Document of

The World Bank

FOR OFCIAL USE ONLY

Report No. 7741

PROJECT PERFORMANCE AUDIT REPORT

PAKISTAN THIRD RIGHWAY PROJECT(CREDIT 974-PAK)

V APRIL 28, 1989

Operations Evaluation Department

This document has a restricted distribution and may be used by recipients only in the performance oftheir offietal duties. Its contents may not otherwise be disclosed without World Bank authorization.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EXCHANGE 1ATES

Name of Currency (Abbreviation) Pakistani Rupee (Ra)

Period Exhane Rate

Appraisal US$ 1 - Re 9.901979-1981 1 9.901982 1 12.841983 1 a 13,501984 1 = 15.361985 1 = 16.001986 (Closing) 1 * 16.80

ABBE ATIONS

C & W - (Provincial) Communications and Works DepartmentGOP - Government of PakistanICB - International Competitive BiddingIDA - International Development AssociationIDBP - Industrial Development Bank of PakistanMOC - Ministry of Cou=icationsNESPAK - National Engineering Services (Pakistan) Ltd.NHB - National Highway BoardNLC - National Logistic CellNTRC - National Transport Research CenterOED - Operations Evaluation DepartmentPCR - Project Completion ReportSAR - Staff Appraisal ReportPPAM - Project Performance Audit MemorandumPPAR - Project Performance Audit Report

FOR oUSCIA ONLYTHE WORLD BANK

Washington. D.C. 20433U.SA.

Ohee Of DNKecIansealOperteam 1wlustM

April 28, 1989

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Performance Audit Report on Pakistan Third HighwayProject (Credit 974-PAK)

Attached, for information, is a copy of a re.port entitled"Project Performance Audit Report on Pakistan Third Highway Project(Credit 974-PAK)" prepared by the Operations Evaluation Department.

Attachment

This document has a restricted distribution and may be used by recipients only in the performsaceof their offcial duties. Its contents may not otherwise be disclosed without World B&nk authorinstion

FU lk. itAL t. ONLY

PROJECT PERFORMANCE AUDIT REPORT

PAKISTAN THIRD HIGHWAY PROJECT(CREDIT 974-PAK)

TABLE OF CONTENTS

Pae No.

Preface ..................................Basic Data Sheet .................................... 1Evaluation Summary ............................................. v

PROJECT PERFORMANCE AUDIT MEMORANDUM

I. LANK ASSISTANCE FOR HIGHWAYS .......................... 1

II. THIRD HIGHWAY PROJECT ............................... 4

1. Road Rehabilitation ................... 42. Highway Maintenance ............................ 43. Local Consulting and Construction Industry ......... 64. Project Planning and Administration ................ 85. Trucking Regulations ............................... 86. Sustainability . .......................... 107. Findings and Recommendations ....................... 10

PROJECT COMPLETION REPORT

Is* INTRODUCTION ...... ............... 19II. TRANSPORT SECTOR 20

III. PROJECT PREPARATION AND ITS DESCRIPTION .............. 22IV. PREVIOUS HIGHWAY CREDITS .................. 24V. THIRD HIGHWAY CREDIT ........................... 25

VI* IMPLEMENTATION 31VII. GROUP I CONTRACT NO. 7 ............................... 38

VIII. GROUP II: CONTRACT NO. 3 & 4 .......................... 48IX. ROLE OF THE BANK A .D THE BORROWER ..................... 62X. IMPROVEMENT OF ROAD MAINTENANCE CAPABILITIES .......... 63

XI. PLAN OF ACTION IN RESPECT 0.7 VEHICLE OVERLOADING ...... 65XII. SCHEDULE OF DISBURSEMENTS FROM WORLD BANK ............ 66

MAP (IBsD 14188R Third Highway Project) ............. 81

SUPPLEMENT TO PROJECT COMPLETION REPORT ......................... 83

This document has a restricted distribution and may be used by recipients onlY in the petformanceof their official duties its contents may not otherwise be disclosed without World Bank authorization.

PRCJECT PERFORMANCE AUDIT REPORT

PAKISTAN THIRD HIGHWAY PROJECT(CREDIT 974-PAK)

PREFACE

This is a Project Performance Audit Report (PPAR) of the Pakistan ThirdHighway Project. Approved on January 15, 1980, the project was supported byCredit 974-PAK for US$ 50 million, of which US$ 44.57 million were disbursedand US$ 5.43 million were cancelled.

The PPAR consists of: (i) an Evaluation Summary and a Project PerformanceAudit Memorandum (PPAM), written by the Operations Evaluation Department(OED); (ii) a ?roject Completion Report (PCR), drafted by a consultant onbehalf of the borrower; and (iii) a Supplement to the PCR, produced by staffof the World Bank's Europe, Middle East & North Africa Regional Office. ThePCR and the Supplement were submitted to OED two years after credit closing.

The PCR and, to some extent, its Supplement are documents comprising attimes an unusually frank discussion of project issues. Most comments by the

* PCR were addressed to the project's construction items. It is to the credit ofthe principal implementing agency, the National Highway Board (NB), to havereleased the PCR to the Bank as it was drafted by the consultant, withoutattempting to blunt its message or wfen as much as editing the report. Theaudit largely accepts the PCR's and the Supplement's findings. But, as itsown contribution to the project review, it expands on a number of topics whichhad not been fully covered or in OED's view needed a wider perspective ormodified presentation.

To prepare the audit, OED reviewed the PCR and Supplement against thePresident's Report, the Staff Appraisal Report (SAR), the legal documents,the Transcript of Board Proceedings, project files and other material. Italso made use of information on other Bank projects for the transport sector.Further, OED discussed the project with Bank staff and, during a mission tothe country in October 1988, with government officials, officers of a Pakis-tani development bank, domestic and foreign consultants and representativesof construction companies.

Following standard procedures, OED invited government comments on thedraft PPAR. No reply was received.

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET

PAKISTAN THIRD SIGMAY PROJECT(CREDIT 974-PAK)

KEY PROJECT DATA

Appraisal ActuallEstimate Forecast

Total Project Cost (US$ million) 82.34 93.17Cost Overrun (1) 0 13Credit Amount (US million) 50.00 50.00Credit Disbursed 50.00 44.57Date Physical Components Completed 12131/83 12/31/86Proportion of Physical Components

Completed by Original Schedule (Z) 100 n.a.Time Overrun (Z) 0 75Economic Rate of Return (2)11 41-85 20-32

CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS(US$ Million)

BankFfs: 1 g 8 8 8 8

Appraisal 19.5 38.0 47.0 50.0 50.0 50.0 50.0Actual 6.2 9.1 15.9 22.9 33.7 42.0 44.6Actual as I of

Appraisal 32 24 34 46 67 84 89

11 Returns for road rehabilitation.

OTHER PROJECT DATA

Orizinal Date Actual Date

First mention in Files 12121/72Government9a Application n.a. no.Negotiations (Completed) n.. 08109179Board Approval '11--177 01/15180Credit Agreement n.a. 04109180Credit Effectiveness n.. 08104/80Credit Closing 06130184 06/30186

Follow-up Project Fourth Hbighway Project (Loan 2814-PAK)

Fiscal Year of Borrower July 01 - June 30

STAFF INPUT(Staff-Weeks)

Bank FYsL 73 74. 75 76 77 78 79 .80 81

. Identif./Prep. 1.2 37.2 3.6 13.4 22.8 44.4 9.3Appr./Neg. 31.4 22.9Supervision 1.0 4.1 14.8

Total 1.2 37.2 3.6 13.4 22.8 44.4 41.7 27.0 14.8

82 83 84 85 86 87 Total

Identif./Prep. 131.9Appr./Neg. 54.3Supervision 10.0 24.6 16.8 13>4 11.0 3.2 98.9

Total 10.0 24.6 .16.8 13.4 11.0 3.2 285.1

ISSION DATA

Nonth/ No. of bays Man- Date ofyear Staff Røport

IdøntificatLon 1 05/73 1 1 1.0 07/73II 11/73 2 14 4.0 01/74III 11,74 1 3 1.0 11/74

Prøpration I 01/75 1 5 1.0 03/75II 01176 1 5 1.0 05/76III 02/77 1 13 2.0 03/77

Pre-appralsal I 02/78 1 11 1.5 03/78II 05/78 3 6 3.0 06/78

Appradsal 11/78 4 11 6.0 12/78

Post-appralsal I 02/79 1 7 1.0 03/79II 06/79 1 9 1.5 06/79III 07/79 i 5 1.0 07/79

Post-negotlations 11/79 1 7 1.0 12/79

Subtotal 1 25.0

Supervision I 02/80 1 10 2.0 04/80II 06/80 1 - 7 1.0 07/80III 03/81 1 7 1.0 04/81IV 06/81 1 13 2.0 07/81v 06/82 1 8 1.0 07/82VI 12/82 1 13 2.0 01/83VII 10/83 2 8 3.0 10/83VIII 07/84 1 9 2.0 07/84IX 02/85 2 13 4.0 03/85X 10/85 1 ·11 2.0 12/85XI 06/86 1 9 1.0 06/86

Subtotal 2 21.0Total 46.0

v

PROJECT PERFORMANCE AUDIT REPORT

PAKISTAN THIRD HIGHWAY PROJECT(CREDIT 974-PAK)

EVALUATION SUMMARY

Introduction

The Bank has beei asociated with the Pakistan land transport since about35 years. Placing the accent on rail transport, it has financed eight railoperations and four road infrastructure projects to date. The first roadproject was approveO in 1964, some twelve years after the first railwayproject, and the ast road project, in 1987. Both raLl and road transportcontinue to display considerable shortcomings: Rail transport is inefficientand financially weak; roads are inadequate in standards, condition and regio-nal coverage (PPAM, pares. 1-3).

Obiectives

The main focus of the Third Highway Project was on national highwayswhich comprise some 5Z of the length of all roads and 10% of the national andprovincial roads systems combined. At this time, the Bank has not yet preparedtransport projects for tertiary roads, in contrast to other countries whereBank assistance has covered the entire road spectrum (PPAM, para. 4).

. The Third Highway Project's explicit objectives were: (a) to rehabilitatehigh-priority national roads; (b) to improve road maintenance capabilities inthe provincial and federal highway administrations; (c) to contribute to the

. development of the domestic consulting and construction industries; and (d) toimprove project planning and administration in tLe national highways agency(PCR, paras. 5.01 and 5.02; and PPAM, paras. 9-19).

The principal item funded under the project was road rehabilitation.Road maintenance improvements were to be accomplished through equipmentpurchase, technical assistance and a study of axle loads of trucks. Overloadedtrucks had long been identified as a main cause of road deterioration. Thedomestic construction industry was to be supported through the financing ofequipment acquisition and technical assistance and through Implementation of aperiodic maintenance program suitable for domestic contractors. The projectwas less specific on the objectives of support to domestic consultants andimprovements in project planning and administration (PCR Supplement, paras.3.1s-6.Ol and Table is; and PPM, paras. 9-19).

Implementation Experience

Project Implementation was troubled. Road rehabilitation suffered sub-stantial delays, cost-overruns and large problems arising primarily from theinexperience and financial weakness of the domestic contractors. Implemen-tation of the road maintenance component succeeded only in part, but theproject planted a seed for maintenance improvements under the Fourth Highway

vi

Project. Actions to support 'the domestic construction industry fell short ofthe plan. In particular, during the stretched-out implementation period, noperiodic maintenance program for domestic contractors was realized. How wellimplementation of the other project components went is not clear (PCR, paras.6.01-8.03 and Chapters IX-XI; PCR Supplement, pars. 9.02s-10.06s; and PPM,parse. 10-20).

Results

The project contributed to the rehabilitation of national highways,providing a signal that priority in road budgets should be given to thepreservation of the existing infrastructure (PCR, Chapter IX; and PCR Supple-ment, para. 3.3s; and PPM, para. 10).

The project yielded valuable experience with the preparation, executionand management of construction contracts (PCR, Highlights and parse. 6.01-6.06, 7.01-7.08 and 8.01; and PCR Suiplement, Supplement to Highlights andpares. 9.01s-9.049; and PPM, para. 10).

Progress in maintenance of national and provincial roads was unsatisfac-tory and inconsistent with overall maintenance requirements. The projectfailed to produce a real solution to the chronic truck overloading, andattempts at controlling vehicle loads have now been shelved because of the lawenforcement situation. Instead, pavement strengthening of Pakistanvs roads isbeing envisaged, but this will be a long-term task with few Immediate economicbenefits (PCR, Chapters IX-XI; PCR Supplement, pars.10.0ls-10.06a and PPN,pares. 11-14 and 19-21).

There is not much evidence that the planned support to the domesticconstruction "industry" has been realized. This is also true for the supportto the domestic consulting "industry" and the development of project manage-ment capabilities (PPAM, paras. 14-18).

Sustainability

Despite current shortcomings of highway maintenance, roads rehabilitatedunder the pr'ject should stand a f-tir chance of reaching the end of theirplanned economic life. The sustainability ,f the non-construction items Ismore in doubt; relatively little has been achieved under the project and, sofar, the transport sector has demonstrated an ability to cancel gains (PPAM,parse. 21-22).

Findings and Recommendations

Flaws in project design and supervision suggest tightening of Bankproject management procedures. The Pakistan experience indicates that theBank should consid-t commissioning a review and policy paper on how to dealwith or compensate twr truck overloading. Government attitudes regarding theproject were inconsistent with the spirit of the project agreements, and theBank's low-key reactions to problems encountered did not necessarily expeditesolutions. Government and Bank postures offer material for reflection by both(PPM, paras. 10-14 and 23-27).

1

PROJECT PERFORMANCE AUDIT MERANDUM

PAKISTAN THIRD HIGHWAY PROJECT(CREDIT 974-PAK)-

I. BANK ASSISTANCE FOR HIGHWAYS

1. Land transport In Pakistan has been steadily Improved since the countrybecame Independent. However, in the tow of a growing economy, the transportsystem has expanded at a slow pace and it still d1splays major shortcomings.There Is an excessive focus on railway transport, ,%hich after better days inthe past has a reduced role but persists in re,sting change. Further, thequality of the road infrastructure, defined by the technical -tandards,condition and regional coverage of roads, is low.

2. The Bank has asated Pakistan land transport since about 35 years.Placing for a long time the accent on rail transport, it has financed eightrailway operations to date, of which the first was approved in 1952 and thelast in 1982. Overall, the projects' success in reshaping the railway hasbeen limited. Steadily losing ground to road transport, the dominant mode,the railway today accounts for 17-252 of the country's freight and passengermovements.

3. Road infrastructure was the beneficiary of four Bank loans or credits.The (first) Highway Project, Credit 54-PAX, was approved in 1964, some twelveyears after the first railway operation. The Second Highway Project, Loan 578-PAK, followed in 1968. The Third Highway Project, Credit 974-PAK, came in1979, and the Fourth Highway Project, Lon 2814-PAK, in 1987.11 While spacedwidely apart, all four projects had remarkably similar characteristics,demonstrating consistency In the Bank's sector assessment and focus though notnecessarily producing the intended results. All financed some road construc-tion or upgrading and all aimed at improvements in highway administration andmaintenance.

