36224-013: Project Completion Report · Completion Report Project Number: ... economic internal...

Completion Report

Project Number: 36224-013 Loan Number: 2254 September 2015

Bangladesh: Second Rural Infrastructure

Improvement Project This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – taka (Tk)

At Appraisal At Project Completion 1 December 2005 26 December 2013

Tk1.00 = $0.01519 $0.01287 $1.00 = Tk65.83 Tk77.70

ABBREVIATIONS

ADB – Asian Development Bank DFID

DSM EIRR FSO GAP GCM GIZ HDM IRI IGA IST KfW km LCS LGD LGED LGI m MMC NGO PCR PMO RHD RRI RRP SAR SDR TTC UC UCC VOC WMS

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

Department for International Development (United Kingdom) design, supervision, and monitoring economic internal rate of return female shop owner gender action plan growth center market Deutsche Gesellschaft für Internationale Zusammenarbeit highway development and maintenance international roughness index income generating activities institutional support and training Kreditanstalt für Wiederaufbau of Germany kilometer labor contracting society Local Government Division Local Government Engineering Department local government institution meter market management committee nongovernment organization project completion review project management office Roads and Highways Department rural roads improvement report and recommendation of the President subproject appraisal report special drawing rights travel time cost union council union council complex vehicle operating cost women’s market section

GLOSSARY

growth center market – a rural market identified as the focus for area development union parishad (council) – the next level of local government below upazila union road

–

a road connecting a union headquarters to an upazila road or the nearest all-weather road

upazila (subdistrict) – the third administrative level of local government after divisions and districts

upazila road – a road connecting a growth center market to the upazila headquarters or the nearest all-weather road

NOTES

(i) The fiscal year (FY) of the Government of Bangladesh ends on 30 June. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2015 ends on 30 June 2015.

(ii) In this report, "$" refers to US dollars. Vice-President W. Zhang, Operations 1 Director General H. Kim, South Asia Department (SARD) Director K. Higuchi, Bangladesh Resident Mission (BRM), SARD Team leader E. Morsheda, Senior Project Officer (Urban Infrastructure), BRM, SARD Team members J. Hossain, Project Analyst, BRM, SARD

R. J. Gomes, Senior Operations Assistant, BRM, SARD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2

B. Project Outputs 3

C. Project Costs 5

D. Disbursements 6

E. Project Schedule 6

F. Implementation Arrangements 7

G. Conditions and Covenants 7

H. Consultant Recruitment and Procurement 8

I. Performance of Consultants, Contractors, and Suppliers 9

J. Performance of the Borrower and the Executing Agency 9

K. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 10

A. Relevance 10

B. Effectiveness in Achieving Outcome and Outputs 10

C. Efficiency in Achieving Outcome and Outputs 11

D. Preliminary Assessment of Sustainability 11

E. Impact 11

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13

A. Overall Assessment 13

B. Lessons 13

C. Recommendations 14

APPENDIXES

1. Design and Monitoring Framework 15 2. Appraisal and Actual Project Costs 18

3. Annual Disbursements of ADB Funds by Category 19

4. Implementation Schedule 20

5. Status of Compliance with Loan Covenants 21

6. Consulting Services 28

7. Implementation of Gender Action Plan 29

8. Assessment of Project Impacts and Benefits 39

9. Economic Reevaluation 41

BASIC DATA

A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report

Number

Bangladesh 2254 Second Rural Infrastructure Improvement Project People’s Republic of Bangladesh Local Government Engineering Department SDR64,766,000 BAN-1534

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan – Interest Rate

– Maturity (number of years)

– Grace Period (number of years)

8. Terms of Relending (if any) – Interest Rate – Maturity (number of years)

– Grace Period (number of years)

– Second-Step Borrower

15 November 2005 01 December 2005 13 July 2006 14 July 2006 18 August 2006 17 September 2006 31 October 2006 5 December 2006 0 31 December 2011 26 December 2013 2 1% per annum during the grace period and 1.5% per annum thereafter 32 8 Not applicable

9. Disbursements a. Dates Initial Disbursement

6 March 2007 Final Disbursement

27 August 2013 Time Interval

78 months

Effective Date 5 December 2006

Original Closing Date 31 December 2011

Time Interval 61 months

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b. Amount (SDR ‘000)

Category

Original

Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balance Rural Road 43,604 48,380 48,380 Rural Others 6,268 4,540 4,540 Equipment 2,224 1,940 1,940 Vehicle 1,280 1,418 1,418 Studies 472 131 131 Training 3,033 1,966 1,966 Consulting Services 4,718 3,791 3,792 Interest Charges 1,617 1,397 - - 1,397 -

Unallocated 1,550 - - - - -

Total SDR 64,766 63,563 1,203 - 63,563 - Equivalent US$ 96,100 97,690 - - 97,690 - 10. Local Costs (Financed) - Amount ($ million) 89.98 - Percent of Local Costs 94% - Percent of Total Cost 43% C. Project Data

1. Project Cost ($ million) Cost Appraisal Estimate Actual

a

Foreign Exchange Cost 66.3 20.6 Local Currency Cost 194.2 185.7 Total 260.5 206.3

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 78.3 74.4 ADB Financed 93.7 95.5 DFID 60.9 4.5 KfW 21.6 22.7 GIZ 3.6 7.0

Total 258.1 204.1 IDC Costs

Borrower Financed - - ADB Financed 2.4 2.2 DFID - - KfW - - GIZ - -

Total 260.5 206.3

ADB = Asian Development Bank, IDC = interest during construction.

Source: Asian Development Bank.

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3. Cost Breakdown by Project Component ($ million)

Category Appraisal Estimate Actual Disbursement

Local Foreign Total Local Foreign Total 1. Civil Works 137.0 44.7 181.7 164.5 4.8 164.5 2. Land Acquisition 2.0 - 2.0 0.5 - 0.5 3. Consultants:

Design and Supervision 2.2 4.8 7.0 4.4

1.4 1.4 LGED Institutional 0.8 0.8 1.6 - - LGI Training 0.7 - 0.7 6.6 11.0

4. Vehicles and Equipment 2.0 4.6 6.6 1.9 3.3 5.2 5. Training - -

LGED 1.3 1.3 2.6 2.2 0.8 3.0 LGI 5.3 - 5.3 - 1.6 1.6 Awareness Campaign 0.9 - 0.9 - - -

6. Studies 0.5 0.1 0.6 - - - Studies (Including External Monitoring) Recurring Cost:

(a) Incremental Staff 4.8 - 4.8 6.5 - 6.5 (b) Office Expenditure and O&M Vehicles 1.6 0.3 1.9 5.7 - 5.7 (c) Maintenance of Upgraded Roads 2.0 0.2 2.2 - - - (d) Tree Maintenance 3.5 - 3.5 - - - Physical Contingencies 14.5 4.8 19.4 - - - Price Contingencies 14.9 2.4 17.3 - - - Financial Charges - 2.4 2.4 - 2.2 2.2 Total 194.2 66.3 260.5 185.7 20.6 206.3 Share of Total (%) 74.6 25.4 100.0 90.0 10.0 100.0

4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants (i) Project design, supervision, and monitoring

- Date of contract - Date of completion

(ii) Institutional training - Date of contract - Date of completion

(iii) Improving LGED’s capacity - Date of contract - Date of completion

October 2005 June 2011

October 2005

June 2011

October 2005 June 2011

December 2007 June 2013

May 2007

September 2011

May 2009 June 2011

Completion of Engineering Designs January 2007 June 2009 Civil Works Contract

- Date of Award January 2007 21 April 2008 - Completion of Work June 2011 14 February 2013

Equipment and Supplies Dates

- First Procurement January 2007 November 2007 - Last Procurement December 2008 April 2010 - Completion of Equipment Installation NA NA - Start of Operations NA NA - Completion of Tests and Commissioning NA NA

Beginning of Start-Up NA NA Other Milestones

b NA NA

a If more than one, show dates for each contract.

b Show key events not listed above, particularly for projects with elements not involving construction or supply of

materials and equipment.

