Document of The World Bank Report No: ICR2817 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-47210 IBRD-77750 TF-90486) ON A LOAN IN THE AMOUNT OF US$84.29 MILLION AND ON AN ADDITIONAL FINANCING LOAN IN THE AMOUNT OF US$79.30 MILLION TO THE KINGDOM OF THAILAND FOR A HIGHWAYS MANAGEMENT PROJECT December 29, 2013 Southeast Asia Sustainable Development Unit Southeast Asia Country Management Unit East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective as of June 30, 2013) Currency Unit = THB (Thai Bhat) THB 1.00 = US$ 0.0322 US$ 1.00 = THB 31.01 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank JSDF Japan Social Development Fund AF Additional Financing KPI Key Performance Indicator AIT Asian Institute of Technology LA Loan Agreement BMMS Bridge Maintenance Management System M&E Monitoring and Evaluation CDP Country Development Partnership MOTC Ministry of Transport and Communications CDP-INFRA Country Development Partnership for NPV Net Present Value Infrastructure PAD Project Appraisal Document CMU Country Management Unit PBC Performance-based Contract DOH Department of Highways PCC Project Coordination Consultants EMP Environment Management Plan PDO Project Development Objectives EOI Expression of Interest PMS Pavement Management System EOP End of Project ESSF Environmental and Social Safeguards RMP Resettlement Mitigation Plan Framework ROW Right of Way GDP Gross Domestic Product RTG Royal Thai Government GRSP Global Road Safety Partnership SME Small and Medium Enterprises HQ Headquarters SOE State Owned Enterprises IBRD International Bank for Reconstruction and TA Technical Assistance Development TARC Thailand Accident Research Center INT Department of Institutional Integrity THB Thai Baht IPE Independent Procurement Evaluator THMP Thailand Highways Management Project ISR Implementation Status and Results Report TOR Terms of Reference USD United States Dollars Vice President: Mr. Axel van Trotsenburg, EAPVP Country Director: Ms. Elmas Arisoy (acting), EACTF Sector Manager: Ms. Julia M. Fraser, EASTS Project Team Leader: Mr. Zhi Liu, EASCS ICR Team Leader: Mr. Chanin Manopiniwes, EASTS THAILAND HIGHWAYS MANAGEMENT PROJECT CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design...................... 1 2. Key Factors Affecting Implementation and Outcomes .........7........7 3. Assessment of Outcomes ........................................... 14 4. Assessment of Risk to Development Outcome. .................... ..... 17 5. Assessment of Bank and Borrower Performance ................ ........ 19 6. Lessons Learned ..................................... ......... 21 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ..... 23 Annex 1. Project Costs and Financing ................................. 24 Annex 2. Outputs by Component ............................... ..... 25 Annex 3. Economic and Financial Analysis ............................. 28 Annex 4. Bank Lending and Implementation Support/Supervision Processes ...... 30 Annex 5. Beneficiary Survey Results............................... 31 Annex 6. Stakeholder Workshop Report and Results......................... 32 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ......... 33 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders .......... 43 Annex 9. List of Supporting Documents .......................... ..... 44 MAPS....................................................... 45 A. Basic Information Highways Management Country: Thailand Project Name: Project Project IBRD-472 10,IBRD- Project ID: P075173 L/C/TF Number(s): I 7 10, BRD- 77750,TF-90486 ICR Date: 12/29/2013 ICR Type: Core ICR KINGDOM OF Lending Instrument: SIL Borrower: THAILAND Original Total Omitnaltal USD 84.29M Disbursed Amount: USD 84.03M Commitment: Revised Amount:i USD 163.59M1,1 Environmental Category: B Implementing Agencies: Department of Highways Cofinanciers and Other External Partners:............ Lk Key Dates Revised / Actual Process Date Process Original Date es) Date(s) Concept Review: 12/17/2001 Effectiveness: 03/15/2004 03/15/2004 07/09/2009 Appraisal: 07/25/2002 Restructuring(s): Approval: 12/09/2003 Mid-term Review: 09/15/2011 Closing: 06/30/2008 06/30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Significant Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately ity at Entry: Government: Unsatisfactory Unsatisfactory .p o . Moderately Implementing Moderately Quality of Supervision:. Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Unsatisfactory Performance: Unsatisfactory Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation Indicators QAG Assessments (if Rating Performance any) Potential Problem Project Quality at Entry at any time (Yes/No): (QEA): Problem Project at any time uality of Supervision (Yes/No): (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Rural and Inter-Urban Roads and Highways 95 95 Sub-national government administration 5 5 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 25 25 Injuries and non-communicable diseases 24 24 Micro, Small and Medium Enterprise support 13 13 Public expenditure, financial management and procurement 13 13 Trade facilitation and market access 25 25 E. Bank Staff Positions At ICR At Approval Vice President: Axel van Trotsenburg Jemal-ud-din Kassum Country Director: Elmas Arisoy (acting) Ian C. Porter Sector Manager: Julia M. Fraser Jitendra N. Bajpai Project Team Leader: Zhi Liu Imogene B. Jensen ICR Team Leader: Chanin Manopiniwes ICR Primary Author: Mitsuyoshi Asada/Anita Shrestha F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The development objective of the project is to enhance the efficiency, productive use, and management of the road network. Revised Project Development Objectives (as approved by original approving authority) N.A., but the slight discrepancy between the PDO formulation in the PAD and the one in the Loan Agreement was addressed in a restructuring. (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Achieved at Indicator Baseline Value appro Revised cmplet approval TreVaus Completion or documents) Target Years Indicator 1: Average unit cost/km of maintenance reduced in real terms by 10% Value quantitative or 403 Bhat/m2 362.7 Bhat/m2 325.6 Bhat/m2 Qualitative) [Date achieved 103/15/2004 06/30/2009 06/30/2013 Comments (incl. % Achieved inclusive of 117km of additional maintenance in late 2011. achievement) Asset value of road network increased by 0.2% by EOP (or decline reversed) on target [Indicator 2 : r oads 291.28 million Baht/km for Value maintenance project 331.62 million quantitative or sections, and 32.32 million +0.2% Baht/km Qualitative) Baht/km for 3 widening projects Date achieved 03/15/2004 06/30/2009 06/30/2013 Comments Achieved under the original loan. The original value of 323.6 million Baht/km (mcl. % acieeen) increased to 331.62 Baht/km by 2.48%. achievement) Indicator 3: [Reduce vehicle operating costs by 10-15% on target roads Value quantitative or 4.68 Baht per vehicle-km 10-15 percent 4.53 Qualitative) [Date achieved 103/15/2004 06/30/2009 06/30/2013 Comments 3.978-4.212 Baht/v-km represents a 10-15% reduction from baseline (mcl. % achievement) National road database established, updated annually, and used for planning, Indicator 4: programming, budgeting, and monitoring of highway investments and maintenance expenditure. Value Established and Established and quantitative or ot existed . . Qultaie otfunctional functional Qualitative) [Date achieved 103/15/2004 06/30/2009 06/30/2013 Comments Achieved under original loan. Approximate date that database was reported functional (mncl. %I ac. % t was June 2011. The database is housed at http://gisweb.doh.go.th/. achievement) Indicator 5 :Road user costs reduced by at least 10% on target roads under additional financing Value 6.35 Baht/km. for 5.715 Baht/km 5.715 Baht/km quantitative or vehicle type: Car<7 . = 6.35 Baht/km Qualitative) passengers Baseline - 10% Date achieved 05/21/2010 06/30/2013 06/30/2013 06/30/2013 Comments Cmm. Not achieved due to repeated bid failures, leading to cancellation of the additional ac. t financing loan. achievement) Indicator 6: Roads rehabilitated, Non-rural (kilometers) Value quantitative or 0 960 1,556 Qualitative) Date achieved 103/03/2004 1 06/30/2013 06/30/2013 Comments This core sector indicator was achieved under original loan approximately before June (mcl. % achievement) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Values (from Achieved at Indicator Baseline Value appro Revised Target cmplet approval Vaus Completion or documents) Target Years Indicator 1 : Average roughness of target roads less than 3.5 IRI. Value (quantitative IRI 4.43 IRI less than 3.5 IRI less than 3.5 IRI 2.24 or Qualitative) _ _ _ _ _ _ _ __ _ _ [Date achieved 03/15/2004 06/30/2009 06/30/2013 06/30/2013 Comments (incl. % Achieved for targeted roads. achievement) Indicator 2: 73 km of priority national highways widened to four lanes as per specifications Value (quantitative 0 km 73 km 86.27 km or Qualitative) Date achieved 03/15/2004 06/30/2009 106/30/2009 Comments Achieved. The actual length was longer than length at appraisal due to addition of a (mcl. % (ic. %bypass. achievement) Indicator 3 : Number of fatalities reduced by 80% at improved locations Value 10 fatalities at 10 fatalities at (quantitative 50 fatalities at 38 locations 80 percent reduction improved improved locations* or Qualitative) locations Date achieved 03/15/2004 06/30/2009 06/30/2013 06/30/2013 Comments Achieved. (mcl. % ac. t (*No more safety works have been carried out under the project since June 2009.) achievement) Periodic maintenance of 960 km of project roads completed using conventional [Indicator 4ethods :ith . MEs ___________contracting methods with SMEs Value (quantitative 0 km 960 km 1,556 km or Qualitative) Date achieved 03/15/2004 06/30/2013 06/12/2013 Comments (incl. % Achieved using conventional methods with SMEs achievement) Indicator 5: Pilot long-term performance-based management and maintenance contract designed Value (quantitative No design Design completed Design completed or Qualitative) [Date achieved 03/15/2004 06/30/2013 106/30/2013 Comments (incl. % Achieved. The PBC consultancy for design was completed and delivered by June 2013. achievement) Indicator 6: Three overpasses constructed at critical locations as per specifications Value (quantitative 0 3 3 or Q ualitative) _ _ _ _ _ _ _ _ _ _ _ __________11/3 /201 [Date achieved 03/15/2004 06/30/2009 11/30/2012 Comments Two fully constructed and 70% of a third overpass was completed under original loan ac. t and the remaining through DOH funds. achievement) Indicator 7: Average travel time reduced on widened sections by 20-30% Total of 52.2- Total of 53.60 Value Total of 74.46 minutes 59.6 minutes of minutes of travel (quantitative of travel time on three 20-30% reduction in travel time on time on three . .travel time three widening .yieig eto or Qualitative) widening sections widening section sections (20 0 d(28.02% reduction) 30% reduction) Date achieved 03/15/2004 06/30/2009 06/30/2013 06/10/2010 Comments (incl. % Achieved for the completed sections with original loan. achievement) Indicator 8: Average delays reduced at improved intersections by 60% 30.47 seconds 27.08 seconds Value 76.17 seconds average average delay in average delay in (quantitative delay in three improved three improved three improved or Qualitative) locations locations (60% locations (64.5% reduction) reduction) Date achieved 03/15/2004 06/30/2013 _06/30/2013 Comments (incl. % Achieved achievement) Indicator 9: 66 hazardous locations improved as per specifications Value (quantitative 0 66 66 or Qualitative) Date achieved 03/15/2004 06/30/2013 06/30/2013 Accordingly to DOH only 37 locations were improved since May 2008. Due to time Comments frame issue at the time and the problem of reallocation on government budget (incl. % supporting, the remaining 29 contracts were cancelled and transferred to be achievement) implemented by the government funding. Later on, more than 100 locations in total were improved using the government fund. Indicator 10: Road safety awareness campaigns carried out Value Campaigns carried Campaigns carried (quantitative No campaigns out out or Qualitative) Date achieved 03/15/2004 06/30/2013 11/30/2012 Achieved with original loan. The study of Traffic Accident Cost in Thailand and the (incl. % Study on Black Spots Program Evaluation and Road Safety Engineering Capacity (ie. t Strengthening were conducted and disseminated in 2007 & 2008, mostly in the form of workshops through Thailand Accident Research Center (TARC). Indicator 11: Accident Research Center established at AIT in collaboration with GRSP Value Thailand Accident (quantitative Center not established Center established Research Center or Qualitative) established [Date achieved 03/15/2004 06/30/2013 11/30/2012 Comments (incl. % Achieved achievement) Modem centralized database, road maintenance management system and bridge management system implemented and operational Value The bridge (quantitative No System operational management system . Sstmdeveloped using or Qualitative) d Oveo wn und DOH own funds Date achieved 03/15/2004 06/30/2013 11/30/2012 Comments (incl. % Considered achieved, although done by using DOH own funds achievement) Indicator 13: Framework and case study for PPP in highways developed and results adopted by DOH Value (qui Framework and study not Framework and Framework and study . developed study adopted adopted or Qualitative) [Date achieved 03/15/2004 06/30/2013 111/30/2012 Comments Achieved with original loan. Study completed and framework followed by DOH for all ac. t projects regardless of funding source. achievement) Indicator 14: Annual report covering DOH's environmental performance disseminated to the public Value (u e Not available for Reports (quantitative dissemination disseminated Reports disseminated or Qualitative) Date achieved 06/30/2013 11/30/2012 Comments Achieved under original loan through DOH regional center's meeting with (incl. % stakeholders. achievement) Additional 216 km of priority national highways widened for four lanes as per Indicator 15 : spcfcto specification Value (quantitative 0 216.00 0 or Qualitative) Date achieved 05/21/2010 06/30/2013 06/30/2013 Comments (incl. % Not achieved as a result of bid failure; AF undisbursed at closing. achievement) PPP financing for the proposed Bang Pa-in to Nakhon Ratchasima Motorway reached bidding stage Value (quantitative No or Qualitative) Date achieved 05/21/2010 06/30/2013 Comments (incl. % Not achieved. Procurement process canceled. achievement) G. Ratings of Project Performance in ISRs Date ISR Actual Disbursements Archived (USD millions) 1 02/10/2004 Satisfactory Satisfactory 0.00 2 12/22/2004 Satisfactory Satisfactory 5.97 3 06/20/2005 Satisfactory Satisfactory 11.44 4 06/14/2006 Satisfactory Satisfactory 55.70 5 04/03/2007 Moderately Satisfactory Moderately Satisfactory 62.04 6 { 05/09/2008 1 Moderately Satisfactory Moderately Satisfactory 64.22 7 12/10/2008 Moderately Satisfactory Moderately Satisfactory 64.83 8 09/12/2009 Satisfactory Satisfactory 69.07 9 06/21/2010 Satisfactory Satisfactory 83.02 10 06/25/2011 Moderately Satisfactory Moderately Unsatisfactory 83.03 11 01/24/2012 Moderately Unsatisfactory Unsatisfactory 84.29 12 06/27/2012 Moderately Unsatisfactory Unsatisfactory 84.30 13 12/26/2012 Moderately Unsatisfactory Unsatisfactory 84.31 14 06/26/2013 Moderately Unsatisfactory Unsatisfactory 84.19 H. Restructuring (if any) Board ISR Ratings at Amount Restructuring Restructuring Disbursed at Reason for Restructuring & Key Date(s) Appro e Do Restructuring Changes Made Change DO IP n USmillions ISR Ratings at Amount Restructuring Restructuring Disbursed at Reason for Restructuring & Key tru ur gApproved PDO Date(s) C D Restructuring Changes Made in USD millions The second order restructuring: (a) reallocated Loan proceeds and modified project outputs; (b) extended the Loan Closing 07/09/2009 N MIS MIS 65.17 Date to June 30, 2010; and (c) addressed slight discrepancies in the PDO formulation between the PAD and Loan Agreement. AF restructuring (a) added $79.3 million; (b) extended the loan 03/18/2010 N S S 81.83 closing date to June 30, 2013; and (c) amended the Results Framework. I. Disbursement Profile Original ---- Formally Revised -- AEual 200- 150 - .2 100 -- 50---------- --------------------------------------- 50- 0II aCN N N N N N C CY CYC Lm Ln9 m m r% N% m m Cq Cq M M l C~ ~ : C, C C= C - - - - I N N N N N NI N N N Nq Nq Nq Nq Nq Nq Nq Nq N Nq 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1.1.1 At the time of appraisal of Thailand Highways Management Project (THMP) in July 2002, the country had a population of about 63 million and total area of 514,000 sq. km. Thailand had made significant progress since the economic and financial crisis in 1997-98, and in 2002 the real GDP growth had accelerated to 5.4% from 2.1% in 2001, and in 2003 real GDP grew further to 6.7%. The recovery was driven mainly by consumption growth, prompted by rising consumer confidence, low interest rates, and fiscal measures to stimulate consumption. 