4. The four projects financed a total of some 1,400 km of major roadsconstruction, including rehabilitation and Improvement. Given Pakistan'sresource constraints, Bank financing was a welcome contribution to the roaddevelopment budgets, though it dealt only with three percent of the country'snational and provincial highway network at present or about 202 of what todayconstitutes the national road system to which most of the Bank-financed roads

11 The Bank railway and road projects ascribed to Pakistan include lendingoperations for the former West Pakistan.

2

belong. No Bank transportation project has yet been made for the developmentof lower class (district and village) roada which is an indication thatPakistan Is lagging behind other countries in the Bank's support for suchroads. The bank explains this situation by the preeminence of national high-ways in carrying traffic2, an argument which could be made In other countriesas well. The anomaly of the Bank's exclusive attention to major roads wasalready naced by the 1976 audit of the First and Second Highway Projectswhich, commenting that "the need for secondary and feeder roads is ... pres-sing", hinted that perhaps the Bank ought to get Involved in feeder roads,3J

5. Bank efforts at improving the highway administration started with the1964 (first) Highway Project, which included a study of the organisation andmanagement of the agency in charge of what today constitutes Pakistan'snational and provincial network. Arguing for institutional progress in anoutdated highway administration, the staff appraisal report (SAR) noted it was"not too early' to start building up a competent and modern highway organiza-tion, correctly characterising the task as "long and difficult*.41 The 1968Second Highway Project continued with the same type of consulting serviceswhich were somewhat enlarged to include training. What tangible progress wasactually achieved under these projects may be surmised from a carefully wordedbut not particularly revealing post-implementation assessment: The auditreport concluded that it was *very hard to assess the Bank's contribution tothe highway sector ... in light of the political and administrative difficul-ties that marred the planning and implementation of both projectsw.l/ Subse-quent Bank reports, such as the SAR for the Third Highway Project, repeatedthis sentiment.61 The political and administrative difficulties the auditalluded to were the 1965 war between India and Pakistan, the 1970 partitioningof West Pakistan into four Provinces and the 1971 civil war and renewedoutbreak of war between India and Pakistan.

6. The 1979 Third Highway Project, following the Second Highway Project withan eleven years' interval, announced the objective of improving planning andadministration, primarily of the National Highway Board (NHB), the agency incharge of national highways, on which the project was focused. The project,further, initiated Bank support to the domestic consulting and construction

21 Staff Appraisal Report (SAR), Fourth Highway Project, Loan 2814-PA,paras. 2.20 and 4.05. Bank staff also said that the Bank approved transpor-tation projects exclusively for national roads because the Asian DevelopmentBank (ADB) and the US Agency for Internat.onal Development (USAID) dealt withother types of roads, as did the Bank's own agricultural projects.

11 Project Performance Audit Report (PPAM), Credits 54-PAM & S-1-PAK andLoan 578-PAK, para. 7.05.

A/ Staff Appraisal Report (SAR), Highway Project, Credit 54-PAK, paras. 14and 99-100.

Al PPAR, Credits 54-PAM & S-1-PAK and Loan 578-PAK, para. 7.01.

Al SAR, Third Highway Project, paras. 2.30-2.31.

3

industries, the governments' partners in the management of the highway in-frastructure. The 1987 Fourth Highway Project continued institutional supportto NHB, launched a new initiative for institutional lmpravement (pCimarilyfor provincial road maintenance) In one of Pakistan's four Provin.es, andextended assistance to the road construction industry.

7. A 1963 Bank mission to Pakistan noted the "growing awareness" on the partof the highway administration of the problems of maintaining the road system,and the (first) Highway Project subsequently made a start In addressing theIssue by commissioning a highway maintenance study. The problems analysed atthe time were lack of maintenance equipment, low quality of works and truckoverloading. The Second Highway Project went a step farther, seeking toimprove workshop facilities in three of five administrative regions and tointroduce a pilot maintenance scheme in one region. The three-year maintenanceprogram was designed as the first stage of a more comprehensive and long-termmaintenance program covering all roads under the jurisdiction of the highwayadministration. According to the audit report, Ono significantO progress wasmade in maintenance practices under the first project, and maintenance did notprosper either under the second, partly because of the country9s political andadministrative turmoil and partly because of "lack of strong official sup-port". There were also suggestions that too much may have been attempted.7I

8. As a consequence, improvement of road maintenance resurfaced as anobjective under the Third.Highway Project and was carried over to the ongoingFourth Highway Project. While focusing on national highways maintenance, bothprojects dealt with provincial roads maintenance as well.

Z/ PPAR, Credits 54-PAx 7 S-1-PA and Loan 578-PAK, paras. 3.01, 5.15 and7.02.

4

II. THIRD HIGHWAY PROJECT

1. Road Rehabilitation

9. A main objective of the project was the rehabilitation of close to 300 kmof roads, most of them sections of the Karachi-Lshore-Peashawar national high-way, the country9s principal transport axis. Based on analyses that upgradingof existing roads was economically preferable to new construction, the plannedworks consisted of raising embankments, road widening, pavement strengtheningand resurfacing. The works were to be executed by contractors under thesupervision of local consulting firms, supported by expatriate consultants.

10. Even though the nature and scope of works were seemingly adapted to thenational civil works capacities, numerous problems developed during implemen-tation, making the project a serious test of the government's will and abilityto mount medium-scale road construction programs. Among the issues encounteredwere inexperience of contractors, consultants and the Implementing agency, aswell as technical problems. Perhaps the most serious issue faced by therehabilitation component was government Indifference to poor constructionprogress and contractor incompetence, which, in combination with the otherfactors, caused the Bank at one time to consider premature termination of theproject. However, it now seems that the lessons were not lost on the respon-sible government agencies, and that as a result, construction under the FourthHighway Project is proceeding in a much smoother way.1

2. Hihway Maintenance

11. Various PCR sections, more information by the PCR consultant and othersources reveal that improvement of highway maintenance capabilities, one ofthe project's formal objectives, was anything but an unqualified success,though the record does not shed full light on the likely causes. Perhaps, thedesign of the maintenance component was too weak as it produced a maintenancemenu consisting of bits and pieces. Contributing, if not leading, factors sayhave been the Bank's. mild response to a-non-performing but important projectcomponent, and a government posture during project implementation which sug-gested other priorities, intentions and commitments than those implied in theproject agreement.

12. Given the complexity and pervasiveness of the maintenance problem, thesolutions envisaged under the project could best be described as palliatives.As restricted as the project's approach was to maintenance, it was not welllinked to the limited analysis of the situation contained in the appraisal

!1 For a detailed account of implementation, refer to the PCR and the PCRSupplement.

*p

5

document. -All in all, at the national highway level, the project confineditself to setting up a system of maintenance monitoring, and to procuringequipment for one single road maintenance unit which was to serve as a train-ing unit.9] The National Highway Board (NHB), which administers nationalhighways, had been established just prior to project approval and had nocapabilities to undertake maintenance, which was therefore delegated to theProvinces and had to be monitored. Prior to the creation of the NHB, theProvinces were already in charge of maintaining what were to become nationalhighways. For provincial highways, action under the project was confined topurchase of some pieces of equipment in two of the four Provinces and thefinancing of a small contingent of technical assistance. Even at the time ofappraisal, let alone ten years later, it should have been obvious that theproject as designed, under the best of circumstances and with full governmentsupport, could only moderately Improve federal and provincial road maintenancecapabilities.101

13. The project's maintenance component, and to some extent other non-con-struction items, tested the patience of the lending institution and thegovernment's commitment to the project agreements. Supervision reports suggestthat the Bank's patience was prodigious throughout the project's six-year im-plementation cycle, perhaps because the problems with construction works wereoverwhelming.111 Nonetheless, the iapression persists, that is was the Bankrather than the government, which was genuinely concerned with maintenanceprogress, putting the Bank in the awkward position of trying to pull a reluc-tant government along. Such an activist role by the Bank could be seen asbeing in the best interest of the borrower, but it could raise questionsabout the long-term effectiveness of Bank assistance and the mandate the Bank

* really had.

14. One bright side of the maintenance component was a national highway* maintenance study by the technical assistance team assigned to NHB121. Com-

pleted in 1986, the study made the for Pakistan revolutionary recommendationthat national highways maintenance be undertaken by contract under the direct

91 While the Board was supportive of' the project's maintenance objective,one Executive Director wondered why the maintenance monitoring system, if notthe maintenance program itself, had not been implemented before this project9sBoard presentation. After all, he noted, this was the Third Highway Project inPakistan. Transcript of Proceedings, January 15, 1980.

10/ SAR, Credit 974-PAK,'para. 3.02. Confirming that little was achieved inmaintenance, Bank staff cited as reason "a rupture of relations between thenewly created NHB and the provincial C&Ws" (Provincial Communications andWorks Departments). Bank staff said, "NHB's and the Bank's efforts were thendevoted to a study and preparation of a prope=ly designed maintenance com-ponent for the follow-on Fourth Highway Project that took account of the newinstitutional situation."

Ill Project supervision reports.

12/ National Highway Maintenance Study, Volumes I and II, November 1986.

6

administration of NHS and that. delegation of maintenance to the Provincesought to be terminated. Drafted by high-grade consultants, endorsed by NHBand competently backed by Bank staff, this solution has now been adopted underthe Bank's Fourth Highway Project. Initial results have been encouraging interms of quality and cost of maintenance works though the real test will comewhen the consultants, who now co-manage the program, phase out their work.Future success is conditional upon the ethical standards in the sector and,more specifically, the integrity of the contracting process.131 Whethercontract maintenance can be extended to the Prvinces remains to be seen,though one of them may soon be willing to test it. One issue to be resolved isthe fate of the "establishment" in the provincial highway administrationswhich, under the new system, will no longer be financed from the maintenancebudgets. Under the old system, now terminated for national highways, anestimated 401 of the maintenance budgets were spent up-front without benefit-ting main;enance.

3. Local Consulting and Construction Industry

15. The project's formal objective to "encourage' the development of thedomestic "consulting industry"14/ looked seemingly modest but was, perhaps,inflated. What purported to be assistance to the *industry* turned out to bethe engagement of an unspecified number of domestic consulting firms forsupervision of the Third Project's road construction, under the overall coor-dination of an expatriate consulting company.15/ In addition, domestic consul-tants were to be used for road investment studies..Otherwise, the SAR offeredno further industry information, recipes or performance targets. Whether theindustry "encouragement, if n-t development, actually took place Is a matteron which the PCR and the Bank supervision reports have little to say, thoughthe PCR noted that two domestic consulting firms actually supervised theconstruction contracts, one with some difficulties.16/ Further, according toBank staff, several firms did successfully work on road studies, some relatodto preparation of the Fourth Highway Project, under guidance of the expatriatefirm.

16. The Third Highway Projects' formal objective to encourage the developmentof the domestic construction industry produced a more comprehensive program ofBank support, and it received more space in the SAR. Referring to a 1974 studyof the construction sector and an update in 1976, the appraisal concluded

131 This is also a theme brought out in a recent survey of Pakistani contrac-tors. Refer to Syed S. Kirmani, The Construction Industry in Development-Issues and Options, Discussion Paper by the Infrastructure and Urban Develop-ment Department, Report INU 10, 1988, paras. 109-111.

141 SAR, Credit 974-PAK, pars. 3.02.

15/ SAR, Credit 974-PAK, para. 3.06.

16f PCRI, Credit 974-PAK, Main Report, paras. 6.04 and 7.01.

7

that except for a few large companies, equipment shortage was a major industryconstraint, which itself was diagnosed as being due to lack of reasonablecredit terme and continuous work. Based on this analysis and reported indica-tions that the government- *would like to encourage the development of aprivate contracting industry"171, the project financed a line of credit forequipment procurement with a Pakistani development bank.181 In addition, theproject provided funds for the recruitment of a construction industry advisorto be attached to the bank. On the crucial question of continuity of construc-tion works, the project offered a study of future road investment needs, whichwas not to help the construction industry imediately, and the implementationof a periodic maintenance program suitable for domestic contractors by Decem-ber 31, 1980.19/ Overall, the project made useful moves to improve the con-struction industry environment. But it is doubtful whether it dealt with themost pressing issues. According to the recent industry survey by the Bank,the most serious problems facing Pakistani contractors are: lack of efficientpre-qualification standards and unfair procedures for awarding contracts; one-sided contract documents delay in payments; lack of institutional credit onreasonable terms; and problems in importing spare parts (linked to problems ingetting import licenses). Other serious matters raised were unfair administra-tion of contracts and unrealistic completion schedules.20/

17. At the Credit closing in 1986, the planned project support to the con-struction industry had proven to be fairly ineffective as the arrangements forequipment funding were unsuitable2l/ and Implementation of a contract main-tenance program did not commence in earnest until thereafter. The industryadvisor performed his task. Bank supervisions commented critically on industryprogress and government support. Questions were also raised in the Bank aboutthe adequacy of the advisor's final report and the required follow-up to theproject's industry component.22/

171 SAR, Credit 974-PAX, paras. 2.26 and 2.27.

18/ One member of the Bank's Board, praising the project's initiative tosupport domestic contractors, expressed particular satisfaction about theloan funds set aside for the industry. Transcript of Proceedings, January.15,1980.

19/ SAR, Credit 974-PAK, paras. 2.27 and 3.17; and Development Credit Agree-ment, Credit 974-PAK, dated April 9, 1980, Section 4.02 (c).

20/ Syed S. Kirmani, The Construction Industry in Development - Issues andOptions, paras. 109-111.

211 PCR, Credit 974-PAR, Supplement to Chapter 6.

2/ Putting a somewhat different light at the situation by the end of theThird Highway Project, the SAR for the 1987 Fourth Highway Project, in pares.1.19 and 2.21, referred to "a viable road contracting industry" which it saidhad already been created, in part because of 'the improvements in maintenanceplanning and executionu which it also said had taken place. Perhaps, theindustry segment comprising large contractors is viable. But this is not yet

8

4. Project Plannins and Administration

18. The Third Highway Project's formal objective to Improve project planningand administration received a rather casual treatment. No special arrangementswere made under the project to achieve the objective, and it was not thesubject of much attention during supervision, in progress monitoring and In-plementation reporting. Results in this area may have been expected from theproject coordinating consultants, which were to be attached to the DirectorateGeneral of National Highways. But their terms of reference suggest that theircontribution to the objective could have been little else than incidental tothe other and better defined tasks.231 Ongoing efforts under the FourthHighway Project to improve highway management are focused on road maintenan-ce.241

5. Truckins Resulations

19. The Bank's contribution to controlling Pakistan's chronic truck overload-ing did not load to visible success, and the Bank is now prepared to abort orscale down Its mission. Overloading had long been known as a widespread andserious problem responsible for a great deal of road damage. Triggered by theineffective measures at enforcing existing load regulations, the principalEsolution" to the problem, as devised under the.Third Highway Project and

the case for the medium- and small-sized contractors, for, which the ThirdHighway Project set up an equipment fund and was to arrange a periodic main-tenance program. These firms are still in their infancy. Execution of contractmaintenance under the Third Highway Project was confined to one pilot schemefor routine, but not periodic, swintenance, as noted in the SAR, Loan 2418-PAK, para. 2.05. Large contracto:rs have not been, and are not, interested inmaintenance works, according to a company representative who met with theaudit mission.

231 SAR, Credit 974-PAK, Annex 1.

241 Bank staff had these commentss "Buge strides were made in project plann-Ing and administration. The preparation of [the] Fourth Highway Project waspart of (the] Third Highway Project and ... NHB ... planned the new project ina satisfactory manner. Also ... the Bank was able to introduce the concept ofProject Management as a separate skill from construction supervision, so thatby the time (the] Fourth Highway Project began, a functioning project manage-ment cell existed within NHB ...

9

tacitly endorsed by the Bank251, would be to raise the legal axle load limit(from 8 to 13.5 tons per axle). This by itself would not reduce road damagebut legalise it up to the new ceiling, and it would limit the discretion ofthe highway police to demand informal payments from trucking operators.Complementary measures envisaged would be future road construction to higherload standards and the installation of fixed weighing stations to *try' toel1inate *excessive" loading (over 13.5 tons)41 For a long time, announce-ments were made, without tangible results, about manufacturing and licencingtrucks with a more appropriate axle configuration.

