, training, flood rehabilitation works and consulting services (able 8A), all of which were easily met out from the provisions made in the agreed project costs. The cost changes in the sub-components of SRR were substantial (above 100%) because the expenditure under this component was US$11.6 million, compared with the ap,praisal esfinutes of US$5.4 million. This was primaily due to the much greater demand for SRRs than expected. When this component was first started under RRMIMP as a pilot, it created so much interest among the poor rural communities that it became necessary to provide additional allocation for this component. ITe additional expenditure under various components were easily met from the provisions of 7 the physical and price contingencies and RRMIMP succeeded to complete all its project objectives without any cost increases. 29. Implementation Delays: The credit was signed on July 29, 1988 and was declared effective on May 5, 1989 after a period of about nine months, because the borrower took a long time in the appointment of the design and supervision consultants, which was one of the several conditions for credit effectiveness. Therefore the civil works on feeder roads, SRR and GCMs could not be started until April 1990. As a result one full construction season was lost. The other reason for this delay was that the contractors were inexperienced, particularly in using the improved system of bidding procedures and the works schedled to be completed within one construction season was prolonged to two construction seasons. Some delays also occurred due to delay in land acquisition for roads caused by complex and lengthy compsaton procedures. However, after the mid-term review, the situation substantially improved and most of the contracts were completed within one construction season as scheduled. With the initial delay of one year and moreover to cover the one year maintenance period liability for the final year contracts, GOB requested and IDA agreed to extend the Credit closing date (CCD) by one year. i.e. up to June 30, 1997, compared with the initial CCD of June 30, 1996. 30. Changes in Project Scope: Because RRMIMP was the first large project in the rural development sector, there was a condition in the Development Credit Agreement that no proceeds of the credit would be withdrawn until the Borrower carred out a joint mid-term review of the project performance up to that date with IDA, KfW and SDC, and agreed on an action plan for the remainder of the project. Accordingly a mid-term review was carried out during May 1992 and the physical targets were reduced as follows: (a) improvement of FRBs from 500 km to 350 Im; (b) upgrading of FRBs from the existing HBB or WBM to bituminous standards, where shown to be uneconomic, and reduced from 200 km to 7 Ian; (c) construction of SRR from 3,705 meters to 2,583 meters. However, in June 1994 another review of project performance was carried out, and considenng the fact that the project had gained good momentum and LGED's institutional capacity was much improved, the physical targets were reset to the ones initially agreed at project appraisal, also, the target for SRRs was increased to 4,041 meters from 3,705 meters due to greater demand and projected savings from the other sub-components. D. PROJECT SUSTAINABILITY 31. The project benefits achieved in providing improved all-weather transport system for about 500 km FRBs for 47 roads and improved hygienic trading facilities for 65 GCMs, are substantial in tenns of reducing transport cost, and enhancing marketing facilities. The project has maintained about 800 km of FRBs during the project period (650 km routine and 150 km periodic maintenance). The sustainability of the improved rural infrastructure is likely because GOB continues to show a strong commitment in the planning and implementation of rural infrastructure maintenance program. LGED has already appointed one Assistant Engineer in each district and one Sub-assistant Engineer in each Thana for maintenance activities. LGEI) has set up a national maintenance system, which is being further developed under the follow-up project RRMIMP-2, to ensure its operational efficiency and effectiveness. Currently funds for mantenance of most rural roads and highways come from Government revenue and some UP revenue, and the amount collected from the road users through fuel levies and other charges is estimated to be adequate to cover maintenance needs of the total road network. Recognising the importance of mantenance, GOB has started allocating funds in the revenue budget for maintenance of rural infrastructure since FY 1992- 93. The budget allocation for maintenance has increased from Tk 300 million in FY 92-93 to Tk 900 million in FY 97-98. GOB has also agreed with IDA under the follow-up project to progressively increase the annual allocation for rural road maintenance, and GOB is meeting this commitment. Following RRMIMP-1 initiatives, there is clearly a major change of Governmental attitude and commnitrnent towards an effecive mainkenance policy and actions. 8 32. To ensure long-term project sustainability, it is important that the local government resources for maintenance should increase progressively. Under the follow-up RRMIMP-2, the resource mobilisation at the UP level has already started with 1% of the land transfer tax allocated to them and by increasing the authority of UPs. Maintenance of markets is adequately financed by direct user charges levied from market users. The on-going use and promotion of labour-intensive technology for maintenance with appropriate hand-tools would make infrastructure maintenance affordable and would enhance sustainabidity. Given that adequate maintenance funding and arrangements at the national level are already in place, and being further strengthened under the follow-up projects, the project can be rated as sustainable. E. BANK PERFORMANCE 33. Identification: The project was identified in 1981, when the GOB made a request to IDA for financing a RDP aimed at improving rural roads and markets in :3 "old" Zilas comprising 65 upazilas in the Northwest of Bangladesh. Prelirrinary engineering studies were undertaken by local consultants from July 1983 to April 1985, after which extensive discussions took place between GOB and IDA to ensure that the project scope was consistent with the institutional capacities of the implementing agencies as well as the local construction industry. In April 1987, the FAO/World Elank Co-operative programme Investmnent Centre issued a project preparation report that recommended a project to upgrade 360 km of FRB, construct 2500m of SRRs and improve 65 markets over an impleDmentation period of 5 years. The project area, which was selected for RRMIMP, was very appropriate because the Government was implementing a rural integrated development project in the same area comprising of irrigation, surface water conservation, pisciculture, afforestation, crop diversification, rural electrification, employment generation and feeder road improvement program. The flood rehabilitation works were identified in the west of the Jamuna River, because ADB was considering to finance flood rehabilitation works on the east side of the Jamuna River. Out of 900 rural markets in the project area, 196 were identifiecl as growth centres, which was used as a basis to select the priority 65 GCMs for further development. IDA's performance in identification of the project was satisfactory, because it focused on the country's economic need, and helped to prepare a well integrated rural development program, which was complementary to the planned development of other sectors in the project area. 34. Preparation: IDA's performnance in the preparation of the project can be rated as satisfactory because it made full use of the studies carried out in November 1987 under a separate UNDP funded and FAO executed contract, and reviewed the detailed designs and tender documents, which were prepared for ffie first year work contracts. The project design was appropriate to achieve its objectives through a rural infrastructure component and a flood rehabilitation componeni:. The rural infrastructure component included improvement, upgrading, and maintenance of feeder roads, rural roads, growth centre markets and project implementation support in the form of design and supervision consultants, incremental project staff, vehicles and equipment and office and laboratory facilities in the project area. The rural infrastructure components involved systematic experimentation with different technical options, careful monitoring, feeding project experience into design of later components and most importantly the definition and design of institutional arangements for project implementation. During credit negotiations a criteria for selection of rural infrastructure projects was agreed and it was adequately followed during project implementation. To ensure adequate and timely attention to the institutional issues, 70°% of disbursement on rural infrastructure works was made dependant upon a successful evaluation of experience during a formal mid-term review before the end of Year 3. 35. Appraisal: The Bank reviewed the project prepared by the consultants in close consultation with implementing agencies and co-financiers (KfW and SDC) durirg the appraisal. The appraisal team comprised of IDA and KfW staff and the skill mix of the specialists was appropriate. The need for carrying out a major review was very thoughtful and provided the borrower, IDA and co-financiers a good 9 opportuity to review project performance and helped to amend the scope of work (pam. 30). During appraisal the three najor risks were correctly identified and adequate arrangements were made for their mitigation: (a) the risk of institutional inertia from obstructing necessary changes in design and maintenance practices was mitigated with the appointment of design and supervision consultants; (b) the risk of project complexity was reduced by having separate management of the rural infrastructure and flood rehabilitation components; and (c) te risk of basic uncertainties regarding optimal technical solutions, institutional arrangements and financial capacities was correctly nitigated by carrying out intensive monitoring, close supervision and a joint mid-term review of the project. Given that the project had severl sub-components, adequate attention was not paid in defining the training programn during the appraisal and as a result the selection of candidates were based on ad hoc decisions and no refined policy on selection criteria for the trainees could be decided during the course of the project implementation. In general the Bank performance in appraisal of the project can be rated as satisfactory. 