1.1.2 Thailand was facing increasing competition both in its major exporting products and markets, and needed to reduce its logistics costs to retain and increase its relative competitive advantages. Road transport accounted for about 94 percent of domestic freight transport at the time of appraisal. A large part of transport cost was made up of road freight. The national strategy to increase competitiveness of both domestic and international trade by reducing transport costs thus needed to focus on road freight, particularly along key corridors linking Thailand with neighboring countries. 1.1.3 A number of issues had emerged from the ongoing engagement between the Royal Thai Government (RTG) and the Bank, both through project-related activities and through the Country Development Partnerships (CDPs), knowledge-based partnerships which set out medium-term integrated frameworks for reform programs. The CDPs were led by the Government, with the Bank and other partners supporting the development of the overall reform framework, analytical work, capacity building, and provision of technical assistance. The key issues in the transport sector were: (i) sustainable road and transport sector management; (ii) improving the competitive landscape; and (iii) road safety. (i) Sustainable road and transport sector management Department of Highways (DOH). The construction, improvement and maintenance of the national highway system were the responsibility of the Department of Highways (DOH) within the Ministry of Transport and Communications (MOTC). DOH's administration comprised 27 bureaus (12 at the center and 15 in regional areas) and eight divisions. It was recognized that DOH was overstaffed, with about 19,000 permanent staff (including civil servants) on its payroll plus 20,000 temporary staff (laborers). Nearly 75 percent of routine maintenance and some emergency repairs were carried out by force account. A system needed to be put in place for programming annual works on the basis of rational planning and economic criteria. Road Maintenance. Thailand's road network consisted of about 52,000 km of national and trunk roads under the jurisdiction of DOH, of which about 150 km were multi-lane motorways, 2,000 km were four-lane divided highways and the remaining were two-lane highways. The network was in relatively good condition, with an asset value estimated at between US$40-$50 billion. Although annual budget allocations for routine maintenance, which was around US$360 million on annual average, met the estimated requirement, periodic maintenance of the national road network was under-funded by about 23 1 percent. As a result, there was a significant backlog of critically needed periodic maintenance. Road Financing. Road user charges comprised part of total government revenue so there was no direct link between revenue and expenditures on roads. Allocations to the road sector were insufficient to fund both the proper maintenance of the network and the provision of additional capacity to cope with continued motorization growth of 7-8% in early 2000s. There was an urgent need to put maintenance funding on a sustainable basis, spend maintenance resources effectively, and increase private sector funding of road transport facilities and infrastructure. Public-Private Partnership. Most of the issues in the implementation of public-private highway projects in Thailand were derived from the absence of a sector-specific legal and regulatory framework that addressed the sector's needs as well as the role of all public and private parties involved. (ii) Improving the Competitive Landscape Access to Remote Areas of the Country. High domestic transport costs inhibited access of the more remote parts of Thailand to the major national areas of consumption around Bangkok. Most export industries were concentrated in the Bangkok region, largely because the cost of transport to and from other regions was very high. The continuing relative attractiveness of the Bangkok area had many implications, among them migration from the rest of the country, growing income disparities between Bangkok and other regions, and increasing environmental and social problems. (iii) Road Safety. Thailand had been experiencing a high incidence of road accidents and fatalities. According to a study carried out by the Transport Research Laboratory (UK), data from 1996 indicated that about 20,000 people died and over 100,000 were being injured annually in road accidents. According to official statistics, the accident rate was about 12 deaths per 10,000 vehicles, which was about six times the rate in developed countries. About 30 percent of these accidents occurred on national highways and trunk roads. Increased efforts by the DOH and MOTC had reduced the number of accidents and fatalities toward 2003, but lack of reliable data, especially due to under-reporting, continued to be a problem. 1.1.4. Rationale for Bank involvement. In response to the above sector constraints and Government's sector strategy, the Government requested that the Bank design a project which helped improve quality of roads network and reduce transport cost. The project was in line with the overall policy of the government and the 2003-2005 Country Assistance Strategy (CAS) of the Bank, which was to support the government in stimulating and sustaining economic growth and reducing poverty. The CAS goal of stimulating economic growth through enhanced competitiveness was supported through: (i) upgrading the quality of the road infrastructure and reducing transport costs; and (ii) expanding the role of the private sector - particularly small and medium-sized enterprises - in road asset maintenance, management, and operation. The CAS goal of improving governance and public sector performance was also supported through: (i) modernizing DOH planning and management information systems; (ii) adopting e-procurement methods and intemet-based advertising, to ensure greater competition, transparency, and 2 accountability; (iii) introducing more stringent financial management systems; and (iv) piloting long-term road maintenance performance-based contracts with the private sector. The project was also aligned with the Bank-assisted program of public sector reform being undertaken by the government, which aimed at improving public sector management through: (i) improved performance-based resource management; (ii) better service delivery; (iii) greater transparency and accountability; (iv) de-concentration of operations; and (v) sound regulation for private sector involvement. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 1.2.1 There were slight discrepancies (marked in italics) in the formulation of the PDO between the Project Appraisal Document (PAD) and Loan Agreement (LA). According to the PAD, the PDO was to enhance the efficiency, productive use, and management of the road network, through: (i) the commercialization of the road sector by introducing better business principles and increased private sector participation in the delivery and management of roads; (ii) the strengthening the operations of the Department of Highways (DOH) through improved use of information technology and computerization; (iii) preserving road assets through sustainable maintenance programs including long- term performance based contracts; and (iv) improving the competition and transparency in the award of contracts by using e-procurement. Furthermore, reducing traffic accidents and fatalities on national highways and decentralize the implementation of periodic maintenance to the districts. 1.2.2 As per the LA, the objective of the Project was "to assist the Borrower in enhancing the efficiency, productive use and management of the Borrower's road network, through: (a) the commercialization of the road sector by introducing better business principles and increasing private sector participation in the construction and maintenance of roads; (b) the strengthening of the institutional capacity and modernization of DOH; (c) sustainable road maintenance programs to preserve road assets; and (d) the enhancement of road safety aimed to reduce traffic fatalities and injuries." 1.2.3 There were originally four Key Performance Indicators (KPI): (i) reduce, in real terms, average unit cost/km of maintenance; (ii) increase (or reversed decline) asset value of the road network; (iii) reduce vehicle operating costs; and (iv) establish a national road database, updated annually, and use for planning, programming, budgeting, and monitoring of highway investments and maintenance expenditure. Fifteen additional intermediate results indicators to monitor output from each component were originally established, as per the LA. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 1.3.1 To address the slight discrepancies in the two formulations of the PDO, the project restructuring in July 2009 reverted to the PDO version used in the LA for its simplicity. 3 1.3.2 Key performance and outcome indicators were not revised in the 2009 restructuring; however, the following output indicators specified in Schedule 7 of the Loan Agreement were modified to read as follows: * Output Indicator 1.2 (Periodic maintenance of about 960 km of project roads completed using conventional contracting methods with SME's); * Output indicator 1.3 (Pilot long-term performance-based management and maintenance contract designed for 150 km motorway); and * Output indicator 4.2 (i.e. Web-based procurement, business-oriented performance- based contracting system established and operational by end of project) was dropped. With approval of Additional Financing (AF) in March 2010, the following indicators were added: (a) road user costs reduced by at least 10% on target roads funded by the AF (PDO Indicator #5); (b) additional 216 km of priority national highways widened for four lanes (Intermediate Outcome Indicator #15); and (c) public-private partnership (PPP) financing for the proposed Bang Pa-in to Nakhon Ratchasima Motorway reached bidding stage (Intermediate Outcome Indicator #16). 1.4 Main Beneficiaries 1.4.1 The Department of Highways (DOH) was the direct beneficiary of the project activities in terms of physical works and institutional strengthening. Other beneficiaries included users of the national highways and trunk roads, including those involved in regional and international trade; cities and towns directly served by the project roads, especially in the economically weaker Northeastern region; and small- and medium-sized enterprises engaged in road construction and maintenance. 1.5 Original Components (as approved) 1.5.1 The original project had four components and 14 sub-components, as follows: A. Highway Rehabilitation and Maintenance: (US$45.26 million IBRD; total project cost US$79.68 million): (i) periodic maintenance of about 700 km of priority national highways; (ii) three long-term (five year) pilot contracts for performance-based maintenance of about 900 km of national highways; (iii) the supervision of periodic maintenance and road safety improvements; and (iv) the study, design, and supervision of performance-based maintenance contracts. This component was to contribute to the sustainable road maintenance programs to preserve road assets. B. Highway Upgrading and Intersection Improvement: (US$28.52 million IBRD; total project cost US$50.32 million) (i) widening three selected sections (73 km in total) of highway network from two to four lanes; (ii) construction of three overpasses at critical intersections; and (iii) the supervision of the widening and overpass civil works. This component was to contribute to the sustainable road maintenance programs to preserve road assets. C. Road Safety Improvement: (US$6.88 million IBRD; total project cost US$11.50 million) (i) improvement of 10 hazardous locations; and (ii) support for 4 the implementation of the road safety action plan in collaboration with the Global Road Safety Partnership, and the establishment and operation of a roads accidents research center. The component was to contribute to the enhancement of road safety aimed to reduce traffic fatalities and injuries. D. Institutional Strengthening: (US$3.63 million IBRD; total project cost US$4.05 million) (i) institutional strengthening of the DOH through (a) development of a centralized road database, road asset maintenance and management system, and a bridge management system; (b) development of a framework for and a case study on public-private partnerships in highways; (c) technical assistance (TA) for project coordination; and (d) introduction of e- procurement system; and (ii) external audit. This component was to contribute to the strengthening of the institutional capacity and modernization of DOH. 1.6 Revised Components 1.6.1 After the second order restructuring in July 2009 and the AF in March 2010 (see section 1.7 below), the original components and sub-components were revised as follows: Original Component Component after Component added with restructuring of 2009 AF of 2010 Component A. Highway Rehabilitation and Maintenance (i) periodic maintenance of about (i) (changed to) periodic 700 km of priority national maintenance of about 960 km highways of priority national highways (ii) three long-term (5 year) pilot (ii) (cancelled) contracts for performance- based maintenance of about 900 km of national highways (iii) the supervision of periodic (iii) same as original maintenance and road safety improvements (iv) the study, design, and (iv) (changed to) the feasibility supervision of performance-based study and design of a pilot maintenance contracts performance-based maintenance contracts for a 150 km motorway Component B. Highway Upgrading and Intersection Improvement (i) widening three selected sections (i) same as original (73 km in total) of highway network from two to four lanes (ii) construction of three (ii) same as original overpasses at critical intersections (iii) the supervision of the (iii) same as original widening and overpass civil works (iv) (added) widening five selection sections (216 km in total) of national highway network from two to four lanes (under Phase II) (v) (added) Carrying out the supervision of the widening and overpass civil works 5 Component C. Road Safety Improvement (i) improvement of 10 hazardous (i) same as original locations (ii) support for the implementation (ii) same as original of the road safety action plan in collaboration with the Global Road Safety Partnership, and the establishment and operation of a roads accidents research center Component D. Institutional Strengthening (i) institutional strengthening of the (i) (a) same as original but DOH through (a) development of a funding source changed to centralized road database, road government own-fund; asset maintenance and management system, and a bridge management (b) same as original; system; (b) development of a framework for and a case study on (c) same as original; and public-private partnerships in highways; (c) technical assistance (d) (changed to) strengthening (TA) for project coordination; and of DOH capacity in (d) introduction of e-procurement procurement system (ii) external audit (ii) same as original (iii) (added) Public-private partnership financing transaction advisory for the proposed Bang Pa-in to Nakhon Ratchasima, Motorway, and Project management support consultancies, including technical (ii)_external_audit(ii) sameasoriginaaudit 1.7 Other significant changes 1.7.1 JSDF Grant on Thailand's Community Youth Helmet Use Program (2007). A grant of US$834,200 for a helmet promotion program supported by the Japan Social Development Fund (JSDF) was approved in 2007. The activities started in late 2007 and included an awareness-raising campaign, helmet subsidies, and enforcement of helmet use in poor communities near national highways. 