20. Adapting to a seemingly unmanageable law enforcement situation, the Bankis now part of a process which will institutionalise the notion that, inPakistan, traffic-induced road damage Is largely outside the realm of economicregulation. In this situation, . little else than construction of strongerpavements is left to a highway administration which attempts to lower roadtransport cost. But it would be illusoxy to hope that a program of pavementreinforcement would quickly yield results.271 With a 45,000 km network ofnational and provincial roads, and the country's likely slow pace of roadImprovements, it would not be far-fetched to assume a 50-year period tocomplete the program. In light of the experience with enforcing truck regula-tions, it is also doubtful whether the proposed weighing stations could bemade workable.28/

_U SAR, Loan 2814-PAK, pard. 1.07; and Pakistan Transport Sector Report,Green Cover, April 10, 1987, para. 3.28.

261 The new plan is based on two studies by the National Transport ResearchCenter (NTRC), Islamabad s Axle Load Survey, 1982; and Economic Implications ofVehicle Overloading, March 1983. The Development Credit Agreement, 974-PAK,Section 4.01 (a) and (b) had stipulated that by September 30, 1980, a study onoverloading be completed; by December 31, 1980, a plan of action be devised;and by March 31, 1981, implementation of the plan be started.

271 The combination of raising legal axle loads and reinforcing pavements wasadvocated by NTRC as the best economic solution. Refer to NTRC, EconomicImplications of Overloading, 1983.

281 Bank staff had these commentst *It should be no surprise ... that controlof axle loads has been no more successful in Pakistan than it has been any-where else, but it should be noted that the axle load survey was well executedand pavement design in NHB is now based on actual rather than notional loadingspectra. The raising of the axle load limit was a serious and practicalmeasure which brought Pakistan int* line with international standards, ac4showed the extent of overloading to be not nearly so bad when viewed againstrealistic standards. The measure should not be dismissed as trivial.* Thestaff also emphasized that the trucking industry was a topic of continuingBank interest.

10

6. Sustainability

21. Whether project benefits are sustainable depends on the specific projectcomponents. Despite misgivings about highway maintenance in the past and theconditions of truck overloading, the project'a physical investments in roadsshould serve the country according to original expectations. If country-widemaintenance problems should persist, the Bank would be expected to put pres-sure on the government to maintain the Third Project's roads, as it has hap-pened several times with a new road financed under the (first) Highway Pro-ject.

22. The case for sustainability of the non-construction items seems to bemore precarios, because relatively little has been achieved, and because thesector has demonstrated a capacity in the past to wipe out gains. Despite theBank's fair efforts, its assistance to transform the highway sector seems tohave produced marginal results. If substantial sector progress is to beachieved in the future, it would have to be on the initiative of the country,but it the last ten years are an indication, the prognosis is not encouraging.Real progress in the sector transcends the transfer from outside of managementand engineering expertise and external advice on the reorganization of thesector, and it can only start with a government and public servants who arecommitted to developing the sector and serving the country. Experience showsthat a development bank can teach little in this respect and cannot substitutefor strong participation from within the country.

7. Findinas and Recommendations

23. The review of the Pakistan Third Highway Project revealed weaknesses inproject design, incomplete project monitoring, dragged-out implementation, arather low-key Bank attitude towards difficulties encountered and an unen-thusiastic performance of the government. Project objectives and componentswere not rigorously linked, and progress reporting on non-construction itemewas weak as the problems with construction, which accounted for most of theloan disbursements, proved overwhelming and took center stage. On the positiveside, the project pointed at areas which are critical for the highway sectordevelopment and it helped in shaping ideas for incorporation into tha FourthHighway Project.

24. For the Bank, the project experience calls for a tightening-up of projectaugement procedures during appraisal and implementation. Project objectives

ought to be more substantive and less cosmetic. Item-by-iten reporting onproject objectives by the government and the Bank during project implemen-tation ought to be more rigorous. Some of these issues are common to otherBank projects as well and, to the knowledge of OED, under review by the Bank.

25. The experience with enforcing trucking regulations is not unique toPakistan, and the time seems to have come when the Bank may consider tocommission a special review and policy paper on the issue. If the Bank, in

11

Pakistan, is to modify its earlier stance on truck overloading, it should doso with its own full and explicit analysis of the economic and road main-tenance implications.

26. The audit noted the Bank's low-key dealings with a hypo-active highwaysector, and for that matter, railway sector. With quite little to show in thePakistan land transport over a period of some 35 years, some fundamentalquestions ought to be asked about what role the Bank can play and, on thebasis of which common ground, the goverinment and Bank can cooperate in thefuture.

27. The audit believes that strong government resolve at the federal andprovincial levels is a missing ingredient of Pakistan's highway sector. Thisrenders some otherwise judicious sector initiatives less than effective. Ifthe government recognizes that good transport in general and road transportin particular are prerequisites for economic development, it should be pre-pared to undertake the decisive actions which go beyond mere statements ofintent.

-- 13-

PAKISTAN

THIRD HIGHWAY PROJECT (CREDIT NO.974 PAK)

PROJECT CQOMPLETION REPORT

- 15 -

PAKISTAN

THIRD HIGHWAY PROJECT (CREDIT No.974 PAK)

PROJECT COMPLETION REPORT

HIGHLIGHTS

The Third Highway Project was successful in achievirg

its main objectives i.e. Rehabilitation & Improvement

of abott 295 Kme of high priority road sections of

Pakistan National Highway on identified design

standards and encouragement in the development of

local construction industry. The borrower's performance

regarding road maintenance and with respect to vehicle

overloading continues to be inadequate. Substantial

.delays, minor cost over-run and enormous problem were

experienced during its implementation which were

caused mainly because of the inexperience and financial

weakness of Contractors, who were assigned various

sections of the Project. The Project Completion Report

critically reviews the main Issues arising from the

Project implementation and draws the following lessons

and conclusions:-

(a) The process of pre-qualification and

bid evaluation should not be limited

to the routine review of documents

.presented by the Contractors. The

Borrower and the World Bank should

go further into the investigation

of past performance of the applicants

and also probe in-the existance of

other projects being executed by the

- 16 -

candidate that may possibly tax its

future financial and executive

capabilities.

(b) The mobilization period of 45 days

was unrealistic especially because the

pre-qualified Contractors were

ill-equipped, it should have been

atleast 90 days.

(c) The mobilization advance of 15% of the

Contract amount was inadequate which

was hardly sufficient as working capital,

it should be more when the Contractors

are required to be suitably equipped also.

(d) The Bank must ensure that the counterpart.

funds are made available by the Borrower

for timely payments to the Contractors for

smooth implementation of the Project.

Ce) It should be ensured.that suitable plant

and machinery is made available at the

site of work, at the time of its start

during the mobilization period.

(f) Appropriate and adequate plant and machinery

especially subgrade compaction equipment,*.

shall always be acquired well in advance

by the Contractor who is also required to

evolve appropriate techniques to achieve

the specified end results.

- 17 -

(g) Mobilzation Advance and work performance

guarantees from an Insurance Company many

times more than its credit rating, should

not be accepted as Bank Guarantees are

more reliable.

(bi) Before the start of work,the Contract

drawings are required to be thoroughly

checked with respect to actual site

conditions as inaccurate and missing

details of vital installations may require

redesign resulting in delays and cost

overrun.

(J) The work of land acquisition and relocation

of utility lines should always be completed

much before the staft of fork for avoiding

delays.

(k) The Borrower has not been able to plan action

in respect to vehicle overloading and

implementation of a maintenance monitoring

system including road maintenance t"ining

programme,.which are essential requirements

to arrest rapid deterioration of the road

network. The World Bank may consider'the

possibility of its inclusion in the Fourth

Highway Credit which is now being finalized.

- 19 -

PAKISTAN

THIRD HIGHWAY PROJECT (CREDIT No. 974 PAK)

PROJECT COMPLETION REPORT

1- INTRODUCTION

1.01 Pakistan is a federation of four Provinces,

Baluchistan, North West Fronteer province, Punjab

and Sind alongwith the territory of Azad Kashmir

and a number of Federally and Provincially adminis-

trated tribal areas ( FATA/PATA ).

1.02 Pakistan has a land area of about eight thousands2

squre kilometers (800,000 Km ) and a population

of approximately 90 million in 1985 which is

estimated to be increasing at an annual rate of

.about 3% . About-75% population lives in rural

areas and their main profession is P.riculture.

which is thus the back bone of the country. The

25% population of the urban areas is rapidly

expanding because of the migration from rural

areas on account of too much pressure on .land

and lack of adequate drily necessities there.

1.03 The topography consists of lofty mounains of.*

Himalayas lying to the North and lower Hindu Kush

to the West but mainly it provides flat Indus

basin plain which is productive, fertile and

mostly irrigated agricultural land-.

1.04 In recent years, Pakistan has experienced rapid

economic growth. Real GDP since the early

1980's has grown at an average of 6.6 percent

yearly, with agriculture and manufacturing

- 20 -

increasing by tour perecent and ten percent

respectively which is much above the population

growth rate. Other indicators of economic

performance have also shown steady impr9rement

as per capital GNP (1984) was U.S. $ 390.

1.05 About one-third of Pakistan GDP originates

in agriculture (33%) while other important

sectors are manufacturing (15%) commerce (14%),

transport including telecommunication (6%) and

construction (4%).

1.06 In value arms, Cotton and Rice are the main

export products and next in importance are

textiles, leather goods and carpets. The

imports consist of heavy and light machinery,

petroleium, edible oil ad tea.

II- TRANSPORT SECTOR

2.01 Transport plays an important role in the

-economy of Pakistan, because of country's

heavy reliance upon exports and growingvolume of imports as indicated above. The

increase in trade among different provinces

of the country and the opening of new areasfor productive use are becoming more important.

The major products which are transported

are, cotton , wheat, rice, cement, fertilizers and

aetroleum.

- 21 -

2.02 The modes of transport range frombullock-carts to jet aircrafts and even

camel carvans along with donkeys, are

not uncommon. The principal modes of

transport are railways, trucks, buses,

aircrafts, saips and gas pipe lines. The

transport system mainly comprises of

42,000 Kms of National and Provincial Roads.

9,000 kilometers of railroads , 4 InternationalAirports alongwith about two dozen feeder

airports, one major sea port and a gas

pipeline transmission system. The transportservices are operated by Government ownedPakistan Railways (PR), National Shipping

Corporation (NSC) and Pakistan International

Airlines (PIA), while passengers and goods

are handled by both government transportcompanies including National Logistic Cell(NLC) and numerous private road transporters.Two gas transmission companies are at present -

operating the gas transport system.

2.03 As per latest figures, the growth in domestic

traffic in Transport Sector has been much

faster than the growth in GDP, pa;ticularly

for passenger traffic. The domestic freight

transport during 1975 to 1985 grew.at a rate

of over 8% while the passenger traffic had

increased at about 10% . Therefore ,the roadsubsector was under more pressure and was

thus clearly the dominant mode of transportand its share is likely to increase further

due to saturation of railway system.

- 22 -

2.04 With the above indicated position of

transport sector where road & rail road

were the only two contestants, a transport

coordination survey was conducted under

the Second Highway Project in 197 where

a conclusion was draun that emphasis

should be placed on the rehabilitation

and improvement of existing roads rather

than the construction of new highways.

III- PROJECT PREPARATIONAND ITS DESCRIPTIM

3.01 Therefore in 1976, a Third Highway Project

Cell was established in order to undertake

feasibility and technical studies for

rehabilitation and improvement of 1600 Kas

of National & Provincial roads which had

jointly been identified by the World Bank

and the Government of Pakistan but-

subsequently, only 800 kas were selected

for final design based on economic priority

and available resources. After final designe

due to substantial increase in cost estimates

only those.sections were include4 for..

construction which-.were in most serious

danger of failure and were likely to carry

heavy volumes of traffic and thus only

high priority roads were included in Third

Highway Project. This increase in cost

was due to.substantial increase in the cost

of materials and due to lower structural

- 23 -

strength of existing pavements as noticedduring detailed design,contrary to one in

feasibility studies where there was a greater

need to only raise embankments.

The road sections selected for rehabilitation

in Third Highway Project, were as shown on

the map and are indicated below :-

lbad Section (Ko)As Argnal s nowproposed. constructe

'NWp

P - Cbarsdd 26.7 27.0Ehairabad- Noebera 29.0 ..30.0

labwe - Sabail 125.0 149.0

SIND

Kandiaro- Robri 100.0 90.0

The proposed rehabilitation consisted

mainly of raising the existing roads in low

areas, easing substandard curves, widening.

where width was inadequate, pavement strengthening

and surfacing on the basis of identified design

standards.

-24-

Project supervision was to be carried

out by the domestic Consultants who had

done the final design with the assistance

from the Expatriate Coordinating Consultants

attached to the Third Highway Project Cell.

IV- PREVIOUS HIGHWAY CREDITS

4.01 World Bank involvement in the West

Pakistan Highway Subsector started in

1964 with approval of the First Highway

Project (Cr. 54-PAK) for U.S. $ 17 million

against which a new 142 Xms highway

between Karachi and Hyderabad was

constructed in addition to the construction

of three major river bridges, employment

of General Consultants for a three years

period to advise and assist the Pakistan

Highway Department on matters of

organization and operations and Consulting

Engineering services to .carry out

feasibility studies-of access to Karachi

and Hyderabad.

4.02 The Second Highway Credit (Loan 578-PAK)

for U.S. $ 35 million in 1968 consisted

of the construction of two trunk Highways

West of Lahore totalling about 270 Ems

in addition to Consulting Services-to

continue assistance in reorganising the

West Pakistan Highway Dqpartment and to

prepare a transport study for West Pakistan.

-25-

In order to prepare a Second HighwayProject a highway Engineering loan(Cr. SI PAK) for U.S. S One million

. was signed in 1966. This Highway

Engineering Project took 4bout 50 months

against 15 months as estimated at appraisaland when construction bids were finally

called in 1970, these were found three

. times the Engineerts Estimate . In July,

1971 the Pakistan Government and the WorldBank thus agreed to cancel the uncommittedbalance of U.S. 8 33.9 mtllion against the

Second Highway Project.

I. V - THIRD HIGHWAY CREDIT

5.01. The total cost of the Third Highvay Project.

was estimated at U.S. $ 93 million equivalent

with a foreign exchange component of U.S.

$ 34 million equivalent but Development

Credit agreement for Third Highway Project

was signed on April 09, 1980 betpeen

Islamic Republic of Pakistan and International

Development Association of U.S. $ 50 million

- (Credit No.974 PAK) as over and above the

foreign exchange component -as Indicated -

above , it was to cover about U.S. $ 16.0million of local cost.

-26-

Schedule 1, 2 & 4 detailing withdrawal of proceeds

of Credit, description of the Project alongwith

Exhibit to Schedule-2 and design standards are

reproduced below for ready reference.

SCHEDULE-1

Withdrawal of the Proceeds of the Credit

1. The Table below sets forth the Categories ofitems to be financed out of the proceeds of

. the Credit, the allocation of the amounts ofCredit to each Category and the percentage ofexpenditure for items so to be financed in eachCategory:

Amount of the Percentage of

teipry Credit Allocated _penditure to(Epressed in be financedDollar Equivalent).

(1) Civil Warks under 32,200,000 100% of foreign expendituPart A of the and 40% of local expendi-Project. tures..

(2) Civil Works under 1,500,000 100% of foreign ependi-Part a of the tures and 401 of localProject for N.W.F.P. . epndir .

(3) EquIpmt,aterials, 600,000 100% of foreign expeAdi-spre parts and tools tures for Importedunder Part A.3 of items and 100% oftbe Project. local expenditures

... (e-factary)ftr locallymanufaatured item and

60% of expmnditures foritem procured locally.

(4) Equipoent, vaterials, 1001 of foreignspare parts and tools apmnditures for 1uportedunder Part B.2 of the items and 100% of localProject. enpenditures (ex-factory)

for locally annufacturediteam and 60% of epndi-turns for Item procuredlocally.

- 27 -

Anmunt of the Percentage ofCategor Credit Allocated Ependitures

(l»pressed in to be Flnaned.DWllar Equivalent).

(a) NWEP 600,000

(b) Baluchistan 400,000

(5) Ians under Part C 5,000,000 100% of aantoof th. Project. didu on acon

of forign flrUld±

(6) Onsultant's Services

(a) Supervision of 3,900,000rebabilitationwork.