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5. Project Performance Report Ratings

Implementation Period

Ratings Development

Objectives Implementation

Progress From 1 May 2005 to 31 December 2005 Satisfactory Satisfactory From 1 January 2006 to 31 December 2006 Satisfactory Satisfactory From 1 January 2007 to 30 November 2007 Satisfactory Satisfactory From 1 December 2007 to 31 December 2007 Satisfactory Highly Satisfactory From 1 January 2008 to 31 January 2008 Satisfactory Highly Satisfactory From 1 February 2008 to 31 December 2008 Highly Satisfactory Highly Satisfactory From 1 January 2009 to 31 March 2009 Highly Satisfactory Highly Satisfactory From 1 April 2009 to 31 December 2009 From 1 January 2010 to 31 December 2010 From 1 January 2011 to 31 December 2011 From 1 January 2012 to 31 December 2012 From 1 January 2013 to 31 December 2013

Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory

Highly Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of Members

a

Inception mission Joint review mission Joint review mission Midterm review mission Project review mission Project review mission Project review mission Project review mission Project review mission Project review mission

6–18 Feb 08 23 Sep–5 Oct 08 29 Mar–9 Apr 09

15–28 Feb 10 24–31 Oct 10

27 Feb–Mar 11 13 Sep–9 Oct 11

8–21 May 12 1–20 Nov 12 5–23 Jul 13

2 6 5 6 2 2 2 1 1 2

18 22 20 25 8 6 8 5 5 7

a, b a, b a, b

a, b, f a, b a, b a, b

a, b, d, e, f a, b, d, e, f a, b, d, e, f

Project completion review 28 Feb–7 Mar 15 2 4 a, g a a = project officer, b = project analyst, c = counsel, d = social safeguard specialist, e = environmental safeguard

specialist, f = gender specialist, g = staff consultant.


I. PROJECT DESCRIPTION 1. The Second Rural Infrastructure Improvement Project1 was formulated in response to the government’s National Strategy for Rural Development (1984). Improving rural infrastructure and linking these to the farmlands and larger marketplaces through an all-weather network of rural roads has been a key element in the government’s efforts to reduce poverty. The project was to (i) support the ultra-poor in the low-income areas in the northwest, central east, and southeast zones of Bangladesh by enhancing access to basic services through improved rural infrastructure; and (ii) strengthen the local government units to enable them to plan, manage, and maintain the local infrastructure. 2. The project aimed to (i) enhance access for the rural community to basic services, (ii) increase on-farm income by ensuring greater availability of agricultural inputs such as fertilizer and high-yielding seed varieties, (iii) strengthen women empowerment through improved access to social services and increased family income, and (iv) improve local governance. 3. The following outcomes were expected by the end of the project: (i) decreased the average time for project households’ access to their preferred agricultural market by 75%, (ii) increased average annual household on-farm income in project areas by 20%, (iii) 100% women members participated in union council meetings, (iv) increase number of female shop owners in project growth center markets (GCMs) by 960, and (v) locate 100% of union government offices in union council complexes (UCCs). The design and monitoring framework is in Appendix 1. 4. At appraisal, the project had four groups of outputs: (i) improving rural roads including 1,360 km of upazila roads, 780 km of union roads, 60 km of submersible roads; resectioning of 7,780 km of village roads; and constructing 5,470 meters of structures and bridges to provide all-weather connectivity between the farmlands and the GCMs and improving road safety to cope with the increasing volume of traffic traversing the roads; (ii) improving rural infrastructure including 370 GCMs, of which 52 GCMs were located in upazila headquarters and 188 major village markets; improving offices and facilities of 190 UCCs for effective delivery of public services; improving 25 jetties to improve the road network system; and constructing six flood refuge shelters to provide emergency relief to flood-affected people; (iii) implementing training and awareness programs for chairpersons and members of 1,832 union councils (UCs), local women leaders, and members of the market management committees (MMCs) of GCMs to enhance their capacity to plan and implement rural infrastructure improvement program; building the capacity of Local Government Engineering Department (LGED) staff by exposing them to local and overseas training in contract management, construction supervision and quality control, gender development, road safety, and (iv) project management; providing incremental staff to district and upazila levels of LGED; and engaging international and national consultants to support project design, supervision, management, and capacity building. 5. The LGED under the Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives was the executing agency. ADB provided a loan of SDR64,766,000 (equivalent to $96.10 million at project appraisal) from ADB’s Special

1 ADB. 2006. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Department for International Development of the United Kingdom Grant to the People’s Republic of Bangladesh for the Second Rural Infrastructure Improvement Project. Manila (Loan 2254-BAN[SF], $96.10 million).

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Funds Resources, which financed 36.9% of the project. The remaining investment cost (equivalent to $78.3 million or 30%) was financed by the government and cofinanciers.

II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 6. The focus on improving rural infrastructure, poverty reduction, improving rural governance through community participation and empowerment of women, implementation assistance, and local capacity building of the UCs proved to be satisfactory and highly relevant. The project was designed under ADB’s Bangladesh country strategy and program update, 2004–2006,2 which aimed to reduce poverty by creating better development opportunities for the poor. The focus for rural infrastructure under ADB’s country operational strategy was to develop and adapt productivity-enhancing technologies and improve local governance.3 7. The government’s interim national poverty reduction strategy emphasized the role of improved infrastructure as a key instrument for poverty reduction by ensuring improved access of the rural poor to services, amenities, and marketplaces.4 The poverty reduction objective was reiterated in the partnership agreement on poverty reduction between ADB and the government.5 The project supported the government’s policy on integrated transport sector development, with special emphasis on improving the network of rural infrastructure for better connectivity to farmland, marketplaces, and social services. The project was also relevant to ADB’s country partnership strategy, 2011–2015 and the government’s Sixth Five-Year Plan, 2011–2015 at completion. 6 During implementation the Department for International Development of the United Kingdom (DFID) withdrew $54.0 million, which led to a major change in the design and scope and a revised output at appraisal to match the reduced financing.7 8. ADB provided project preparatory technical assistance (TA),8 under which a consulting firm and individual consultants were recruited following ADB Guidelines on Use of Consultants. The performance of the consultants was generally satisfactory. Project design was generally sound, and both the assessment and formulation process were adequate. The major stakeholders were consulted by means acceptable to ADB during project planning, design, and implementation. The project scope was determined in consultation with the LGED, LGD, Ministry of Local Government, Rural Development and Cooperatives, other ministries and departments, rural communities, interested groups, local leaders, and the target beneficiaries. The TA implementation arrangement was satisfactory. 9. Lessons stemming from the post-evaluation of ADB-assisted rural development projects9 were (i) emphasizing the pro-poor priority in selecting the project area; (ii) ensuring enhanced

2 ADB. 2004. Country Strategy and Program Update: Bangladesh, 2004–2006. Manila.

3 ADB. 1999. Country Operational Strategy: Bangladesh—Responding to the Challenge of Poverty. Manila.

4 Government of Bangladesh. 2002. A National Strategy for Economic Growth, Poverty Reduction and Social

Development (i-PRSP). Dhaka. 5 ADB and the Government of Bangladesh. 2000. Partnership Agreement on Poverty Reduction. Manila.

6 Government of Bangladesh, Planning Commission, Ministry of Planning. The Sixth Five-Year Plan, 2011–2015.

Dhaka (Chapter VII, pp. 139–146). 7 The design monitoring framework was updated by ADB’s midterm review mission in February 2010 and project

review mission in October 2011. The change did not affect the achievement of the overall project outcome. 8 ADB. 2004. Technical Assistance to the People’s Republic of Bangladesh for Preparing the Second Rural

Infrastructure Improvement Project. Manila (TA 4516-BAN, $0.4 million). 9 ADB. 1988. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the

People’s Republic of Bangladesh for the Rural Infrastructure Development Project. Manila; ADB. 1992. Report and

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stakeholder participation in designing and implementing the project; (iii) strengthening local government’s capacity in managing rural infrastructure; (iv) continuing deployment of labor contracting societies (LCSs) for maintaining the infrastructure, and thereby providing employment opportunities for the destitute rural women; (v) continuing the use and training of local contractors who provide cost-effective and labor-intensive skills; and (vi) institutional strengthening of LGED particularly in the areas of participatory development and contract and financial management. These lessons were followed in designing the project at appraisal (footnote 1), and were mostly accomplished at project completion. B. Project Outputs 10. Project outputs 10 after completion substantially conformed to the project design at appraisal and that revised during implementation (paras. 4 and 7; para. 16 of midterm review mission’s aide memoire, February 2010). The major outputs achieved under each component are briefly outlined below. Detailed assessment of the targets at appraisal compared with actual output is in Appendix 1.

1. Improvement of Rural Roads 11. The project improved about 874 kilometers (km) of upazila roads (versus 1,300 km estimated at appraisal); 398 km of union roads (versus 550 km estimated at appraisal); 48 km of submersible roads (versus 60 km estimated at appraisal); 105 km of village roads (versus 7,328 km estimated at appraisal); and 5,335 meters of bridges and structures (versus 4,380 meters estimated at appraisal), including 90 bridges of which three were longer span bridges of more than 200 meters each. The project fully achieved the targeted outputs set out in the revised project design (footnote 7). The scope of civil works had to be substantially scaled down in view of the DFID’s withdrawal of $54 million, compounded by the sudden increase in prices of construction materials.11 To cope with this financing shortfall, ADB and the government agreed to identify and exclude the low-priority subprojects from the scope of the works.12 The major component that was affected by this financing shortfall was the roads, and rural infrastructure, of which the village roads subcomponent was the hardest hit. As a result, only 105 km of village roads were re-sectioned and/or improved. 12. The project also promoted road safety among the rural community by (i) reactivating 164 upazila and district road safety committees; (ii) producing and disseminating 10 types of public awareness materials, short films, TV spots, posters, festoons, booklets, billboards, and reflectors to a range of target groups of rural inhabitants; (iii) conducting 16 workshops to train motorized and non-motorized vehicle drivers; (iv) organizing 11 rallies to enhance public awareness on road safety; and (v) equipping 223 narrow bridges with reflectors.

Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of Bangladesh for the Second Rural Infrastructure Development Project. Manila; ADB. 1997. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of Bangladesh for the Third Rural Infrastructure Development Project. Manila; and ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of Bangladesh for the Rural Infrastructure Improvement Project. Manila.

10 Result framework Indicators include (i) movement of people and goods on roads built or upgraded (measured as time reduction in minutes per km; target: 75% reduction; achieved: 71% reduction); and (ii) national highways, provincial, district, and rural roads built or upgraded (measured in km; target: 1,360 km; achieved: 1,421 km). .

11 DFID in its letter dated 3 March 2008 advised LGED of its decision to “cease funding for the infrastructure component of RIIP II.”

12 Scope of the project components were revised pursuant to para. 32, Report and Recommendation of the President (footnote 2), and Schedule 5 of the Loan Agreement.

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13. The positive impact of road development was conspicuous in the project area and the vicinity. According to the benchmark study13 and final performance assessment14 conducted by LGED, the growth of annual average daily traffic increased by 46% per annum for motorized traffic and 5% per annum for nonmotorized traffic because of the improved road network.15 Movement of rural people and goods to the agricultural markets and public services also increased. At project completion, the growth of passenger-km on the improved road network was assessed at 70% for motorized traffic and 24% for nonmotorized traffic. The project also reduced travel time by 72.46% from 6.90 minutes/km to 2.10 minutes/km for motorized traffic, and by 71.52% from 14.75 minutes/km to 4.20 minutes/km for nonmotorized traffic including cycle rickshaw and rickshaw van.16 This led to reduced vehicle operating cost (VOC), improved value of time (VOT), and increased monthly income for transport operators ranging from 0.2% (for animal carts) to 69% (for auto rickshaws). The average cost of carrying goods and/or crops to markets was reduced by 27% for head load and/or bicycle and 10% for rickshaw and/or van.

2. Improvement of Rural Infrastructure

14. The project improved 130 markets including 38 existing GCMs and 40 women market sections (WMSs), rehabilitated 52 existing rural hat bazars (village markets), enhanced the effective delivery of public services, offices, and facilities of 55 UCCs and functional buildings (all of which were occupied by users at project completion), constructed two boat landings, two flood refuge centers, and plantation of trees and maintenance thereof in 300 km of road sections (versus 182 GCMs, 188 village markets, 190 union council complexes, 25 jetties and 6 flood refuge centers envisaged at appraisal) (para. 4). 15. The GCMs have been positively influenced by the project. According to the final performance assessment (footnote 14), the market area of the project GCMs increased by 42%. The average annual lease value of the project GCMs increased by 44% at project completion. The number of shops and/or business enterprises rapidly increased by 67%, generating increased employment in the project GCMs by 36% at project completion. The 40 WMSs constructed by the project included 313 shops for female shop owners (FSOs) to increase the mobility and empowerment of women and encourage women entrepreneurs to increase interaction with the market network. All shops in the WMSs were leased and women started business in 308 shops by June 2013. The MMCs of all GCMs were adequately represented by FSOs. WMSs are working well with 94% of the FSOs running their shops. Almost 80% of WMSs have separate toilets for women.

3. Improvement of Local Governance and LGED Capacity 16. In accordance with the agreement between GIZ and LGED, the institutional development and training component supported strengthening LGED’s capacity in road maintenance management, market development, road safety, local government, implementation of gender action plan (GAP), and benefit monitoring and evaluation. The project supported LGED’s rural infrastructure management unit at Dhaka and strengthened the capacity of 23 district executive

13

Local Government Engineering Department. 2010. Second Rural Infrastructure Improvement Project: Benchmark Study by BCL Associates Limited. Dhaka.

14 Local Government Engineering Department. 2013. Second Rural Infrastructure Improvement Project: Final Performance Assessment of the Project by BCL Associates Limited. Dhaka.

15 Overall, the growth of nonmotorized traffic declined by about 47% due to the surge in the growth of motorized traffic using the improved roads in project areas.

16 PCR mission’s survey.

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engineers in road maintenance management. In 2011, training for 111 days was provided to 137 (100%) LGED staff involved in project management. The project also supported (i) proper formation, training, and regular meetings of MMCs in 38 project GCMs and 52 rural markets; (ii) proper planning for GCMs; and (iii) streamlining the use of WMSs by female shop owners. A total of 114 MMCs were activated. 17. The project trained representatives of 420 UCs on administrative and financial management, good governance, tax assessment, budget preparation, selection of schemes, and coordination of citizens’ participation, which led to an improved collection of holding taxes from 56.6% to 65.9%. Gender development training for 229 UCs strengthened the role and functions of 672 women and 1,840 men. Training on UC management and gender empowerment was imparted to 25,648 persons comprising UC chairpersons, members, and secretaries. As assessed during the final performance assessment, 63% of households received services delivered by the UCs (versus 23% of households assessed by the benchmark study). In addition, 1,564 UC chairpersons (including seven women) and 4,803 women UC members and secretaries were trained by December 2012. As a result, 100% of the UCs in the project area was able to handle funds by project completion. 18. A detailed training needs assessment was conducted for LGED personnel, based on which 754 men and 25 women were trained on gender development. Overall, 6,424 (100%) LGED personnel were provided training by June 2011 with an input of 13,708 trainee-days and 39 training modules (para. 4). LGED officials also received training abroad in 16 courses for 2,649 trainee-days.

4. Support for Project Management 19. To ensure efficient implementation and management of project activities, incremental staffing was provided to the district and upazila levels of LGED along with the required logistics support. Three groups of international (283.7 person-months) and national (2,365 person-months) consultants (versus 188 person-months international and 2,196 person-months national, as envisaged at appraisal) were recruited to support LGED in project management (para. 4). The consultants effectively supported LGED in (i) project design, supervision, and monitoring; (ii) providing institutional support by enhancing capacity building of the UCs; (iii) strengthening local governance; (iv) improving rural infrastructure management; and (v) monitoring and evaluation of the project’s impact and outcome. C. Project Costs 20. At appraisal, project cost was estimated at $260.5 million equivalent, out of which $66.3 million (25%) was in foreign currency (including $2.4 million for service charges and interest during construction) and $194.2 million (75%) was in local currency, including taxes and duties. ADB’s loan of $96.1 million was to finance 36.9% of the total project cost. At appraisal, cofinancing by DFID of $60.9 million (23.4%), KfW of $21.6 million (8.3%), and GIZ of $3.6 million (1.4%) was envisaged. The government was to provide $78.3 million (30%) in local cost. Cofinancing of a portion of the DFID grant ($56.7 million) was on a joint basis to be administered by ADB, while the GIZ and KfW grants and the remaining portion of DFID were on a parallel basis. It was agreed at appraisal that the project scope could be scaled down to cope with any cofinancing shortfall. DFID shifted its priority on financing from infrastructure to social sectors, delayed the approval of social appraisals, and substantially reduced its contribution to $6.9 million, out of which $2.0 million was channeled through GIZ and $4.9 million through ADB. Consequently, the project cost was substantially reduced to $216.2 million.

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21. The actual project cost estimated by the project completion review (PCR) mission was $206.29 million, including a foreign exchange cost of $101.99 million and local currency cost of $104.30 million equivalent. ADB financed $97.69 million (47.35%), including $2.16 million for service charges and interest during construction. Detailed project costs at appraisal and at completion are given in Appendix 2. At the closing of loan accounts on 26 December 2013, ADB cancelled $1.846 million that remained undisbursed due mainly to gains (para. 22).

22. The original ADB loan amount of $96.10 million and KfW grant amount of $21.60 million increased to $97.69 million and $24.0 million, respectively, largely due to depreciation of US dollar against SDR during implementation. ADB and KfW originally allocated $74.0 million and $20.30 million, respectively, for roads infrastructure. The downsized roads component needed ADB and KfW financing of $73.0 million and $22.5 million, respectively, and the increased amounts (because of exchange rate fluctuations) served as a respite to cover these expenditures. D. Disbursements 23. At loan closing, $97.69 million (SDR63.56 million), including $2.16 million (SDR1.4 million) for interest during construction, was disbursed. Loan savings of $1.846 million (SDR1.203 million) was cancelled at loan account closing. Considering foreign exchange, the total amount actually disbursed was thus higher (101.65%) than the loan amount ($96.1 million equivalent) envisaged at appraisal because of the depreciation of the US dollar and the taka (para. 22). The initial disbursement was made on 6 March 2007 and final disbursement on 27 August 2013. Details of annual disbursements of ADB loan funds are in Appendix 3. 24. As envisaged at appraisal, an imprest account was established by LGED and ADB’s statement of expenditures procedure was followed to reimburse eligible expenditures and liquidate advances to the imprest accounts. LGED’s imprest account was well maintained and the statement of expenditures procedure facilitated timely payments to the consultants and contractors. German financing through KfW was implemented as parallel financing and disbursed following KfW’s disposition fund procedure, which was found appropriate. DFID’s funds were disbursed through a separate imprest account satisfactorily.