1.7.2 2008 - Closing Date Extension. The loan closing date was extended by 12 months (from June 30, 2008 to June 30, 2009) to allow time for the completion of remaining activities and new activities under the AF, but the AF was not approved until March 20 10. 1.7.3 2009 - Second Order Restructuring and Closing Date Extensions. In order to process the second order restructuring, the loan closing date was extended by three months to September 30, 2009. The project was restructured in early July 2009 to (i) reallocate available Loan proceeds that resulted from the cancellation of two consultancies to finance additional activities (mainly civil works) and to modify the project outputs accordingly; (ii) extend the Loan Closing Date to June 30, 2010; and (iii) address the slight discrepancies in the formulations of the PDO as noted above. 6 1.7.4 2010 - Additional Financing (AF). Originally the second order restructuring and AF were intended to be presented in one package for Board approval. However, uncertainties emerged regarding the timing of Parliamentary approval of government borrowing from the Bank. As a result, the Bank first proceeded with the restructuring approved on July 8, 2009; and after the Parliament approved further borrowing, the Board approved the AF for US$79.30 million on March 25, 2010 and extended the Loan closing date to June 30, 2013. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 2.1.1 The project was prepared in about two-and-one-half years from the first identification mission (June 2001) to the Board approval (December 2003). Positive aspects of project preparation and design include the following: * The PDO and design were in line with overall government policy and the 2002 Thailand-World Bank Group Partnership for Development, which was to support the government in stimulating and sustaining economic growth and reducing poverty, through improving the quality of road infrastructure to reduce transport cost. * The substantial commitment of RTG at the project entry was reflected in a number of critical actions. On October 1, 2002 the Government embarked on the restructuring of the MOTC as part of the overall Public Sector Management Reform Plan approved by the Cabinet in May 1999. * The key issues in the road sector were thoroughly assessed, and the project was designed to: (i) help reduce the backlog of periodic maintenance and stem further degradation of the network and loss of asset value; (ii) promote private sector involvement in periodic and routine maintenance, pilot more cost-effective ways of performing road maintenance activities, and chart new ways to improve public and private partnering in road concessions, with or without private funding; (iii) support enhancements of the information technology system in road asset management; (iv) upgrade portions of the national road network that give access to new and improved border facilities and ports; and (v) enhance road safety at critical locations to reduce the number of accidents, property damage, injuries and fatalities. * Inclusion of long-term performance-based maintenance contracts (PBC) on a pilot basis intended to take advantage of the Bank's accumulated knowledge and experience in using such contracts seemed to add value at entry, although later this sub-component was cancelled due to the failure of procurement for its preparation in sub-component A-4. * All designs for Component B, the draft bidding document and pre-registration of qualified contractors for the periodic maintenance (part of Component A) were satisfactorily prepared. 2.1.2 However, some aspects of project preparation and design could have been improved. These include the following: 7 * Capacity assessment of DOH. DOH was an experienced road organization and implemented a total of 11 Bank-financed highway projects from 1961 to 1995. However, the Highways Management Project was initiated five-and-one half years after the last highway project closed, and there had been limited influence of external assistance/funding (in this case IBRD) on DOH's internal system and processes during that period. Since significant time had elapsed, DOH's institutional capacity and internal processes should have been more carefully revisited as many of the delays that occurred during implementation were due to DOH's lengthy internal processes. * Assessment of DOH Commitment. The appraisal overestimated DOH's interest and ownership in performance-based maintenance contracts (PBC). As a result, the pilot PBC maintenance failed due to the failure of procurement for its preparation in sub- component A-4, while DOH performed well on other periodic maintenance contracts. * Preparation Delays by RTG. It took about two-and-one-half years from the first identification until the Board approval to prepare the project. Although the project was originally negotiated in in October 2002 - within one year from the concept review -subsequent RTG approval of the negotiated loan agreement was not provided. Nine months later, DOH provided a revised version of the roads proposed to be rehabilitated in 2004 and 2005, and RTG decided to reduce the project scope and loan amount from US$100 million to US$84.29 million. The project was re-negotiated in September 2003 (11 months after the original negotiation), and from there the project was processed at a normal pace. * PDO Discrepancy between PAD and LA. The discrepancy in the PDO between the PAD and the LA (see para 1.2.1 and 1.2.2) caused a confusion in establishing the project's results framework, and the logframe did not include the baselines or annualized targets, even though the baseline and annual targets were not required in 2003 and that documentation met standards in vogue at the time. * Project Scope. The project also experienced a classic design issue where excessive time was spent in identifying all the key sector issues and trying to address them with the project. The project ended up with an ambitious design, particularly for inclusion of the very long (900 km) pilot PBC sub-component (A - (ii) and (iv)). This project scope should have been discussed with the client more thoroughly before inclusion. * Assessment of risks. The assessments of the critical risks and overall risk rating as "moderate" were inadequate. The project did not properly identify all critical risks nor prepare mitigation plans for those identified risks, which later materialized as obstacles to project implementation: (i) DOH's existing implementation and management practices particularly in terms of procurement management; (ii) the design and quality control procedures of the various Regional Bureaus engaged in the periodic maintenance work; and (iii) governance risks. * Procurement Capacity Assessment. The overall procurement capacity of the project's implementing agencies and units was assessed as "good" and the associated risk was "average". This seemed optimistic considering: 8 o It had been about seven-and-a-half years since DOH implemented the last Bank- financed highway project. o The project activities were spread across divisions within DOH and sub-national level, resulting in management coordination complexity. o The 15 DOH Regional Bureaus assigned to undertake the entire civil works program were not familiar with the Bank's procurement procedures and guidelines. o The Bureau of Highway Maintenance Management and Bureau of Safety, responsible for two main components of the project, were not familiar with the Bank's procurement procedures and guidelines. Given the above shortcomings, Quality at Entry is rated Moderately Unsatisfactory. 2.2 Implementation 2.2.1 Despite a slow start, the project implementation progress was rated satisfactory until April 2007 when it was downgraded to moderately satisfactory. The reasons for the downgrade related to cancellations of procurement processes for two major consultancies: (a) the study, design and supervision of PBC; and (b) development of a centralized road database and management system and a bridge management system as discussed in more detailed below. * Failed procurement processes for consultancies A-4 and D-1(a). In mid-2006 the Bank received allegations of improper influence to the procurement processes for two consultancies, A-4 (study, design and supervision of performance-based contracts for maintenance); and D-1 (a) (development of a centralized road database, road maintenance and management system and a bridge management system). The allegations were investigated by the Bank's Department of Institutional Integrity (INT), which substantiated the allegations in the consulting service (A-4). Because of the failed procurement processes, the ratings for PDO and Implementation Performance (IP) were downgraded from Satisfactory to Moderately Satisfactory in April 2007. In order to address these problems, DOH decided to use its own funds to support the development of a pavement management system (PMS) and a bridge maintenance and management system (BMMS), which were formerly under D-1(a), and rebid for A-4 using the Bank's loan. However, A-4 continued to be problematic. After the second round of advertisement failed to result in the selection of suitable consultant, the Bank team recommended an experienced consulting firm for single-source selection. However, Thai regulations did not permit government agencies to use government budget to hire private sector consultants through single-source selection. Finally the consultant was hired in December 2012 after a third round of bidding, which eventually took 3.5 years in total. * Implications of changes in the government's procurement and funding requirements. The RTG decided to use its own funds to finance the following activities either because of unsuccessful procurement or changes in RTG policy. In total these activities represented US$5.1 million in Loan savings. 9 a. Development of a pavement management system (PMS) and a bridge maintenance and management system (BMMS), formerly D-1(a). Initial procurement processes were cancelled after the INT investigation; later DOH decided to use its own funds to support the development of PMS and BMMS. b. e-Procurement system (sub-component D-4). The MOF eventually required that RTG line agencies use the e-procurement system developed by MOF, so this sub- component was dropped. c. PPP financing transaction advisory services were not hired because RTG decided to use its own funds to finance the proposed Bang Pa-in to Nakhon Ratchasima Motorway. d. Overpass Contract TH4 was delayed when the contractor suffered a cash shortfall. DOH terminated the contract in June 2007 and resumed the remaining works of some US$ 1 million using own funds; the overpass was opened to traffic by the end of 2007. e. Road Safety Improvement (C-1). Out of total of 66 small road safety packages, 37 packages were completed. Since the DOH had its own road safety work program, DOH decided to implement the remaining 29 packages (US$1.66 million) in their program, and reallocate that amount of the Bank loan to finance additional periodic maintenance works. That amount of the Loan was used mainly for enhancement of A-1. Among the above, this ICR considered activities (a), (d) and (e) above were implemented as an integral part of the project as they were implemented by the government's own funds even though that was eventually not part of the Bank finance. 2.2.2 The primary focus of the additional financing was to widen five selected sections (216 km in total) of national highway network. These AF activities were not implemented due to the following factors: (a) Factors beyond the control of the government or DOH Impact offlooding on widening offive national highways under AF loan. Thailand experienced its worst flooding in 50 years during the 2011 monsoon season. The flood emergency lasted from July through December. About 83% of the provinces were affected, some severely. Over 800 people were killed, and 10% of the rice crop was destroyed. The World Bank estimated economic losses at US$45.7 billion, making this flooding one of the top five costliest natural disasters in modern history at that time. The North Region of the country was the hardest hit. Fortunately, the flooding had a minimal impact on the roads completed under the original loan, which were largely located in the Northeastern Region. Roads near Bangkok were not severely damaged by the floods as the water passed through quickly there. During this time, the prequalification process for nine civil works contracts under the AF was underway. The bid submission date was postponed to allow contractors more time to assemble bids. Nevertheless, despite the fact that all pre-qualified bidders except one purchased the bid documents, none of the pre-qualified bidders submitted bids before 10 the new bid closing date of October 16, 2012. According to DOH investigation and analysis, the amount of government-funded civil works in the market amounted to approximately THB 25,000 million (US$800 million). This level of flood-related road reconstruction and rehabilitation nearly fully absorbed the capacity of the Thai road construction industry. Costs of road construction materials increased substantially and became volatile. As a result, the pre-qualified bidders were reluctant to take on more projects as they feared being subjected to financial penalties if they were unable to complete the projects in a timely manner. DOH proposed a re-bid with bid submission and opening scheduled in January 2013. However, another extension of the project closing date for three years would have been required to ensure sufficient time to complete these civil works. As there was no clear assurance that the re- bidding would be successful and that the civil works implementation would be completed within the additional two year time frame specified in the contracts, the Bank declined the request to re-bid. The project closed on June 30, 2013 and the entire AF loan was cancelled. (b) Factors within the control of the government Delays due to delayed loan signing and effectiveness and changes in government. As discussed above in Section 1.7, the processing of the AF was delayed due to the delays in Parliamentary approval which was required for the Government to sign the Loan Agreement and a major management change at DOH between July 2009 and February 2010. The effectiveness of AF was further delayed from June 30, 2010 to September 8, 2010 as the Government was unable to provide the legal opinion necessary for loan effectiveness within the required timeframe. DOH was heavily affected by an outbreak of violence in Bangkok in 2010 and changes in all the government departments. (c) Factors within the control of DOH DOH's lengthy internal processes. Most implementation delays occurred due to DOH's lengthy internal procurement processes. The Bank identified this bottleneck early in project implementation, and regularly alerted the DOH that any further delays would jeopardize the overall performance of the project. It suggested ways to shorten the length of its procurement processes and organized procurement training for DOH staff. However, no significant improvement was noted. As part of the project restructuring and additional financing, further project-specific strengthening measures that built on DOH's existing procedures and practices were suggested to strengthen the procurement system. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 2.3.1 M&E Design. The original Results Framework had four PDO outcome indicators and 15 intermediate outcome indicators. Design included specific indicators for each component and covered physical as well as institutional results. The data collection requirement was linked with the legal covenant in Schedule 5, para 5(b) of the original Loan Agreement that required the borrower to "prepare and furnish to the Bank a report integrating the results of the monitoring and evaluation activities and setting out measures achievement of objectives by December 15, 2005". The project coordination consultant's 11 (PCC) terms of reference (TOR) included collecting baseline data which were not provided for all indicators at appraisal, and monitoring progress against each indicator until the end of the project. The Results Framework in the PAD employed the "Logframe" presentation and thus did not provide annual targets. 