36. Supervision: The quality of Bank supervision was very professional, objectively oriented and based on understanding of the borrowers institutional capabilities and needs and on the basis of IDA policies and procedures. During project implementation, the IDA/Borrower relationship was beneficial and productive. Both the parties responded very positively to the practical needs tat arose during implementation. Implementation problems were correctly identified, adequately assessed and appropriate performance ratings in the supervision Forn 590 were provided. Credit covenants were complied with. Sufficient and timely advice was given to the implementing agencies and follow up actions were more than adequate. The timing of supervision missions were appropriate and the time spent in the field was sufficient. On the whole, the Banks perfonnance in supervision was highly satisfactory both in quality and quantity, because: (a) it took timely actions in carrying out mid-term review and correctly amended the scope of project activities; and (b) to assess the project's impact and effectiveness, IDA carried out a SEM&E study at an appropriate time, which did not focus only on the main component of FRB but evaluated the impact of the project in terms of all social and economic aspects. The findings and recommendations of the SEM&E study (para. 40) were found very useful in the -preparation, design and implementation of the follow-up RDPs. F. BORROWER PERFORMANCE 37. Preparation: The project was identified and prepared jointly by the GOB, LGED, RHD and IDA with the support of consultants. The borrowers performance in providing the technical data, formulation of the project components and reviewing the project proposal with respect to technical, economical and implementation arrangements was satisfactory. All the sub-components were selected and designed so as to ensure that they fit well within project objectives and were economical to construct and maintain. The selection criteria was agreed separately for the improvement of FRB, upgrading of FRBs, structures on rural roads and GCM. The key criteria for improvement and upgrading of FRBs was, inter-alia; that: (a) the investment must yield an economic rate of return of at least 12%; (b) priority was given to those FRBs which connected growth centres improved under the project but so far did not have all-weather access; and (c) the land required for widening and raising was under the legal possession of GOB before the start of the construction. The key criteria for selecting SRR was: (a) that they were located on roads under a specific maintenance program; (b) upazilas contributed 7% of their costs and payment of the upazila's share of the estimated cost for one year's work was made before calling tenders; and (c) they were on roads which were connected with FRBs and/or markets improved under the project. The key criteria for selection of GCMs was that: (a) the estimated economic benefits from the improvements exceeded the costs of improvement and maintenance; (b) the markets were already on all-weather access; (c) the upazilas had agreed to finance 7% of the costs of the improvements from it's own resources and the payment was made before calling tenders; and (d) the upazilas had agreed to seek an increase in tolls charged to users of the improved markets and the Government had approved the proposed increase. The Project Proforma, which is a 10 mandatory requirement for all GOB's project, and was a condition for the credit effectiveness, was timely approved by the Executive Committee of the National Economic Council (ECNEC). In general, the borrower's performance in preparation of the project was satisfactory. 38. Implementation: The rural infritructure development component was implemented by LGED and the flood rehabilitation component was implemented by both RHD for works on main roads, and by LGED for works on FRBs and rural roads. A separate Project Implementation Office (PIO) was established within LGED, which was supported by the design and supervision consultants. The PIO was responsible for preparing annual work programs and budgets, engage consultants and other staff, procure equipment, supervise project implementation, manage project accounts and report to IDA. The PIO was responsible for ensuring that the project components were selected consistent with the agreed selection criteria. The Project Director (PD), who was the head of the PIO, was assisted by 8 Executive Engineers based in each district and 65 Thana Engineers. The PD was also assisted by the headquarters staff assigned to the PIO. A District Road Development Committee l(DRDC) was established in each district and was responsible for final selection of road .segments and for co-ordination of improvement, upgrading and maintenance works. At the initial stage, quality control work was mostly done by consultants; however, as LGED staff became trained, this responsibility was gradually taken over by the LGED staff and was satisfactorily performed with assistance and advise from the Consultants. Some of the markets selected did not have sufficient land to accommodate the planned developments and as a result new markets had to be taken up for improvement. The performance of the contractors and consultants, closely monitored by the LGED, was found to be generally satisfactory. The availability of GOB counterpart funding was satisfactory and the implementing agencies showed adequate commitment in compliance of the major credit covenants. The implementing agency complied with IDA guideline on procurement and disbursement though there were some delays in submission of awdit reports. In general, the borrower's performance can be rated as highly satisfactory, because the works completed were of satisfactory quality and despite initial delays, the project succeeded to complt all physical targets within the approved costs. G. ASSESSMENT OF OUTCOME 39. The project has achieved most of its major objectives. ]t has fully met all its physical targets within the original cost estimates, substantially met its institutional objectives (in achieving a sustainable maintenance system with assured and adequate maintenance budget and an acceptable maintenance strategy; in ensuring good quality standards in.roads design, imylementation and supervision, which is getting replicated on a national scale; in incorporating a Socio-Economic Monitoring and Evaluation system as a part of the project and of the implementing agency (IGED) organisation; in strengthening LGED as an efficient agency for project design and management; and in considerably strengthening local contractor capacity which is now able to take up larger contracts under the follow-up project). 40. The project has also achieved fully its socio-economic objectives in increasing rural mobility, reducing rural transport costs, in improving markets and reducing marketing costs; and in creating rural employment for the poor. Besides significantly reducing the transportation costs on improved and upgraded roads, the project also contributed in reducing travel time and providing good riding quality, both for motorised and non-motorised traffic. The construction of structures on rural roads showed a remarkable achievement in improving accessibility because the rural roads were constructed in the past under the food for work program but the culverts were not constructed and gaps were left in between: The sub-component of SRR greatly helped to fill these gaps and improved accessibility. Motorised and non- motorised traffic increased significantly on improved roads, whichi brought a great relief for the poor nckshaw puller in terms of both financial income as well reduced physical fatigue. Due to inprovement of GCMs, spoilage in marketing of perishable goods decreased, and it helped to increase the income of the market users. High quality of improved roads helped in reducing their maintenance costs. Tree plantation 11 on both sides of the improved roads and surfacing of the unpaved roads, reduced dust and improved the environment of the project area, while also giving regular employment to poor women (who are employed to take care of these trees, one person per Iam). Given the full or substantial achievemens of all the physical targets both in terms of quantity and quality, and the instutional and economic objectives of the project, the overall assessment of the project outcome can be rated as very satisfactory. 41. Economic Re-evaluation: The econonic re-evaluation, after the project was complete, indicated that the project outcome is highly satisfactory because the average economic internal rate of return (EIRR) for 40 of the 47 comnpleted roads studied under the feeder road conponent is estimated at 26% (Table 9A), compared with its average 25% estimated at appraisal, and the average EIRR for the completed GCMs component is esfimated at 31% (Table 9-B), conpared with its (10%) estimated at appraisal. Assuming similar returns from road iunprovements under SRR (structures on rural roads) and the roads under flood rehabilitation component, the cost coverage related to feeder road component is providing the above level of economic return is about 720/o, and that related to GCM about 5%. The economic re-evaluation is based on findings of the SEM&E study which was carried out under the project and completed in May 1997. The key objective of this study was to monitor and evaluate socio-economic effects of the rural infrastructure which were developed under the project in the eight districts. The SEM&E study evaluated the effects of 40 selected rural roads and 10 GCMs (a total of 47 FRBs and 65 GCMs were developed) through estimating EIRR by comparing pre-development and post-development status of the rural roads and markets along with a series of other specific indicators. In addition to the EIRR estimates which are based on quantifiable partial benefits, the SEM&E study concluded that the development of rural roads and markets has generated several positive impacts, which can be easily reflected in the following general pattern: (a) development of rural roads generated substantial increase in the total movement of goods and persons. On improved roads the volume of both passenger and goods traffic increased significantly (with about 70 % increase in ton-kan of freight carried and 170% in passenger-km, one year after road improvement); (b) on improved roads, unit transport charges for goods and passengers decreased substantially (about 60% reduction in motor vehicle charges on a sarnple of improved roads, and about 30% reduction in non-motorised vehicle charges); (c) stimulated the operation of bus service for the first ime on many improved roads that brings in many social benefits, including better access to health facilities, schools, and extension services; (d) generated significant new employment opportunities for the poor (created an estimated 18,600 for the construction and improvement works, as against 12,000 estimated at appraisal), and about 500 regular positions in future maintenance; indirect employment effects have been estimated at about 5,000 full-time jobs in markets, new road-side shops, and transport services); (e) losses due to spoilage or quality deterioration for perishable items such as fish, meat, eggs, milk, vegetables, etc. decreased significantly; (f) the lease value (bid price for running markets) and toll revenue (from traders) in the markets went up significantly; (g) new shops and commercial activities started up around the markets; (h) cost of the land near the market increased significantly; and (i) the markets became more efficient, more hygienic - for example with better drainage and toilet facilities and hygienic slaughter houses in lieu of open places for slaughter of animals for meat; busier, and more active commercial centres facilitating rural economic growth in both fann and non-farm sectors. 