(b) Tedhnical eas-tance to FederalGovernmnt. 200,000

(c) 'enial asis-1,an~ to Provl~ialaGvrnmnts. 700,000

(d) Project PI*paratim 1,500,000

(7) unal1o~ated 3,400,000

MAL 50,000,000

- 28 -

SCHEDULE-2

Description of the Project

The Project consists of the following Parts:

PART-A : Borrower

1. Rehabilitation and Improvement of about180 Kms of national highway as describedin the Exhibit to this Schedule.

2. Preparation of future highway and roadprojects.

3. Maintenance of highways

PART-B : Provinces

1. Rehabilitation and Improvement of about25 Km of other roads as described in theExhibit to this Schedule.

2. Maintenance of highways and roads

PART-C : IDBP

Term-loans to eligible highway and roadcontractors to permit them to acquire roadconstruction and maintenance equipment,spare parts and tools, primarily to carryout works under the Project.

EXHBIT 10 *S LS2

Province National Higbmay Sections Other aoad Sections

Punjab Part of Lahare- Sabiwal(about 125 RN).

Siad Part of Hohri -randle(about 50-100 Ka).

NWP lbairabad - Nowera Peaar - Charsadda(about 30 W). . .. (about 25 NWs).

- 29 -

SCHEDULE -4

Design Standards

Design Speed 80 Kph minimum

Minimum Curve Radius 254 m

Maximum Superelevation 8%

Maxiana Gradient 5%

Safe Stopping Distance 107 M

Minimum Vertical CurveLength. 64 m

Width of SurfacedRoadway. 7.3 m or the existing

width whichever isgreater.

Width of CompactedShoulders. 1.7 m

Crossfall 2% on Pavement

4% on Shoulders

Side Slopes 2 Horizontal:.

1 Verticl.

-30-

5.02 The objectives of the Third Highway

Project were :

1) To improve certain existing roads.

2) * To improve road maintenance UtFederal and Provincial level.

3) To encourage development ofdomestic road construction industry.

5.03 For implementation, the Project was placedunder the responsibility of the Ministryof Coammaications and within the Ministry,

Director General, National Highways Boardwas

to . execute and coordinate the various

project activities.IDBP were made. responsible

for relending funds to domestic road

Contractors to suitably equip them with road

construction machinery.

5.04 During construction, the domestic consultants

who were involved in project prep"ration, were

to. supervise construction act4vities

with the assistance from CoordinatingExpatriate Consultants attached to the

Third Highway Project Cell.

- 31 -

VI - IMPLEMENTATION

6.01 For implementation and bidding purposes,

the Third Highway Project was devided into

two groups with different Contracts under

each group as detailed below:-

Group Ontract Number Ifength cost(FaS) (Million rupees

I 1 [ Peawar - amrada] 27 25.8702 [ airabad- N.o => ] 29 26.306

3 [ Bhri -Kandiaro 90 270.713

II 3 [ Iabore - PattokI 67 227.886

4 [ Pattoki - Sahbiwal 83 298.723

6.02 Five road rehabilitation contracts, as

indicated above*were put to tender in June,

1979. Twenty number tenders were issued

to pre-qualified Contractors yielding only

7 (seven) positive responses. After 8 months

delay, 3 number contracts ( Contract 1, 2 & 7)

were let out in March, 1980.

Bid prices were considered excessive for

Contract No. 3 & 4 and therefore were retenderer

in February, 1980. Eight number pre-qualified

Contractors responded,which included 4-number

- 32 -

in Pakistan at that time as such statt had

gone to Middle East with better job opportu-

nities there. In consequence, the site control

and plant utilization was poor. By December ,1981

progress was slow and much behind schedue. He

was awarded a 6 months extension for initial

delays beyond his control and finally the

Project was completed in November ,1983.The

work qualty appeared to be within specifications

but in February, 1982 extensive failure occured

to the new pavement of Contract No.2 . Further

work was stopped by National Highway Board in

March ,1982 until the failure cause could be

identiti-d and remedial measures specified.

Decision was deterred until the World Bank Mission

in June, 1982 recommended that the Contractor was

not responsible and suggested appropriate remedial

measures including a revision of the Job Mix to

reduce stability. Work was resumed in August,1982

and the Contract time was further extended to

November ,1982 so as to accommodate specified

remedial works. The pace of progress could not be

accelerated by the Contractor-due to short production

of crushed aggregate for asphalt concrete.and.

changes in Contractors site staff.

The work was finally completed in November, 1983

and the responsibility for this-utlayed completion

was shared by all coticerned.

6.04 Consultant

M/s Progressive Consultants supervised the work

and their original supervision contract was for

9 monthe with a supervidion tee of Rs. 1.186 millions

- 33 -

but the period had to be extended due to

delays in the completion of work.There were

no major changes in the design or contract

drawings, only minor deviations were made

which were necessary. The Consultants site

staff was inadequate in number, quality.and

practical experience to control the works and

maintain accurate and adequate work records.

Lack of experience sometimes resulted ininflexible adherence to tight specifications

due to their inability to appreciate the

consequences of minor deviations from specifi-

cations which only sometimes are important but

other times less significant. Rigid application

of specifications is a recipe for avoiding anysubsequent blame but is always likely to lead

to slow progress and frustrating site-relation-

ship between the Consultants and the Contractor,

each losing faith of one another. Under such

circumstances, the project suffers and the Client

is always in a fix.

6.05 Reporting

The Consultants had been sending.ponthlyprogress reports to the Client and the*supervising Expatriate Consultant which werecomprehensive-showing uptodate progress of eachitem of work, progress during the mbnth,machinery and labour employed on the job,suspension if work if any, with its causes ,

progress achieLved in.comparison to one scheduled

with reason of short falls or,advances andthese report were of great value to the

supervisory agencies.

- 34 -

6.06 Economic Re-evaluation of Contract 1 & 2

The purpose of the post analysis of the economic

justification is to find out whether at Project

Completion Report time, the Project appeared worth

while in so far as producing a satisfactdry economic

rate of return that is higher than the opportunity

cost of capital in the country In retrospect and

how it compared to appraisal expectations.

The- completed project cost of Contract-1 (Peshawar-

Charsadda) including Land Acquisition, relocation of

utilities and Consultancy £ervices works out to

Re. 33010 Thousands againat the one originally

appraised at the time of start of the project in

1980, as Re. 18010 Thousands. The anticipated

period of construction was I year but the actual

period in which the project has been completed is

31 years.

Similarly the completed project cost of Contract-2

(Khairabad- Nowahera Section) including Land

Acquisition, relocation of utilities and

* Consultancy Services works out to Re. 40492 Thousands

. .against the one originally-appraised at-the time of

start of the project in 1980 as.Rs. 13921 Thousands.

The anticipated period of construction was it years

but the actual period in which the project has been

completed is 31 rears.-

- 35 -

The Economic Analysis shown at the time of

appraisal in 1980 for Contract 1 & 2 is attached

aa Annexure A-1 & B-1, while the final

reevaluation on the basis of actual cost of

construction is shown in Annexure*A-2 & B-2.

The results of Initial & Final Evaluation are

tabulated below :-

Section Initial Evaluation Final Reevaluation

B/C Ratio IRR B/C Ratio IRR(Percent) Percen

Contract-I 4.06 40.36 2.45 31.5

Contract-2 5.18 47.68 2.09 26.6

Although the Economic indicators are below the

appraisal expectations caused due to abnormal

increase in construction cost and unusual delay

in the completion of the two sections but the

projects are still economically well justified;

- 36 -

These two contracts were successfully completed

with gome . overrun in cost and abnormal -

overrun in time which were beyond-any body's

control. The appraisal expectations were not fully

met.

The lessons learnt from the implemeptation of

these two contracts of Group-I are briefly

identified below :

(1) The Mobilization period of 45 days was

un-realistic especially when the

pre-qualified contractors were notproperly equipped and organized. Itshould have been at-least 90 days.

(2) The Mobilization Advance was inadequate15% and such advance is only sufficient

as a working capital.

(3) Plant Selection suited to the requirements

was delayed which is required to be

provided at the-start of the work during

mbbilization period.*

(4) Identification of the causes of pavement

failure should have received immediate

attention for its rectification for

early completion of the project.

(5) It is in the interest of all parties

implementing the project to minimise

-37-

financial uncertainties as the Contractorhad severe cash flow problems which were

further worsened due to delay in the

payment of his monthly invoices. Sound

financial position of the Contractor

according to the magnitude of the Project,

is a key requirement which is required to

be confirmed before prequalification and

in addition payment procedures are required

to be streamlined and simplified for timely

payments to the Contractor.

I.

- 38 -

VII : GROUP I- CONTRACT 7

7.01 90 Kms of Contract 7 were devided into

two sub-contracts i.e. Rohri- Kotdiji

(45 Kms) and Kotdiji- Kandiaro (45 Ems).

The first sub-contract from Robri to

Kotdiji was let out to U/s Continental

Engineers being the lowest bidder in

March, 1980 for Ra. 116.250 million with

a 45 days mobilization period and a

completion period of 540 calendar days.

The engineering of the sub-contract was

done by U/s Techno-Consult but its construe-

tion supervision was,assigned to M/s

National Engineering Services Pakistan

Limited (NESPAX). The existing road which

was to be rehabilitated was in a poor state

of repairs with its serviceability below 3.

7.02 The pub-contract in rural areas mostlyinvolved widening both sides of an existing

embankment and its raising by about 0.6 meters

using suitable local soil. The pavement

comprised of 30 cm granular sub-base, 15 cm

granular base followed by 10 cm asphaltic

binder and wearing course. The traffic

(ADT 4000) was to be..temporarily diverted

on to a service road which was widened

embankment shoulder having granular topping.In urban areas the existing pavement wasstrengthened and regulated by an overlayof 10 cm asphaltic levelling-course followed

by 10 cm asphaltic binder and wearing course

- 39 -

as reconstruction due to limited space and

non-availability of room for diversion of

traffic, was not possible.

P

7.03 As the Contractor M/s Continental Engineers

had no previous road construction experience,

his pre-qualification data claimed,joint venture

with a West German Firm which was subsequently

changed to KAMPSAX (DENMARK) and WALAS, a U.K.Company . After contract award, investigations

revealed that the arrangement was not a joint

venture but merely a service agreement withKAMPSAX to provide technical and managerialadvice at an agreed fee scale but U.K.

participation was practically non existant.

7.04 Immediately on signing of contract the site

work commenced but the contract drawings were

foun4 to be totally unreliable and useless.

Further more a main multicore coaxial.telephone

cable was suddenly found in the existingembankment running all along the road which wasnot shown on the plans and could not be relocated

thereby necessitating the shifting of%the

centre line of the new road. Design modifications,

thus had to be immediately made by supervision

Consultant (NESPAK) resulting in the change ofboth lines and levels which not only resulted

in the delay in construction but also involved

considerable deviations in quantities and

working methods.

The Client also was not able to pay the

mobilization advance to the Contractor in time

-40-

ROAD DESIGNTHIRD HIGHWAY PROJECT

CONTRACT 1 AND 2 (NWFP)

2. 73M

i em AUPMAUIC WEA^N COU~£M0.30 C» ØMANULAM eASE COMSE

EMST$NG SURFACE TREATEO PaVIMNT

OONTRA£T 3 AND 4 (PUNJAB)

"" i 7. 2M

is Cm SuSs~

14 Cm AS~BC aEKme WEaRN COUIME

CONTRACT 7 (SIND)

Urban Rural

ts 7.34 2 2mi 7.3. ti

a *1. -- , . .. 20

L 3 cm ASPNAUIC WEAMN COURSE 30 cmU susOASt

i cm ASPHAUIC IMUER COUSEa Cm MAULAR OASE COUR

-. c. 20CI ASPALTIC AmS.t

SENSG ROAD 3 Cm APNALICW~M CU •

leds... He I000 . II 2000

vet 11200

but as import of road construction machinery

was to take some time, the Contractor had to

hire plant which was locally available but

unfortunately useless machines were purchased/hired.

7.05 The Contractor practically exhausted his

construction period by slowly carrying on

certain items of work which could be handled

with hired or locally purchased machinery and

also his working capital appeared extremelyinadequate . The progress of work always hadbeen unsatisfactory, although the contract

was adjacent to extensive natural deposits of

excellent road construction materials. The site

conditions continued to deteriorate as evenKAMPSAX advice to the Contractor was being

ignored due tc cash shortage. The contractamount of the work was Ra. 116.250 million but

in a period of about 540 days (completion period),-.the Contractor had done work valued as Ra. 6.80.

millions which is abQut 6 % (six percent). The

contract was therefore terminated.by National

Highways Board in October, 1981 and the same..work was relet to M/e Nazir & Company in

November, 1981, who were the second l6west at

the time of tendering and who had been previously

allotted Contract 1 & 2 of the same Group at

negotiated price more or less, the same as per

original contract except minor increase inasphalt items due to increase in the price of

asphalt at the timeof.negotiations. The.coptract

amount was Ra. 107.594 millions with a mobilisation

period of 45 days and its time of completion as455 calendar days. As per contract conditions the

- 42 -

original contractor whose contract was terminated

had sought Arbitration against the decision of the

Engineer concerning his claims, which is still

pending . However, the Insurance Company who had

provided Guarantees against mobilization advance

and Performance has also defaulted.

7.06 The World Bank, against the Third Highway Project

had provided Industrial Development Bank of

Pakistan (IDBP) with credit of U.S. $ 5 millions

for on lending to domestic Contractors who were

awarded road construction contracts and against

the credit IDSP had imported certain plant and

machinery for M/s Continental Engineers ( the

original Contractor) which was transferred to

M/s Nazir & Company ( new Contractor ) and in

addition extended the loan for import of an

asphalt plant and additional soil and asphalt

concrete compaction equipment. As this new

contractor was still busy constructing Contract

1 & 2 . he could hardly transfer a few items. of

road construction machinery*from there and the

one which was to be imported against IDBP loan,.

arrived in early, January, 1983. Therefore,.the

Contractor was not fully equipped until, January,1983, therefore he was forced to continue work

with inadequate euipment which had resulted in

slow progress upto end of 1982. Under.tbe

circumstances, explained above, the site was:

fully mobilized only by January, 1983 when the

Contractor was able to accelerate his work but

cash.-flow had always been his problem which -

- sometimes was further aggravated by non-payment

- 43 -

of his monthly invoices for months together

due to inadequate financial allotment with the

Client. The contract was finally completed in

January, 1985 with an overrun of about 1j year

which is even more than double the provided

completion time.

Unfortunately, during the one year maintenance

period rutting in asphaltic wearing course

appeared in certain reaches, which on investigations

was established due to the use of high penetration

grade of imported asphalt used in the wearing

course (over 100) at a site where field

temperature in summer exceeds 600 C and is

maintained at this level over 20 hours In a day

and over axle loading of pavement on which there

is no control. The Contractor is at present- making

arrangements to rectify the rutted portions as

his retention money shall only be released when

the rectification work is completed and tested.

7.07 The second sub-section of -Contract No.7 from

Kotdiji to Kandiaro (45 Kme )*was not initially

let out as its start of construction was subject

to the availability of money out of World Bank

loan after completion of the committed sections

*of the roads. After assessingthe. availability

of funds out of the loan after discussion with

the World Bank Mission, this sub-section was

let. out to the same Contractor (s Nazir & Company)

in August, 1985 for an-amount.of Ra. 154.463 millions

on the same terms and conditions except additional

payment of haul now applicable for sub-base

-'44-

base, embankment over the one originally involved

in the first section and for asphalt items where

the rates necessitated revision due to enhanced

price of asphalt from Re. 2000/- to Ra. 3850/-

per ton ex-Karachi Refinery . The Project' completion

period was 330 calendar days with no mobilization

period, as the Contractor was already fully

mobilized at site on the completion of the first

sub-section. Construction supervision was continued

by NESPAK as for first sub-section.