2.3.2 M&E Implementation and Utilization. Baseline values were not established for any of the key indicators until 2005 (over a year after effectiveness) due to slow hiring and mobilization of the PCC. The PCC was recruited on April 1, 2005 but by June 2006 baseline values were collected for only one key indicator and one intermediate. The reliability of the provided data was uncertain as the baseline values for some indicators were not consistent among the different ISRs. 2.3.3 The progress towards achieving all PDO-level and intermediate indicators of the original project started late and was incomplete. As a result, LA covenants 5(a) and 5(b) (Schedule 5) that covered monitoring, evaluation and reporting on the project monitoring indicators were not complied by the specified deadline. In 2010, DOH terminated the PCC and the monitoring indicators were not updated for some time. As a result, M&E was rated "unsatisfactory" between June 2010 and January 2012. 2.3.4 As reported in Section 1.3 above, with the 2009 restructuring and the AF, the output indicators were modified, resulting in five outcome indicators and 16 intermediate indicators. However, no annual targets were introduced to tighten monitoring. Monitoring of all indicators in the ISRs was not consistent. In ISR # 13, the core sector indicator "Roads rehabilitated non-rural" was added to comply with a Bank corporate mandate to include core sector indicators, and recorded as "achieved under original loan". Due to the lack of baseline values, ownership and proper monitoring, M&E implementation and utilization were unsatisfactory. 2.4 Safeguard and Fiduciary Compliance 2.4.1 Safeguards policies were satisfactorily complied with for all activities under the original loan. DOH funded the social and environmental capacity building (sub- component D-4) from its own budget and implemented the agreed action plan to strengthen its social and environmental safeguard capacity. 2.4.2 Environmental Safeguards. The project was correctly classified as Environmental Category B as the impacts and risks identified were mostly known and manageable. The Project triggered three safeguard policies: Environmental Assessment (OP/BP/GP 4.01); Indigenous Peoples (OD 4.20); and Involuntary Resettlement (OP/BP 4.12). DOH prepared an Environmental and Social Safeguards Framework (ESSF) to be applied to the works to be carried under components 1 and 3 and the ESSF was made public on July 31, 2002. DOH also prepared an Initial Environmental Evaluation Report for the six subprojects under component 2, as well as Environmental Management Plans (EMPs). To achieve the objective of mainstreaming the environment and social aspects into DOH operational procedures, the Road Environmental Policy Committee was set up and Operational Policy Guidelines on Environment and Social Aspects were prepared. Specific requirements were included in all bidding documents to ensure effective execution of the mitigation measures during construction. The EMPs were implemented 12 satisfactorily as confirmed by field and supervision engineers in project progress reports. Under the AF, the project remained a Category B project with Environment Assessment and Involuntary Resettlement triggered. EMPs for all five national highway sections were prepared with specific requirements included in the bidding documents, in which the ISDS was disclosed in February 2010. 2.4.3 Social Safeguards. A Resettlement Action Plan was not required as there was no land acquisition or resettlement associated with Project activities. The widening of three road sections (total 73 km) and construction of overpasses on three road junctions were carried out within the established rights of way (ROW) and on land owned by DOH. As noted above, the ESSF was prepared to ensure compliance with safeguard policies on Indigenous Peoples and Involuntary Resettlement in case any adverse impacts were identified during implementation. 2.4.4 Under the AF, social safeguards screening for all five selected national highway sections was done. Since the proposed widening of selected road sections was to be carried out within the established ROW, no land acquisition and no significant demolition and displacement of population was required. Therefore, no resettlement action plan was prepared. However, a Resettlement Mitigation Plan (RMP) was prepared to address the limited resettlement impacts within the ROW to 21 temporary shops, and temporary use of 2.4 hectares of land areas by three households for planting paddy and sugarcane. The RMP summarized the in-kind rehabilitation measures to be provided to the 24 affected households. The RMP was not implemented due to bid failures as noted above. 2.4.5 Procurement. As already reported, the AF was cancelled due to procurement failures for nine civil works contracts, a major part of the AF activities. All procurement activities remaining after the 2009 restructuring under the original project were completed and fully disbursed by March 2012, eight years after effectiveness. Under the original project, DOH handled procurement of civil works contracts effectively, but not for consultancy services. The procurement processes for most consultancy services (including design of performance-based maintenance contract, independent procurement evaluator, independent procurement consultant) suffered from the INT investigation for the allegations of improper influence to the procurement process for A-4 and D-1 (a), inadequate interest from qualified consultants, DOH's lengthy internal processes and uncertain timing of Parliamentary approval of the negotiated loan. As a result, procurement was downgraded to "moderately satisfactory" (MS) on June 14, 2006 and subsequently "Unsatisfactory" (U) on April 3, 2007. The project was restructured to make productive use of the uncommitted loan funds. In order to address future procurement risks, an Anti-Corruption Action Plan was put in place and training workshops for DOH staff on Bank procurement and anticorruption guidelines were held. 2.4.6 Fiduciary risks were re-assessed for the 2009 restructuring and the AF, in light of the above problems. Based on the updated assessment, follow-up mitigation measures were agreed with DOH and acted upon. However, procurement continued to suffer. Hiring of consultancy services remained challenging because of inadequate expressions of interest, lack of qualified consultants, and delays, which brought down the procurement rating to "MS" and later "U" after unsuccessful procurement of civil works. 13 The project went through a number of changes but only one procurement plan dated December 2007 was made available to the public. 2.4.7 Financial Management. There were no major issues in the Project's financial management. DOH, through funding provided by the Asian Development Bank (ADB), hired a consulting firm to install and implement the accounting software, trained the financial staff and developed a financial management manual. The quarterly interim financial reports, together with a detailed discussion of project progress, were submitted regularly by DOH. All audits received had unqualified (clean) opinions, and with only one exception in 2010, all audit reports were submitted on time. (The 2010 audit was submitted about five months late due to delays in appointing the auditor.) This was the only time the financial rating was downgraded to "unsatisfactory". Overall, financial management was reviewed regularly through the periodic supervision missions and found satisfactory. 2.5 Post-completion Operation/Next Phase 2.5.1 The post-completion operation of the completed civil works will be the responsibility of DOH. The asset value of the national highway network after the completion of the original loan was increased. The historic floods of 2011, which affected many parts of the country, did not affect the national highways improved under the original loan. RTG is expected to continue using force account to carry out reasonable levels of routine maintenance of the national road network to sustain the project benefits for the anticipated life of the road. DOH has adequate staffing with technical know-how and adequate budget, and with the improved road asset management systems. 2.5.2 DOH did not yet provide plans to finance the widening of the priority national highways selected under the AF after loan closing. 2.5.3 The Thailand Accident Research Center (TARC), which opened in 2002 and was supported under the loan, has been operational under the umbrella of the Asian Institute of Technology (AIT). It is well-staffed with university professors knowledgeable and specialized in crash investigation and road safety. TARC has been funded by various domestic funding sources to cope with road accidents (e.g. Thai Health Promotion Fund) as well as providing services such as accident investigation and reconstruction, road safety audit, road safety training and seminars, and other road safety consultancy. TARC's activities and reports can be found on their website at www.tarc.ait.ac.th. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Rating: High 3.1.1 During the long period of preparation and implementation of the project from 2001 to 2013, there were two major country assistance strategies issued by the Bank. These were namely (i) the 2003 Country Assistance Strategy for FYO3-05, and (ii) the 2010 Interim Strategy Note for FYI 1-12. The project has been highly relevant through these major Bank strategies for Thailand. For (i) the 2003 Country Assistance Strategy, the project directly supported the pillar for Competitiveness - Support for Infrastructure 14 Development with a direct quote of this project; and for (ii) the 2010 Interim Strategy Note, the project directly supported the second Prong: Improving competitiveness, and inclusive and sustainable growth; Cluster III: Infrastructure and climate change with a direct quote of this project's AF components. 3.2 Achievement of Project Development Objectives Rating: Moderately Unsatisfactory 3.2.1 The PDO was to assist the Borrower in enhancing the efficiency, productive use and management of the Borrower's road network, through: (a) the commercialization of the road sector by introducing better business principles and increasing private sector participation in the construction and maintenance of roads; (b) the strengthening of the institutional capacity and modernization of DOH; (c) sustainable road maintenance programs to preserve road assets; and (d) the enhancement of road safety aimed to reduce traffic fatalities and injuries. The following discussions describe the assessment on each specific objective. Specific Objective (a): Commercialization of the road sector by introducing better business principles and increasing private sector participation in the construction and maintenance of roads The achievement of this specific objective is unsatisfactory. This specific objective was clearly indicated to be achieved by the implementation of the PBC pilot maintenance in the original Component A - (ii). Due to the cancellation of the PBC pilot maintenance (but yet this specific objective remained without modification in 2009 restructuring), it was not achieved. The Intermediate Outcome Indicator #5 (Output Indicator #1.3 discussed in para 1.3.2) was revised in the 2009 restructuring (Pilot long-term performance-based management and maintenance contract designed for 150 km motorway) and achieved, but the achievement of this indicator does not represent the achievement of this specific objective, as the commercialization of the road sector was not warranted by the achievement of the feasibility study and design only. Specific Objective (b): Strengthening of the institutional capacity and modernization of DOH The achievement of this specific objective is moderately unsatisfactory. The project intended to support (a) the development of a centralized road asset maintenance and management system (implemented by DOH own funds), (b) the development of a framework and case study for PPP in highways (completed), (c) technical assistance for project coordination (completed), and (d) strengthening of DOH capacity in procurement (not implemented). The AF intended to support PPP financing transaction advisory (AF Component 2) and Independent Procurement Evaluator and Financial and Technical Audits (AF Component 3), but neither component was implemented (see Annex 2 for details). In terms of achievements, the national road database was established, and is being updated and used (PDO Indicator 4 and Intermediate Outcome Indicator #12 were achieved), Intermediate Outcome Indicator #13 (PPP framework and case study) and #14 (environmental annual report disseminated) were achieved. However, Intermediate Outcome Indicator #16 (PPP financing Motorway reached bidding stage) was not achieved. 15 Specific Objective (c): Sustainable road maintenance programs to preserve road assets The achievement of this specific objective is moderately unsatisfactory. This is measured by two parts, the original project and its related indicators, and the AF project and its related indicators. The original project improved the sustainability of the road maintenance program primarily through the successful implementation of Component A - (i), B - (i) and (ii). The project achieved the periodic maintenance of 960 km of priority national highways, 73 km of national highway widening, and construction of three overpasses as intended (see Annex 2 for details). These achievements contributed to the reduction of average unit cost of maintenance (PDO Indicator #1), the intended increase of the asset value of road network (PDO Indicator #2), and 1,556 km of roads rehabilitated (PDO Indicator #6), but the intended VOC reduction target of 10-15% on target roads was only 9.7% achieved with a final VOC savings estimated at June 2013 (PDO Indicator #3). The related Intermediate Outcome Indicators #1 (average roughness target), #2 (73km national highway widened), #4 (periodic maintenance of 960km), #6 (three overpasses constructed), #7 (average travel time reduction), and #8 (reduction of average delays) were also all achieved. So the contribution of the original project activities to this specific objective was moderately satisfactory. The AF project failed to contribute to this specific objective as AF Components 1, 2 and 3 were never implemented (see Annex 2 for details). Hence, neither of the intended road user cost reduction (PDO Indicator #5), nor Intermediate Outcome Indicators #15 (widening of additional 216 km priority national highways) were achieved. So the contribution of the AF project activities to this specific objective is unsatisfactory. It was not rated highly unsatisfactory due to the fact that the delay in the AF civil works components (failure of civil works procurement) was partly caused by the factor outside of control of the implementing agency (see para 2.2.2 (a) for details). Specific Objective (d): Enhancement of road safety aimed to reduce traffic fatalities and injuries The achievement of this specific objective is moderately satisfactory. The project enhanced road safety by the partial achievements of Component C - (i) and (ii). The project achieved the improvement of 37 hazardous locations out of the intended 66 locations, and support of the implementation of the road safety action plan and the operation of the Thailand Accident Research Center (see Annex 2 for details). These contributed to the achievements of Intermediate Output Indicators #3 (road fatality reduction), #10 (safety awareness campaign), #11 (ARC established), and #9 (37 out of 66 hazardous locations were improved). DOH implemented the remaining 29 locations with their own funds and more locations as part of their programs, and #9 is considered achieved. 