42. The SEME studies under the project have resulted in good models for impact studies involving predominantly non-motorised transport; these reports currently provide good guidance for future impact studies in Bangladesh. A separate exercise is currently under way (under the follow-up project) to review the massive socio-economic surveys conducted under RRMIMP, and to prepare a concise report on "rural infiastructure impact," after screening the many case studies under the project; the resulting report would be published for international use. 12 H. FUTURE OPERATIONS 43. Since most of the civil works covered under RRMIM included improvement of FRBs, construction of drainage structures on feeder roads and rural roads, construction of GCMs and periodic maintenance on existing feeder and rural roads, no formal plan of operation was established. However to ensure routine and periodic maintenance of the improved roads is appropriately undertaken, LGED is currently implementing IDA financed RRMIMP-2, which includes, inter-alia, a substantial component on road maintenance and capacity building. The component of road maintenance under RRMIMP-2 attaches great importance to building an adequate maintenance management system in the country based on best practice and techniques. LGED maintenance budget has increased progressively from Taka 300 million (US$7.5 million) in 1992/93 to Taka 900 million (US$22.5 million) in 1997/98. A Rural Infrastructure Maintenance Cell (RMIC) was established within LGED in 1992, and since then it has made considerable progress in establishing the framework for road maintenance by setfing up a road inventory database, introducing national maintenance guidelines, and establishing a b-aining program. 44. The other main source for funding maintenance of rural roads is the CIDA/CARE road maintenance program, which is designed as a poverty-alleviation program for destitute women. To complement and support its efforts for setting up an effective, planned periodic maintenance system, RRMIMP-2 would finance: (a) technical assistance for setting up and designing an effective and efficient management system in the selected area; (b) provide 50% of the periodic maintenance costs in the project area on a declining percentage basis over the implementation period, starting at 80% in the first three years and decreasing to 30% in the last two years. This assistance would be provided in co-ordination with RIMC's program and other ADB financed inputs for maintenance strengthening. The resource base for UPs has also been expanded by giving them 1% of the land transfer fee which will increase their financial capability to improve and maintain rural infrastructure. 50% lease value of markets is now going to UPs instead of previous 40%. Leasing threshold for UP managed markets has been increased from Tk 50,000 to Tk 100,000. Given that LGED has made all necessary arrangemnents including technical planning and budgetary provisions to carry out the maintenance of roads, structures and GCMs, and IDA has a follow- on project RRMIMP-2, there is no need for a specific future plan of operation for RRMIMP. i. KEY LESSONS LEARNT 45. The key lessons learned from the project are as follows: * To facilitate effective project implementation, it is advisable to start bidding process for civil works before project start, and appoint design and supervision consultants before Credit approval so as to avoid delays; * For the success of rural infrastructure development projects, it is important to ensure active local cOMmunity participation at all project stages including priority setting, site selection, plannng, design, implementation, quality control and measuring the impact of completed project; * To enhance all-weather accessibility of rural roads, it is necessary to place greater emphasis on the construction of drainage structures on rural roads; * To improve transport and trading system in rural areas where seasonally navigable waterways prevail, it is important to develop river jetties to ensure adequate integration of inland water transport and road transport; 13 . To develop small scale contractors, the continued training and equipment support plays an important role, and at the same time gradual increase in contract size is necessary to promote contractors' output and efficiency; * An early action on the preparation of land acquisition action plan, simplified compensation procedures, and timely compensation payment to land owners, can substantially reduce the project completion time; * An effective mid-term review can make the project flexible with all physical targets achieved in phases along with gradual capacity building of the borrowing agency; * Restructuring growth center market management and its leasing systems with greater user participation, can prove helpful to improve efficiency and increase revenue for UP-managed markets; and * To ensure sustainability of rural infrastructure maintenance, it is critical to strengthen the financial status of local bodies (UPs) and to make them accountable for maintenance success. 14 PART-II Stadstical Information Table 1: Summary of Assessments Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursements : Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation Table 7: Studies Included in Project Table 8A: Project Costs Table 8B: Project Financing Table 9A: Economic Costs and Benefits Table 9B: Economic Costs and Benefits Markets Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions 15 Table 1: Summary of Assessments A. Achievement of objectives Substantial . Partial Negigbl Not applicable (/) (V) (/) (/) Macroeconomics policies D 0 0 0 Sector policies 1 0 0 0 Financial objectives 0 ° 0 Institutional development 0 0 0 Physical objectives 0 0 0 Poverty reduction O 00 O 0 Gender concerns O 0 0 0 Other social objectives 0 03 0 Environmental objectives 0 0 0 Public sector management 0 0 0 Private sector development 0 0 0 Other (specify) 0 e0 0 B. Project sustainabilit Likely Unlikely Uncertain (/) (1) (I") El ~ 00 C. Bank verformance Highly satisfactory satisfactory Deficient (I) V) ( ) Identification 0 0 Preparation assistance O0 0 Appraisal 0 0 0 Supervision 0 2l 0 D. Borrower performance satisfactorv satisfactory Deficient (/) (") ) Preparation 0 0 Implementation 0 03 Covenant compliance 0 21 0 Operation (if applicable) O0 0 E. Assessment of outcome Hiv IMy satis fir Satisfactory Unsatisfactory unsatisfactory 0/ 0/ 0/ / 16 Table 2: Related Bank Loans/Credits Loan / credit dtle Purpose Year of approval Status Preceding operations Nil Following operations RRMIMP-2 Inprovement of feeder roads, 1997 On going. growth centre markets, small river jetties and their maintenance. Table 3: Project Timetable Steps in projet cycle Date ed Date actual Identification 1981 Preparation _ 1983-87 Appraisal l__ _________Sept. 21-Oct. 15, 1987 Negotiations r May 23-27, 1988 Letter of development policy (if applicable) Board presentation June 24, 1988 Signing July 29, 1988 Effectiveness May 05, 1989 First tranche release (if applicable) Second (and third) tranche release (if applicable) Project completion June 30, 1997 Loan closing June 30, 1997 17 Table 4: Loan I Credit Disbursements: Cumulative Estimated and Actual (USS thousands) FYf I PfFY 17Y FY FY FY FY FY FY FY U8-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 Applaisal 5,800 9,400 30,100 38,500 44,500 51,800 58,900 62,300 - esfimate Actual 8,638 14,420 22,251 28,353 33,946 43,562 *51,598 56,120 57,900 Actual as % of 91.89 47.91 57.79 63.71 65.53 73.96 82.82 90.01 92.94 esfimate I Date of final Oct. 31, 1997 disbursement *Source of actual Disbursement: Local Government Engineering Department (LGED) Table 5: Key Indicators for Project Implementation (i) Key Implementation Indicators in SAR/President's Report Estimated Actual 01. FRB Improvermnt 500 Km. 496.85 Km. 02. FRB Upgrading 200 Km. 495.72 Km (l 03. Bridges on FRBs 1223 m. (PP) 1079 m. 35 Nos. 04. Markets 65 Nos. 65 Nos. 05. SRRs 3705 m. 4041 m. 06. Maintenance 1867 Km. 400.78 Km. 07. Tree Planftaion 500 Km. 398.89 Km. 08. Flood Component: i) Roads 399.04 Km. 428.19 Km. ii) Bridges 1797.04m. 2373.86m. iii) Drainage 21776.00 m. 17505.00 m. iv) Retaing 3001.00 m. 2215.63 m. 09. LGED HQ Building 1 No: 6 Storied Building Completed 10. Functional Buildings 6 Nos. 8 Nos. (i) During appraisal it was estimated that 110 Km. would be upgraded firom HBB to WBM to B.C and 90 Km. would be bituminous carpeted directly. Finally in order to protect the pavement and the environmental from dust hazard all 495.72Km bituminous surfaced. 18 Table 6: Key Indicators for Prciject Operation -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. . . . . . . . . . . .. - , . . . . Maintenance There were no indicators Routing Maintenance responsibility is taken by Rural established at the time of Infrastruture Maineace Cell (RlMC) of LGED, appraisal. Periodic Maintenance would be done under RRMIMP-2. Maintenance budget has been increased 3 times in 1997- _ ~~~~~~~~~~~~~~98 from lhat of 1992-93. Table 7: Studies Included in Project .. . . . . .. ............. . ............. =H=.==.===. ~~~~~~~~~~~~~~~~~~~~~~~~..,. . ....... .... ................. .,,-,,,,,......... ..... 1. Socio- Ecooic Monitonng and To deternuine Socio-Economist Completed in 1997 Project interventions have Evaluation (SEME) Study Clumge. made significant short term socio-Economic benefit; investmnent have shown high Economic 2. Rural Transport Study Investment strategy C'ompleted in 1994 Useful for appropriate investment 3. Financial Planning Study for Upazila To assess mobilisation of local Completed in In line with the finding of Parishad resource 1992 the study, steps have been taken to augment local resource . 4. Disaster Assessment and Emergency Priority ascertain 'Completed in Found usefull in taking 1995 appropriate measures in disaster management within the project area. 5. Financial Management Study and Improve Financial Completed in Found useful in Financial Private Audit Mnagement System and 1997 management and auditing. maintain proper system of Accounting 6. Study of Follow-up To prepare a new Project Completed in A Pr,oject of similar nature 1996 has been launched . 7. Impact Study To determine the Impact of the Completed in Significant short/long term project to the society 1992 Impact on the society have been observed. .. . . . . . .. . . . . . .. . . . . . . .. . . . . . . . . . . . . .. . . . . . . .. . . . . .. . .. . . . .. . . . . . . 19 Table 8A: Project Costs Appraisal estimate US$M) Actual/latest estimate (US$M) Si. Item Local Foreign Local Foreign No. costs costs Total costs costs Total 01. L and Acquisition 1.1 0.0 1.1 2.220 0.000 2.220 02. FRB Improvement 20.7 5.2 25.9 26.41 6.61 33.05 03. FRB Upgrading 4.6 1.2 5.8 2.69 0.67 3.36 04. Tree Plantation 0.0 0.0 0.0 0.32 0.000 0.32 05. FRB Maintenance 3.0 0.6 3.6 0.64 0.16 0.80 06. Growth Centre 4.5 1.5 6.0 3.22 0.80 4.02 07. SRR 4.3 1.1 5.4 8.85 2.21 11.06 08. Lab & Office Building 0.0 0.0 0.0 0.56 0.14 0.70 09. Equipment 0.5 1.4 1.9 2.80 0.70 3.50 10. Training 0.5 0.2 0.8 0.30 0.08 0.38 11. Other (Addl. M.P + O&M) 3.0 1.1 4.1 2.99 0.000 2.99 12. LGED HQ Building 1.0 0.7 1.7 1.62 0.41 2.03 13. Consultancy - Main 3.9 3.2 7.1 5.86 4.80 10.66 14. Consultancy-Flood 0.7 0.3 1.1 0.661 0.000 0.661 15. Consultancy - HQ 0.0 0.0 0.0 0.270 0.000 0.270 16. Flood Rehabilitation Works 12.5 3.2 15.7 12.94 3.24 16.18 Goods 0.4 0.3 0.6 0.17 0.16 0.330 17. Base Line: Physical Contingency. 6.0 1.8 7.8 1.50 0.97 2.47 Price Contingency 7.4 2.3 9.7 0.000 0.000 0.000 Total Costs 74.3 23.9 98.3 74.05 20.95 95.00 20 Table 8B: Project Financing Apprai estimate S$M) Aal I aest estimale (US$M) Source Loc Foreign Local Foreign costs costs Total costs costs Total IBRD/IDA 46.3 15.9 62.3 43.30 14.60 57.90 Cofinancing institutions (KfW) 10.3 3.8 14.2 12.18 1.33 14.06 (SDC) 4.8 3.8 8.6 5.65 4.47 9.84 Other external sources Domestic contribution 13.2 - 13.2 13.2 - 13.2 Total 74.60 23.50 98.30 74.37 20.44 94.81 Table 9A: Economic Costs iand Benefits (For Feeder Road Tylpe B) District Length No. of Roads Cost EIRR (°/O) l______ __ (hn) (Taka in million)_ Appraisal Re-evaluation ___ __ _Rang__ _ Rage Mean Rajshahi 83.4 7 212.3 16-54 27 Naogaon 54.3 5 149.9 16-31 21 Natore 39.1 5 90.2 20-45 34 Nawabganj 45.1 5 106.7 13-36 24 Pabna 43.1 2 97.8 17-47 32 Sirajganj 40.1 5 127.7 14-25 18 Bogra 81.6 7 214.7 15-62 28 Joypurhat 71.8 4 130.7 17-31 25 (average) . _ 25 26 21 Table 9B: Economic Costs and Benefits For Growth Centre Market Improvement Cost Name of Market District (Taka in million) EIR (%) Appraisal Re-evaluation Charghat Rajshahi 2.42 22 Bonpara Natore 3.43 32 Malanchi Natore 2.45 23 Sujanagar Pabna 8.59 84 Jamtail Sirajganj 2.56 23 Kahaloo Bogra 3.87 36 Pnachbibi Joypurhat 3.63 31 Badalgachi Naogaon 1.93 18 Shibganj Nawabganj 2.55 21 Borgachi Nawabganj 1.98 17 Average 10 31 22 Table 10: Status of Legal Covenants 0 0 0 0 it tXA >'g' ': ~~~~~~~~~~~~~~~~~~~~~~~~~~~~. .... ... DCA 3.01 (a) 05 C CGOEI oommitled to objectives and to plDViing appropriate means. 