E. Project Schedule 25. ADB approved the loan on 18 August 2006. The loan agreement was signed on 17 September 2006 and became effective on 5 December 2006. The original closing date of the loan was 31 December 2011. The project experienced a total of 24 months of implementation delays to 26 December 2013, including initial start-up delays because of (i) DFID’s protracted process of conducting and approving social surveys (by 6 months after loan effectiveness), and (ii) recruiting and fielding the design, supervision, and monitoring (DSM) consultants (by 12 months). Delayed mobilization of the consultants caused parallel delays of 12 months in starting up the project, as a large number of the subproject appraisal reports (SARs) needed consultant’s review and approval prior to commencement of the procurement process, which was completed in December 2009. In FY2011, the project experienced further delays caused by spiraling price increases for construction materials. The contractors could not be compensated for the increased cost in the absence of provisions of price escalation under the contracts, since the contracts were small in size with an average construction period of 12 months. This caused many contractors to abandon their works before completion to avoid further financial losses. As many as 59 contracts had to be cancelled and rebid involving higher construction costs and loss

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of time. This was exacerbated by delays due to political unrest during January to December 2013, including 30 days of hartals (general strikes), which affected the completion of civil works. Following a request by the borrower on 25 September 2011, ADB, on 25 October 2011, extended the loan closing date by 18 months from 31 December 2011 to 30 June 2013. A comparison of the project schedule at appraisal and completion is in Appendix 4. F. Implementation Arrangements 26. LGED, under the LGD of the Ministry of Local Government, Rural Development and Cooperatives, was the executing agency. The interministerial steering committee constituted for the Rural Infrastructure Improvement Project continued to oversee the project.17 The steering committee met once a year to review project progress and provide guidance on implementation and policy issues, as required. A full-time project director (executive engineer) led the project management office (PMO) established within LGED. The project director was responsible for overall project implementation, coordination, technical guidance, financial control, monitoring and supervision of project activities, and reported to the chief engineer of LGED. LGED appointed three qualified deputy project directors, along with qualified administrative and support staff. Two deputy project directors were stationed in LGED’s divisional offices in Rangpur and Mymensingh, and the one for Dhaka Division was stationed in the PMO. The PMO prepared the overall project implementation plan and detailed design, organized and maintained project accounts, implemented the social safeguard plans, supervised monitoring and evaluation, and prepared the progress and completion reports. The PMO was supported by a group of consultants in engineering design and supervision, economics and finance, social and gender development, environmental assessment, monitoring and evaluation, and local governance. Overall, the PMO functioned satisfactorily (with the support of incremental project staff) in delivering outputs and achieving the project outcome. G. Conditions and Covenants 27. The status of compliance with loan covenants is in Appendix 5. All major loan covenants were generally met, given the expanse and complexities of the project. Out of 35 covenants, 33 were fully complied with and two were partly complied with. The covenants on providing adequate maintenance budget for the improved infrastructure (schedule 5, para. 7 of the loan agreement) and appointing an accountant assistant for each UC by 2008 (schedule 5, para.11 of the loan agreement) were challenging over the short term because of the large LGED road network, and full compliance required strong government support, particularly in terms of adequate budgetary allocation. The government has approved the appointment of accountant assistants and is expected to provide budgetary support by 2015. The government has provided funds for maintaining rural roads to LGED on a sustained basis since LGED assumed this responsibility in 1993. Government allocation for LGED’s maintenance budget has increased from Tk300 million in FY1993/94 to Tk9,750 million in FY2014/15. Every year, 3,000–4,000 km of rural roads are constructed and/or improved leading to increasing demand for funds to maintain these roads. LGD has changed its policy from construction of new roads to maintenance of existing roads. In January 2013, the government approved the Rural Road and

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ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the People’s Republic of Bangladesh for the Rural Infrastructure Improvement Project. Manila. The Secretary of LGD chaired the committee, with representatives from LGD; LGED; Roads and Highways Department; Planning Commission and Implementation, Monitoring, and Evaluation Division of the Ministry of Planning; Economic Relations Division and Finance Division of the Ministry of Finance; National Institute of Local Government; Ministry of Women and Children’s Affairs; local government bodies; nongovernment organizations; and private sector. Representatives of ADB, DFID, GTZ, and KfW participated in meetings of the steering committee as observers.

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Structure Maintenance Policy, which distributes the responsibilities of road maintenance between LGED and local government institutions (LGIs).18 Accordingly, LGED will maintain the upazila roads, union roads, and vital paved rural roads, while the LGIs (district) council, upazila council, and union council) will maintain the earthen and paved village roads. With the increasing tax net and revenue earned from services provided by the LGIs (particularly the UCs, increasing at 20% per year), a substantial part of the maintenance funds will be self-generated by the LGIs over the years. The policy prioritized allocation of maintenance funds in rural development projects financed by the government and development partners equivalent to at least 30% of project cost. As a result of these initiatives, the gap between the demand and allocation of maintenance funds is likely to be substantially narrowed from 70% in 2014 to 30% in 2020, and continue to improve in the succeeding years. 28. The borrower and the executing agency generally complied with the covenants. As warranted by the loan covenants, LGED maintained separate records and accounts on transactions for goods and services financed by the loan. Imprest account with Bangladesh Bank and operating accounts with the commercial bank were opened on time and operated satisfactorily. The accounts were audited annually by the government and independent auditors, and the audited accounts were submitted to ADB on time, substantially meeting the requirement of the relevant covenant. The PCR mission noted that all 14 audit observations were settled with the Foreign Aided Project Audit Directorate satisfactorily. The status of compliance with loan covenants is in Appendix 5.

H. Consultant Recruitment and Procurement 29. Consultant recruitment. Recruitment of consultants was carried out through quality- and cost-based selection method in accordance with ADB’s Guidelines on the Use of Consultants as planned at appraisal. Three teams of consultants were engaged, one each for the (i) design, supervision, and monitoring (DSM) of the works; (ii) institutional strengthening and training support to LGIs; and (iii) strengthening LGED’s capacity (para. 40 of the report and recommendation of the President). The DSM consultants were fielded in January 2008—a delay of 12 months. The institutional support consultants were fielded in December 2007 and the capacity building consultants (GIZ-funded) in May 2007. It was envisaged at appraisal that 188 person-months of international consultants and 2,196 person-months of national consultants would be required. The actual input of consulting services at completion was 283.7 person-months of international and 2,365 person-months of national consultants, without any additional cost. The increase of international and national consultants’ inputs was justified as a cost-effective means to ensure consultants’ presence during the extended implementation period until June 2013 (para. 25). 30. The 12-month delay in recruiting the DSM consultant triggered commensurate delays in start-up activities, and resulted in an overall project implementation delay. The delay was mainly caused by the replacement of the team leader and deputy team leader during contract negotiation, and the absence of provision for advance action in project preparatory activities, including recruitment of consultants. Details of consulting services are in Appendix 6. 31. Procurement. Procurement of civil works, goods and services was carried out through national competitive bidding in accordance with ADB’s Procurement Guidelines as envisaged at appraisal. This also complied with the government’s Public Procurement Regulations, 2003

18

Government of Bangladesh, Ministry of Local Government, Rural Development and Cooperatives. 2013. Rural Road and Structure Maintenance Policy. Dhaka.