3.2.2 The overall achievement of the PDO is rated "Moderately Unsatisfactory". The rating takes into account the achievements of the key associated outcome targets set at appraisal and AF. In overall, the project did not perform well in terms of "enhancing the efficiency and management" since the key TAs were not delivered. The "productive use" 16 of the network was partially achieved with the completion of the intended road widening and rehabilitation subprojects. The completed activities led to only limited improvements in efficiency and productive use of Thailand's national highway network represented in the reduced average unit maintenance costs and reduced vehicle operating costs. The asset value of the national highway network increased as targeted. However, the activities under the additional financing loan were never implemented. 3.3 Efficiency Rating: Satisfactory for completed physical works 3.3.1 The project ex-post economic evaluation for the completed physical road improvements was conducted based on the project monitoring indicators data and using spreadsheet calculations. Since the additional financing was not disbursed, the analysis focused on the physical works under the original loan only. 3.3.2 The ex-post overall EIRR of the original project was substantial, 56%, which is only about 3% less than the estimated EIRR at appraisal. The post NPV was THB 37,345 million. Although it is about THB 10,500 million less than the estimated NPV at appraisal is still substantial for the completed works. 3.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 3.4.1 The PDO and the project design remained relevant to the Government of Thailand's priorities and consistent with the Bank's country assistance/partnership strategies throughout the period of implementation. However, the overall achievement of the development objectives is considered Moderately Unsatisfactory based on the combined relevance rating of High; the PDO achievement of MU, and the rating for efficiency of Satisfactory for the original loan. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 3.5.1 Poverty alleviation and gender issues were not specifically addressed in the project. Although no data on poverty reduction attributable to the project was collected, it is likely that the rehabilitation and improvement of the highways contributed to poverty reduction through job creation and improved access to social and economic opportunities for people living in the project areas. Improving the national road network was the country's economic development agenda, and its social development impacts were demonstrated by the growth in vehicle traffic in the project areas, as maintained and improved transport infrastructure contributed to increasing mobility and access to services. (b) Institutional Change/Strengthening 3.5.2 The institutional strengthening component is rated "Moderately Unsatisfactory". Not all activities under the original loan and after restructuring were completed (see Annex 2 for details). DOH struggled from the beginning of the project in hiring international consultants needed to achieve this component. The PPP advisory services 17 were not hired due to changes in government policy, and for other consultants (PMS, BMMS) DOH decided to use its own funds and completed. The project moderately contributed in strengthening DOH's institutional and procurement capacities. (c) Other Unintended Outcomes and Impacts (positive or negative) 3.5.3 The community youth helmet use project, supported by a JSDF grant of US$834,200, was successfully completed in the 4th Quarter of 2011. The program complemented the road safety actions supported under the project and anecdotal evidence suggests that it reduced head injury and injury-related deaths due to motorcycle accidents in Thailand, through the increased use of motorcycle helmets and awareness of road safety issues. Using sub-grants to penetrate communities through schools, local authorities, and policemen, the program was seen as effective and replicated with funding from local insurance companies in other areas. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable. 4. Assessment of Risk to Development Outcome Rating: Significant 4.1.1 The risk to sustainable road sector management is moderate. DOH has sufficient technical and financial capability of maintaining the road network covered under the project with sustainable budget arrangement. 4.1.2 However, the risk of damage to DOH's road network as a result of climate change and/or natural disaster is significant as was observed in the recent 2011 large scale flood, although the 2011 flood did not specifically affect the completed project roads. 4.1.3 DOH's internal system to cope with governance risks remains significant for likely affecting the future priorities. Because of recent political turmoil and shifting policy directions, political influences may also contribute to the risk of sub-optimal allocation of budget for road sector management. 4.1.4 The risk to improved competitive landscape is moderate. RTG has a priority to improve the domestic transport to the remote area of the country, so that the concentrated industries in the Bangkok region can be diversified for improving the competitive landscape. That is expected to continue with DOH's sustainable road maintenance and management. The risks related to the unexpected and adverse market behavior is moderate. 4.1.5 The risk to road safety measures introduced in the project is moderate. The achieved improvements of hazardous locations are limited by the number of locations, and DOH is continuously working to further expand it. The TARC is achieving a sustainable operation mechanism, and expected to contribute to the articulated road accident data analysis and dissemination for country level awareness of the issue. 18 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 5.1.1 The rating of Bank performance in ensuring quality at entry is "Moderately Unsatisfactory". The key sector issues were thoroughly assessed in the Project design, and the preparation was managed well including the identification of safeguards and assistance with the preparation of the ESSF, in spite of the change of the Task Team Leader at the late stage of the preparation. However, the project design was very ambitious particularly in terms of introducing PBC pilot without thorough discussion with DOH for its ownership and interest, and also the controls for a number of identified critical risks were inadequate. The Bank appraisal of DOH's ownership of PBC was too optimistic. The original project was designed with a primary focus on maintenance as opposed to new construction, and overall PDO were closely aligned with both Government and Bank strategies. The successful use of safeguards and fiduciary staff from the Bangkok office to move the project along was efficient. However, delays in the effectiveness, institutional and procurement arrangements of the implementing units should have been properly identified as potential risks from a number of indicative factors, as they eventually influenced the project outcome significantly. The monitoring aspects were not well controlled; baseline values were not established for any of the key indicators until 2005 (over a year after the project effectiveness) and as the old "logframe" results framework was used, no annual targets were established to facilitate monitoring. There was no formal review of quality at entry by the Quality Assurance Group in the Bank. (b) Quality of Supervision Rating: Moderately Unsatisfactory 5.1.2 The rating of Bank performance in ensuring quality at supervision is "Moderately Unsatisfactory." Formal supervision mission were carried out twice a year on average, and the team members were largely based in the Bangkok office which allowed the team to follow up regularly with reduced mission costs. The Bank team helped DOH tackle technical issues by fielding additional experts specialized in key activities on an as needed basis, such as road pavement design, PMS and BMMS technical issues, and procurement capacity assessment related to the procurement misconduct and preparation of the additional financing. Safeguards monitoring were adequately conducted. The Bank was flexible in helping DOH manage delays by carrying out two restructuring and three extensions of the closing date. The quality of these restructuring design was reasonable and appropriate to address these design flows, except for the insufficiency of the modified indicator (Intermediate Outcome Indicator #5) for measuring the achievement of commercialization of the road sector (see assessment of Specific Objective (a) achievement in para 3.2.1). 5.1.3 However, given the project was implemented over a decade and experienced several major issues, the number of mission records (total 14 aide-memoires and 14 ISRs) were limited and the documentation in file was not fully sufficient. The PDO and IP 19 ratings did not properly detect the seriousness of delays associated with the PBC consultancy (A-4), and they were kept consistently "S" to "MS" range even with the significant delays caused by the termination of procurement processes of the two consultancies (see Section 2.2.1), although the procurement rating was made "U" once after the incident. Although the Bank provided additional resources in FY12 and FY13 to address these underperforming situations, the Bank did not put in place proper timely measures to mitigate identified risks, such as DOH's internal procurement processing system, weak procurement capacity, and governance. Although governance issues were flagged from the implementation of previous Bank-financed projects in Thailand, it was not identified as a critical risk, nor was mitigation measures put in place until the INT investigation for two consultancy services started. After the termination of the consultancy procurement, the Bank team conducted a procurement capacity assessment, based on which the mitigation (anti-corruption) measures were agreed and put in place in the AF Project Paper in February 2012. However, its monitoring process was not adequately documented. 5.1.4 The AF Project Paper also did not specify the annual targets for the results framework which prevented adequate monitoring. One of the objectives "the commercialization of the road sector by introducing better business principles and increased private sector participation in the delivery and management of roads" was linked with the sub-component A - (ii), PBC contracts implementation. Without successful implementation of PBC contracts, the above objective would not have been achieved. The sub-component A - (ii) was cancelled during the restructuring but the objective was kept in the restructuring. The focus of the additional financing, widening of five selected sections (216 km in total) of national highway network was not implemented due to the bid failure. The Bank's decision not to grant an extension beyond June 30, 2013, for another round of bidding was correct. Retrospectively, the Bank would not have done this as the AF. Notwithstanding the bid failure which occurred in the AF, these activities could have been processed as a new project to avoid being linked to the original project, which was already experiencing critical length and delays. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory 5.1.5 The overall Bank performance is rated "Moderately Unsatisfactory" based on the Bank's moderately unsatisfactory rating both at Quality at Entry and Quality at Supervision. 5.2 Borrower Performance (a) Government Performance Rating: Unsatisfactory 5.2.1 The Government's commitment to the project was not fully demonstrated with a number of delays in the procedures during the preparation and implementation of the project. The indecision of the Government on approval of the first negotiation results conducted in October 2002 delayed the project preparation until the re-negotiation which took place in September 2003. The signing of the AF loan was delayed due to delays in obtaining Parliamentary approval, and effectiveness of the AF was further delayed when 20 RTG was unable to issue the standard legal opinion necessary for effectiveness within the required timeframe. While counterpart funding remained available as a part of the government budget, the project also suffered some delays due to processing requirements of using national budget. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 5.2.2 During the preparation, DGH effectively conducted the preparation activities with close coordination with the Bank team with a strong commitment with the periodic maintenance. However, DGH's commitment to performance-based maintenance was not very clear, although the MOF encouraged the enhancement of new methods of more cost efficient operations, i.e. PBC. 5.2.3 The DOH effectively implemented the main part of the original project, i.e. the periodic maintenance works in Component A (except for the cancelled PBC sub- component), highway upgrading and intersection improvements in Component B, part of the intended road safety improvements in Component C, and some of the institutional strengthening in Component D. The safeguard compliance was satisfactorily managed. The key legal covenants were all complied with. The direct cause of the failure of PBC sub-component was the termination of the procurement of consultancies, and it showed governance weakness in the internal control in DOH. However, from the start of the project, DOH was not interested in nor committed to the implementation of the performance-based maintenance contracts. In spite of that, they accepted the PBC, which was linked to the achievement of the PDO. The failure of the PBC sub-component adversely affected the achievement of the overall PDO. Most of the failed procurements during the implementation were due to the lengthy internal processes of DOH. (c) Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory 5.2.4 In line with the harmonized evaluation criteria, the overall borrower performance is rated "unsatisfactory" because of the government's unsatisfactory performance as a result of weak commitment, the number of changes in the government and changes in their requirements, DOH's moderately unsatisfactory performance due to lack of interest and ownership in PBC sub-component and lengthy internal processes as discussed above. 6. Lessons Learned 6.1 The Bank should assess the interest of the borrower for proposed activities carefully, and should not push its own agenda. The implementing agency also should assess its own interests and ownership of project activities seriously and convey them clearly. The inclusion of the performance-based maintenance in this Project was proposed by the Bank during preparation and supported by MOF, but DOH did not have interest and ownership, leading to the eventual failure of the PBC component. Sub- component A-(ii) (three long-term pilot contracts for PBC maintenance of 900 km on national highways) was too ambitious for a first time pilot PBC for a client who had no previous experience. PBC is a method for more private sector-oriented road maintenance, which has proved to be more efficient in terms of managing road assets efficiently and 21 effectively, and advocating for the usage of PBC in road contracts is generally right. However, when these activities are proposed in a project, the status of the sector in the country must be studied carefully. The PBC, i.e. public-private partnership in road asset management, is desirable when the country's public road agencies suffer from a shortage of public sector engineers or where public sector asset management practices are inefficient. In a country like Thailand, where traditionally strong public sector oriented road asset management is still prominent and working, the client's interest or incentive for introducing more private sector led asset management practices is very low. Even if such a new scheme is proposed, a pilot activity should be much more modestly designed. 