3.01 (b) 05 C GOEI to execute in accordance Done with Impementation Scbedule (S^due M). 3.01 (c) 05 C GOEI to follow agreed criteria in Done selwdiouldesipn subcpont. 3.02 (a) 10 C GOB to engage consultants with Done -iifcy qualsfications, expuience, terms of reference, (Schidule 3) for Part A in accordance with IDA guidelines. 3.02 (b) 10 C GOB to engage conutants with Done qualification, experience and terns of reference s actory to IDA for Part E3 (flood repair). 4.01 (a) 01 C GOB to keep adequate project Accounts satisfactory, accounts computerised Accouting System has been prepared and is now under operatio-. 4.01 (b) 01 C 03/31/91 GOB to submit audited accounts 9 GOB submitted audit nmontts after end of fiscal year report which was prepared in old format Accredited private auditors have since been appointed for accounts fron 1994-95. They have submitted report for 1994-95, 1995-96. 1996-97 audit report is under preparatiorL 4.01 01 C GOB to naintain records for SOEs, retain copies until I year after last withdrawal, ensure SOEs covered in annual audit 6.01 05 C 10/27/1988 05/05/89 Effectiveness Conditions 1.3 (b) 10 C GOB to adopt: (a) system for (a) Being complied with feeder road maintenance; (b) plan on a continuing basis; (b) for finang feeder road Allocation for maintenance; (c) system for maintenance expenditure monitoring local govenment road is provided in the revenue and nm£rket activities; (d) design budget; (c) Staff deployed and colsruction of standards for to monitor activities, (d) feeder .md rural roads; and (e) plan Done and (e) Done. of actice for rest of project, satisfactory to IDA. (All conditions for disbursement over SDR 8 m on Category 1 (a) (rural infrastructure civil works). 1.3 (c) 10 C 06/30/90 01/31/93 GOB to carry out study and Financial Plan produced; financial plan for LGEDHQ's IDAlADB/KfW/GOB (disburement condition for the have agreed to finance the LGED HQ Component, Part A9). building amounting to __ __ __ _ __ __ _ __ __ __ __ __ _ __ __ __ __ _ _ _ _US$2.2 millionL 23 sch. m 10 c Prouaent ICB goods imit $200,000; pnzdest shopping $25,000/500,000; minum flood works paages Ik Imn for LGED and RHD reap.; IDA review of wodk conracts graer than $200,000 and first contma of each type; GOB to provide 2 copies confirmed contacs (ex. SOEs) 15% variation_ Sah. IV.1 10 C 03/31/92 05/28/92 GOB to caiy out projed in Coniplied with acordance with Implmentation Schedule to be agreed wihh IDA annuly by March 31. S& IV.2 04 C GOB to enne upazils centribute _______ _______ _____ ______ ______ 70 cots of nal improvemet SiL IV.3 02 C GOB to cime zilas: (a) recover coas of EQ in raeals (b) maintain separate accounts for EQ rental/expenses. Sch IVA 02 C GOB to ensure upazilas increase District Administration has market tolls on improved markets in rised toll rates in all accordance with schedule to be agreed districts starting fromn April with IDA. 15, 1996 (Bengali New _______ ________ ______ _______ ______ ~~~~ ~~~~~~year). Sch. IV.5(a) 09 C 03/31/91 03/31/92 GOBto fishiislDAwith assessment GOB submitted assessment of project performance to date and in April and Nov. 1994. draft action plan for remainder of Second major project project. review done in May 1994. Sch. IV.S(b) 10 C 06/30/91 05/31/92 GOB to review action plan with GOB submitted asessment donor__ in Aprl and Nov. 1994. Second major project _________ _______ ________ ~~~~~~~~~~~~~~~review done in May 1994. Sch. IV.6 10 C GOB to issue no tender documents for Complied with civil works until consultants are engaged and have reviewed tender documents. *Zovenant TyDes: 1 = Accouns/audits 7 = Involuntary resettlemaet 2 = Fina perfmance/revenue geeration 8 = Indigenous people firom beneficiaries 9 Monitoring, review and reporting 3 = Flow and utilisation of project funds 10 Project implementation not covered by categories 1-9 4 = Counterpart fund 11 = Sectoral; cross- sectoral budgetary or other resource allocation 5 = Management aspects ofthe project or 12 = Sectoral or cross-sectoral policy/ regulatory/institutional action 6 = Environmental covenants 13 = Other Present Status: C - Complied with CD - Complied after delay NC - Not Complied with Soon - Compliance expected in reasonable short timne CP - Complied with Partially NYD - Not yet due. 24 Table 11: Compliance with Operational Manual Statements No significance lack of compliance with any applicable Bank Operational Manual! Statement (OD or OP/BP) was noticed. Table 12: Bank Resources : Staff Inputs Stage of project cycle Plamned Revised Actual _ Weeks US$ Weeks US$ Weeks US$ Through appraisal 68.3 100.1 Appraisal - Board 64.4 105.0 Board - effectiveness ] Supervision 1 273.3 438.1 Conpletion 1.3 1.0 Total 407.3 644.2 25 Table 13: Bank Resources: Missions Stwae of projet Mouth Numbe of Days in Specblised stanills I Deelop- Tpes of Cycle erw Perm)ons field rWeirsetd tatiori mast Ptoben - field ~~~~~~~~~~~~~~~~~~~~dta fmpd Tbrough 1981 appraisl to 1987 Apprs]'a1 _ Sept.'87 3 25 TE, FS, TE . - Board approva Boarfd 'eb.. 1 14 TE val Ieff :'Uu CL8 221 T,S Supervision OCt.'89 2 13 TE, HE 3 1 m Apr.'90 3 6 TE, HE, DO 3 1 I Sept.'91 2 8 TE,TS 2 1 M Feb.'92 3 5 TE,HE,TE 2 1 M May'92 5 19 TE,TS, TS, DO, HE I I m Nov'92 4 13 TS, TE, HE,TS 1 I C June'93 2 10 TS, HE 2 1 C Nov.'93 4 14 TS, TE,HE, AR 2 2 C Feb.'94 3 19 TS, TS, TE 2 2 C May'94 4 1 7 TS,TE i,TSHE S S C Nov.'94 3 9 TS, TIE,HE S S C,M Feb.'95 2 12 OS, TE -- May'95 4 8 TS, HE, HE, TE- - (paitiai Nov.'95 4 14 TS, TE, HE, TE S S C.M May,96 2 6 TE, HE S S C,M Completin June'97 4 8 TE, HE. HE. US S S- Notes: Ratings: Mlinor Problem: 1; Moderate Problenm 2; Major Problem: 3 Highy Satifactory, HS; Satisfactoy: S; Umsatisfactory: U; Hfighly Unisatisfactory: HU Specializatioa Transport Economust: TE; Highway Enpiwer: HE; Transpoft SpecahisL TS; Disbursemnent Specialist: Do Operations Specialist: OS; Urban Speialist: US; Architect: AR, Finanial Specialibu FS Problem.: Finacia Problem: F; Managemnwt Problem: M; Covenant Problent C 26 ANNEX A BORROWER'S CONTRIBUTION TO THE ICR 27 ANNEX-A THE PEOPLE'S REPUBLIC OF BANGLADESH RURAL ROADS AND MARKETS IMPROVEMENT AND MAINTENANCE PROJECT CREDIT NO 1940-BD BORROWER'S CONTRIBUTION TO IMPLEMENTATION COMPLETION REPORT (ICR) LOCAL GOVERNMENT ENGINEERING DEPARTMENT MINISTRY OF LOCAL GOVERNMENT RURAL DEVELOPMENT AND CO-OPERATIVES LOCAL GOVERNMENT DIVISION 28 INTRODUCTION: 1. The economy of Bangladesh is overwhelmingly rural and dependent on Agriculture. More than 80% of its 120 million people live in the rural areas most of which are directly or indirectly connected with activities linked with agriculturn. Achievement of higher agriculture growth through cheap agriculture input and improved and hygienic marketing facilities is one of the main policy of the Govemment of Bangladesh. Keeping this in view the Planning commission of Bangladesh initially selected over 1400 rnarkets out of more than 6000 rural markets as Growth Centres. These numbers were increased to over 2100 at a later stage. These Growth Centres are to act as centre of rural development which will have better trading facilities like covered multipurpose shed, fish shed, meat shed, open space pavement, paved, intemal roads, drains, toilets to provide improved hygienic atmosphere for trading and office building for market management. Introduction at low cost year round access to these Growth Centres is one of the important component of the strategy, for Rural Development (SRD) of the Govemment of Bangladesh. 2. With this view the Rural Roads and Markets improvement and Maintenance Project (RRMIMP) was designed with finance from the World Bank, KfW, SDC and GOB. Separated agreement were signed each of the donors. Credit 1940 - BD with IDA was signed on 29 July 1988. 3. The parameters which this report includes are: (i) An assessment of the project objectives, design implementation and operation experence (ii) an evaluation at the borrowers own performance during the evolution and implementation of the project (iii) an evaluation of the Bank and the Co-financiers ASSESSMENT OF THE PROJECT OBJECTIVES, DESIGN, IMPLEMENTATION AND OPERATION EXPERIENCE ASSESSMENT OF THE OBJECTIVE: The objective of the project as stated in the Staff Appraisal Report (SAR) were: (a) to promote rural development through the reconstruction, upgrading and maintenance of feeder roads, growth centre markets and the construction of structures on rural roads in the project area; (b) to implement cost effective approaches to designs, construction and maintenance of these components within resource constraints (c) to improve resource mobilisation to support Zila and Upazila maintenance activities (d) to strengthen the institution concerned with the development and maintenance to feeder and rural roads and markets and 29 (e) to rehabilitate roads and associated structures damaged by the 1987 floods while improving standards to minimise flood damage To achieve these objectives the Project comprised of the following Component: (a) improving, maintaining, and upgrading 500 km of Type B feeder roads including bridges and drainage structures; (b) constructing bridges and culverts on about 650 km of rural roads; (c) master planning and improving infrastructures in 65 growth centre markets; (d) providing project support in the form of consultants, project staff, vehicles and equipment, and office and laboratory facilities in the project area; and (e) constructing a new headquarters building for the LGED. Evaluation of Obiectives The project was in line with Strategy for Rural Development" (SRD) published by the Planning Commission of Bangladesh in January 1984. The Strategy for Rural Development (SRD) was designed to achieve higher agriculture growth rate through cheaper agriculture inputs and ease in marketing agriculture outputs through a series of project each of which was to cover at least one or more of the three following main elements: (a) Rural Infrastructure (b) Minor Irrigation drainage and flood control (c) Production and employment component with emphasis on improving opportunities for the rural poor and women. Physical components of the project like improvement of 500 km of FRBs which connects Growth Centres, improvement of 65 Growth Centres one in each of the project Thanas and construction of more than 4000 m structures on Rural Roads were all aimed at improving the Rural Infrastructure. Use of local labour force in the construction of the said physical components and use of destitute women in maintenance of roads and trees addressed the third component of SRD. 4. The objective of resource mobilisation to support Zila and Upazila maintenance activities was included to achieve sustainable infrastructure development. The project was to identify existing and potential resources at District and Thana level which could be utilised for maintenance of the developed infrastructure. A study was carried out under the project on "Upazila Financial Planning" for that purpose. But with the change of Govemment the emphasis was shifted to Union level from Upazila level and no effective use could be made of the study. With the change of Government in 1996 emphasis is again being given on the Thanas as focal point of development. Thus the study could be utilised in RRMIMP-2 to help find ways of resource mobilisation to support maintenance activities at local level. 