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(subsequently replaced by Public Procurement Rules, 2008) and the Public Procurement Act, 2006. ADB approved the government’s local competitive bidding procedures for the single-stage, one-envelope system, which was followed for the procurement of civil works. The streamlined procurement plan enabled faster contract awards. Subprojects were selected after evaluation of SARs by the DSM consultants. A total of 880 civil works contract packages (including 636 financed by ADB, 191 financed by KfW, and 53 financed by DFID) were procured for construction and/or rehabilitation of rural infrastructure. Procurement of 11 packages of vehicles, construction equipment, and office equipment were completed on time as planned at appraisal. Procurement of all contract packages went smoothly, except for a few incidents in which competing bidders made allegations regarding a lack of integrity in the procurement process; these were adequately addressed by the executing agency following ADB’s Anticorruption Policy. I. Performance of Consultants, Contractors, and Suppliers 32. Consultants. The performance of the consultants under all three packages was generally satisfactory. The engineering designs prepared by the DSM consultants were generally adequate and supervision of the civil construction works was generally satisfactory. Performance of the institutional support consultants in strengthening and training the local government institutions was timely and satisfactory. The capacity building (of LGED and LGIs) consultants financed by GIZ also performed well as expected at appraisal. Notwithstanding the satisfactory performance of the consultants, the PMO had the potential capacity to further enhance their performance in terms of comprehension and efficiency through better coordination among the consultants and the benefiting LGIs. This may be underscored for future rural infrastructure improvement project. 33. Contractors. The performance of the project contractors was satisfactory (with vigilant and continuous monitoring by the executing agency and DSM consultants), and the quality of the completed works compared favorably with the average standard of similar works in Bangladesh. Implementation delays (para. 25) were caused by the delay in fielding the DSM consultants and consequent delays in approving SARs, compounded by a sudden rise in the prices of major construction materials, and interruption of project activities due to political unrest in 2013. This threatened to affect the timely completion and quality of works in some contracts, but was eventually corrected by the involvement of the executing agency, with effective monitoring and guidance by ADB. 34. Suppliers. The performance of the suppliers in delivering construction equipment, vehicles, and field and office equipment was generally satisfactory. The cost and quality of the vehicles and equipment compared satisfactorily to that prevalent in the general market. J. Performance of the Borrower and the Executing Agency 35. Notwithstanding the expanse of the project in large geographical areas with multiple components and many target beneficiaries, the performance of the borrower, executing agency, and the LGIs was satisfactory, contributing to successful project implementation. The steering committee performed well and fulfilled most of its tasks in monitoring project implementation and providing strategic guidance, particularly on interministerial issues, as needed. The performance of LGED is rated satisfactory in steering and assisting the PMO and project consultants on procurement, infrastructure development, and capacity building of its staff and LGIs. The government provided counterpart funds regularly and no shortages were reported during project implementation. The institutional memory of LGED is commendable in archiving the project

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documents well and maintaining a rich data bank, which helped the PCR mission to obtain the project data and information needed for preparing the PCR. However, the downstream linkage of LGED beyond the upazila level to the UC level may be further strengthened for effective functioning of the local government. K. Performance of the Asian Development Bank 36. ADB’s performance is rated satisfactory in its timely response to assist the government in formulating and implementing a follow-up rural development project after the successful implementation of the previous ADB-assisted rural infrastructure development projects (footnote 10). The design of the follow-up project incorporated lessons from these projects. Project formulation and implementation arrangements were generally satisfactory. ADB responded quickly to the issues that emerged during project implementation. The Bangladesh Resident Mission carried out effective coordination through regular monthly and quarterly meetings with the executing agencies and project review missions. ADB fielded one inception mission, a number of joint review missions along with the cofinanciers, a midterm review mission (15–28 February 2010), and six project review missions.

III. EVALUATION OF PERFORMANCE

A. Relevance 37. The project is rated relevant. The outcome as envisioned at appraisal was fully achieved. The project’s design and formulation were relevant to government’s development objectives, to ADB’s strategy for agriculture and natural resources sector in general and the rural infrastructure subsector in particular at appraisal (para. 6), and remained so at completion, as defined in the government’s Sixth Five-Year Plan, 2011–2015. 19 The rationale was satisfactorily justified by referring to the growing importance of the rural infrastructure subsector as the major catalyst for poverty reduction, contributing to the country’s economic development. The project outputs and outcomes were effectively designed to address the critical subsector issues and opportunities, particularly the bottlenecks that are known to slow down poverty reduction. However, although the project largely achieved the targeted outputs in spite of DFID’s decision to withdraw a major part of their financing during project implementation, this could have been avoided had there been further intensified and in-depth consultation between ADB and the cofinanciers during project preparation. The project was also conceived in the light of studies and research conducted by other development partners, including the World Bank. B. Effectiveness in Achieving Outcome and Outputs 38. Overall, the project is rated effective. The envisioned project impact and outcome were substantially achieved in terms of the revised design and monitoring framework. Targets under output 1 were fully achieved: (i) 6,342 (100%) LGED staff were trained in financial management, project design, quality control, and other activities; (ii) 100 (100%) UC chairmen, members, and secretaries were trained by 2013; (iii) 137 (100%) LGED staff involved in project management received training by 2011; and (iv) the PCR mission noted that 100% of the project area UCs can properly manage funds by 2013. Targets under output 2 were also nearly reached with 38 GCMs improved; 2 jetties, 55 UCCs, 40 WMSs, 2 flood refuge centers, and 52 rural markets constructed; all 55 UCCs occupied by the users, and all shops in WMSs leased out (para. 15).

19

Government of Bangladesh, Planning Commission, Ministry of Planning. The Sixth Five-Year Plan, 2011–2015. Dhaka.

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All five performance targets under output 3 were fully achieved. International and national consultants were engaged for design, supervision, and monitoring; institutional strengthening of the LGIs; and strengthening of LGED’s capacity (para. 32). A discussion of the project impacts and benefits based on the PCR mission’s assessment is in Appendix 8. C. Efficiency in Achieving Outcome and Outputs 39. The investment has been efficient because of significant incremental economic benefits and revenue generation at project completion compared to the base case. The PCR mission analyzed the combined benefits accrued from 16 sample upazila and union roads (selected randomly from four regions of the project area). Notwithstanding the substantial shrinkage of financing during implementation (paras. 11 and 20), the recalculated economic internal rate of return (EIRR) is robust with an average of 24.8%, albeit slightly lower than the appraisal estimate of 28.4% (assessed for three sample roads versus 16 sample roads assessed by the PCR mission), which still substantially exceeds the opportunity cost of capital at 12%. The net present value is Tk1,623 million and benefit–cost ratio is 2.39, which supports the efficient rating.20 The economic reevaluation is in Appendix 9. D. Preliminary Assessment of Sustainability 40. Maintenance of the project facilities is essential to sustain their economic life. At present, the flow of funds is insufficient to cover periodic maintenance costs of the rural road network. LGED is responsible for maintaining the rural infrastructure with annual budget allocations from the government, and funds allocated in the development partners funded projects The PCR mission noted that the rural road network developed by the project was in good condition. 41. Notwithstanding these developments, and considering the accumulated backlog of maintenance funds, the project outputs are rated less likely to be sustainable over the short term. The government remains committed to prioritizing the allocation of maintenance funds. Also, the change in LGD’s policy from new construction to maintenance of existing roads will put an end to the incremental demand for maintenance funds (para. 27). Considering that the investments in LGED’s development projects are henceforth diverted to maintenance of rural roads, the influx of maintenance funds is expected to increase dramatically, narrowing down the shortfall in the medium term. 21 Following the provisions of the Rural Road and Structure Maintenance Policy (footnote 18), the LGIs will henceforth be responsible for maintaining their own infrastructure and facilities using government allocations, and the incremental revenue collected by the UCs against services provided to the inhabitants (para. 27). E. Impact 42. The project contributed to the impact of reducing poverty by 9.8% in the rural communities of 23 districts of Bangladesh, which was more than the target of 7%. The project contributed to improving living conditions for 6.0 million people in the project area, which constitute about 45% of the country’s total population. The outcome envisaged at appraisal was also substantially achieved in terms of the revised design and monitoring framework and targets

20

The guidelines of ADB’s Independent Evaluation Department state that, if the estimated EIRR exceeds 18%, a project is normally rated highly efficient. However, considering factors such as implementation delays and reduced cofinancing, it was modestly rated efficient.

21 The aggregated costs of LGED’s projects approved in FY2014 was equivalent to $1.08 billion, a substantial part of which is expected to be diverted for maintenance of rural infrastructure, triggered by LGED’s paradigm shift to maintenance from new construction of rural roads.

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therein, in spite of the major shrinkage of the financing package by more than 17% than that envisaged at appraisal due to DFID’s reduced funding during implementation (para. 23). For outcome 1 (enhanced accessibility to basic services), the project has provided rural farmers better access to the nearest agricultural market by reducing travel time by 72.46%. For outcome 2, the average household and per capita income exceeded the performance target (para. 15). For outcome 3 (enhanced women’s empowerment), 100% of the women members of the UCs regularly participate in meetings, and separate WMSs with 312 shops were constructed by the project out of which 308 were occupied by the FSOs at project completion. All union level government offices are located in the UCC at project completion (para. 14).22 43. The social benefits generated by the improvement of rural infrastructure, combined with the benefits from the improvement of roads, have been robust. The dependency ratio was reduced from 29.6 to 26.0, average household size was reduced from 5.04 to 4.83, school enrollment rate increased from 87.3% to 93.1%, and continuation of schooling increased from 85.4% to 88.2%. The project improved the overall living conditions of people in the project area by contributing to better housing with 2.2 rooms per house with 97.5% households (compared to 1.78 rooms per house with 94.8% households in pre-project period) having access to safe drinking water, and increased numbers of households with electricity connection from 34.7% to 46.9%. The improved infrastructure also triggered an increase in the value of assets per household by 93% compared to the pre-project value. Overall, the project immensely helped the beneficiaries in taking a leap forward to a changed and better life (footnotes 14 and 15). 44. An initial environmental examination indicated that no significant adverse environmental impact was associated with the project. Project activities did not interfere with the ecosystem, as all works were of limited scale and designed to avoid any adverse environmental impact.