The construction requirements were similar to

the first sub-section and relatively straight

forward except a short reach where sand embankment

was boxed within earthen shoulders due to high

water table underneath caused on account of water

logged conditions in the area. On account of slow

progress of the Contractor, last 12 Em reach oft,

the sub-section was given to another Contractor

(M/S Saadullah Khan & Bros) on the same terms and

odditions, in order to ensure the.completion of

the sub-section by end of September, 1986 a date

fixed by the World Bank Mission in June, .1986 'when

after the close of Credit, disbursement for

existing committments were continued upto

December, 1986. This sub-section from Eotdiji to

Kandiaro is now nearly complete except making-

of shoulders and trimming of embankment side.

slopes to line and grade .which too shall be

completed by October 31,1986.

7.08 Experience gathered during project implementation

suggests that the following lessons can be learned:

(1) The process of pre-qualification and

bid evaluation should not be limited

- 45 -

to the routine review of documents

presented by the Contractors. The Client

should go further into the investigation

of past perfotmance of the candidates and

should also probe into the existance of

other projects being carried out by the

applicant that may possibly tax its future

financial capabilities.

(2) The Bank should ensure that the counterpart

funds are made available by the Client(Government) for timely payments to the

Contractor for smooth implementation of theProject.

(3) The mobilization period of 45 days was

unrealistic which should have been atleast

90 days.

(4) Mobilization advance of 15% is inadequate

which is hardly sufficient as working capital.

(5) Plant Selection suited to the requirements

should be provided at the start of the workduring mobilization period.

(6) Mobilization Advance and work performance

guarantees from an Insurance Company manytimes more than its credit rating, should

not be acepeted..

(7) Contract drawings should thoroughly bescrutinized with respect to actual site

conditions as inaccurate and missing of

vital installations, may require redesignresulting in delays and cost overrun.

- 46 -

(8) The work of Land Acquisition and

relocation of utility lines including

cutting of trees in the work area must

be completed before the start of

construction work for avoiding delays.

.(9) Axle load checks at weighing stations

which should be established, round the

clock is essential as at present there

are no such checks where overaxle loads

are damaging the pavements.

7.09 Economic Re-evaluation

The first sub-section from Rohri to Kot Diji was

completed on 15.1.1985 at a cost of Rs. 166.77

millions as detailed below:-'-

Item of Work Cost!Million rupees).

1.Payment made to M/s Continental 0.815Engineers against work done uptotermination of Contract.

2.Cost of termination of Contractof W/e Continental Engineers 11.520

3.Payment made to M/s Nazir & Companyupto comaletion 124.165

4.Land Acquisition & Re-location 6of Utilities. .800

5.Additional Cost of ImportedAsphalt. - 9.300

O.Consultancy 8.470

Total 168.770

- 47 -

The second sub section frnm Knt Diji to Kandiaro

has also now been completed at a cost of Rs. 168.82

million as detailed below :-

Item of work Cost(Million rupees)

1. Payment to Contractorsfor Work done. 185.604

2. Aand Acquisition andrelocation of utilities. 0.386

3, Consultancy 2.830

Total 168.620

Therefore the completed project cost of contract-?

(Rohri- Kandiaro ) comes to Bs. 335.49 milliois and

the Economic re-evaluation of Contract-? has yielded

the following results as detailed in Annexure- C. .

Section B/C Ratio NPV IRR(Million (Percent)Ruponm).

Rohri-Kandiaro 2.45 588.42- 31.0(Contract-7).

The Economic indicators dtailed above are reasonably

high and thus the project is economically well justified.

- 48 -

VIII- GROUP II : CONTRACT No. 3 & 4(LAHORE - SARIWAL SECTION)

8.01 Lahore - Sabiwal Section of the Project

was the longest road length of about 150

Kms , split up into two contracts i.e.

Contract No.3, which was initially 55 Kme

in length but finally extended to 67 1ms

due to its extension towards Lahore and

Contract No.4, which is 83 Em and ends

at Sabiwal.

Rehabilitation of the road from Lahore to

Sahiwal was approved, as the existing road

was in an extremely poor state of repairs

although it was serving very importing towns

and areas of good potential of agricultural

resources. The improvement of the road was

essential in order to get very high rate

of return by way of reducing the vehkoles

operating costs and time saving.

These two contracts involved scarification-

and removing an*existing pavement which had

completely.disintegrated*and in pom reabhes

even thrown .outside the-paved.-width by-

heavy traffic and raising the embankment

on the previous alignment except substandard

curves where the geometry was improved,

by about 1 (one) meter with CBR 7 material

in Contract No.3 and about 2 (two)meter

in Contract No.4 and then superimposing a

- 49 -

new pavement comprising of 15 cm granular

subbase, 14 cm asphalt concrete base and

8 cm asphalt concrete wearing course

with 7.3 meter pavement width. A major

problem was to accommodate existing heavy

traffic ( over 4500 ADT ) by a temporary

diversion road along side.

M/s Saadullah Khan & Bros were the lowest

Contractors for both Contract No.3 & 4 and

both these contracts were signed in June,

1980 with contract amount of Rs. 157.018millions and Re. 271.466 millions respectively

with a mobilization period of 45 days in

both cases and construction period of 800

and 1095 calendar days respectively. The

date of commencement of the two projects

was July 01, 1980.

The Contractor was required.to be paid his

mobilization advance and foreign exchange

component within the mobilisation period

of 43 days but mobilization.advance was paid

to him about 21 months and foreign exchange

component about 4 months after the signing

of the two contracts due.to the non-availability

of allocation of funds. The Contractor was

required to give-his.work schedule duringthe mobilization period but he was able to

submit the same for the first time in

December, 1980 which delay was due to so

many uncertainties i.e. availability of

clear site, construction of diversion roads,

import of machinery etc.

- 50 -

Big trees were standing in the layout of

the proposed formation, which were required

to be removed for providing temporary

diversion alongside for diverting the exist-

ing traffic before starting ripping off

of the existing pavement. The respodsibility

for the cutting of these trees rested with

the Forest Department with whom the Consultants

were required to finalize a work plan in line

with the work schedule of the Contractor.

After prolonged delays caused due to lengthy

procedures, 2 Km stretches in both the

contracts were cleared of trees in February,

1981 and handed over to the Contractor as a

working space. This delay of over 7 months

gave a severe set back to the two contracts.

The imported machinery of the Contractor

including rollers, asphalt plant, paver etcalso started arriving at the site in Marchjl9$1

which took further about 2 months to get the

project really moving. Therefore, the first12 months of site work were iargely unproductive

as with the locally available machinery, the

Contractor was not in position to seriously

take in hand any important item of work.

When all the above mentioned problems were

clearing off and the Contractor -was -also

well equipped, he failed to evolve adequate

subgrade compaction techniques and thus

resorted to strident protests that the

specifications were unattainable. Ultimately,

wholy due to persistance of Consultsnts,

- 51 -

appropriate plant and machinery was acquired

and techniques were developed to achieve the

required compaction of subgrade with CBR I

material obtained from approved borrow areas.

The plant on site was now adequate in type

and reasonably well managed and had started

producing good work by middle of 1981 and

the Contractor was able just to complete 18 Kms

road by end of September, 1982 against 80 Ems

required to be completed in both the contracts.

Thus slow rate was mainly due to inadequate

technical and managerial ability of the

Contractor which was a serious concern of Client

and the World Bank. At this stage, it was

considered by all concerned that the Contractor

due to his limited capability may only be

able to complete Contract 3 and as such

balance work of Contract 4 may be withdrawn

from him and let him only complete Contract 3.

In addition, long diversion roads in two

contracts with heavy traffic (ADT over.4500)

where 80% were trucks & buses ,were problematic

and inconvenient for public,therefore the

Contractor was directed to transfer allhis

plant and labour to Contract.No.3, in -order.to complete it as early as possible. This

arrangement proved very fruitful as the

Contractor was now able to accelerate hisprogress very much. Contract No.3 was, thus

completed in January, 1984 at a-cost. of -

Re. 205.740 millions with a cost overrun of

. . 48.722 millions and period overrun of

about 750 calendar days.-The cost overrun'was

- 52 -

due to following reasons :

1) Originally unpaved shoulders were

provided which were changed to brick

paved ones, in order to meet high

traffic requirements and erosion.

2) Urban drains-were constructed forthe disposal of run of.

3) New bridges and culverts had to beconstructed inplace of old onedamaged by traffic during construction

which were not originally provided.

4) Asphalt had to be imported as the

local refinery was not able to meet

the requirement so cost increased

due to variation in its rate.

5) Slushy pockets met in the existingsubgrade were replaced by sand as

back fill.

6) Cost increase due to variation in

BOQ and rates.

The period overrun was due to nominal progressin the first two years due to reasons already

detailed above.

The section was taken over by the Client from

the Contractor in May,1985 after the maintenance

period.

- 53 -

Initially, the length of road in Contract 3

was 55 Kms which was subsequently extended

by 12 (Twelve) Kms towards Lahore to make

it 67 Kma as additional committed funds were

available out of the loan and the design of

this extension was ready. This extended lengthwas allotted to the same Contractor (M/s Saadullah

Khan & Bros) in September, 1985 .for an amount

of Re. 66.150 million and a completion period

of 180 calendar days at a time when both the

original Contracts 3 & 4 were nearly completed

on negotiated rates more or less similar to

Contract 3 rates. The design of extension was

similar to the main contract except provision

of surface treated shoulders in place of brick

paving and in addition, the width of the shoulders

was increased by one meter, the area along

being urban and industrial

The work on this extension of Contract No.3

was taken in hand when the original length of.the project from point.of ptart to Sahiwal.was

nearly completed.and the entire machinery

and staff of the.Contractor was available for

its completion. This extended length was

completed in February, 1986 and is at present

under maintenance period for one year with

the Contractor.

Again after completion of Contract S, theContractor had transferred back bisentire

plant and labour-to.Contract 4 where he had

already completed about 16 Kms prior to

transfer of his machinery and labour to

- 54 -

Contract No.3 for its prior completion.

Now with adequate machinery and labour

with lot of useful expierence so far gained,

the Contractor was confident of his

techniques to handle the remaining work which

was more difficult in comparison to

Contract No.3 as the area through which the

road was passing beyond the initially completed

16 Kms, was severely water-logged and saline.

In considerable length the natural ground

water was above the natural surface while in

the remaining reach, it was within 2 meters

from natural ground. No road construction

machinery was able to ply on the natural ground4

even for clearing and grubbing as it bogged

down the moent. . it was landed on surface.

The conditions were not so adverse at the*

time of its design in 1976 as the same was

based on field data collected in early 1975.

Therefore, during the time lag of one decade,

the position of subsoil water had aggravated

to an extent to require modification.in

design as the area is extensively canal

irrigated, the construction of which.otherwise

had been impossibleapart from damager of

severe damage after its completions The

modified design provided sand boxing within

earthen shoulders in order to improve the -

.subgrade for higher bearing value & to check

the ingress of water and.injurious salts into

the pavemen. from below. There was no change

In the pavement components and its depth,as

it was followed as originally designed.

Certain bridges and culverts on existing road

- 55 -

had failed during rehabilitation work and

thus were reconstructed although these

were not provided in the original contract.

Contract No.4 (Pattoki- Sahiwal) was

completet in May, 1985 at a cost of

Re. 401.732 millions with a cost over run

of Ra. 130.266 million and a period overrun

of about 420 caleader days as the work remain

suspended on the directions of the Client

and World Bank in this Contract for 210 days

for prior completion of Contract No.3

The break-up of the cost overrun is identified

belows-

I- Additional Items of Costwork executed at site. (million rupees)

1) Sand Boxing under 63.593the pavement assubgrade.

2) Brick paved shoulders 24.070

3) New Bridge@ & Culverts * 4.900

II- Excessive Cost of importedasphalt. - 18.000..

III- Variation in BOQ & Rates 19.703

130.266

The reasons for.period over run are the same

as already identified under. Contract No.3.

Contract No.4 on expiry of maintenance

- 56 -

period was banded over to the Client in

July, 1986.

Due to cost savinga in the Credit ,the

following two major bridges were also

included in the Third Highway ProjeZt:

Appraisal Time

Cost(Million rupees)

1) A tour lane rail over 24.000pass at Wan Radha R4m.

2).A two lane Canal Bridge 11.808over B.S.Link Canal.

The first bridge was let out to M/s M.A.Rashid

and Company.while the second one to M/s Cannon

Associates . The work on overpass is held up

for the last about 8 months due to the

incompetency of the Contractor to launch the

prestressed girders over the railway track

with a live conductor. Now help has been

sought from the Pakistan Railway to launch

these girders after which the deck slab would

be cast after concreting,cross girders. The

bridge would be ready for use by the end of

December, 1986. While work on Canal Bridge isprogressing slowly and inspite of grave*

concern shown both by the Client and World

Bank , the bridge may not.be completed before

June, 1987 which is due to the cash flowproblems of the Contractor in addition to

his limited resources and capability ,although

the loan disbursement shall close in December,

1986.

The experience gathered during the execution

of Contract No.3 & 4 suggests the lessons to

be learnt as already enumerated forContractNo.7 under article 8.08 .

-57-

8.02 : ECONOUIC REEVALUATION OF CONTRACT No.3 & 4(LAHORE- SAHIWAL SECTION)

The completed Project Cost of Contract No.3 + 4 ( Lahore-

Sahiwal Section) without its extension including Land

Acquisition 9 relocation of utilities, and Consultancy

Services now in 1986 works out to Rs. 629.534 million

against the one originally appraised at the time of start

of the project in 1980 as Ra. 477.989 million. The cost

of constructing 12 Km Contract No.3 extension is Ra. 66.452

millions. The anticipated period of construction was 3 years

but the actual period in which the project has been

completed is about S years including 12 Kma estension

which was not originally included.

For sensitivity analysis, the following three criteria were

originally adopted and now the same has been used for updated

cost ( Annexure-.A):

How much benefits may be reduced and the*road still remains acceptable?

How much cost may be increased and theroad still remains acceptable?

Now much could the road opening bedelayed assuring no change in the yearlyexpenditure?

Comparative results of this analysis are shown belows-

Cotract-3 Conct-4 gtra" 44 gtract 344

1)Variation io benefits 58 66% . 8% 4412)Vhriatice in Cost 137% 193 . 140% 785

M)ariationi n opening tim 7t Yars 91 Yaws 71 Yeam 5 Yeans

- 58 -

The economic analysis shown at the time of appraisal

in 1980 is attached as AnnexureE(1), E(2) and E(3) and now

initial and final results thereof are shown below:-

(a) INITIAL EVALUATION

B/C Ratio NPV RE(Million Rupees) (Percent)

(At 122 rate of discount)

Contract No.3 2.37 188.22 29

Contract No.4 2.96 230.30 20

Contract No.3+4(Original). 2.40 405.22 29

(b) FINAL REEVALUATION

If we take into account the actual cost of construction

as Re. 629.534 millions for Contract 3 & 4, the

economic reevaluation of Lahore- Sahiwal Section has

yielded the following results as detailed in

Annexure -E (4).

Section B/C Ratio NPV-.* IRR(Million (Percent)Rupees).

Lahore- Sabiwal 1.78 273.86 20(Contract 3 + 4)'8qevised.

Althouvh the economic indicators are below the

appraisal expectations caused dup to abnormal increase

in construction'cost and unusal delay in the completion

of the road but the same-is still economically welljustified.

- 59 -

8.03: Economic Reevaluation of Wan Radha RamRail over Pass and B.S. Link Canal Bridage

At the time of writing of the Project Completion Report,both these bridges are still under construction, rail

over pass shall be completed by end of Decemter ,1986

while the B.S. Link Canal Bridge would be ready by end

of June, 1987.