5. Participatory process was not well documented during appraisal however it was carried out during implementation to the extent possible. Cost effective approaches to design, construction and maintenance 30 6. The objective of cost effective approaches to design, construction and maintenance of the various components of the project have also been significantly achieved. Semi-dense bituminous concrete mix designs were carried out for surfacing of the roads eliminating the immediate need for seal coating. Bridges with bank seat and return type wing walls were designed reducing the cost by about 10%. However the smaller bench seat bridges with brick mattressing in the approaches, were, subsequently not considered cost effective by some professionals as they would need costly maintenance. The project initiated developing a cost effective maintenance system. A report on maintenance management was produced. A tender document with specification of maintenance works and a library of standard items for maintenance works was produced for use in getting maintenance works done through contractors. Lengthman system was used in routine maintenance of road shoulder, slopes and drainage structures. However labour contracting societies could not be developed under this project. Well trained LCSs would be very useful for routine and smaller periodic maintenance of rural infrastructure. This issue should be more seriously addressed in RRMIMP-2. Resource Mobilisation at Zila and Upazila level 7. The Govemment of Bangladesh has formed a Local Govemment Commission to suggest structure, power and responsibilities of different tyres of Local Government. The commissions recommendations are now with the Govemrment awaiting final decisions. As such implementation of the recommendations of the Upazila lFinance Planning Study conducted under RRMIMP has been delayed. However the potential sources of resource mobilisation identified by the study got active consideration during preparation of RRMIMP-2 which has since been implemented to increase the income of Union Parishads. This will increase the capability of the Union Parshads to finance development programmes and maintain them. EVALUATION OF BORROWERS OWN PERFORMANCE PHASE- 1 ACHIEVEMENT: The credit agreement with IDA was signed on 29 July 1988. As a condition of the credit effectiveness, an agreement was signed on 25 April, 1988 with a consortium of consultants lead by TPO Sullivan and Partners Limited engaging them as Design and Supervision Consultants (D&SC) of the Project. Due to delay in engagement of Consultant of the start up of the project was delayed. Prequalificabon of contractors with the help of the D&SC was carried out. Tender documents were prepared for construction of physical components of the project, procurement of construction and laboratory equipment. After completion of all these steps tenders were floated in March/April 1989 for construction of Markets and Structures on Rural Roads. Tenders for Improvement of FRBs and construction of Bridges were invited in ApnilMay of 1989. As a result almost a year was lost for these components. However with the arrival of constructon & laboratory equipment and increased Technical assistance construction activities paced up. 31 By the Mid-Term Review of the Project in May 1992 only 75 km of FRBs were improved and another 75 km were underway. Due to the slow performance and due to anticipated shortage of fund (which was later on proved wrong as was earlier daimed by the borrowers) the donors reduced the physical targets of the project as follows: (a) Improvement of 350 km of FRB in place of 500 km. (b) Upgrading of 200 km of FRB dropped (c) Construction SRR reduced to 2583 m from 3705 m. PHASE- 2 PERFORMANCE In doing so the donors underestimated the borrowers capability and during November 1992 and June 1993 Missions donors reviewed and reset the physical targets to be achieved in the Phase -2 of the project as follows: (i) Improvement of FRBs approximately 500 km with 35 Bridges and other drainage structures (ii) Surfacing/upgrading of FRBs approximately 500 km (iii) Construction of over 4000 m of SRRs. The project successfully achieved all those targets even with considerable savings. ROAD MAINTENANCE The borrower with the help of the Consultants produced report on Road Maintenance Management and Tender document for carrying out road maintenance through contractors. Routine Maintenance of roads were carried out through lengthman system. After completion of the project routine maintenance of its components have been taken over by Rural Infrastructure Maintenance Cell (RIMC) of LGED. Periodic maintenance haven taken over by RRMIMP-2. About 57.22 km of Roads improved under RDP-7 are being maintained at a cost of Tk 19.99 Million by RRMIMP-2 under 1996-97 programme. UPAZILA FINANCING PLANNING STUDY As required by the project a study on Upazila Financing Planning was carried out to identify potential resource mobilisation sources for maintenance of rural infrastructure. However with the change of Govemments the implementation of the recommendations of the study has been delayed. The study was useful in addressing the issue of resource mobilisation in RRMIMP-2. KEY LESSONS LEARNT (i) A participatory process in selection of project components will avoid problems during implementation and will increase users acceptability (ii) Land Acquisition problems should be resolved through co-ordination between various Ministries and Agencies 32 (iii) The quantum of acquisition of land in this type of Rural Development project being very small special care is necessairy in preparation of Land Acquisition Plan to avoid future complication (iv) Time required for completing Land Acquisition process is always found to be much more than the planned time. As such this process should start at least two seasons ahead (v) The responsibility of valuation Land and other properties acquired should be given to the requiring body (LGED) (vi) Surveys of roads or markets are generally carried out about 2 years ahead of actual execution causing difference in the designed quantity and actual requirement during execution specially for earth works and drainage structures. As such provision of Physical Contingencies & price contingencies should be kept in the contract to avoid price over run (vii) Action should be taken at the earlier stage for failing contractors (viii) Persons trained under the project should be in the project for some considerable time so that the project can gain from the experience gained in training (ix) Traffic increases with the completion of improvement of the road far exceeds the predicated rate of increase. Diverted and generated heavy traffic beyond prediction reduces the life of the road. Stricter law regulating heavy traffic should be enacted and enforced. (x) Hard shoulders is essential for prolonging the life of the road. (xi) Regular Maintenance of rural infrastructure is essential. EVALUATION OF THE PERFORMANCE OF THE BANK AND THE CO-FINANCIERS Donors' performance from identification to completion of the project was satisfactory. Though there were some initial problems. about selection of some roads, the donor - borrower relationship was good. Supervision Missions were very professional, objectively oriented and based on understanding of the Borrowers institutional capabilities and on the basis of donors' policies and procedures. During the project implementation, the donor - borrower relationship was beneficial and productive. Both parties responded positively to the practical needs that arose during implementation. Implementation problems were correctly identified, adequately assessed. Necessary advice was given to the implementing agencies and follow up actions were adequate. The timing of Supervision Missions was appropriate and time spent in the field was sufficient. 33 ANNEX B ECONOMIC RE-EVALUATION 34 ANNEX-B Economic Costs and Benefits Effects of FRB DeveloDment Quantification of the effects of FRB development showed that on the average transport charges as measured by freight charges declined to Tk 8.29 per ton/kilometre after development compared to Tk 27.42 before development and passenger trips declined to Tk 0.60 per kllometre after development compared to Tk 1.24 before development. Overall effect of each FRB development was measured by its EIRR The methodology for estimating EIRR of individual FRB development was based on a partial analysis of the users transport cost savings from FRB improvement and ignored other economic and social benefits from increased assess and mobility. The distribution of EIRRs of the 40 FRBs studied under the SEME project are given in the enclosed table- 1. The EIRRs of the developed FRBs range from 12.9 to 62.0 percent with average around 26.4 percent. SAR of June 1988 estimated EIRR of FRB development at 25% on the average, on the assumption of 5% growth of transport. On the same assumption SEME study estimated the average EIRR at 26.4% (SEME Final Report, May 1997 page 54) for 40 FRBs studied by the SEME out of the 47 FRBs targeted for development. None of the estimated EIRRs was less than 12% - the minimum level of tolerance prescribed for FRB development under RDP-7. There was, however, considerable variations in the average EIRR among the eight project districts reflecting variations in economic and business opportunities at the project hinterlands in the districts. SAR EIRR estimate was stipulated on benefits arising not only from growth of transport but also on externalities such as growth of agricultural productions, health benefit etc. SEME EIRR on the other hand, is based on partial analysis of reduction in financial transport charges and does not take into account other externalities. Had the excluded extemalities been taken into account, the average SEME EIRR for FRB development would have been higher than 26.4%. In addition to higher EIRR compared to SAR estimate, the SEME study also identified the following specific benefits from FRB development. FRB road improvements generated substantial increase in the total movement of people and goods. On improved FRBs the volume of both passenger and cargo transport increased; by over 113 percent on the average in case of cargo and 136-percent in case of passenger Traffic within a year of development. Resulted in transfer to more efficient modes, with substantial growth in vehicular traffic - both motorised (215%) and non-motorised (110%) and reduction in pedestrian (13%) and bullock cart trips (55%). Increased the number of both motorised and non-motorised vehicles for all the 40 FRBs; motorised traffic as measured by the AADT (Annual Average Daily Traffic Count) grew by 117 percent, while non-motorised traffic grew by 58%. 