6.2 Usage of Additional Financing for "scale up" (enhanced scope of work) should be examined carefully. The AF for scaling up the four-lane highway widening of additional five national highway sections (216 km) was approved as an enhanced scope of work of Component B-(i) (original length: 73km). At the time, both the client and the Bank thought it would be faster and simpler to process it as a scale-up AF; however, it ended with failure due to the unavailability of contractors caused by the 2011 flood. This AF was processed in 2010, after the original project experienced three different closing date extensions of totaling 24 months. The additional finance gave a restriction of 3 year closing date extension up to June 30, 2013 as the implementation period of the additional finance activities (due to the Bank rule of 3-year maximum closing date extension for AF activities). Even though the 3-year maximum closing date extension rule for AF activities was no longer applicable by the time the project closed, the delays in the AF activities when the original project has experienced substantial delays would affect its assessment adversely. If these activities were processed as a new project, the Bank's tolerance about implementation delays associated with the 2011 flood would have been quite different, and the project might have survived longer for implementation. The Bank did not agree to exceptionally extend the closing date further as the decision was clearly influenced by the much delayed original project. The easy usage of additional finance, particularly for scaling up, needs to be examined whether it would be the best financing modality. When processing the AF for scaling up, it needs to ensure that the works financed by the AF are doable in an appropriate time against the remaining life of the project. The age of the project needs to be taken into account so as not to push the project into overage status. 6.3 Performance Indicators and targets should be clearly defined and the monitoring process should be agreed firmly at appraisal The performance indicator selection and target-value setting are critical to measure the effectiveness of project interventions. Inadequate indicators and the lack of its monitoring mechanism distort the project's performance results and lower the confidence on evaluation system. When designing the project's outcome indicators, the indicators should be simple and measurable, and should not be too many. This project had too many Intermediate Outcome Indicators (16). While many indicators may help assessing each element of the specific objectives, too many indicators diluted the overall evaluation of whether or not the project was satisfactory in its intended achievements. Also the lack of monitoring system without annual targets represented the lack of serious M&E mechanism establishment at appraisal. The indicators should be carefully designed so that its correlation with the project interventions is clearly identified and should avoid too much external factors (outside of the project's control) coming into play. 22 6.4 Improving road safety needs continuous efforts. Statistics show that road accidents in Thailand still have high incidents and fatalities compared with those of the developed world (see para 1.1.3 (iii) for details). Several key road safety improvements were implemented during the project, particularly the improvement of hazardous locations. Effectiveness of road safety improvements should recognize that: (i) there are normally not sufficient details in road safety features provided in the engineering drawings, and (ii) adequate technical knowledge is still required to ensure that roads can achieve the maximum safety despite the recent major progress in the understanding of road safety issues among professional staff in DOH. This lesson suggests that the road safety improvements in hazardous locations requires that all safety measures are specifically identified in the engineering drawings; and that continuous training and dissemination is required on road safety design which should take into account local behavior factors. 6.5 The fiduciary requirements for middle income clients need to be monitored carefully. The project was initiated after long time lag (5.5 years) from the previous Bank engagement in the sector. Although significant time had elapsed, the assessment of DOH's capacity and internal processes to cope with Bank's fiduciary requirements was concluded with an expectation of a reasonable level of their general capacity. While many middle income countries have established their own fiduciary system, it may turn out to be inflexible to cope with the external requirements, such as the one with international lending institutions. The fiduciary assessment for middle income countries like Thailand should be carefully assessed, particularly for procurement requirements, so that their adaptability and flexibility to cope with the Bank's system are known in advance. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies No comments (b) Cofinanciers Not applicable (c) Other partners and stakeholders Not applicable 23 Annex 1. Project Costs and Financing (a) Original Project Cost by Component (in USD Million equivalent) Appraisal Estimate Actual/Latest Percentage of Components (USD millions) Estimate (USD Appraisal millions) 1. Highway rehabilitation and 79.68 98.09 123% maintenance 2. Highway upgrading and 50.32 40.54 81% intersection improvement 3. Road safety improvement 11.50 8.82 77% 4. Institutional strengthening 4.05 1.79 44% Total Project Costs 145.55 149.24 103% Front-end fee IBRD 0.84[ 0.841 100% Total Financing Required 146.391 150.081 103% (b) Financing of Original Project Appraisal Actual/Latest Percentage of Source of Funds Tof Estimate Estimate (USD millions) (USD millions) Borrower NA 62.10 66.05 106% International Bank for Reconstruction NA 84.29 84.03 100% and Development Total 146.39 150.08 103% (c) Additional Financing Cost by Component (in USD Million equivalent) Appraisal Actual/Latest Percentage of Components Estimate (USD Estimate (USD Appraisal millions) millions) 1. Widening of five selected sections 156.70 0.00 0% 2. Public-private partnership financing 1.40 0.00 0% transaction advisory 3. Project management support 0.10 0.04 42% consultancies Total Baseline Cost 158.20 0.04 0% Physical Contingencies 0.00 0.00 0.00 Price Contingencies 0.00 0.00 0.00 Total Project Costs 158.20 0.04 Front-end fee IBRD 0.20 0.20 100% Total Financing Required [ 158.40 0.24 0.2% (d) Financing of Additional Financing Appraisal Actual/Latest Percentage of Source of Funds Tof Estimate Estimate (USD millions) (USD millions) Borrower NA 79.10 0.02 0.3% International Bank for Reconstruction NA 79.30 0.22 0.3% and Development Total 158.40 0.24 0.2% 24 Annex 2. Outputs by Component The original project, at appraisal and after restructuring, consisted of four components and the AF consisted of three components. The Project's outputs by component are detailed in the following two tables, one for the original project and one for the AF. 2.1 Outputs by Component of Original Project Component in original Component after Output Comments PAD restructuring Component A. Highway Rehabilitation and Maintenance (i) periodic maintenance (i) (changed to) periodic About 960 km of Contributed to of about 700 km of maintenance of about priority national PDO (c) priority national 960 km of priority highways built highways national highways (ii) three long-term (5 (ii) (cancelled) NA Supposed to have year) pilot contracts for contributed to performance-based PDO (a), but maintenance of about cancelled. 900 km of national highways (iii) the supervision of (iii) same as original Partly achieved Contributed to periodic maintenance PDO (c) and (d) and road safety improvements (iv) the study, design, (iv) (changed to) the Only design Supposed to have and supervision of feasibility study and completed by June contributed to performance-based design of a pilot 2013. PDO (a), but did maintenance contracts performance-based not. maintenance contracts for a 150 km motorway Component B. Highway Upgrading and Intersection Improvement (i) widening three (i) same as original Achieved Contributed to selected sections (73 km PDO (c) in total) of highway network from two to four lanes (ii) construction of three (ii) same as original Two overpasses Partly contributed overpasses at critical completed using to PDO (c) intersections 100% original loan. Due to contractor's failure only about 70% of Overpass at Intersection ofRoute 22 and Udonthani Bypass Route 2 was completed under original loan and the remaining achieved using DOH's own 25 funds. (iii) the supervision of (iii) same as original The consultant Contributed to the widening and supervised five out of PDO (c) overpass civil works six contracts. DOH continued the remaining. Component C. Road Safe Improvement (i) improvement of 10 (i) same as original Completed. Out of 66 Contributed to hazardous locations locations 37 PDO (d) improved under the project, and the rest (29) was improved under RTG finance. (ii) support for the (ii) same as original Completed. Thailand Contributed to implementation of the Accident Research PDO (d) road safety action plan in Center was collaboration with the established in 2003. Global Road Safety The Study of Traffic Partnership, and the Accident Cost in establishment and Thailand was operation of a roads completed in accidents research center September 2007. Component D. Institutional Strengthening (i) institutional (i) (a) same as original (i) (a) DOH Partly contributed strengthening of the but funding source implemented the to PDO (b) DOH through (a) changed to government development of a development of a own-fund; pavement centralized road management system database, road asset and a bridge maintenance and maintenance and management system, and management system a bridge management through own funds. system; (b) development of a framework for and a (b) same as original; (b) Completed. case study on public- private partnerships in highways; (c) technical (c) same as original; and (c) Completed. assistance (TA) for project coordination; and (d) (changed to) (d) Not implemented. (d) introduction of e- strengthening of DOH procurement system capacity in procurement (ii) external audit (ii) same as original Completed. Contributed to system;(b)develo nPDO (b) 2.2 Outputs by Component of Additional Financing Component IOutput Comments Component 1: Widening f fve national highways (i) widening five selected Not achieved The bidding for the nine civil sections (216 km in total) of works contracts was not 26 highway network from two to successful as no pre-qualified four lanes bidders submitted bids on the date of bid submission. (refer to para 2.2.2 (a) for detail information) Component 2: PPPffinancing transaction advisory Public-private partnership Not achieved The government decided to use its financing transaction advisory own fund to finance the proposed for the proposed Bang Pa-in Bang Pa-in to Nakhon to Nakhon Ratchasima Ratchasima Motorway. As a Motorway result, the PPP consultant was not hired. Component 3: Project management support consultancies Independent Procurement Not achieved The contract was terminated Evaluator (IPE) because of unsuccessful procurement process of hiring PPP financing transaction advisor. The IPE was supposed to do an independent evaluation of the technical and financial proposals for PPP advisory services. Financial audit and technical Not achieved Not implemented audit 27 Annex 3. Economic and Financial Analysis 3.1 Methodology at Appraisal Estimate The economic evaluation for the original project at appraisal was carried out for four categories: (i) periodic maintenance, (ii) performance based maintenance, (iii) highways upgrading, and (iv) intersection improvement. The cost-benefit analysis was carried out in 2003 using the Highway Development and Management Model (HDM-4), which simulates highway life cycle and vehicle operation conditions and costs for multiple road design and maintenance alternatives. The appraisal evaluation was based on the key assumptions: (i) an opportunity cost of capital of 12 percent; and (ii) an analysis period of 20 years; and (iii) economic costs on average 80 percent of financial costs. A similar methodology and model were used for the economic analysis of the AF, but since it was not disbursed, the analysis focuses on the original loan only. 3.2 Methodology for Post-Project Economic Analysis Some components changed during the decade long implementation of the project and performance-based maintenance contracts funds were shifted to regular maintenance. Therefore, the ex-post economic analysis of the project using the same methodologies and the HDM-4 model as in the original project could not be used. Therefore, the post economic analysis was conducted based on the project monitoring indicators updated during implementation and calculations were done in Excel spreadsheet. The original project was mostly completely by 2009. 3.3 Assumptions Some of the assumptions follow the methodology at appraisal, such as a 20-year evaluation period and economic cost being 80 percent of financial cost. Prices. The evaluation was conducted in THB on the conventional basis of constant prices; that is without including the impact of inflation on prices. Prices in 2004 were used as the base year. However, passenger time values are likely to increase in real terms as the economy develops. The passenger time values are assumed to grow at 4 percent' Traffic. Traffic data is assembled from actual traffic growth on project routes. The annual traffic growth rate ranges from 2 to 19 percent, with the average of around 7 percent. Due to fluctuations that may occur in the future, a conservative assumption of 5 percent is used in this evaluation. Some of the indicators, such as travel time, delays at intersections, road accidents, and asset values, were collected up to 2008, as the consultancy contract for the project coordinator expired. Although they were expected to improve further, taking a Average real GDP growth during 2000-2011 is 4.2 percent, source: Bank of Thailand. 28 conservative approach, the economic benefits of 2008 were used for subsequent years. However, based on time series data collected as one of the indicators, the improvement in asset values (both from maintenance and construction) was assumed to decline over time. 3.4 Evaluation Results The results of the evaluation are summarized in the following table in terms of EIRR and NPV of the original project. EIRR NPV Appraisal Post-project Appraisal Post-project Estimate Estimate Estimate Estimate (THB mil) (THB mil) TOTAL 59% 43.22% 47,925 37,344.87 A. Highways Rehabilitation and Maintenance 64% 50.85% 41,539 30,792.86 Bl. Highway Upgrading 23% 24.13% 1,262 3,464.71 B2. Intersection Improvement 72% 40.70% 5,124 3,042.56 C. Road Safety Improvement N.A. 5.80% N.A. 44.75 *Additional Financing was not disbursed At appraisal, the overall NPV was THB 47,925 million with an overall IRR of 59 percent. The estimated EIRR post-project is marginally less than the appraisal estimate. The only component where the EIRR and NPV are above the appraisal estimate is highway upgrading. All other post-project estimates for NPV are below appraisal estimates. It appears that the benefits were over-estimated, especially for intersection improvement, at appraisal stage. While the intersection improvements can reduce traffic congestion and delays, they also induce more traffic in other directions. The exchange rate at appraisal was 40 THB/USD, but was around 30 THB/USD at closing. Appreciation of the THB was a constraint in terms of budget and increased opportunity costs of the project. 29 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Names Title Unit Responsibility/ Specialty Supervision/ICR Ahsan Ali Lead Procurement Specialist EASR1 Procurement Rodrigo Archondo-Callao Sr. Highway Engineer ECSTR Economist Arnab Bandyopadhyay Sr. Transport. Engineer SASDT Highway Specialist Christopher R. Bennett Sr. Transport Specialist GSDFO-HIS Highway Specialist Anil S. Bhandari Consultant IEGPS Highway Specialist Anthony G. Bliss Consultant SASDT Road Safety Chinnakorn Chantra Procurement Specialist EASRP-HIS Procurement Said Dahdah Transport Specialist MNSSD Road Safety Kannathee Danaisawat Financial Management Specialist EASFM Financial Mgment Imogene B. Jensen Consultant EASNS Former-TTL Alain L. Labeau Consultant SASFP IHighway Specialist Zhi Liu Lead Infrastructure Specialist EASTS TTL Chanin Manopiniwes Infrastructure Economist EASTS Economist Teresita Ortega Program Assistant EASWE Program Assistant Vachraras Pasuksuwan Program Assistant EACTF Program Assistant Sirirat Sirijaratwong Procurement Specialist EASR2 Procurement Environmental Manida Unkulvasapaul Consultant CEAMV Evafegua Safeguards Chaohua Zhang Lead Social Development Specialist SASDS Social Safeguards (b) Staff Time and Costs Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel and consultant costs) Lending FY02 33 151.79 FY03 18 102.96 FY04 12 51.76 Total: 63 306.51 Supervision/ICR I FY04 6 45.48 FY05 10 46.38 FY06 12 56.08 FY07 11 48.88 FY08 9 53.60 FY09 7 63.02 FY10 7 56.40 FY11 11 45.80 FY12 20 73.70 FY13 26 88.16 FY14 5 19.28 Total: 124 596.78 30 Annex 5. Beneficiary Survey Results (Not applicable) 31 Annex 6. Stakeholder Workshop Report and Results (Not applicable) 32 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR THAILAND PROJECT COMPLETION DOCUMENT FOR Thailand: Highways Management Project (IBRD Loan No. 4721 & 7775) Department of Highways Ministry of Transport Thailand September 20, 2013 33 Table of Contents 1. Project Background ......................................... .....35 2. Brief Description of the Project......................................35 3. Evaluation of Project Development Objectives .....................37 4. Evaluation of Project Design .......................................37 5. Evaluation of Project Implementation by Components............... ......38 6. Rating Summary ........................ .................42 7. Assessment of Bank and Borrower Performance ................ .........42 8. Lessons Learned ....................... .................42 34 1. Project Background The Highway Management Project is a loan project under apart financing of the World Bank.The Highway Management Projects comprises of two phases, the Highway Management Project (Loan 4721 - TH) and the Highway Management Additional Financing Project (Loan 7775 - TH). Loan 4721 -TH was signed between Kingdom of Thailand and the International Bank for Reconstruction and Development (IBRD) on 16 December 2003 and Loan 7775 - TH was signed on 11 June 2010. The original loan amount set forth in the agreement is 84,290,000 USD and additional supporting by the government fund about 61,260,000 USD therefore the total estimated project amount is 145,550,000 USD. The additional financing amount is 75,000,000 USD with 75,000,000 USD governments funding totaling 150,000,000 USD of total project amount. DOH is the implementing agency of the project. Various divisions of the DOH have involved in project implementation, including regional offices and central office. 2. Brief Description of the Project The objectives of the Highway Management Project are to assist in enhancing the efficiency, productive use and management of the road network, through (i) the commercialization of the road sector by introducing better business principles and increasing private sector participation in the construction and maintenance of roads; (ii) the strengthening of the institutional capacity and modernization of DOH; (iii) sustainable road maintenance programs to preserve road assets; and (iv) the enhancement of road safety aimed to reduce traffic fatalities and injuries. 2.1. The original project (Loan 4721) has four components and 14 sub-components as follows: Component A: Highway Rehabilitation and Maintenance (1) Periodic Maintenance: To carry out of periodic maintenance of selected sections on the highway network that comprising about 700 km. (2) Long Term Performance Based Maintenance: To carry out, on a pilot basis of a five year program of highway performance-based maintenance on selected sections of the highway network, where located in the central, southern and north-eastern province with totalling about 900 km., through contracts with private contractors. (3) Supervision of Periodic Maintenance and Road Safety Improvement: To supervision of periodic maintenance activities. (4) The Study, Design and Supervision of Performance - Based Maintenance Contracts: Component B: Highway Rehabilitation and Maintenance (1) Widening of three selected sections(73 km in total) from two to four lanes: A.Si Chon -A.ThaSala The works executed under the contract converted the existing two-lane road into a four lane divided highway, within the existing 50 meter right-of-way, they involved constructing an entirely new carriageway alongside the existing road, and recycling and resurfacing the existing road pavement. A.NiKhom Kham Sroi - A.LoengNokTha The works executed under this contract converted the existing two-lane road into a four-lane divided highway by widening on both sides of the original centerline within the original 30 meter right-of-way using a raised median to separate the carriageways. B.NongBuaKhok - ChaiyaPhum The works executed under this contract will convert the existing two-lane road into a four-lane divided highway by widening on both sides of the existing centerline within the original 40 meter right-of-way using a raised median to separate the carriageways. 35 (2) Construction of three overpasses at critical intersections: Overpass at Intersection ofRoute 22 and Udonthani Bypass Route 2 The works executed under the contract primarily involve the construction of a prestressed concrete girder bridge, 350 meters long and 24 meters wide carries two traffic lanes in each direction (separated by a concreted/ barrier) over the main UdonThani Bypass. Overpass at KM.8, Ramindra Road The works executed under the contract primarily involved the construction, within the Bangkok Metropolitan Area, of twin pre-stressed concrete girder type bridges, each approximately 460 meter long and 9.50 meter wide that carry the heavily congested Ramindra Road over the intersection with highway route 304 and 3202. Railway overpass at Ban Pong The works executed under the contract primarily involve the construction of a prestressed concrete type bridge. This reinforced concrete viaduct 550 meters long and 15.60 meters wide extends over eighteen (18) spans of varying length and provides two traffic lanes in each direction (separated by a concrete barrier) carrying route 323 over the main road access to A.Ban Pong and the adjacent railway line. The structure also includes two side ramp bridges; one is an entrance across the intersection while the other gives access to A. Ban Pong. (3) Supervision of the Widening and Overpasses Projects: To carry out the supervision of the widening and overpass civil works under component B-1 and B-2. Component C: Road Safety Improvement (1) Improvement of Hazardous Locations: (a) the provision of guard rails in about 10 locations; (b) the signalization of about 42 intersections in selected locations; and (c) the provision of pedestrian crossing and bridges in about 14 locations. (2) Support for Implementation of the Road Safety Action Plan with the Global Road Safety Partnership (GRSP): Collaboration with Accident Research Program at AIT on Partnership Basis to Establish Thailand Accident Research Center (TARC) This component had planned the establishment, start-up and operation of a road accidents research center within the Asian Institutional of Technology (AIT). The Study of Traffic Accident Cost in Thailand This component is apart indicated in the project description on the preparation of a study on traffic accident costs. The Study on Black Spots Program Evaluation and Road Safety Engineering Capacity Strengthening This component is an additional provision of technical assistance under road safety improvement. (3) Additional Road Safety for Technical Assistance Activities: The additional road safety for technical assistance activities is apart from the reviewed on the project fund utilization that agreed in June 2007. DOH proposed to use the remaining loan fund for five services in road safety component. Development ofAccess Management Policy and Guidelines for Safety and Efficient Operation of National Highways: The QCBS-services are required to develop good practice policy and guidelines for access management techniques and guidelines for traffic assessment of site development for safety and efficient operation of national highways. Development of a National Road Classification System and Speed Management: The QCBS-services are required to develop road hierarchy framework and corresponding speed zone management, in order to promote a nationally consistent operation and management approach to roadway classification. 36 Study, Design and Update of Traffic Control Devices and Roadway Lightings Manual for Department ofHighways: The QCBS-services are required to update Manual on Traffic Control Devices for Department of Highways as well as to update standards and specifications of traffic signals and roadways lightings. Road Safety Audit on Pilot Routes: The QBS-services are required to study and analyze facts concerning problem of road safety, produce the result of analysis, recommendations and practical guidelines to improve the safety of roadways, correct road defects and prevent road accidents through the road safety audit pilot project that conforms to universal standards and create a prototype model and guidelines of road safety audit. Road Safety Knowledge Development and Dissemination (TARC): The SSS are planned to continue and supporting to TARC for 12 months services. The main objective of this project therefore is to build on the success of the first 3 year activities and further develop, utilize, and disseminate the knowledge to address the road safety problems in Thailand. The outcome of this extended phase will enable TARC to become a sustainable center of research excellence in road safety with adequate resources to continue a high quality and useful research program in the future. The project's Final Report was submitted on May 25, 2009. Component D: Institutional Strengthening (1)Institutional strengthening of the DOH through (a) development of a centralized road database, road asset maintenance and management system, and a bridge management system; (b)development of a framework for and a case study on public-private partnerships in highways; (c) strengthening capacity in project coordination; and (d) introduction of a highway specific e-procurement system; 2.2. The additional financing project(Loan 7775) has three components as follows: Component 1: Widening of five selected sections (216 km in total) of national highway network from two to four lanes (same scope as Subcomponent B-I of the HMP): (a) Civil works (US$ 144.3 million including contingencies) (i) Route 201: Sikhiu - NongBuaKhok, 60 km (ii) Route 24: Nang Rong - Prasart, 65 km (iii) Route 331: Intersection Route 36 - Intersection Route 3, 28 km (iv) Route 4: PhangNga - Krabi Section 3, 27 km (v) Route 408: Ranot - Sathingpra, 36 km (b) Supervision of the widening civil works (same scope as Sub-component B-3 of the HMP), US$ 1 million Component 2: Public-private partnership financing transaction advisory for the proposed Bang Pa-in to NakhonRachasima Motorway (same scope as Subcomponent D-1(b) of the HMP), (US$ 1 million) Component 3: Financial audit (US$50,000, same scope as D-2 of HMP) and technical audit (US$ 50,000). 3. Evaluation of Project Development Objectives The main achievement of the PDO as assessed by key performance indicators are listed as follows: * Reduced average unit cost/km of maintenance in real terms * Asset value of road network increased by 0.2% by end of project (or decline reversed) * Reduced vehicle operating costs by 10-15% on target roads * National road database established, updated annually, and used for planning, programming, budgeting, and monitoring of highway investments and maintenance expenditures 4. Evaluation of Project Design The project design aims to promote performance-based contract in DOH's periodic maintenance to reduce cost. However, the shift toward performance-based contracts faces several complications as DOH is still largely responsible for carrying out their own maintenance. The design of the project was perhaps too optimistic in expecting major changes in DOH's maintenance practice. 37 5. Evaluation of Project Implementation by Components Loan 4721 - Component A: Highway Rehabilitation and Maintenance (1) Periodic Maintenance: There were implemented all about 675 km out of 65 projects as reporting ended in June 2009. The periodic maintenance had been implemented in two stages, 55 projects in the beginning stage during 2005-2006 and 10 more projects at recentness of June 2009. The NCB (National Competitive Bidding) procurement process had been arranged for all original fifty five (55) packages during year 2004 to 2005 for the first stage. The first contract was started in May 2005 and last contract was completed in October 2006. The overall progresses were successive as planned. Subsequently, due to the loan saving under the civil works category, it had agreed in principle during 2007 that DOH would be proposed addition NCB for more periodic maintenance under the remaining loan fund for the work category. In the last quarter of 2007, DOH was selected some out of initial proposed locations for additional Periodic Maintenance works under the budget constraint. The procurement had been arranged in January 2008 while some procurement packages had invalidity dated of bidding price due to some delayed on the government support fund. Subsequently, new additional projects which more proposed to utilized of the remaining loan fund from the cancelled of Performance Based Maintenance project. Furthermore new procurement had been re-arranged again in the first quarter of 2009. Since then, there were 10 projects implemented for the second stage, out of all additional proposed until June 2009. However, there were indicated to use the project cost savings and the uncommitted funds to finance the more of 37 packages for periodic maintenance. Therefore, the implementation of outstanding additional projects would depend on the approval process on the project restructuring and additional financing. (2) Long Term Performance Based Maintenance: The implementation of this civil works component would depend on the commencement of the consulting services of the study, design and supervision of Performance-Based Maintenance Contracts (component A-4) and result of their works. However, due to drop on the consultancy and terminated the procurement process in May 2008 that it may not possibility to achieved this component as original planned. Otherwise, the loan allocation of this component had reviewed for future activities in Periodic Maintenance. (3) Supervision of Periodic Maintenance and Road Safety Improvement: Initially, there were QCBS (Quality and Cost Based Selection) consultants' contract with the Louis Berger Group for a service period of 24 months on supervision activities for original 55 periodic maintenance projects, and some initiated implementing of the road safety improvement component. Then, this contract was concluded in January 2007. In additional to the new recently proposed on additional periodic maintenance in 2009, there were requested to hiring the individual consultant service for three(3) Highway Maintenance Engineers to supporting the DOH on managing and coordinating the supervision works. The term of engagement on the independent civil engineers have been made and commenced on February 18, 2009 for the additional 10 recently implemented projects. (4) The Study, Design and Supervision of Performance - Based Maintenance Contracts: This consultancy component was first arranged on original QBS procurement process for "the Study, Design and Supervision of Performance - Based Maintenance Contracts" during year 2005 and 2006, but it was cancelled due to some obstacle in negotiation process on the draft contract. Then new TOR had been revised and divided into two phases for new QCBS procurement processes for "the Design, Procurement and Monitoring of Performance - Based Maintenance Contracts in Thailand" during the last quarter of 2006. The procurement process had been continued until the proposal submission in June 2007 and evaluation process thereafter. However, the new procurement process was failed again similarly to the first stage in May 2008. However, there were indicated under the restructuring that proposed to use the project cost saving and uncommitted funds to finance a consultant to assist the DOH to study the feasibility of performance-based contract (PBC) and to design a pilot PBC for the maintenance of about 150 km motorway. 