For reevaluation purposes, actual expenditure upto

October 15,1986 has been taken while anticipated

expenditure upto coipletidn: has been added so as to

arrive at the project cost. The actual e penditure forWan Radha Ram Rail Over Pass upto Octobex 15,1986 is

Ra. 2,46,88,807 as per details given below :-

Construction Relocation land Construction tal costCost. of Utilities. Acquisition. Supervision.

1983-84 - 11,50,000 1,08,000 1,2,500 14,20,5001984-85 1,28,53,970 6,75,225 6,612 4,34,500 1,39,10,30

. 1985-86 87,77,400 - - 4,36,600 92,14,000

1986-87

a)Actualexpenditure - - 82,000 82,000upto15-10-1986.

2,16,31,370 18,25,225 1,14,612 11,15,600 2,4,86,807

7he'anticipated expenditure lipto completion is Ra.271,65,518asdetailed belows

27,25,930 - 21,388 18,200 21,65,518

Thus t total completion cost would be Be. 27.460 sul1as- as tabulated

belo1s1.

29350 8259M1,5f,9 11,00 y;4'3,325a-

- 60 -

Similarly for B.S.Link Canal Bridge, the actual expenditure

upto October*15,1986 is given below :-

1- Canal Bridge Ra. 4.84 Million

2- Relocation ofUtilities Rs. 0.14 Million

3- ConstructionSupervision. Rs. 0.93 MilUon

Totalupto 15.10.86 Rs. 5.91. Millions

While the anticipated expenditure upto its completion is

Ra. 6.21 Million as detailed below :-

1- Canal Bridge Ra. 3.96 Millias

2- Approach Roads Rs. 1.68 MIllions

3- ConstructionSupervision. Re. 0.57 Millions-

Additionalanticipatedupto completion. Re. 6.21 Millions

Grand Total R Ra. 5.91 + 6.21 * Re. 12.12 Millions

The financial position of both the bridges thus works out

as under:-

Name of Structure Actual. Anticipated TotalExpenditure Expenditure Costupto upto (Million15-10-1986 completion rupees)(Million r pees) (Million:rupees)

1)Was Radhab I= Rail 24.687 2.765 27.452Over Pass.

2)A.S.Link Canal .. 91 6.21 12.120Bridge.

- 61 -

The economic analysis for both the bridges, both initialevaluation (Appraisal time) and Final Reevaluation (Actual

cost of construction) are attached as Annexure-F(1),F(2)

and G(1) and G(2) for overpass and canal bridge respectively.

The Economic Reevaluation of both the bridges have

yielded the followings results:-

Nam of Structure Initial Evalmatin Floal ReevaluationBTC Patio N.P.V. I B/C O IR

(Million (Percent). Ratio (Million (Percent)rupees) rupees).

1-ftn Badba ,aBail Over Pass. 1.59 125.34 19.6 5.95 137.43 24.79

2-8.8. Link Cnal 2.18 10.98 20.78 2.05 10.26 19.2Bridg.

'The lOMnnemindicators detailed above have et the appraaal

expectations and as such both the works are eo0cmically well

Justified.

-62-

IX* ROLE OF THE WORLD BANK AND THE BORROWER

The World Bank had played a very effective and

significant role in Project identification and

its preparation including reviewing and comment-

Ing upon the feasibility and engineering studies

particularly through its financing. The Third

Highway Project was well selected since it

presented the high priority sections of Pakistan

National Highway carrying the highest intensity of

traffic for rehabilitation which were in an

extremely poor state due to its neglected mainten-

ance

Project implementation had some serious problem

which could possibly be reduced by timely action

by the Bank and the Borrower, a few important ones

are identified below:-

1) The Bank and the Borrower should

not have approved the contract

mobilization period.of 45 days which.*

was highly inadequate especially when

the Contractors were not at a;L1 equipped

and experienced.

.2) rhe Borrower had not ensured the

timely availability of required funds

for payment to Contractors including

even mobilization advance as such.

Sfinancial uncertainties if not

minimized, always result in cash

flow problems of the Contractor.

World Bank had provided assistance

even in this regard by making payments

direct to the Contractors at critical

periods.

- 63 -

3) Advance land acquisition , in-time

relocation of utilities, in-time cutting

of trees falling within work area etc,

resulted in delays completely upsetting

the work schedules , which can alwaysbe avoided if these activities are

made prerequisite to the construction

of the work.

4) Inspite of the provision in the

Development Credit agreement as per

Section 5.01 (a, b & c ) no iplan

of action in respect to vehicle

overloading has so far been commenced

although the deadline of March, 1981

had since expired.

5) Implementation of a maintenance

monitoring system and road maintenancetraining programme were subjects ofstandard covenants included in theDevelopmeat Credit Agreement but

borrowers performance regarding roadmaintenance continues to be inadequateand the road network is deteriorating

rapidly. Lack of firm conviction on the

part of the borrower, on the need toimprove its maintenance operations, islimited.

X_ IMPROVEMENT OF ROAD MAINTENANCE CAPABILITIES

The Development Credit Agreement, Article IV

(Other covenants) Section 4.02 provides for

the implementation of a maintenance monitoring

system which includes road maintenance

training programme in order to arrest

further deterioration of roads.

The Technical Assistance Team attached to

the Third Highway Project Cell was to support

both the maintenance monitoring system and

the maintenance training unit and was alsorequired to start operating the soils and

materials laboratories in both NWFP andBaluchistan Provinces. It was also to provide

practical assistance in Workshop operation

in Baluchistan. At the time of appraisal, theevaluation only considered benefits derived

from reduction in tyre wear, maintenanceparts and labour costs which were taken asmost sensitive to changes in road roughness.

Unfortunately, very little headway had been

made to implement this proposed programme as

for handling it, certain internal changesare required to be made in the structure of the

Departments which include reorientation-and

strengthening.

The loan's closing date has already expired

and only very small progress has so far been

made but sound operating base for its

implementation is essentialin order to

provide a viable and sound solution.

National Highways Board has now started

taking up themselves the maintenance of certain

- 65 -

selected length, through maintenance

Contracts, as previous maintenance of

all National Highway was with the

Provincial C W W Departments but its

outcome shall only be known after some

period.

Xi. PLAN OF ACTION IN RESPECT OFVEHIML MVRiff ING

Inspite of the provision in the DevelopmentCredit Agreement as per Section 4.01

( a, b & c ), no plan of action in respect

to vehicle overloading has so far been

commenced although its necessity had .already been established by a report prepared

by N.T.R.C (National Transport Research

Cell ) to whom this work was assigned.*

- 66 -

PAKISTANxII. THIRD HIGNWAY PROJECT(CREDIT No. 974 PAK)

PROJECT COMPLETION REPORT

SCHEDULE OF DISBURSEMENTS FROM WORLD BANK(U.S. Dollars Millions)

Disbursements from the Credit account were required to be made on thefollowing basis :-

(a) 100% of foreign expenditure or 40% of local expendituresfor rehabilitation and improvement works.

(b) 100% of foreign expenditures for equipment, spare partsand supplies including laboratory equipment,training aidsand training materials or 1005 of local expenditures(Ex-factory cost)for locally manufactured goods and 609 oflocal expenditures for other goods procured locally(off-the-shelf).

(c) 100t of the amounts disbursed on account of foreignexpenditures of IDBP subloans made to the Constructionindustry.

(d) 100% of expenditures for Consultants Services andadvisors with a maximw of US $ 1.0 million for retroactivefinancing.

At the appraisal time, an estimated schedule of disbursements was

prepared which was based on the appraisal time project iAplementationschedule and is attached as Annexure -M(I).

The actual -disbursements from the Credit account obtained byinistry of Comunications'. National Highway .Board uptp, ctober 15,

1986 are contained in the attached Annexure *H(2) . The disbursentsare admissible upto December 31,1986 as the Credit account was closedon June 30, 1986.

-67 -

AnnexureA(1)

ORIGINAL

BENEFIT COST ANALYSIS

PESHAWAR-CRARBADDA SECTION

(Contract-1)Project Cost = 18010 ThousandsEconomic Cost 14407 Thousands

C 0 S T Dis- User Main- Salvage Benefit DiscountedYear Const- Mainte- Total counted cost tenance value at 12%

ruction nance at 12% saving cost,Saving

1979 7205 760 7965 79651980 3601 760 4361 38941981 3601 760 4361 34761982 -760 - 760 - 541 7474 760 8234 5863

1983 -90 - 590 - 375 8247 590 8837 56201984 -630 - 620 - 351 9078 620 9898 5499

1985 -650 -. 650 - 329 9583 650 10233 5178

1986 -420 - 420 - 190 10312 420 10732 48511987 -441 - 441 - 178 10754 441 11195 4523

1988 -463 . 463 - 167 11454 463 11917 4302

1989 -486 - 486 - 156 12286 486 13372 4308'1990 -511 - 511 - 147 12782 511 13293 3815

1991 -536 - 536 - 138 13316 536 13852 35601992 -563 - 563 - 129 15541 563 470 16574 3795

12634 51312

Total discounted Costs * 12634 Total discounted benefits -51812

Benefit Cost Ratio - .4.06 Internal Rate of Return * 40.86

- 68 -

Annexure -A(2)

Revised (At ActualBENEFIT COST ANALYSIS Constructiont

PESHAWAR-CHARSADDA SECTION(27Kas)(CONTRACT- 1)

Project Cost = Rs.33010 ThousandsEconomic Cost = Rs.25416 Thousands

C 0 S T Dis- User Main- Salvage Benefit DiscountYear Const- Mainte- Total counted cost tenance value at 12%

ruction nance. at 12% saving costSaving

1980 6354 760 7114 7114

1981 6354 760 7114 6352

1982 6354 760 7114 5671

1983 6354 760 7114 5064

1984 - 760 - 760 - 483 9078 780 9838 6252

1985 - 590 - 590 - 335 9583. 590 10173 5772

1986 - 620 - 620 - 314 10312 620 10932 5538

1987 - 650 - 650 - 294 10754 650 11404 5159

1988 - 420 420 - 170 11454 420 11874 4796

1989 - 441 - 441 - 159 12286 441 12727 4589

1990 - 463 - 463 - 149 12782 463 13245 4265

1981 - 486 - 486 - 140 13316 486 18802 3968

19w2 - 511 - 511 - 131 15541 511 16052 4120

1993 - 536 - 536 - 123 18138 536 18674 4280

1994 - 563 - 563 - 115 21169 563 638 422370 4577

21788 53316

Total discounted cost * 21788 Total discounted benefit * 53316

Benefit Cost Ratio a 2.45 Internal Rate of Return - 31.5%

-69 -Annexure -B(1)

Original

BENEFIT COST ANALYSIS

KRAIRABAD -NOWSHERA SECTION(Contract-2)

Project Cost Ra. 13921 ThousandsEconomic Cost = Ra. 11137 Thousands

C 0 S T Dis- User Main- Salvage Benefit DiscountedYear Const- Mainte- Total counted cost tenance value at 12%

ruction nance at 12% saving costSaving

1979 5569 450 6019 6019

1980 2784 450 3234 2888

1981 2784 450 3234 2577

1982 -450 - 450 - 320 7671 450 8121 5752

1983 -300 - 300 - 191 7954 300 8254 5250

. 1984 -315 - 315 - 179 8248 315 8563 4855

1985 -331 - 331 - 168 8553 331 8884 4495

. 1986 -347 - 347 - 157 8868 347 9215 4165

1987 -365 - 365 - 147 9196 365 9561 3863

1988 -383 - 383 - 138 10759 383 11142 4022

1989* -402 - 402 - 129 12589 402 12991 4183

1990 -422 - 422 - 121 14730 422 15152 4349

1991 -443 - 443 - 114 17235 443 17678 4543

1992 -465 - 465 - 107 20165 465 180 20810 4765

9713 30272

Total Discounted Cost * 9713 Total of Discounted - 50272

Cost Benefit Ratio . 5.18 Internal'Rate of Returna 47.68%

ANNEXURE-D

SENSITIVITY ANALYSISLAORE - SAHIWAL SECTION

(CONTRACT 3 + 4)

Labore- Pattoki Pattoki- Sahiwal Lahore- Sahiwal(Basic) Lahore-Sahiwal(Uptodate)(Contract-3) ( Contract-4) (Contract 3+4) (Contract 3+4

How much benefits may bereduced and the Projectstill remains acceptable?

Variation In Benefits* 325.32 - 137.102 349.93 - 119.629 693.68 - 288.46 625.22 - 351.36PV Benefits- P.V.Costs 325.3Z 349.93 693.68 625.22

P.V.Benefits. * 0.58 a 0.66 a 0.58 * 0.4458 Percent. 66 Percent 58 Percent. 44 Percent

Now much Costs may beincreased and the Project-still remWas acceptable?Variation in Costs* 325.32 - 137.102 349.93 - 119.629 693.68 - 288.46 625.22 - 351.36

P.V.Benefits- P.V.Costs 187.102 119.z29 288.46 351.36P.V. Costs. * 1.37 * 1.93 = 1.40 = 0.78

137 Percent. 193 Percent. 140 Percent. 78 Percent

How much could the Roadopening be delayed,assuring no change in the 137.2 119.629 288.46 351.36yearly Cost expenditure? 325.32 393 6 8 6.5.22Variation in Opening * * 0.421437 0.342 0.41584 0.56198P*VIiifits. 7.50Years 9.50 Years 7.50 Years 5 Years

- 71 -

BDi|FIT 3CT ANALYSIS

LA1EE - PATKKI (55 Km) IWithout 12 Ka etanism1(contract- 3)-

Project CoBt • Rs. 237.477 mi1licm

Bgomc Cst * Re. 189.982 allic

Year Cbst Net 'otal Discunt &alvag nfits nlm~tedMiantane Comt. Cost@ b~nefits.

12%

80 47.495 - 47.495 47.495

81 66.493 - 66.493 59.318 .

82 75.992 -24.176 51.816 41.297 -

83 - -0.034 - 0.034 - 0.024 59.1 42.07

84 - -0.034 - 0.034 -. 0.022 60.8 38.67

85 - - 0.034 - 0.034 - 0.019 62.6 35.49

86 - - 0.034 - 0.034 - 0.017 64.3 32.60

87 - -24.176 - 24.176 -10.94 66.0 29.63

88 - - 0.034 - 0.034 - 0.014 74.6 30.14

89 - -0.034 - 0.034 - 0.012 * 83.2 30.04

90 - 0.034 - 0.034 - 0.011 91.9 29.59

91 - - 0.034 - 0.034 - 0..010 100.5 28.84

92 - - 0.034 - 0.034 - 0.009 109.1 28.04

137.102 19.56

BC Ratio a 2.87IR * 29%

MY w 188.22 OUIm Rapes)

- 72 -

- ANNDRE-E( 2)

BENEIT CDS ANALYSIS

PATIMI - SAIAL sECTIG ( 83 Xbs)

(CæRmACr-4)

Project t sa. 240.512 millim

Facnmic Cost R Rs. 192.409 illlm

ear Cen tim Net 'otal Discomtd Bn~its Salvage DiscountCost. Mantennæ Cost. Cmst 12% benefits

Cost. ' 12%

80 48.102 - 48.102 48.102 - - -

81 67.343 - 67.343 60.137 - - -

82 76.964 - 37.142 29.602 - - -

83 - -0.047 - 0.047 - 0.033 58.6 - 41.72

84 - -0.047 - 0.047 - 0.030 60.3 - 38.35

85 - -0.04i - 0.047 - 0.027 61.9 - 36.06

86 - -0.047 - 0.047 - 0.024 63.6 32.25

87 - -39.870 -39.870 - 18.021 63.3 - 29.52

88 - -0.041 - 0.047 - 0.019 72.5 29.29

89 - -0.047 - 0.047 - 0.017 79.7 28.17

90 - -0.047 - 0.047 - 0.015 86.8 27.95

91 - -0.047 - 0.047 - 0.014 94.0 26.98

92 - -0.047 - 0.047 - 0.012 101.2 26.01

128.5 33.03

119.629 349.93

BC BAtio - 2.96

Iffi a2021PW - 230.301 mim bass)

- 73 -

(uriginal

BET CXM ANAIrSIS

LA - SIWAL OSIICH((MMACr 3 & 4)

BASIC omS

Project ROt e Es. 477.989 millioM

a~ei Cost P Rs. 382.389 millimn

Year Coutruction met Total Dm=ted m8£nt8 Balvage DiscmtedCut. katnanm COst Cost @ 12% Bnfits

Om.t

80 95.597 - 95.597 95.597 - -

81 133.836 - 133.836 119.496 - -

82 152.956 -24.176 128.780 102.663 - -

83 - - 0.081 - 0.081 - 0.058 117.7 - 83.78

84 - - 0.081 - 0.081 - 0.051 121.1 - 76.96

85 - - 0.081 - 0.081 - 0.046 124.5 - 70.65

86 - - 0.081 - 0.081 - 0.041 127.9 - 64.80

87 - -64.046 - 64.046 -28.971 131.3 - 59.39

88 - - 0.081 - 0.081 - 0.033 147.1 - 59.41

89 - - 0.081 - 0.081 - 0.029 162.9 - 58.74

90 - - 0.081 - 0.081 0.026 118.1 - 57.54

91 - - 0.081 - 0.081 - 0.023 194.5 - 55.91

92 -- 0.081 - - 0.081 - 0.021 210.3 *204.60 53.98

288.46 * 52.52

D/C Rauo 2.40 : 1.R 2 u.1 .