35 The relative share of traffic volume carried by motorised traffic increased. For the 40 study FRBs share of motorised traffic in cargo increased from 40% to 70% and passenger share increased from 17% to 36% after development. Stimulated the operation of bus services for the first time in most of the FRBs which is likely to bring many social benefits. Reduced the operating costs and transport charges of rickshaws and rickshaw vans because of the availability of smoother running surface provided by the developed FRBs compared to undeveloped dirt roads (table-1). Effects of Market Develormeent Overall effect of market development was measured by EIR. EIRR of market development, like EIRR of FRB development, was based on a partial analysis of spoilage reduction due to market development and ignoring several other economic benefits such as increased market turnover, increase in volume of toll collection and increase in rentals from permanent shops etc. The EIRR of nmarket development ranges from 17.9% (for Borgachi located in Bholarhat dtana of Nawabgonj to 83.6% for Sujanagar located in Sujanagar dtana of Pabna district) with average of 30.7%. The effects of market development were monitored and quantified by SEME study and showed the following specific benefits: - The number of temporary sellers increased by 26% and market turnover by 80%. - The number of permanent shops increased by 53%. - Toll collection increased by 115% and market auction proceeds by 38% - Spoilage of perishable goods marketed reduced by 21% onl the average.. The EIRR of the individual markets and other market related ihdicators such as toil collection, auction proceed, daily overall turnover number of permanent shops elc. showing the levels at before market development compared to the levels after development are provided in table-2. EmDlovment Effects of FRB and Market DeveloDment An additional key effects of FRB and market development was direct employment generation due to construction and indirect employment generation through creation of new activities such as appearance of road side shops, of increase in non-motorised vehicles (Rickshaw, rickshaw-van) and motorised vehicles (auto-rickshaws, pickup vans, trucks etc.) and diversion of traffic etc. Total number of worker years generated as direct employment effects estimated around 19600 and total number of worker years generated as indirect employment effects estimated around 5000 from both FRB and market development. Generation of direct and indirect employment opportunities seemed to have helped alleviation of poverty and raising overall welfare of the poor in the project catchment areas. Table- I INDICATORS OF FRB DEVELOPMENT Si. Name of Lengthi Costs EIRR Sport Perfomnance Share of Morotised Pedestrians No. FRBs kmn Transport using Road District Fin. 1 O. PsegrGoods Passenger (% Goods C/o) Million I~~~~~~~~~~II~~~I ~~efreBefore IAt Befr Ate District: Rajshahi _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ I DUR-BEL 8.79 25.50 22.96 23.37 4029 18390 129 669 2 13 8 73 184 2356 2 _(OD-KAK 14.00 38.14 34.32 12.93 4838 43084 795 1615 14 7 40 59 946 1615 3 J 1CHA-D1IU 3.08 32.89 11.97 ~~~~~ ~ ~~~~~~~~~16.06 4666 5556 137 356 2 6 48 57 3049 1303 4 J AG-NAR 1.97 3.85 3.49 54.48 1977 3725 45 ISO 6 12 50 44 1469 150 5 DAR-CHO 32,27 84.63 76,26 29.79 7774 427481 1735 3020 12 58 58 78 1362 2689 6 PUTr-ARA 10.67 . 25.70 23.12 29.88 7131 134420 394 826 7 8 31 16 3284 9498 7 NAG-RAM ~~~~10.57 22.33 20.13 21.40 8028 6197 113 910 9 1 6 2 80 j2572 1671 District: Naogaon______ I IAL-PAI 14.13 37433.62 16.35 f3074 16262 13R 383 2 77 01 69 1453 1863 2 PRO-DEL 6.46 114.29 12.87 30.54 5891 9251 193 803 6 12 13 46 1144 1349 3 MAD-AGR 10.89 23.75 23.37 22.80 10524 20669 278 994 3 j35 02 23 2851 3064 GA.B-CHIH 1970 21.68 19.32 18.00 3711 4485 5 446 23 27 2 84 1027 1035 District : Natore I BAG-DAY [6.95 14.29 12.8 45.19 3653 14833 233 985 41 54 20 69 669 2376 2 HAY-LAX 12.19 3.69 3.32 20.06 13389 2480 335 280 1 3 24 56 64 11311 1025 3 LAL-ABD 111.19 26.37 23.90 30.52 111617 1599 *1958 2085 47 76 83 95 2592 2385 4 RH-A 9.18 27.82 23.05 35.16 118843 17472 '174 1281 39 45. is 78 T2711 2085 3 (AR-KAN _9.56 17.66 15.99 53.36 J2697 8703 1171 1275 9 21 7 81 [1113 1915 Distrct : Nawabganj __ _ _ __ _ _ _ _ _ _ ___ _ _ _ __ __ _ _ I NAW-NAM 3.36 7.11 6.40 14.89 J 3386 5519 98 264 3 II1 47 75 11547 1910 2 MON-RAM 2.15 5.93 544 12.86 119996 2328 143 195 7 2 24 32 11183 1170 3 _H __A_G 130.53 67.76 66.11 18.73 19027 23328 340 1637 2 62 .29 91 93s 1787 4 HAR-CHA 12.69 6.60 5.95 32.86 13442 5378 195 264 6 II1 8 68 11611 1834 S 51H1-MON J6.34 19.45 17.31 36.16 J7706 10795 369 558 4 8 34 30 [1683 2198 Si. Namne of Length Costs EIRR Sport Performance Share of Morotised Pedestuians No. FRBs kmn Transport using Road Distrct Fin Eco. Passenger Goods Passenger (%/) JGoods() _ _ ~~~~~~~Million Tk MillionIk _ Before AfterI BefoeAfer BeoeAfter BfrTAfter beeAfe District: Palma I GOY-ERD 7.17 17.09 15.38 46.64 120,45 15394 673 99 33 1 i 2 2125T 2 ]SUJ-TR1 35___92 _ 18D.71 172.65 Ii.53 t I9 II2i29i 49II]~ 44 4IZZ12 1I9K2I4I 96 I2 District: Sirajganj ____ ____ I DRA-ENA 9.31 133.11 31.57 T16.80 1939 115907 (326 526 3 14 1 121 12312 12604 2 JAM-BAL 7.70 28.20 25.38 14.07 1223 8618 137 396 4 43 02 26 1293 11947 3 TAR-BAR 10.53 130.71 27.63 122.38 3342 112043 II 372 S 40 11 170 12081 ~ 1685 4 TAIL-MOH 8.33 J23.48 21.44 13.78 6185 8191 52 406 .10 13 0 J72 2374 2087 5 BAN4-RAT 4.70 9.07 8.90 124.82 6029 15516 116 262 3 17 131 76 2135 12267 District: Bogra ____ I PHD-DH4A 1.12 2.66 2.38 61.97 3952 5561 180 223 3 6 41 43 3244 2906 2 KHA-D2UR 11L22 12.10 29.60 19.11 4387 -11392 493 710 I 61 4 86 -1125 3034 3 8.11-GIIO 13.66 35.00 31.49 52.60 21186 -27508 84 1485 35 28 37 81 -2606 2174 4 TIL-SAN 7.04 1110 t1357 14.68 5693 -6764 351 523 3 is 65 74 -2025 --2019 3 SON-NAR 22.46 57.36 51.62 13.31 3255 649 2 1270 41 32 2 93 SD80 1238 6 CHO-CIOA 11.62 26.03 23.41 17,60 8683 --13717 6 793 55 64 s0 78 958 1333 7 DHU-CI{A 114.46 143.60 41.12 25.40 110039 1 20980 2011 2052 112 32 I38 71 1721 3962 District: Joypuiihat ____ r K-IS O Iu Us 8.8 23.13 r 28.14 11807 -13154 240 634 5 10 .01 52 T2636 2462 2 PAN-SHA 25.56 167.69 61.46 3098 69785 85261 770 2630 843 ~ O 67 7745 03220 23 PAN-KAM 21.360 67.39 61.06 22.92 69795 95264 223 263 8 53 1 65 303 17720 4 RHD8-MAD 12.30 29.68 26.61 17.61 9108976 239 812 22 38 161 1B8 1739 2303 Average all FRB 1088 J 28.18 25351 26.43 6928 16339 450 957 14 29 126 164 2024 2723 Table-2 INDICATORS OF MARKET DEVELOPMENTS SR Name ofche Name of Axe MS" EIRR Inaes Seerdst Day ToR Coecdm dH day A timon MoneyN/er Tumovu Hoit day Spoilae Saving Pemane Shop No. MdA Disiit (Ame) Size f cost i (o.) (1k) ok) (1k) ((%) No,) in u ATk Iar. hc. F Be9 Aw f e., Eh Befee Abc h.. h. Bore Ao hc . h. Bdo. MOore h- Edo, AMO 9. h. _______ 96~~~~~~~~~~~~~~~ ~~~~~~~ ____ % ____9 In% 96 I 37~ ~Rrif 2.17 2 22.02 2419 441 497 12.70 13181 15611 18.44 335000 487000 45.37 1276703 1595764 24.99 4.58 .20 1.39 41 204 397.56 2 Boq NK- 2.07 2 32.24 3.431 549 1692 99.29 5531 6343 14.72 33800 1076000 92.83 340139 U10032 342.0 6.74 3.17 3.57 104 194 09.54 3 _M hl. Nore _ 2.04 0 22.30 2.454 692 993 43.50 2235 3872 73.24 7020D 123151 7028 241922 470762 89.63 5.00 3.47 233 75 103 37.33 4 94jw P. 2.33 1 33.63 .595 13u9 1a90 36.72 3969 14830 274.15 130000 310100 110.73 473302 203382s 327.9 6.79 3.73 3.04 170 269 37.65 3 .nw! Sijjg-i 2.32 0 23.09 2.561 81o 877 8.27 s09 1421 30.06 70040 10o00 42.86 31628_ 372061 81.06 3.22 3.15 9.07 148 161 s78 6 ICh,..o B-N 3.08 I 35302 3.870 1 610 782 28.20 2748 5137 83.39 20900 135101 -25.79 250209 339720 39.31 7.52 4357 2.93 135 2106 40 7 9,51 J6,1* 5.0s 2 31.19 3.629 3107 3447 10.94 249360 70333 1s2.11 182o n00 2 o2 10 2334 339380 4007920 30.37 4.70 2.97 1.73 402 420 6.47 S B.dul N8 1.09 1 1&19 1.912 1304 1497 140.0 3729 420 29.26 132000 133000 2.27 374601 727n42 94.22 4.59 3.76 0,o3 21 41 93.24 9 _so'd NW-bo 4.92 1 20.62 2. 54 961 1293 34.55 1304 5973 297.14 104000 163000 63.00 330303 969747 193.3 7.16 4.36 2.60 5 173 190.20 10 B50.1i N , 1.36 0 17.91 1.977 7s5 010 3.18 2433 29 .0 2e84 02030 75001 s9.59 257931 332974 1066 7.17 4.36 2.91 4a 50 4.17 To8 2.72 30.70 3.34 10949 13787 25.93 6110fl7 131.322 114.62 3.5311230 4, s 353 3829 7.467.38 13,454971 00.12 8 37 21 12 1.038 32.91 A,~_: _ 27 0.0 30.7 3.3 1093 1379 29.2 6119 13132 103. 353125 400333 424 7467353 1345497 133.3 3.8 3.7 2.1 120 194 9.2 00 39 ANNEX C SOCIO-ECONOMIC MONITORING AND EVALUATION STUDY REPORTS AND OVERALL ECONOMIC IMPACTS OF RRMIMP-1 40 ANNEX C SOCIO-ECONOMIC MONITORING AND EVALUATION STUDY REPORTS and OVERALL ECONOMIC IMPACTS OF RRMIMP-1 Introduction 1. The RRMIMP-1 was implemented in eight districts of north-western Bangladesh from July 1991 through May 1997. The basic objectives of this project were the promotion of rural development through reconstruction, upgrading and maintenance of roads and markets in the project areas, leading to the rural population's increased access to transport and fostering more efficient marketing of surplus commodities. In order to monitor and evaluate the economic impacts and socio-economic effects of the project, a Socio- Economic Monitoring and Evaluation (SEME) Unit was also established and, later in 1992, integrated into the project. The SEME unit was also assigned the tasks of economic appraisal of roads, bridges and markets in the project areas prior to their implementation. The objectives of the SEME unit included, among other aspects, the training of local government staff in SEME-type tasks and assist in the institutionalisation of SEME as part of a Management Information System (MIS). The SEME study was undertaken by Development and Design Consultants Ltd. (DDC) and their World Bank-approved SEME consultant. The SEME methodology 2. The SEME methodology is essentially that of estimating economic internal rates of return (EIRR) by comparing pre-project ("before") and post-project implementation ("after") situations of the roads and warkets developed under this project. The transport component of the RRMIMP-1 concentrated on the improvement of Feeder type-B roads (FRBs), as well as building small structures and culverts; the market component improved the selling spaces, drainage and internal accesses in rural markets which had been classified as growth centres on and off the developed road network. 3. It was assumed that the impacts of the road improvement would lead to: (a) reduced transport costs for freight and passengers which, in turn, would increase traffic and demand for transport; and (b) increase the choice, range, and efficiency of rural transport modes available to the rural population, which would lead to other positive effects, such as increased agricultural productivity, access to schools, health centres, etc. In the case of improved markets, it was assumed that benefits would lead to decrease in the spoilage of perishable commodities through improved sanitary conditions and decreased congestion in the imnediate environment; the market users were expected to pay for these developments through increased tolls. 4. As such, the SEME methodology was based on a conceptual framework where the development of rural roads and markets is expected to generate a chain of positive externalities that are reflected in: (a) significant increase in the volumes of both passenger and goods traffic; (b) reduction in average unit transPort charges; (c) increase in vehicular traffic, such as buses and trucks, which is assumed to lead to a more efficient modal nix; (d) sustained reduction of operating costs and transport charges for non- motorised vehicular traffic; (e) stinulation of new employment opportunities directly, as well as through indirect effects, for the rural poor in the project areas; (f) improved market facilities leading to decline in the losses from spoilage or quality deterioration; (g) possible increase in the volume and value of commodities traded as well as increase in market-users; (h) increase in the lease values (bid prices) and rental charges (toils) from the developed markets as well as rise in the land values in surrounding areas; and (i) possible growth of new commerce in these areas. 