38 Loan 4721 - Component B: Highway Rehabilitation and Maintenance (1) Widening of three selected sections (73 km in total) from two to four lanes: A.Si Chon - A. ThaSala The ICB contractor was started on October 1, 2004 and scheduled completion dated on March 24, 2006. The final construction inspection was successfully conducted on March 20, 2006 when the works were considered substantially completed in accordance with the contract. The works were completed within budget and on schedule. A.NiKhom Kham Sroi - A.LoengNokTha The ICB contractor was started on October 1, 2004 and scheduled completion dated on March 24, 2006. The final construction inspection was on March 24, 2006. The works were completed within budget and on schedule. B.NongBuaKhok - ChaiyaPhum The ICB contractor was started on October 1, 2004 and scheduled completion date was on September 20, 2006. The final construction inspection was conducted on September 19, 2006. The works were completed within budget and on schedule. (2) Construction of three overpasses at critical intersections: Overpass at Intersection ofRoute 22 and Udonthani Bypass Route 2 The ICB contractor was started on October 1, 2004 and schedule completion dated was on January 23, 2006 at only about one third of the contract works completed with extended until February 18, 2006. This contract had been plagued by the contractor's cash flow problems since the beginning and works slow down until the final cumulative progress about 69.80%. Subsequently, the contract had terminated according to the letter dated June 27, 2007.After the contract termination on June 27, 2007, DOH proposed to completion the remaining works by force account and using the government fund. The works had been re-organized by DOH's Bridge Construction and Rehabilitation Center No.2 (KhonKaen) in July 2007 until substantially completion for the overpass bridge opened on January 31, 2008. Overpass at KM. 8, Ramindra Road The ICB contractor was started on October 1, 2004. The scheduled completion dated was on March 24, 2006. The contract time was extended until April 25, 2006 to take account of work suspension arising out of delay factors. The final construction inspection was successfully concluded on April 24, 2006. The works were completed within budget and about one month behind the original scheduled. Railway overpass at Ban Pong The ICB contractor was started on October 1, 2004. The scheduled completion dated was on March 24, 2006. The contract time was extended until May 2, 2006 to take account of work suspensions arising out of the delaying factor. The final construction inspection was concluded on May 2, 2006. The works were completed within budget and about six weeks behind the original scheduled. (3) Supervision of the Widening and Overpasses Projects: The QCBS consultant contract was signed on September 15, 2004 and the notice to commence the service was issued on October 1, 2004 with period of 24 months. The contract was original ended in September 2006 and extended three months until ended on December 31, 2006. There were five out of six contracts completed under the supervision. The slippage in program is attributable to the contractor's failure to completion at Udonthani overpass. However, the remaining works had been continued undertaken by DOH departmental. Loan 4721 - Component C: Road Safety Improvement (1) Improvement of Hazardous Locations: The 37 NCB contracts were completed under this component since May 2008. The implemented locations comprises of 7-Safety Guard Devices, 6- Pedestrian Bridges and 24-Improvement of Roadway. However, Bureau of Highway Safety was ever proposed to fully utilize the remaining fund by proposed additional road safety projects and intends to procure and completion these before loan closing dated in June 2009. 39 But due to the loan timeframe and the problem of reallocation on government budget supporting, there were cancel the remaining outstanding packages from the loan and transferred to be implemented by the government funding only. In conclusion under this component that, an original 66 packages were planned and 37 packages completed. (2) Support for Implementation of the Road Safety Action Plan with the Global Road Safety Partnership (GRSP): Collaboration with Accident Research Program at AIT on Partnership Basis to Establish Thailand Accident Research Center (TARC) The contract was signed and effective on June 23, 2005 and original scheduled completion in June 2007. However, the contract was extended until September 1, 2007 and the Final Report was submitted on August 31, 2007. The project website "WWW.TARC.OR.TH" can be found more information for this component. However, this component had been continued and supporting to TARC for road safety knowledge development and dissemination. The Study of Traffic Accident Cost in Thailand The contract was signed and commenced on August 15, 2005 and scheduled to completion within August 2007. The contract was extended until October 1, 2007. The Final Report was submitted on September 28, 2007. However, the key successive of the study that, the results should be more widely disseminated to the various stakeholders and could also be useful for the private sector stakeholders to stream line the accident investigation and other associated processes to achieve overall cost savings and efficiency gains. The Study on Black Spots Program Evaluation and Road Safety Engineering Capacity Strengthening The contract was signed on September 11, 2006 and effective on October 2, 2006 with original completion in April 2, 2008 and then extended until June 30, 2008 and the Final Report was submitted on June 30, 2008. However, the study results could also be useful and widely disseminated to the various stakeholders to stream line the accident investigation and other associated processes to achieve overall road safety improvements. (3) Additional Road Safety for Technical Assistance Activities:The procurement on four services had been arranged in 2007. However, due to the loan time frame and delaying on the government budget supporting, the planned had postpone and transferred the 4 services to be implementing in the future. The four cancelled services include 3 QCBS and 1 QBS as follows, beside 1 SSS had been implemented as planned. Loan 4721 - Component D: Institutional Strengthening (1) Institutional strengthening of the DOH Development of a Centralized Road Database, Road Asset Maintenance and Management System and a Bridge Management System (Original): The QCBS procurement method had been arranged for original scope of works during year 2005 to 2006. The contract was prepared and appointed to sign on June 23, 2006 but there were some obstacle in the signing process and finalized to terminate the procurement process. However it was agreed during March 2007, due to the emerging scenario in overall IT framework and capacity of DOH the original scope of works in this component would change to consist only of the development of Pavement Management System (PMS) and Bridge Maintenance and Management System (BMMS). * Pavement Management System (PMS) The project's outcome of this subcomponent had recommended that closely linked to a part of the project development objective and decided to implement by the government funding only. In July 2008, DOH by Bureau of Highways Maintenance Management had a contract signed with the Faculty of Engineering, Chulalongkorn University in the project of Maintenance Road Database System and Pavement Management System. The project objectives and scope of works are based on the originally agreed TOR which it may reasonable apart supporting to the 40 original objectives. This project planned to be completion within July 2009, and the Final Report was submitted on June 19, 2009. * Bridge Maintenance and Management System (BMMS) This subcomponent is similarly to PMS by initially agreement to implementation apart supporting by the loan, but due to the delaying on the selection process and the project closing date, the project was considered to transfer under DOH's funding in August 2008. Subsequently, Bureau of Bridge Construction has decided to continue and implementing by the government fund. They had been prepared a new revised TOR that based on the originally agreed by the Bank. However, this project was waiting for the government budget allocation prior contract signing since this report period at the ending of June 2009. Framework and Case Study for Public-Private Partnerships (PPP) in Thailand's Highway Program: The QBS consultant was signed on July 26, 2007 and commenced on August 1, 2007 which scheduled completion in May 2008. However, the consultants were submitted the Final Report on June 10, 2009. However, due to the proposed additional financing, there are indicated to be finance under the consultant services of Public-Private Partnership financing transaction advisory for the proposed Bang Pa-in to NakhonRatchasima Motorway. Project Coordination: The QBS consulting service were completed the original works in June 2008. However, due to the loan was extended for continuing the remaining works until June 2009, DOH was approved for contract extension until new loan closing date in June 2009. The draft Addendum No.2 in granting a contract extension has no objection in July 2008 and signed on September 22, 2008 for the project implementation during July 2008 to June 2009. However, the consultants' contract is ended on the same currently loan closing dated in June 2009. Social and Environmental Capacity Building: The environmental issue is one of the most important items that specified in the Loan Agreement and Project Appraisal Document (PAD). This component is a part supporting to the project and financing by the government fund. DOH has set up Operation Policy Guidelines on Environmental and Social Aspects (OPGES) in order to be the guidelines for the work. In order to drive the OPGES to actual implemental, DOH has been arranged and implementing in 2 services concern includes, * The consulting services to study on environmental operational procedure in road works, this project planned to set up the Operational Procedures (OP), Action Plan and Auditing and Evaluation, including the indicator of effectiveness of environmental and social operation. The consultants have substantial completion on the studying and submitted the Final Report in March 2009. * The consultant services to strengthen EG's capacity to address social issues related to road projects given due focus on social impact assessment (SIA) and public participation (PP). This project will increasing performance of evaluation of social impact assessment and public participation by making manual of environmental and social impact assessment and also manual of public participation for the concerned operation department which working closely to the public. This project has planned to be completion within September 2009. Introduction ofE-Procurement: This project originally was envisaged in the project appraisal document to supporting the development and implements a highway specific e-procurement system. However, due to the government agencies have been used the e-procurement system developed by Ministry of Finance since 2004. As a result, this component has not been implemented under the project. In additional that, DOH has been following the original government regulation and policy on E-auction and Web base procedures that according to the original public's regulation in E-procurement procedure and the government's policy. (2) External audit Financial Management The consulting service had been implemented in 2004. External Audit 41 The contract for the auditor of project financial statements and accompanying statement of expenditures and special account was signed and commencement on January 8, 2007. The financial statement of independent certified public accountants as at September 30, 2008 was submitted in March 2009. However, due to the loan extended to June 2009, the Auditor's contract had extended another 4 months until October 2009. Loan 7775-Almost all activities were not implemented as the World Bank did not extend the project closing date. Only some of the consultancies were done, such as the hiring of the International Procurement Consultant. 6. Rating Summary Loan 4721: Moderately Satisfactory Loan 7775: Unsatisfactory 7. Assessment of Bank and Borrower Performance 7.1. Bank (a) Bank performance in ensuring quality since the beginning was highly satisfactory (b) Quality of supervision was satisfactory (c) Implementation performance was moderately satisfactory 7.2. Borrower (a) DOH performance in ensuring quality since the beginning was highly satisfactory (b) Quality of preparing all relevant documents and evaluation of PQ application was highly satisfactory (c) Implementation performance was moderately satisfactory 8. Lessons Learned Project Design and Project Preparation - The Precise project appraisal significantly contributes a lot to the project implementation stage - It is time consuming to prepare all the relevant documents in English. Even though the individual procurement consultant (IPC) was hired to assist in preparing the documents, the time for preparation such a document which is only 5 months still not adequate. So DOH had to complete the remaining part by itself until the bidding process. - An incompatible of the Bank's guidelines and the Country's system of procurement procedures. The discussion was to be made regularly in order to only make all stake holders have the same understanding. The in-depth details of implementation condition should be negotiated and included in the loan agreement at the initial stage. It will be very clear to all parties how to proceed without any doubts. - The proportion of the loan should be 100%. It would contribute to the government budget allocation - The Bank can help improve the appropriateness of the project cost by considering major factors that might affect to the project cost in the future i.e. the fluctuation of inflation, labor fare, fuel, and also construction materials. - The individual procurement consultant should be hired at the beginning stage as to assist DOH preparing all relevant documents throughout the bidding and evaluation process. Project Implementation - The method of selection that consider the total lowest price is appropriate for the project which is located not too far from the others, so that the mobilization cost of machinery and equipment also the transportation of construction materials have slightly effect to project cost. Practically, the project location which are scattered and far away from each other will be affect a lot from additional cost from the mobilization and transportation. It could cause the contractor's financial crisis and consequently stop working. 42 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 43 Annex 9. List of Supporting Documents 1. The World Bank, Highways Management Project: Project Appraisal Document (No. 24525-TH), October 27, 2003 2. The World Bank, Highways Management Project: Loan Agreement (No. 472 1- TH) between Kingdom of Thailand and the International Bank for Reconstruction and Development, December 16, 2003 3. The World Bank, Back to office reports and Aide-memoires of Highways Management Project from 2003 to 2013 4. The World Bank, Project Status Report and Implementation Status and Results Reports for Highways Management Project from 2003 to 2013 5. The World Bank, Thailand Highways Management Project, Restructuring Paper for Second Order Restructuring, July 8, 2009 6. The World Bank, Thailand Highways Management Project, Project Paper for Additional Financing IBRD Loan (No. 52994-TH), February 12, 2010 7. The World Bank, Highways Management Project: Loan Agreement (No. 7775- TH) between Kingdom of Thailand and the International Bank for Reconstruction and Development, June 11, 2010 8. Department of Highways, The Study of Traffic Accident Cost in Thailand, September 2007 9. Department of Highways, Framework and Case Study for Public-Private Partnerships (PPP) in Thailand's Highway Program, June 2009 10. Department of Highways, The Study, Design and Supervision ofPerformance - Based Maintenance Contracts, June 2013 44 MAPS m -- ut 77,Hw s KM 52 014- m 7 0 4 7.5 452 . . .......2 [BRRD - Iliighway Management Projectd Prxkject Implemented (COv1 Worksi: Northern Area Highway Upgrading and Intersection Improvement. (B-1,B-2) Imiprovemnent ofllazardous Locations. 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