169 • 405.22 <nÉUma rupees)

- 74 -

ANNEXURE -E(4)(Revised)

BENEFIT COST ANALYSISLAHORE- SANIWAL SECTION

(CONTRACT 3 + 4 ) UPTODATE COST

Project Cost a Rs. 629.534 millions

Economic Cost a Rs. 503.627 millions

Year Construction Net Total Discount Discounted Beneftts Salvage DiscouCost. Maintenance Cost. Cost.@ Cost. ai ted

Cost 12% ' Benefif 121

80 60.28 - 60.28 1.000 60.28 - - -

81 94.73 - 94.73 0.893 84.59 - - -

82 136.66 - 136.66 0.797 108.92 - - -

83 136.38 136.38 0.712 97.10 - - -

84 75.S77 - 75.577 0.635 47.99 - - -

85 - -1.311 - 1.311 0.567 - 0.74 124.50 - 70.59

86 - -1.311 - 1.311 0.507 - 0.66 127.90 - 64.85

87 - -1.311 - 1.311 0.452 - 0.59 129.30 - 58.44

88 - -1.311 - 1.311 0.404 - 0.53 147.50 - 59.59

89 - -65.37 - 65.37 0.361 - 23.60 162.90 . - 58.81

90 - -1.311 * 1.311 0.322 - 0.42 178.70 . 57.54

91 - -1.311 * 1.311 0.287 - 0.38. 195.46 - 56.10

92 . - -1.311 -- 1.311 0.257 . - 0.34 212.23 - 54.54

93 - -1.311 - 1.311 0.229 - .0.30 228.99: -. 52.44

94 - -97.38 - 97.38 0.205 - 19.96 245.75 * 269.47 50.38

351.36 55.14

B/C Ratio * 1.78 : 1IRR * 205

NPV * 273.86 ililIons

- 75 -ANNEXURE FØ1)

BENEFIT COST ANALYSIS

WAN RAEIA RAM OVE |D BRIM

Project Cost = Rs. 245.66(Lacs)

Economic Costa Rs. 196.53(Lacs)

vsa nes samms esome o ..mss secs cost wummmw atseems m av gaac ost - Æ*Ucøtge

1984 - - 6.53 196.53 175.47

1985 31.70 25.27 5.6 5.6 4.46

9__ 3.04 24.23 5.6 5.6 3.99

1947 36.38 23.12 5.6 5.6 3.56

1988 38.72 21.97 5.6 5.6 3.18

1989 41.06 20.80 5.6 5.6 2.83

1990 43.41 19.64 5.6 5.6 2.53-

1991 46.65 18.84 5.6 5.6 2.26

1992 49.88 17.99 5. 5.6 2.01

1993 53.12 17.10 5.6 5.6 1.80

1994 56.35 16.20 5.6 5.6 1.61

1995 59.59 15.30 - _1.8 5.6 1,4L

1996 64.01 14.67 5.6 5.6 1.28

1997 68.43 14.00 5.6 5.6 1.15

198 72.86 13.31 5.6 5.6 1.02

1999 77.28 12.61 5.6 5.6 0.91

2000 81.70 11.90 5.6 5.6 0.82

2001 87.72 11.40 5.6 5.6 0.73

2002 93.74 10.88 5.6 5.6 0.65

2003 99.77 10.34 5.6 5.6 0.58

2004 105.79 9.79 5.6 5.6 0.52

2005 111.81 9.24 5.6 5.6 0.46

Total: • 338.6 19.5311.6 314.13 213.26

Total Discunted Costa R&. 213.26(La«s). Total discounted benmfit~=Rs.338.60

Bnfit Cost Ratio * .1.59 . Internal rate of£.return.-. 19.62

Net Presnt Wrth = Ra. 125.36 (Lacs)

-76-ANNEXURE - F(2).

BENEFIT COST ANALYSIS

WAN RA1A RAá OVERIMD RIDGE

project Cost a R*. 27.45 (Millions)Economic Costa Rt. 23.27 :(Millims)

*em to va en~ pst

1983. . . 1,204- 1.204 1.69

1984- - - 11. - 11.84- 14.861985 - . 7.81 - 7.811 8.75

1986 - 2.42 - 2.421 2.16

1987. 15.329 12.22 - 0.05 0.05 0.041988 16.554 11.78 - 0.05 0.05 0.03

1989 17.779 11.30 - 0.05 0.05 0.03

1990 19.004 10,78 - [.05. 0.05 0.031991 20.229 10.23 - 0.05 0.05 0.03

1992 21.849 9.88 - 0.05 0.05. 0.02

1993 23.468 9.48 - 0.05 0.05 0.02

1994· 25.088 9.05 - 0.05 0.05 0.02

1995 26.707 8.60 - 0.05 0.05 0.02-9 -831 81 - -- n

1997. 30.538 7.84 - 0.05 0*.05 0.011998 32.749 7.51 - 0.05 0.05 0 01

1999 32.749 7.51 - .0.05 0.05 0.01

2000 7.170 6.79 - 0.05 0.05 0.01

2001 39.381- 6.42 - 0.05 0.05 0.01

2002 42.372 6.17 - 0.05 0.05 0.01

2003 -45.36 5.90 - .05

2004 •9.5 •n_.l

2005 51. 5.32 .- :0.05 0.05

200 54. 22 42 . n-nv, • n ns -p

lbtal .630.904 165.22 23.28 1.00 24.28 24.79

'Ital acamted CdotsuRs.27.79 'Tal dlmamted benofits R.165.22(M11lenm)

.mnt t patio 5.9s. . Int~r mte of.• Nét 'Plr~it Faty'•E.- 131.43.ruan ~l

- 77 -ANNEXURE-G()(ORIGINAL>

BENEFIT COST ANALYSIS

*1.S. LDK CANAL MRIGE

Project Cost a Ra. li.808 M11lonEconomic Costa Ra. 10.24 Million

pea as v or,t .mo aNot

1984 - - - -

1985 - - 10.24 - 10.24 9.14

1986. 0.96 0.77• - 0.03 0.03 0.02

1987 1.14 0.81 - 0.03 0.03 0.02 .

- 1.32 0.84 - 0.03 0.03 0.01

1989 1.51 0.86 - 0.03 0.03 0.01

1990 1.9 0.86 ~ 0.03 0.03 .0.01

1992 2.24, 0.90 0.03 0.03 0.01

1993 2.62 0.94 - 0.03 0.03 0.01

1994 - 0

1995 3.37 0.94 - 0.03 0.03 0.01

1994 3.74 0.96 - 0.03 0.03

1997 4.16 0.95 - 0.03 0.03 0.01

1991 4.58 0.94 - 0.03 0.03 0.01

1998 5.00 0.91 - 0.03 0.03 0.012000 5.42- 0.88 - .03 03

2001 .5.84 0.85 - 0.03 0.03 -2002 5.28 0.82 - 0.03 0.03 -

2003 6.71 0.78 0.3 0.03

2004 .7.15 0.84 - 0.03 0.03 -

2005 7.58 0.7Q - 0.03 0.03

2006 8.02 0.82 - 0.03 0.03 -

-2007 - -•

2008 9.17 0.60 - 0.03 0.03 -

2009 7.15 0.57 - 0.03 0.03 -

2010 10.32 0.54 ~ 0.03 0.03 -

2006 20.28 .1024 . 0.03 10.99 .

2008 9E1t 0t 0s 9.30 01 3 0a d2009n . , 0.57 .. 03 1,

- 78 -

ANNEXURE -GU2(REVISE)

BENEFIT COST ANALYSISB.S. LINK CANAL DRID

Project Cost n Rs.12.12 (Millins)Economic.Costa Rs.10,¿§,<*11us)

-1985 .3.81 3.81 4.27

-198 . 6.70 - 6.70 5.34

1987 1.14 0.81 - 0.03 0.03 0.02

18 1.51 0.86 0.03 0.03 0.01

1990 1.69 0.86 0.03 - 0.03 0.01

1991 1.87 0.85 0.03 0.03 0.011992 .2.24 0.90 - 0.03 0.03 0.01

-993 2.62 0.94 - 0.03 003 0.01

1994 . 2.99 0.98 - 0.03 0.03 - 0.01

1995 .. 3.3.71 0.96 - 0.03 0.03 0.01

1996 3.741 0.96 - Q.03 0.03 0.01

1997 4.8 0.95 - 0.03 0.03 0.01

1998 4.58 0.94 - 0.03 0.03 0.01-1999 5.00 0.91 - 0.03 0.03 0.01

2000 5.42 0.88 0.03 0.03

2001 5.84 0.85 - 0.03 0.03 .01

2002- 6.28 0.82 0.03 0.03

2003 6.71 0.78 - 0.03 0.03 -

2004 .7.15 .0.4- - 0.03 0.03 -

2003 7.58 0.70 -

200 8.021, 0.66 - 0.03 0.03 -

20 · · .6 0.3- - - fl.f-

1008 9.17 0.60 - 0.03. 0.03 -

- Cfnt-..(2)

-79-

2009 9.75 0.57 - 0.03 0.03 -

2010 10.32. 0.54. - 0.03 0.03 -

2011 10.90 0.51 - 0.03 0.03. -

121g97 20302- 0.5 0.75 11.26 9.76

'Ibtal discounted Csts - Rs. 9.76 ?óta1 diMcoumted beefts m flo. 20.02(m1m) (Miut111 )

eneftit Cost Ratio * 2.05 luternal Fate of Røturn 19.2 %

Net Present Worth • Rs. 10.26 (MI11Ia)

IBRD 14188RI64- n·l - U s S R

,..CHINAPAKISTAN

THIRD HIGHWAY PROJECT-- PROJECT ROADS

-- NATIONAL ROADS-- PRIMARY AND SECONDARY ROADS

--- RAILWAYS

+ AIRPORTSPROVINCE SOUNDARIES JA~ ADINTERNATIONAL BOUNDARIESRIVERS KA$

L DL

3U j

REP. OF L.IRANm

mn i a o 2

\ ' B 19 Es 0 5

-28 H 2d

Arabiah4 Sea

DCME

DE~U 1988

- 83 -

PAKISTAN

THIUD HIGHWAY PROJECT (CL 974-PAK)

Supplement to Project Completion Report

Introduction

1. A PCR was completed by the borrower, the Government of Pakistan (GOP)through the project implementing agency, the National Highway board (NHB)which was responsible to the Ministry of Communications (MOC). The report waswritten by Engineer Inam Bari Pervaize of NESPAK, the consulting engineersresponsible for the bulk of civil works design and supervision. The report isgood in terms of its quality and is written in accordance with the Guidelines.It was completed within five months of the Closing Date, but it was notforwarded to the IDA until March 1988. Throughout its life the project wasadministered by the South Asia Region; this report is being prepared by ENTINon behalf of EMIIN in the EENA Region. The Region feels that the PCR shouldstand unaltered. This supplement follows the.PCR paragraph numbering andshould be read together with it. The supplement is intended to addinformation on the IDA aspects of the project, to comment on the PCR or togive the Region's view where it is at variance with the PCR. Two tables (Is,Zs) are attached giving financial details of project costs and use of loan 'proceeds. Accounts were audited annually.by the Auditor General of Pakistan.

. Supplement to Highlights

There was a substantial and valuable learning process both for the. contractors and for NEB, from which the current Fourth Highway Project has

greatly benefited. The great majority of the shortcomings identified in thisreport were independently noted by NHB and Bank staff responsible for FourthHighway Project preparation, and specific steps to prevent any re-occurrencehave already been built into that project.

Comments on the points made in the Highlights are as follows:

(a) Pre-qualification. There was pressure on NIB staff and consultantsto pre*qualify local firms who were not subject to the same scrutiny asforeign firms. On the other hand pre-qualifying. was a new experience to localfirms who did not have financial information in the required form. Inspectionof major equipment was carried out in one case, but NIB failed to see theprocedure as important for their protection. In the event all three localcontractors did badly for the first two years. Under the Fourth HighwayProject the procedure was revised, with the use of a chartered accountancyfirm to determine a true financial situation for local firms of which thereare now many more.

(b) Slow mobilization was a by-product of poor pre-qualification. Nomobilization period has been set in Fourth Highway Project, but bidders wererequired to include a program with their bid showing that the works would becompleted within a stated contract period.

- 84 -

(c) Mobilization Advance. A lack of cash flow slowed the pace of work,but so did the underlying inadequacy of local contractors' resources - again aby-product of poor pre-qualification procedures. Compounding the problem wasslow payment by GOP, relieved in the last years by the retro-fitting of aspecial account for pkyments from the credit. In the Fourth Highway Project a20% non-refundable mobilization payment has teen made. Interestingly itproduced very good rates from the low bidders - 7 to 12% below estimate.When questioned on these rates both low-bid contractors said that the healthyadvance made the usual (disguised) front-end loading of rates unnecessary.

(d) Counterpart funds. Their non-provision is a common source ofproblems in Bank projects. Governments commit themselves at negotiations to"provide, promptly as needed the funds...etc.," but countries' economies arefrequently overtaken by events. Poor funding performance by GOP in ThirdHighway Project was definitely a factor in the two year time over-run. InFourth Highway Project, the signing of contracts after the first year isconditional upon good funding performance.

(e) & (f) Inadequacy of equipment. This was another consequence of poorpre-qualification, but was also due to a lack of construction management skillsby local contractors who did not appreciate how much plant was required andhow long it took to procure. In the Fourth Highway Project, local contactorshave been required to employ an expatriate management team, and equipment isbeing inspected under a post-qualification procedure provided for In theInstructions to Bidders.

(g) Guarantees. Neither banks nor insurance companies were accustomed toprovide this type of service back in 1980, nor did NHB have the experience tojudge the underwriting capacity of the institutions. In the Fourth HighwayProject guarantees are now limited to "scheduled" bank, and one issued by aninsurance company must be-for for 50% (not 101) of the contract sum.

Ch) Plan checking. Inexperienced local consultants prepared the plansand the co-ordinating consultant had inadequate resources for checking. Thislatter situation probably also occurred under the Fourth Highway Project, butthe local design consultants are now more experienced and expatriatesupervision consultants are employed in joint venture with local firms foron-site checking.

(j) Land acquisition. NEB was w9ak in this area in 1980 but now hasexperienced personnel for this work. In Fourth Highway Project prioracquisition of land, shifting of utilities, etc., was made a pre-condition forcontract signature.