45. The project was classified category A for involuntary resettlement. The draft resettlement plan prepared during the project preparatory TA identified 213 project-affected people for physical displacement or having significant impact of resettlement in a subproject in Rangpur. The subproject location was moved from the alignment of the resettlement plan. All roads subprojects and other infrastructure were constructed or improved on the existing alignment of LGED, having no impact on land acquisition and resettlement. Therefore, the resettlement plan was redundant and not implemented. The cumulative number of project-affected people with significant impact of resettlement due to the project’s intervention did not exceed 200 people for the whole project. As a result, the project could be reclassified to category B for involuntary resettlement. An individual staff consultant appointed by ADB prepared the due diligence report on social safeguards, which may be treated as the independent monitoring report on involuntary resettlement. The project was classified category C for indigenous people. 46. Gender and development stood out prominently among the targets of the project with a well-defined GAP. It integrated the activities that were targeted to benefit women economically, enhance their access to community resources including infrastructure, and increase their participation in decision-making processes. The PCR mission noted that the project generated employment for women in construction with 194 women employed for tree plantation through the LCS for 18,501 days in 2010. The project employed 666 women through LCS for 2 years for tree plantation, maintenance of 300 km road upazila and union road, and construction of 100 km of village roads. Separate WMSs with 4–12 shops each (312 shops total) were constructed in 40 GCMs with water and sanitation facilities. By the end of the project, 308 women started business and the rest were about to start. Training on business skills was provided to 287 FSOs.

22

The medical officer was, however, stationed in the UC clinic located outside the UCC.

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The project also trained 1,527 LCS women on business skills, including signing and computing. Another 233 LCS women received training on income-generation activities by the contracted nongovernment organization to efficiently use the savings for income generation within the first 6 months of their contract termination. The project ensured involvement of both women UC members and FSOs in MMC’s activities. After completion of the GIZ-financed technical cooperation component, LGED and/or PMO designated a gender focal point to monitor GAP implementation. A detailed assessment of the GAP activities status report is in Appendix 7.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 47. The project is rated successful based on the review of its relevance, effectiveness, efficiency, and sustainability. The project was relevant as its design and formulation matched the government’s development objectives and ADB’s strategy, and remained so at completion. The project is considered effective as the envisioned impact and outcome were substantially achieved in terms of the revised design and monitoring framework. The investment is considered efficient because of significant incremental economic benefits and revenue generation at project completion compared to the base case. However, considering the present accumulated backlog of maintenance funds, the outputs are rated less likely to be sustainable in the short term. B. Lessons 48. Need for a high-level coordinating body. For a complex, multicomponent project, regular monitoring of implementation progress by the government through a high-level and active plenary body or steering committee is indispensable. Regular interaction among the borrower, stakeholders, consultants, contractors and suppliers, and ADB through the executing agency’s PMO contributed greatly to the success of the project. 49. Plan and coordinate preliminary activities well to minimize delays. The executing agency needs to pursue a set of well-planned and concerted actions to ensure timely completion of all critical activities for identification and appraisal of subprojects; government approval of the initial environmental examination, environmental management plan, and resettlement plan as appropriate; recruitment of consultants; streamlining the procurement of civil works contracts; and continuous cooperation among the executing agency and LGIs. The delay in project implementation is attributed mainly to protracted recruitment and fielding of the consultants and the consequent delays in preparing the SARs. 50. Use advance actions. The project experienced delays of 24 months for several reasons (para. 29). The absence of borrower’s advance action largely contributed to these start-up delays and affected project implementation. ADB has been emphasizing this issue through its country and tripartite portfolio review meetings, and has included in most ADB-assisted projects provisions for advance action for selection of consultants, selection of subprojects, stakeholder consultation, and preparatory work for land acquisition and resettlement, if applicable. 51. Ensure sufficient consultation during project preparation. DFID’s decision to reduce substantial portions of its funding during project implementation indicated the need for greater consultation among cofinanciers, borrower, and other stakeholders during project preparation.

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C. Recommendations

1. Project Related 52. Future monitoring. The government may regularly monitor the accruals of benefits from the project. Strengthening of LGED’s project monitoring mechanism, particularly with regard to sustainability of the project infrastructure by routine and periodic maintenance, should be emphasized. The role of LGED’s upazila engineer’s offices, being the most proximate entities to the infrastructure, need to be enhanced with scaled up responsibilities and resources. 53. Covenants. The executing agency complied with most of the loan covenants, except two covenants that were considered too ambitious (para. 29). Full compliance with these covenants required strong government support in terms of policy and practice, and was beyond the control of project management. Strengthening of UCs’ capacity for financial management will require government budgetary support to appoint accountant assistants by 2015. 54. Further action or follow-up. The new infrastructure constructed under the project created additional demand for operation and maintenance funds, over and above the backlog accumulated since 1991. In line with LGD’s change of policy from new construction to maintenance of the rural infrastructure (paras. 27 and 41), the government may substantially increase its budgetary support for maintenance funds. UCs may be encouraged to develop a mechanism for regular collection of taxes and levies to sustainably maintain their infrastructure. 55. Timing of the project performance evaluation report. If a project performance evaluation report were to be undertaken by ADB, 2018 would be the appropriate timing to assess the medium-term sustainability and long-term impacts of the project. The borrower may continue monitoring the project benefits to ensure data availability.

2. General

56. Exhaustive consultations with the cofinanciers, borrower, executing agencies, community leaders, and stakeholders may be undertaken during project preparation to avoid any major change in the project’s financing and/or implementation plan.

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DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Targets/Indicators

(Appraisal) Performance Targets/ Indicators (Revised) Project Achievements

Key Issues and

Recommendations

1. Impact Reduce rural poverty through sustainable economic growth, rural development and improved infrastructure.

Percentage of the population in project areas in poverty reduced by 7% of the total population.

Percentage of the population in project areas in poverty reduced by 7% of the total population.

The project contributed to reduced incidence of poverty in the project area by 9.8% which exceeded the target at appraisal.

See para. 42

2. Outcome

2.1 Enhanced accessibility to basic services.

Average time (hours) for project households to access their preferred agricultural market will decrease by 75% by EOP.

Average time (hours) for project households to access their preferred agricultural market will decrease by 75% by EOP.

The project contributed to reduced travel time by 72.46% for motorized traffic, and by 71.52% for nonmotorized traffic.

See para.13

2.2 Increased on-farm income

Average annual household on-farm income in project areas will increase by 20% by the EOP

Average annual household on-farm income in project areas will increase by 20% by the EOP

The average annual household on-farm income increased by 71% at project completion.

See para. 43

2.3 Enhanced women’s empowerment

100% women members participate in UC meetings by EOP.

Number of female shop owners in project GCMs will increase by 960 by EOP.

100% of union government offices are located in UCCs by EOP.

100% women members participate in UC meetings by EOP. Number of female shop owners in project GCMs will increase by 312 by EOP. 100% of union government offices are located in UCCs by EOP.

By end of project, 100% of the women members of the UCs regularly participate in meetings. Separate WMSs with 312 shops were constructed by the project. All union level government offices are located in UCCs at project completion.

See para. 44

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Key Issues and

Recommendations

3. Outputs 3.1 Capacity of LGED and LGIs strengthened

100% LGED staff in the project areas trained in financial management, quality control, project design, M&E, and participatory approach by EOP.

By December 2010, UC chairpersons, members and secretaries in the project areas trained.

LGED staff involved in project preparation trained on RBM.

100% of project area UCs can properly handle fund by EOP.

100% LGED staff in the project areas trained in financial management, quality control, project design, M&E, and participatory approach by EOP. By December 2010, UC chairpersons, members and secretaries in the project areas trained. LGED staff involved in project preparation trained on RBM. 100% of project area UCs can properly handle fund by EOP.

Total 6,424 or 100% of LGED staff were provided training with input of 13,708 training-days by June 2011. By December 2012, total 1,564 UC chairpersons, including 7 women, and 4,803 women UC members and secretaries were trained. Total 137 or 100% of LGED staff involved in project preparation were trained with input of 111 training days by August 2011. At project completion, 100% of the UCs in the project area can handle their funds.

See paras. 17–18

3.2 Growth center, markets, jetties and UCCs improved.

370 GCM facilities improved.

25 jetties constructed. Construction of 190 UCCs completed. Construction of 196 WMSs completed.

Construction of 6 flood refuge shelters completed. Construction of 52 rural hat bazar (markets) completed 190 UCCs occupied by the users.

All shops in the WMS leased.

38 GCM facilities improved. 2 jetties constructed. Construction of 55 UCCs completed. Construction of 40 WMSs completed. Construction of 2 flood refuge shelters completed. Construction of 52 rural hat bazar (markets) completed 55 UCCs occupied by the users. All shops in the WMS leased.