41 5. In this conceptual framework, the expected benefits are compared with their concomitant costs. The costs include: (a) the actual costs of investments in rural roads improvements, upgrading, construction of structures and culverts, land acquisition and tree plantation; (b) the costs of required routine and periodic makitenance over the expected 20-year lifetime of the FRBs; and (c) design and supervision costs calculated at seven per cent of constuction costs. However, taxes and duties as well as contingencies were excluded from the total cost. 6. For FRBs, the methodology is based on the assumption of increased user cost savings in a developed rural road compared to the previous undeveloped dirt road; where total costs comprised of the direct and indirect costs savings. The discounted cost and discounted benefits streams over 20 years were used to estimate the discount rate or the economic internal rate of return (EIRR). The EIRR for this component was estimated to be 26.4% on average, which was higher than appraisal estimate of 25%, and ranged between 12.9% to 62% (SEME Final Report, May 1977; page 54). 7. In order to obtain data on transport volume, average daiLly traffic counts were used for "before" and "after" situations. The draft Final Report on the Socio-Economic Monitoring and Evaluation Study (Miay 1997) prepared by DDC details the analytical framework that was developed through "considerable experimentation and modifications" for evaluating the impacts of developing FRBs. However, it must be pointed out that several effects were not quantified; these include both positive externalities (such as introduction of bus services) and negative externalities (congestion, for example). Overall, it was found that weighted averages of the estimated transport charges/costs had decreased following the development of the FTLBs: (a) for cargo, the average cost (in Taka per ton-kilometer) declined from Tk 24.38 "before" to Tk 9.10 "after"; (b) for passengers, the average cost (in Taka per passenger-kilometer) went down from Tk 1.67 to Tk 0.68. 8. In the case of developed markets, the analytical framework used for the savings in spoilage was found fiom the difference in the turnovers for undeveloped and developed markets given a composite price differential between the "before" and "after" cases. Based on actual market surveys, the spoilage saving was calculated as the difference between the spoilage ratio (of perishable items) in the "after" situation compared to "before". The detailed methodology is available on page 19-21 of the Final Report on the SEME Study (May 1997). An average spoilage saving of 2.1 per cent was found to have occurred in the ten marlkets surveyed, and average tumover per market day recorcded an incremental growth of 133.3 per cent (Table 4.2 Final Report). The EIRR for this component was found to be 30.7 per cent on average, and raged between 17.9 per cent and 83.6 per cent. SEME Surveys and Monitoring 9. In order collect data for the analyses of the impacts of rural roads and markets improvements, several field surveys were designed, developed and administered. The surveys on roads-related issues covered traffic counts, traffic surveys, transport charge surveys and road condition inventory surveys. Markets-related surveys included enumeration and surveys of traders and selected commercial activities. These surveys were administered for a sample of 40 roads (out o.f 47 roads under RRMIMP-1) and 10 markets (out of 65 markets) "before" and "after" project-financed improvements. A special rural transport survey was conducted in four of the eight project districts to investigate the problems of rural transport in Xt projects areas. 42 10. The list of these sample roads and markets are provided in Table 3.1 of the draft Final Repor, while the timetable of these surveys is given in Tables 3.2 and 3.3. The logframe for four roads-related questionnaires is available in Table 3.4 of the draft Final Report Similarly, Table 3.5 lists the ten market- related questionnaires with their survey types, key infonnation to be collected, and their purpose and uses. 11 In addition, the SEME also included a training component aimed at improving monitoring, field data collecton and generation of reliable traffic and market data. Training activities imcluded workshops (held at Bogra and Rajshahi in July, 1993) for the training of field staff, a course on Economic Analysis for project and LGED research staff in (April, 1995). Relevant guidelines and manuals were also developed, and two dissemination workshops organised (in July, 1992 and July, 1995). In total, 59 reports and/or publications, including 30 special reports, 22 monthly progress reports and five annual reports, were produced by SEME between 1991 and 1997. 12. More importantly, a notable achievement has been the establishment of a SEME uiit at LGED, which will contribute significantly to the Department's institutional development. Its objectives include the development of a standardised SEME system for LGED projects, with functions both at its headquarters and at the local level such that SEME activities would become an integral part of the MIS at LGED. 43 ANNEX D ICR MISSION'S AIDE-MEMOIRE 44 ANNEX D BANGLADESH RURAL ROADS AND MARKETS IMPROVEMENT AND MAINTENANCE PROJECT (CREDIT 1940-BD) AIDE-MEMOIRE SUPERVISION MISSION June 22-June 30, 1997 A. INTRODUCTION 1. This aide-memoire records the findings of a mission comprising Messrs. M. Quazi (Mission Leader), Z. Khan, J. Channe, S. Seth of the International Development Association (IDA), R. Habib of Swiss Agency for Development and Cooperation (SDC) and G. Rupprecht, 0. Meyer-Ruhle of Kreditanstalt fur Wiederaufbau (consultants of KfW), who conducted the final supervision of the project between June 22 and June 30, 1997. The purpose of the mission was to review and assess completion of the project with respect to physical objectives and targets, legal covenants, institutional objectives and the final status of the project at completion. A wrap-up meeting with LGD was held on June 29, 1997, chaired by Mr. A.H.M. Abdul Hye, Secretary, Local Government Division of the Ministry of LGRD&C. The mission findings and recommendations recorded here are subject to confirmation by management of the donor agencies (IDA, SDC and KfW). 2. The mission is grateful for the assistance and cooperation extended to it by Government officials, ncluding the Secretary, LGD and staff of LGED and their Consultants. B. FINDINGS Implementation Status - Civil Works 3. The project fully achieved its objective of promoting rural development through reconstruction, upgrading and maintenance of the feeder roads, improvement of growth centre markets, construction of structures on rural roads in the project area, construction of LGED headquarters building and district office/laboratory facilities, tree planting along side roads and implementation of flood component. The mission is pleased to report that all civil works have been completed as appraised and modified during the project period, and that the quality of completed works has been very satisfactory. Table 1 presents the physical targets achieved under the project: 45 Table 1: Physical Targets Achieved Item Cmpnt SAR Achie:ved Remarks No. 1. FRB Improvement 500 km 496.85 km 300m remaining is in progress 2. FRB Upgrading 200 km 495.72 km HBB upgraded to BC 3. Bridges on FRB 1223 m 1079 m 35 bridges completed 4. Structares on RR 3705 m 4041 m 5. Growth Center Markets 65 No. 65 No. 1 GCM lost due to river erosion 6. Tree planting 500 km 399 Iam 47.6 kn by otiers 7. Maintenance 1867 km 800 lcm 8. LGED HQ Building 6 floors 11 flaors Donors financed 6 floors only 9. District Office/Laboratory 6 No. 8 No. 2 buildings added to replace Facilities existing offices 10. Flood Component (LGD) Roads 399 km 428 Ian } Bridges 1797 m 2374 m } Completed as required Drains 21776 m 17505m } Retaining Walls 3000 m 2216m } Socio-economic Impact 4. In order to monitor and evaluate the economic impacts and socio-economic effects of RRMIMP-1, a Socio-Economic Monitoring and Evaluation (SEME) Unit was established and, later in 1992, integrated into the project. The SEME unit was also assigned the tasks of economic appraisal of roads, bridges and markets in the project areas prior to their implementation. The objectives of the SEME unit included, among other aspects, the training of local govemment staff in SEME-type tasks and assisting in the insiitutionalisation of SEME as part of a Management Information System (MIS). The SEME study was undertaken by Development and Design Consultants Ltd. (DDC) and their World Bank-approved SEME consultant. The Mission reviewed the draft Final Report produced by the SEME Consultants upon copnletion of their work. However, this draft Final Report (May 1997) will be fmnalised following revisions to incorporate sonw corrections, clarifications and improvements. 5. The SEME methodology is essentially that of estimating economic internal rates of return (EIRR) by comparing pre-project ("before') and post-project implementation ("after") situations of the roads and markets developed under this project. In order to collect data for the analyses of the impacts of rural roads and markets improvements, several field surveys were designed, developed and administered. The methodology for the evaluation was proposed by the Consultants and agreed by the Government and the donors (Revised Methodology Report, July 1994). Based on this methodology, the Consultants have quantified several impact indicators for both road and market improvements, with the central indicators being economic internal rates of return (EIRR) for each project component. In the calculation of FRB- related EIRRs, only the benefits from reductions in transport charges are accounted for; for the calculation of market-related EIRRs, only reducfions in spoilage of marketed products are quantified as project benefits. 6. Overall, it was found that weighted averages of the estimated transport charges/costs had decreased following the development of the FRBs from dirt roads ("before") to paved roads ("after"): (a) for cargo, the average cost (in Taka per ton-kilometre) declined from Tk 24.38 "before" to Tk 9.10 "after"; (b) for passengers, the average cost (in Taka per passenger-kilometre) went down from Tk. 1.67 to 46 Tk. 0.68. Based on their survey results, the SEME consultants have estimated EIRRs to be between 13 per cent and 62 per cent for 40 out of 47 FRBs, with an average EIRR of 22.7 per cent. This compares to the EIRR target of 25 per cent projected in the World Bank Staff Appraisal Report (SAR) of June 1988. 7. The surveys of 10 (out of 65) developed markets produced ElRRs between 18 per cent and 64 per cent, with an average rate of 26.4 per cent. An average spoilage saving of 2.1 per cent was found to have occurred in the ten markets surveyed, and average turnover per market day recorded an incremental growth of 133.3 per cent. In addition, average auction prices per year (for toll collection leases) recorded an increase of 42.4 per cent; the toll collection per hat (market) day more than doubled with a 105.4 per cent growth (Table 4.2 Final Report). 