(k) Vehicle overloading. An excellent study was prepared by the NationalTransport Research Centre (NTRC) (see para. 10.05.) but little has been doneto cure the problem.

Supplement to Ch. 1

None

- 85 -

Supplement to Ch. 2

None

SuppLement to Ch. 3

3.1(s) Discussions with GOP on the project began in January L973. GOPwished to carry out road improvements on trunk roads in each province, tointroduce modern specifications, and to "modernize" its contractors by makingthem more equipment-oriented. Following an identification mission in January1974, the Bank proposed that expatriate consultants be employed to help withproject preparation and further refinement of the list of roads to be includedin the proposed project. It was not until June L976 that a contract wasfinally signed with co-ordinating consu)tants to prepare the project, with thehelp of six firms of local consultants. As late as May 1976, a preparationmission spoke of a project for rehabilitation of some 1,000 km of roads withan IDA credit of US$30 million, but commented that GOP had done little to helppreparation and had not appointed a project co-ordinacor.

3.2(s) A project brief was issued in March 1978 showing that while 1,000 kmsof highway were under feasibility study, costs (even after IDA pressure toreduce design standards) were unacceptably high, and suggesting scaling theproject down to US$70-80 million. It was also noted that "foreign contractorsare unlikely to be interested in this work". A major issue in IDA/GOPdiscussions was IDA's concern for the 'proposed level of investment in theIndus Super Highway. This was designed as a grand sweeping highway along theWest Bank of the Indus River, on a wholly new alignment but with littleeconomic justification. After IDA proposed to discontinue projectpreparation, GOP agreed to limit construction to upgrading existing- roads inthe region and to cut expenditure from Rs 2;000 million to Rs 500 million.Eventually a covenant was included in the Credit Agreement proscribingconstruction of the Super Highway. The Indus Super Highway Board was renamedthe National Highway Board, eventually becoming the implementing agency forthe project.

3.3(s) Appraisal took place in November 1978, six years after thepreliminary discussions. The road rehabilitation to be financed had beenreduced to 350 kma under an US$85 million project of which IDA would financeUS$50 million. Principal issues discussed in the Issues Paper, datedDecember 29, 1978, were maintenance funding; GOP's strong request t"tconstruction of an adjacent carriage way rather than rehabilitation f theexisting road should be undertaken on heavily trafficked sections; and ratesof interest for on-lending funds to be supplied under the credit to theIndustrial Development Bank of Pakistan (IDBP). Negotiations eventually tookplace in July 1979. The credit amount remained at US$50 million, but by thisstage bids had been called for the civil works. Becauae of the high level ofbids it was necessary again to reduce the amount of rehabilitation to 280 km(see para. 3.01 PCR). On road maintenance funding, IDA accepted Governmentassurances in a side letter that an annual allocation of of Ra 9,000/km per10ft. width of national highway would be made available. A similar letter setout the agreed [DBP on-lending arrangements. As conditions of Board

- 86 -

Presentation. IDA required that letters of intent should have been issued forcivil works, and signature of an agreement with the co-ordinatingconsultants. These conditions were thought necessary to bring GOP to takefirm action on contract award. Board presentation took place on January 15,1980, but owing to a shorciall in IDA replenishment, signature of the creditwas postponed until April 9, 1980.

Supplement to Chapter 4

No commente.

Supplement to Chapter 5

No comments..

Supplement to Chapter 6

6.01(s) This component consisted of the establishment of a line of creditwith IDBP of US$5 million, and the services of a construction industryspecialist (financed by UNDP) to assist domestic contractors with the purchaseand management of appropriate construction equipment.

While the specialist was well-qualified to advise contractors andIDBP, and became widely respected, the conditions and circumstancessurrounding the line of credit discouraged its use and only US$1.3 million ofthe US$5 million available were utilized, and the balance of the funds wasredistributed to other credit categories.

The intention of the credit was to help domestic contractors with the: foreign exchange costs of purchasing and importing machinery, but in practice

the following fa4tors arose:

(a) the time required to win a civil works contract under Third HighwayProject, get a subloan approved by IDBP, order, ship and processthrough customs an item of new machinery, was so long that the loanwas of no practical value to the contractor;

(b) collateral requirements were set too high and, the equipment beingfinanced being "movable", was not accepted as collateral; and

(c) the credit could not be used for second-hand machinery from theMiddle East, the most popular market for Pakistani contractors.

There was no shortage of funds for the purchase of machinery, particularlyfrom the Gulf, and there are now more asphalt plants in Oakistan than theGovernment can finance work for. Other ways have been adopted in the FourthHighway Project to help local contractors.

Supplement to Chapter 7

None

- 87 -

Supplement to Chapter 8

4one

Supplement to Chapter 9

Role of the IDA and Borrower

9.01(s) The lengthy time required from the opening of the dialogue to BoardPresentation. seven years, was mostly due to slow decision making by GOPs buta comparison between the length of roads studied and the size of loan underconsideration suggests the blind were leading the blind over the cost of works,even after narrowing down from 1,200 km to 350 km after bid opening. All thisfollowed in the wake of the Second Highway Project, which was cancelled soonafter approval because bids bore no relation to the loan amount.

Implementation

9.02(s) With hindsight, the decision to build detours with material salvagedfrom the existing pavement and then to reconstruct on the same centre line waswrong. Maintaining traffic on the existing road while building an adjacentnew carriage way, as GOP requested, would have made more sense, and is thesolution adopted for the Fourth Highway Project.

The PCR details NHB's failure to press either contractor to makeprogress or suffer.penalties. IDA applied considerable pressure, and actedwith great pragmatism in finally setting a program of lengths and dates to beachieved as conditions of granting successive contract extensions. Thisapproach, coupled with the arrival of a new head of the co-ordinatingconsultant's team, who really helped the conttactors to plan and schedule

* works progress, got construction moving. That was in the summer of 1984; atour Project Implementation Review discussions in November 1983 terminating theproject had been discussed.

9.03(s) There were*technical problems with asphalt concrete design andunforseen ground conditions. Neither GOP nor it3 consultant nor thecontractor had real experience, and IDA failed to appreciate the effect of thehigh ambient temperatures until some wearing course failures had occurred.Thereafter mix design improved and the contractors climbed up the learningcurve. Likewise, neither the local designers nor contractors had appreciatedthe extent of waterlogging of natural ground caused by a rise in the watertable (see PCR p. 4t). Although conditions of contract always assume that thecontractor has verified site information, he frequently does not. As thedesigners had failed to give any indicwion of a possible problem in thisarea, the contractor did not structure uis rates accordingly and was slowedconsiderably. The problem was highlighted to all design firms for the FourthHighway Project.

9.04(s) As noted in the PCR (page 9) the failure of GOP to provide anadequate flow of funds brought the project almost to a halt for the latterhalf of FY85/86. At the borrower's request, IDA agreed to make some payments

- 88 -

under Procedure 3 and to retrofit a special account. rnspite of IDA'sagreement, given in January 1985, it took six months before the account wasopened on July 15, 1985. It was unfortunate that the period when GOP wasunable to maintain a flow of payments followed immediately after a majoreffort to get the contractors to maintain an adequate flow of work.

Supplement to Chapter 10

Provision of Equipment for Maintenance

10.1(s) The appraisal report (para. 3.16) provided for the setting up of nineroad resealing units. The project was to finance equipment on the assurancethat the Federal Government would set-up a model resealing team. The plan wasto train foremen from provincial C & W's, rotating through this team, whowould then train up teams in their own provinces. In the event NUB did nothave the logistic.support for such a team and the equipment was distributeddirectly to the provinces.

The equipment which was procured through ICB at a total cost ofUS$1.54 million, consisted of nine sets of:

- bitumen distributor

- pneumatic tired roller

chipping distributor

- 2 dump trucks

It was used with varying degrees of enthusiasm and skill by the four provinces,but only to mechanize the existing type of surface dressing already beingpracticed. The project did not provide for expatriate instruction nor theintroduction of "designed" seals based on appropriate measurements and tightcontrol. Furthermore two provinces found that the lack of a front-end loader

.and a drum decanting unit made for an incomplete team, and made little use ofthe equipment. Thud far, this component could be considered only r-artiallysuccessful. However, the Fourth Highway Project provides for this missingequipment, rehabilitation of that supplied under the Third Project, a-ndtechnical assistance for training. Provision of this equipment will beconditional upon the C & W's having nominated sanctioned and funded schemes intheir work programmes for which surface treatment is required, and upondemonstrating a willingness to adopt modern seal designs.

Teahnical Assistance to C & W's in NWFP and Baluchistan

10.02(s) Two specialists, one in equipment and one in materials testing eachspent six months in Quetta and six months in Peshawar, actached to therespective C & W departments. Both experts, supplied by the co-ordinatingconsultants, were very competent in their fields and each demonstrated awillingness and ability to work directly with lower level employees, even whilefacing the usually bureaucratic difficulties placed in the way of people trying

- 89 -

to make changes, improve efficiency or destroy cozy relationships. Thespecialists were treated differently in the two provinces - in NWFP they metwith indifference and achieved little, but in Baluchistan they hadenthusiastic official support and despite dIfficulties due to personnelpolicies, were able tb make a start physically and institutionally. The sametwo experts are again working in Baluchistan under the Fourth Highway Project,but NWFP did not request a second visit.

The main achievements in the equipment field were:

(a) the introduction of the rudiments of equipment fleet management;

(b) the completion of a province-wide fleet inventory which revealed hugepiles of junk, side by side, paradoxically, with sheds full of unusedbrand new machinery and a backlog of repairs of existing machinery;and

(c) the decentralization of the central workshop.

In the materials testing field the main achievements were:

(1) a laboratory was built and equipped (including a field vehicle);

(ii) a staff of twelve was trained in a range of tests; ahd

(iii) quality control was greatly improved on current jobs sincereliable testing was now available, and even private companiesand other government departuents began to seek testing servicesonce they knew it was available.

10.03 The combination of energetic and enthusiastic official support andcompetent specialists prepared to work within or around constraints, made thisa sudcessful component in Baluchistan and has laid the ground for additionalassistance under the Fourth Highway Project.

Fellowships and External Traini

10.04(s) The project helped finance a one year attendance at VirginiaPolytechnic Institute, USA of an NHB engineer to study traffic engineering.He gained an MSc and returned to NRB go head its newly formed TrafficEngineering Section. Creation of this unit was covenanted by the FourthHighway Project loan agreement and was a successful example of action in oneproject paving the way for a more ambitious component in the next. AnotherNRB staff member took a six-month course at Bradford University, UK, inproject management, returning to the exacting task of planning andco-ordinating all land acquisition and relocation of utilities over 650 km ofPakistan's principal highway.

Maintenance Monitoring

10.05(s) In addition to the contributions to maintenance described in paras.LO.01(s) and 10.02(s), the SAR (para 3.07) described the project support for

- 90 -

NRB's maintenance monitoring system. An initial report was produced by NESPAKin 1982 for a reorganization of maintenance but no action was taken. However,a complete inventory and deficiency survey was carried out by internationalconsultants in 1986 and was worked up into a computerized data base andpavement management system. It forms the basis of a major component of thefollow-on project, under which NHB has established a wholly new MaintenanceDirectorate with a training program in full swing, and all maintenance isscheduled based on the monitoring system.

Vehicle Overloading

10.06(s) As required by the covenant, a comprehensive axle load survey wascarried out by NTRC, who also prepared a paper on the economic implications ofvehicle overloading. The survey was well executed and drew favourable comentfrom IDA and GOP (see Axle Load Survey; Report NTRC-65 dated October 1982).The survey found that 83% of loaded vehicles exceeded the then 8.2 ton legaluaimum actual load. In a special survey of trucks belonging to the NationalLogistic Cell (NLC) (an Army-run organization) loads were found to exceed thelimit by a wide margin. The first outcome of the study was to extract fromNLC an undertaking that they would cease overloading. Their agreement is onXRB files but there is no enforcement. The second outcome was the realizationthat using an equivalent standard axle pavement design approach, the designlife would expire sooner than planned, and it was decided to increase somepavement thicknesses on the project and to design for hfgher loads in theFourth Highway Project.

Discussions were held during supervision missions about roadside axleload control, and the widely-held GOP view was that any scheme would merelyenrich the police. The Secretary MOC agreed to contact National Motors topromote the idea of a second rear axle on their Bedford trucks, with so far noresult. The most conclusive action was initiated by a IDA economist whoproposed raising the legal ax4e load to 13 metric tons. This was accepted,and at a stroke, the percent3ge of illegal trucks plumeted. Now the emphasisis on catching a few seriously overloaded vehicles for which a series of fixedweight stations is proposed. As part of the activities of the MaintenanceDirectorate (para. 10.05(s)) axle loads are routinely monitored as an inputinto the pavement management system, along with rutting and cracking, so thatthe time for overlaying or reconstruction can be better predicted.

4710*-O:syG

*91 -

Table its)

PROJECT COMPLETION REPORTPARISTAN

THIRD HIGHWAY PROJECTComparison of Project Costs

Appraisal Estimate Actual Expenditure

Component $000 Re million $000 Rs million******---

Part A Contracts 2, 3, 4, 7 73,980 732.4 82,068 958.3Part B Contract 1 4,162 41.2 4,534 52.6

Equipment 1,700 16.8 1,605 44.1

Loans througt IDBP 5,140 50.9 1,281 14.6

Consulting Services:

supervision 4,070 40.3 5,324 47.1Technical Assistance to

Federal Government 34 3.6 97 2.2Provincial Government 606 6.0 1 0.2Project Preparation 3,162 31.3 1,602 18.7

93,184 922.5 96,512 1137.

Source: Project Accountant, NHB, & Disbursements Division IBRD.

- 92 - Table 2(s)

PROJECT CONfLETION REPORT

PAKISTAN

THIRD HIGHWAY PROJECT

Comparison between Estimated and Actual IDA Contributions

ts$ millions

CreditCatexory Component Appraisal Estimate Actual Cost

1 Civil Works Part A 34.40 32.842 Part B 1.60 1.81

3 Equipment and Materials Part A .60 1.604 Part B, 1.00 -

5 Loans through IDBP 5.00 1.28

6a Consultants for Supervision 4.90 5.32

6b Technical Assistance toFederal Government .20 .10

6c Technical Assistance toProvincial Governments .70 .01

6d Project Preparation 1.60 1.60

Loan funds cancelled 5.43Exchange adj"stment .. 01

Source: LOALE

-91-

Tabt !is"

PROJECT COMPLETION REPORTPAKISTAN'

THRD HIGHWAY PROJECTComparison of Project Costs

Appraisal Estimate Actual Expenditure

component $000 as Million $000 Re million

Part A Contracts 3, 3, 4, 7 73,980 732.4 82,068 958.3Part 8, Contract 1 4.162 41.2 4,534 52.4

Equipment 1,700 16.8 1,605 44.1

Loans through IDBP 5,140 50.9 1,281 14.6

Consultinq Services:

Supervision 4,070 40.3 5,324 47.1Technical Assistance to

Federal Government 364 3.6 97 2.2Provincial Government 606 6.0 1 0.2Project Preparation 3,162 31.3 1,602 18.7

93,184 922.5 96,512 1137.8

Source: Project Accountant, NHBs & Disbursements Division IBRD.

- 92 -Table 2)

PROJECT COMPLETION REPORT

PAKISTAN

THIRD HIGHWAY PROJECT

CoMarison between Estimated and Actual IDA Contributions

US$,millions

CreditCatexory Component Appraisal Estimate Actual Cost

1 Civil Works Part A 34.40 32.842 Part B 1.60 1.81

3 Equipment and Materials Part A .60 1.604 Part 8 1.00 -

5 Loans through IDBP 5.00 1.28,

6a Consultants for Supervision 4.90 5.32

6b Technical Assistance toFederal Government .20 .10

6c Techn:cal Assistance toProvincial Governments .70 .01

6d Project Preparation 1.60 1.60

Loan funds cancelled 5.43Exchange adjustment .. 01

Source: LOALE