38 GCMs improved. Construction of 2 jetties completed New construction of 55 UCCs completed. 40 WMSs constructed. 2 flood refuge centers constructed. Construction of 52 rural markets completed. At end of project, 55 UCCs have been occupied by users. All shops in the WMSs were leased and women started business in 308 shops.

See paras. 14–15

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Key Issues and

Recommendations

3.3 Rural roads upgraded

1,360 km subdistrict roads upgraded to bituminous surface standard.

550 km of union roads upgraded to bituminous surface standard

4,380 meters of bridges and/or culverts constructed.

7,328 km of village roads improved.

60 km of submersible roads constructed (60 km at appraisal).

874 km subdistrict roads upgraded to bituminous surface standard 398 km of union roads upgraded to bituminous surface standard. 5,335 meters of bridges and/or culverts constructed. 100 km of village roads improved. 48 km of submersible roads constructed

874 kilometers (km) of upazila (subdistrict) roads upgraded following the standard. 398 km of union roads upgraded following the standard 5,335 meters of bridges and structures, including 90 bridges. 105 km of village roads improved 48 km of submersible roads completed following standard

See para. 11

3.4 Support for project management provided

153 person-months of international and 1,504 person-months of national consultants provided.

138 person-months of national consultants for LGI training provided.

130 person-months of an international consultant and 723 person-months of national consultants for GIZ-assisted LGED capacity building provided.

153 person-months of international and 1,504 person-months of national consultants provided.

138 person-months of national consultants for LGI training provided.

130 person-months of an international consultant and 723 person-months of national consultants for GIZ-assisted LGED capacity building provided.

153.7 person-months of international and 1,504 person-months of national consultants provided until June 2013. 138 person-months of national consultants for LGI training provided until December 2010. 130 person-months of an international consultant and 723 person-months of national consultants for GIZ-assisted LGED capacity building provided until September 2011.

See paras. 19, 32, and Appendix 6

EOP = End of Project; M&E = Monitoring and Evaluation; RBM = Result based Management Note: The project framework was slightly modified by the ADB midterm review mission (February 2010) and project review mission (October 2011). The performance targets and indicators were updated following the change in financing arrangements (footnote 1).


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APPRAISAL AND ACTUAL PROJECT COSTS ($ million)

Item

Appraisal Estimate

Actual Disbursement

ADB

DFID

KFW GIZ GOB Total

Loc For Total Loc For Loc For Loc For Loc For Loc For Total

1. Civil Works 137.0 44.7 181.7 81.3 - 4.5 21.3 - - 0.3 61.9 - 164.5 4.8 169.3

2. Land Acquisition 2.0 - 2.0 - - - - - 0.5 - 0.5 - 0.5

3. Consultants: - - - - - - - - -

Design and Supervision 2.2 4.8 7.0

4.4 1.5

- 1.4 - - - -

4.4

1.4 1.4

LGED Institutional 0.8 0.8 1.6 - - - - - - -

LGI Training 0.7 0 0.7 - - - 5.1 - - 6.6 11.0

4. Vehicles and Equipment 2.0 4.6 6.6 1.9 3.2 - - - - - - 1.9 3.2 5.1

5. Training - - - - - - - -

LGED 1.3 1.3 2.6 2.2 0.8 - - - - - - 2.2 0.8 3.0

LGI 5.3 - 5.3 - - - 1.6 - - - 1.6 1.6

Awareness Campaign 0.9 - 0.9

6. Studies 0.5 0.1 0.6

Studies (Including External Monitoring) Recurring Cost:

(a) Incremental Staff 4.8 - 4.8

0.2

- - - - - 6.5 - 6.5 - 6.5

(b) Office Expenditure and O&M Vehicles

1.6 0.3 1.9 - - - - 5.5 - 5.7 - 5.7

(c) Maintenance of Upgraded Roads

2 0.2 2.2 - - - - - - - - -

(d) Tree Maintenance 3.5 - 3.5 - - - - - - - - -

Physical Contingencies 14.5 4.8 19.4

Price Contingencies 14.9 2.4 17.3

Financial Charges - 2.4 2.4 2.2 - - - - - - - 2.2 2.2

Total 194.2 66.3 260.5 89.9 7.7 4.5 21.3 1.4 - 7.0 74.4 - 185.6 20.6 206.3

Share of Total (%) 75.6 25.5 100.0 43.6 3.7 2.2 10.3 0.7 0 3.4 36.1 0 90.0 10.0 100.0

DFID = Department for International Development (United Kingdom); For = foreign currency; GIZ = Deutsche Gesellschaft für Internationale Zusammenarbeit; GOB= Government of Bangladesh; KfW = Kreditanstalt für Wiederaufbau of Germany; Loc = local currency; LGD = Local Government Division; LGED = Local Government Engineering Department; O&M = Operations and Maintenance. Source: Asian Development Bank.

Appendix 3 19

ANNUAL DISBURSEMENTS OF ADB FUNDS BY CATEGORY ($ million)

Category

Disbursement

2007 2008 2009 2010 2011 2012 2013 Total

01A Infrastructure - rural road 2.1 0.7 7.6 22.0 23.6 16.3 2.0 74.4

01B Infrastructure - rural others 0.3 0.2 1.4 2.1 2.2 0.7 0.1 7.0

02A Equipment and furniture 0.4 0.6 1.3 0.4 0.2 0.1 - 3.0

02B Vehicle 0.3 0.6 0.6 0.1 0.1 0.3 0.2 2.2

03 Studies 0.0 - - - 0.1 0.1 0.1 0.2

04 Training 0.2 0.1 0.7 1.0 0.1 0.8 0.1 3.0

05 Consulting services 1.5 0.3 0.6 0.9 1.6 0.8 0.1 5.8

06 Interest 0.0 0.1 0.1 0.2 0.5 0.8 0.5 2.2

07 Unallocated - - - - - - -

Total 5.0 2.5 12.3 26.7 28.4 19.8 3.1 97.7


20 A

ppe

nd

ix 4

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

A. Preparatory Activities

B. Rural Roads

Civil Works:

C. Rural Infrastructure

Civil Works:

D. LGED Capacity Building and Local

Governance

E. Project Management Support

IMPLEMENTATION SCHEDULE

Work Description2007 200820062005 2009 2011 2012 2013

Preparation of DPP

Loan Effectiveness

2010

Establishment of PMO

Recruitment of Consultants

Upgrading of subdistrict roads

Upgrading of union roads

Resectioning of village roads

Construction of submersible roads

Structures on subdistrict and union roads

Structures on village roads

Design, Supervision and Monitoring Consultants

Incremental staff

Women market sections

Functional Buildings

Jetties

Flood Refuge Shelters

Capacity building consultants

Training

Tree planting and maintenance

Land acquisition and resettlement

Growth centers

Union council complexes


Appendix 5 21

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Reference in Loan Agreement Covenant

Status of Compliance

Schedule Para No. 5 1 LGED shall be the Project Executing Agency and shall be

responsible for the overall implementation of the Project. Complied with.

5 2 The steering committee for the ongoing Rural Infrastructure Improvement Project financed by ADB Loan 1952-BAN(SF) shall serve as the Project Steering Committee (PSC). The PSC shall be chaired by the Secretary of LGD and shall comprise the representatives of LGD, LGED, NILG, the Borrower's Road and Highway Department, the Planning Commission and the Implementation, Monitoring & Evaluation Division of the Borrower's Ministry of Women and Children Affairs, local government bodies, and NGOs. The PSC shall meet at least once a year to review the progress of project implementation and provide overall policy guidance. Representatives of ADB, DFID, GTZ, and KfW may participate in PSC meetings as observers.

Complied with. PSC established on 19 December 2006. The PSC meets at least once in a year to provide policy guidance.

5 3 A PMO shall be established by LGED at its headquarters in Dhaka. The PMO shall be headed by a full-time project director, with qualifications, acceptable to ADB. The project Direct shall be directly responsible for the overall project implementation, monitoring, supervision, and coordination. The project director shall report to the chief engineer of LGED. The project director shall be supported by qualified administrative and supporting staff. LGED shall also establish three regional office of the PMO in the cities of Rangpur, Mymensingh, and Dhaka. Each regional office shall be headed by q qualified deputy project director responsible for the day-to-day project implementation and supervision of project activities. The deputy project director assigned for the regional office in Dhaka shall be based at the PMO.

Complied with.

5 4 The PMO shall be responsible for (a) preparing an overall project implementation plan and detailed designs, and supervising civil works; (b) organizing and maintaining the project financial accounts; (c) implementing the gender action, resettlement, and environmental management plans; (d) implementing the capacity-building activities; (e) monitoring and evaluation activities; (f) preparing project progress and completion reports; and (g) coordinating project activities with union councils, management committees of GCMs and jetties, and NILG. The PMO assisted by consultants shall work closely with LGED staff at district and sub-district levels.