8. The impact of RRMIMP-1 on employment, according to the draft Final Report, was 18,600 person-years for construction and improvement works; around 1,000 permanent positions have also been created. In comparison, the Bank SAR had anticipated 12,000 person-years and 500 positions respectively. Indirect employment effects have been estimated to be around 5,000 permanent jobs in markets, roadside shops, and transport services. In addition, the SEME also included a training component aimed at improving monitoring, field data collection and generation of reliable traffic and market data; the training activities have been completed as also have been most reporting requirements. More importatly, in order to conserve and sustain for future the acquired know-how of field-level and LGED headquarters staff, the establishment of a SEME unit at LGED would be essential for the Department's institutional development. Project Implementation Support 9. LGED as the implementing agency was responsible for carrying out the project. The Project Implementation Office (PIO), with a total staff of 272, was responsible for the overall management of the project. The PIO was headed by the Project Director and was supported by the Design Supervision and Management (DSM) consultants and Socio-Economic Monitoring and Evaluation (SEME) consultant. Due to delay in the appointment of DSM consultants, the civil works started about a year late, which resulted in the Credit to be extended by a year to complete all project components. Performance of PIO as well as DSM and SEME consultants has been generally satisfactory. Under this project eight functional buildings, furnished with materials testing laboratory, garage and workshop facilities, have been constructed in 8 project districts. Effective quality control for civil works component was achieved through training of site staff and use of field laboratories. To consolidate the activities of LGED, a new HQ building was also constructed under te project. The institutional development of LGED was only partly addressed under the project, as LGED was still evolving into a competent and experienced organization. The project inputs greatly assisted in its growth and efficiency. Its further development is being addressed through RRMIMP- 2 (Cr. 2927-BD), based on the recommendations of study funded by Asian Development Bank. Flood Rehabilitation Component 10. The flood rehabilitation component under this project was successfully completed by RHD and LGED during 1989 to 1993. RHD rehabilitated and repaired flood damaged bridges and roads (damaged during 1987-88 flood) in the southwest of Bangladesh with a cost of SDR 4.3 million. LGED rehabilitated flood damaged feeder roads and related bridges in 28 districts; and rehabilitated roads, bridges, drainage ditches and retaining walls in 42 municipalities west of Jamuna river with a total cost of SDR 8.1 million. 47 Financial Status 11. Category-wise project cost up to project completion and the total disbursement figure are shown in Annex-1. Based on the latest information, about SDR 2.72 million and DM 2.51 million will remain undisbursed at Credit closing. An amount of SDR 2.37 million and DM 1.12 million is comnuitted to be paid to the contractors and will be disbursed as soon as the final quantities are certified by the supervision consultants. To date, CHF 12.87 million has been disbursed for the technical assistance and training, and CHF 0.456 million is committed to be disbursed shortly; there will be no undisbursed balance in CHF amount. Financial Management 12. To streamline the accounting and financial management of LGED, a private financial management consultant has developed a computerized financial management system for the project. The financial data for the period of FY 91- FY 95 have been compiled and the remaining informiation is being entered into the system. Under the system, following output/reports have been generated: - Summary statements of receipts and utilization of fund by category and different currencies. - Statements of account balances at 143 project sites and Project Director's office at HQ. The consultant has miparted training to LGED staff for data entry. The consultant has also developed a simple computerized accounting system for project districts, and the system is being installed under RRMIMP-2. Financial Audit 13. During the first half of the project, audit reports prepared by the Auditor General's Office were not always submitted in time, moreover the quality of the reports was not fully in accordance with appropriate auditing principles, and resulted in a lot of queries. During the midterm review of the project, it was decided that in addition to GOB's regular audit, a private auditor would be appointed to conduct audit of the project accounts. The private auditor has submitted audit reports starting FY95. The audit reports showed satisfactory performance of financial and fund managemerLt as per IDA requirements. The auditor, however, found that different accounting standards were followed in different site offices. To overcome this problem, the audit accounting and financial guidelines have been prepared and 149 accounting personnel have been trained, which has resulted in a marked improvement in the accounting system. Training 14. The Training Unit of LGED at Head Quarter is responsible for co-ordination and implementation of training programs nation-wide through its 15 Regional Trainingi Centres. The project contributed to the national training program of LGED by funding all costs related to ithe training in the project area during the project period. The variety of courses designed for the participants were focused on road construction, surveying, material testing, drawing and estimating, accounts and book keeping, administrative and financial management, computer, etc. The LGED technical and financial staff of various levels participated these courses. In addition, the project carried out some project specific training courses for LGED staff and contractors. These courses included programming and planning, construction management, maintenance implementation, supervision and quality control. The project also sponsored the overseas training courses, study tours, workshops and seminars for LGED engineers and other relevant GOB officials. It implemented the local training for 7,837 trainee days at a cost of Tk 2.78 million and the overseas training for 677 trainee days at a cost of Tk 7.98 million. Moreover, LGED engineers learned practical oriented appropriate skills and techniques through field training provided by the consulitants, which has had a positive effect on 48 the quality of works in the field. The mission observed that overseas training was conducted on ad hoc basis; this training could have been more effective through the adoption of a training strategy and a comprehensive tuining plan. Maintenance of FRBs 15. The project has maintained about 800 kmn of FRBs during the project period (650 km routine and 150 periodic maintenance). The periodic maintenance was carried out through contractors and routine maintenance was carried out by laborers on length person basis. Although routine maintenance should have started on project roads after contractor's liability period, it was deferred to since WBM and HBB surfaced roads inproved during the first year of the project were later upgraded to be bituminous paved roads to avoid rapid deterioration caused by bullock carts. One of the requirements of the project was to develop a maintenance implementation program, and a maintenance management system. For this purpose Rural Infrastructure Maintenance Cell (RIMC) has been established at LGED which has produced maintenance guideline. Under this project, road condition survey format and standard contract documents for maintenance work were developed and used. Recognizing the importance of maintenance, GOB has started allocating fund in the revenue budget for the maintenance of rural infrastructure since FY 1992-93. The budget allocation for maintenance has increased from Tk 300 million in FY 92-93 to Tk 900 million in FY 97-98. The mission strongly feels that LGED should continue routine maintenance of all maintainable roads in the project area, give further training to field staff for maintenance work., and ensure better co- ordination between the field offices and RIMC located at Head Quarter. Project Closing Date 16. The mission reminded that the Credit closing date June 30, 1997 will remain unchanged, and all activities must be completed before this date in order to be eligible for expenditure. Currently more than 88% of the credit funds have been disbursed and LGED were advised that reimbursement of expenditures incurred on or before the closing date of June 30, 1997, would be allowed beyond a period of four months after the credit closing date up to October 31, 1997. Preparation of Implementation Completion Report (ICR) 17. The mission reviewed the data made available by LGED and requested to provide the following additional data: (a) statistical tables; (b) sector specific data including road expenditures, budget allocations, market tolls and other related information; (c) economic re-evaluation so that its analysis could be compared with the economic evaluation carried out at the time of the project appraisal; and (d) future plan of operation as provided in the ICR guidelines para. 34 with emphasis on technical, financial and institutional arangements to ensure effective project operation. Borrower's Contribution to ICR 18. The mission advised LGED that in accordance with the "General Conditions Applicable to Development Credit Agreements", the Borrower is required to prepare its own and submit this to the Bank By August 15, 1997. The evaluation report/summary would be attached unedited to the ICR and will include: (i) an assessment of the project objectives, design, implementation, and operation experience; (ii) an evaluation of the borrower's own performance during the evolution and implementation of the project, with special emphasis on lessons learned; and 49 (iii) an evaluation of the performance of the IDA and any other co-financiers during the evolution and the implementation of the project, including the effectiveness of the relationship among the, borrower, the IDA, and co-financiers, with special emphasis on lessons learned. C. SUMMARY OF MAIN FINDINGS AND ACTION AGREED Next Steps 19. The following next steps were agreed: (a) Make final payment to contractors and consultants and submit withdrawal applications by August 31, 1997. (b) Observe target dates for ICR: - Prepare information needed for ICR July 31, 1997 - Send economic reevaluation July 31, 1997 - Send to IDA GOB's contribution to ICR Aug. 15, 1997 Mohiuzzanan Quazi Mission Leader Date: July 29, 1997 50 ANNEX E MAP IBRD 29273 A8M8'h~"Ag B BANGLADESH I N D I A * Dhorgunosh _, Po, soht z RURAL ROADS AND MARKETS INDIAhaf- Sooh - I~~~ 0 pN ' - ''4M=dh.Ar IMPROVEMENT AND Potn~~oI * A RHMAINTENANCE PROJECT -25 /* 2 |lhtpuw 1--Shipuri '' W _ - '' t t > . ,/ 25- (RRMIMP) Shib - Ft_ -<~~ ) /t < 1orba>gtosR AbIdwShiq-* EEDER ROADS TYPE-B M~~,odebpsr N~o~A (IMPROVED UNDER THE PROJECT) INDIA~~~ ~~~~ A A-uap GROWTH CENTER MARKETS K,0~~~~~~~~~~~~~~~, A ~~~~~~~~~~~~~~(IMPROVED UNDER THE PROJECT) :. . p, RURAL ROADS ~~~~ 02 0 s<- hsv˘o Ad nMadigi a' Kohono>E Gobo IAOOAON * -yo---- FEEDER ROADS TYPE-A IRoa9oAa ~ ~ IMonb o - NATIONAL AND REGIONAL ROADS - ~~~~~- '-'-----~~~~~~~~~~~~~~ ~RAILROADS Shibg-n MiNcoe E o,~g.RTB9r -M 0 THANA HEADQUARTERS -6.". Ab.d4ku~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ DISTRICT HEADQUARTER-S Mohoropor NOWAEQAh(J I - - - - - IN~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~TANA BOUNDARIES ,ITOTeOROa - - -~~~~~~~~~~~~~~~~~~)N- DISTRICT BOUNDARIES No,,,oho~Eo,p AT. lop)1Ah.b-9-1I \ P'~" I - - -INTERNATIONAL BOUNDARIES K~~~~~ ~~~~~~~~~~~~~~ k- hop tlr ~~ \Ls ~~~~~~~P~~~>EooYMpoc~~~~~~,. N..hgi. DU,~~ ' ' '-~~ F~& oW',A soro Dhozodpor ,' Lp I N D o I A , ELtrr I - '>- 01000~~~~~~~~~~~~~~~~~~~~1 L1 - - - - ~ ~ ~~~~0 10 22 32 Kd- 5l ..g. Bcrv of Bengal! JANUARY H998