Complied with.

5 5 The Borrower shall ensure that, before 31 December of each year of Project implementation, the PMO submits to ADB an annual project implementation plan, including among other things, the project activities and required counterpart funding, including but not limited to, the cost of land acquisition and resettlement compensations.

Complied with.

22 Appendix 5



Schedule Para No. 5 6 Before 30 June of each year during project

implementation, LGED and ADB shall agree on the annual maintenance program, including the required budget, for sub district and union roads in the Project area for the following year. LGED shall submit to MOF and ADB for review the proposed maintenance budget by 31 May of every year.

Complied with.

5 7 The Borrower shall ensure that adequate budgetary funds are annually allocated and timely released to LGED for financing all routine and periodic maintenance activities on the Project sub-district and union roads, and the financial gap between annual budgetary requirements for operation and maintenance and actual budgetary releases to LGED is eliminated by year 2013.

Partly complied with. Full compliance required strong government support. Government’s allocation for LGED’s maintenance budget has been increasing. Complied with.

5 8 The Borrower shall also ensure that each union council in

the Project area (a) contributes, at least (10) ten percent to LGED's account, in cash, of the construction cost of GCMs, jetties, village roads and structures on the village roads, and (b) deposits an amount equivalent to (5) five percent of UCC construction cost into an account at a local commercial bank to be used exclusively for operation and maintenance of UCCs.

5 9 The Borrower shall approve by 31 December 2009, the revised guidelines on a GCM management committee that cover the increased responsibility of the union councils and their increased share from the market lease income to cover the cost of operation and maintenance of GCMs.

Complied with. Revised guidelines were approved in February 2008.

5 10 The Borrower shall undertake all necessary actions so that by 31 December 2007, at least (a) ten permanent positions of superintending engineers funded from the revenue budget are established at LGED to enhance construction of quality control and supervision, and oversee regional training programs, (b) ten additional permanent positions of executive engineers funded from the revenue budget are established at the regional offices of LGED to conduct and implement necessary training programs (on-the-job training and workshops), and (c) sixty four social scientists for the approved positions are appointed, one for each of the district offices of LGED.

Complied with.

5 11 The Borrower shall undertake all necessary actions so that, by 31 December 2008, (a) an accountant assistant is appointed for each union council to strengthen its technical capacity and financial transparency, (b) LGED's design and planning unit is staffed with full-time personnel and made fully operational, and (c) LGED's procurement unit is strengthened by recruiting four additional engineers and five support staff.

(a) Partly complied with. Post for accountant

assistant created in each union council. Approval for fund allocation for these new positions is with Finance Ministry. Recruitment process is expected to start

Appendix 5 23



Schedule Para No. in 2013. (b) Complied with. (c) Complied with.

5 12 The Borrower shall ensure that (a) each subproject is selected and prioritized by the PMO based on the criteria agreed between LGED and ADB, including five main aspects, namely, (i) economic, (ii) technical and/or engineering, (iii) equity, (iv) environmental and (v) social, as specified in Appendix 7 to the RRP; and (b) prior to detailed design of subprojects, the PMO carries out consultations with local communities to confirm the selection of the subprojects.

Complied with.

5 13 The Borrower shall ensure that subprojects are implemented by LGED district offices, headed by executive engineers, under the guidance of the PMO. Each subproject shall be implemented in accordance with ADB's safeguard policies and requirements. To this end, the PMO shall prepare and submit to ADB for approval, a report including a district-wide initial environmental examination and initial social analysis for subprojects in each district in the Project area. The report will also include whether a resettlement plan for a subproject will be required in accordance with the Resettlement Framework. If land acquisition for a subproject is not completed within a year and half after the completion of the detailed design of the civil work activity, the respective civil works activity shall be excluded from the subproject.

Complied with.

5 14 Each union council in the Project area shall (a) be responsible for the operation and maintenance of UCCs, the village roads, and the constructions on such roads within its jurisdiction, and (b) provide financing as discussed in paragraph 8 above.

Complied with. MOU signed between UCs and LGED in this regard.

5 15 Each union council in the Project area shall prepare and submit to the PMO for review a proposal for improvement of the village roads, selected through a participatory development approach based on the criteria agreed with ADB.

Complied with.

5 16 At each GCM under the Project, a market management committee shall be responsible for maintenance of the market facilities. At each jetty under the Project, a jetty management committee shall be responsible for day-to-day operation and maintenance of the jetty facilities.

Complied with.

5 17 The Borrower shall ensure that LGED carries out the selection of staff for overseas training under the Project is based on the transparent criteria and procedures acceptable to ADB.

Complied with. Training completed.

24 Appendix 5



Schedule Para No. 5 18 The Borrower shall ensure that (a) the design,

construction and operation of all Project facilities and implementation of the subprojects are in accordance with the applicable environmental laws and regulations of the Borrower and the ADB's Environment Policy (2002); and (b) the environmental mitigation measures and environmental monitoring plans outlined in the IEE and the summary IEE are fully implemented.

Complied with. Obtained environmental clearance certificate from the Department of Environment. In the result-based monitoring process (developed during baseline survey), environmental indicators are included.

5 19 The Borrower shall ensure that all land acquisition and resettlement activities under the Project, including activities to be carried out under the KfW cofinancing, are implemented in accordance with applicable laws and regulations of the Borrower, the ADB's Policy on Involuntary Resettlement (1995), the Resettlement Framework, and respective resettlement plans.

Complied with.

5 20 The Borrower shall ensure that (a) the Resettlement Plans for the three core subprojects prepared in detail during the feasibility study are updated upon completion of the detailed design of those core subprojects to include census information and a full inventory of losses, and (b) Resettlement Plans for other subprojects are prepared, if required, in accordance with the Resettlement Framework based on the detailed design for the subprojects, and include a complete census and inventory of losses.

Complied with. Resettlement plans for the three core subprojects were prepared in detail during the feasibility study. No land acquisition and/or resettlement issues were identified in most of the subprojects.

5 21 Each Resettlement Plan as prepared and/or updated as described in paragraph 20 above shall be submitted to ADB for approval and shall be disclosed to affected people by LGED.

Complied with. No land acquisition and/or resettlement issues were identified in most of the subprojects. Therefore, resettlement plans were not required.

5 22 The Borrower shall ensure that all affected people under the Project are compensated at full replacement cost prior to possession of land and/or other assets, in accordance with the respective Resettlement Plan.

Complied with. No land acquisition and/or resettlement issues were identified in most of the subprojects. Therefore, resettlement plans were not required.

5 23 The Borrower shall take necessary and appropriate measure to ensure full implementation of the GAP during

Complied with.

Appendix 5 25



Schedule Para No. Project implementation. The PMO shall prepare field manuals for the GAP and conduct training for PMO staff.

5 24 LGED, DFID, and ADB shall jointly undertake semi-annual review missions. To which GTZ and KfW will also be invited to participate, during Project implementation. The review shall cover physical implementation, financial performance, implementation of different action plans, and identification of problems that may need to be addressed early on.

Complied with. As DFID withdrew funds, they did not participate in the review mission. Other cofinanciers regularly joined the review missions.

5 25 LGED, DFID, GTZ, KfW, and ADB shall jointly undertake a comprehensive mid-term review (MTR) of the Project in the third year of Project implementation. The MTR shall evaluate the Project design, stakeholders participating, quality of works, social and environmental impacts, capacity building, compliance with loan covenants, progress in implementing LGAP and GAP, effective of implementation arrangements and project management structure, attainment of budget for sustainable maintenance, and future implementation plans for remaining works. The MTR shall recommend nominations in the Project design, scope and implementation arraignments, and reallocation of funds, if needed.

Complied with. DFID withdrew its financing commitment on 3 March 2008. MTR conducted in February 2010.

5 26 The project performance management system (PPMS) shall be established and operated under the Project. The PPMS shall be designed to support the data requirements of a fully integrated result-based management system. Within (6) six months of the Effective Date, the PMO shall conduct benchmark physical and socioeconomic surveys at each district in the Project area and submit to ADB for review and approval a detailed PPMS implementation plan. Subsequent surveys shall be conducted on the third year and at the end of the Project. Throughout project implementation period, annual benefit monitoring reports shall be submitted to ADB, GTZ, and KfW.

Complied with. The system supports the data requirements of the results-based management system. Benchmark survey was completed.

5 27 If cofinancing by DFID, GIZa or KfW does not become

available, the scope of activities under the Project shall be reduced by an agreement between the Borrower and ADB.

Complied with. GIZ and KfW complied with cofinancing. DFID partially withdrew funds. The government and ADB signed a grant agreement indicating the revised grant amount of $4.85 million.

5 28 The Borrower shall ensure that the GAP is fully carried Complied with. Final

a The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH was formed on 1 January 2011. It

brings together the long-standing expertise of the Deutscher Entwicklungsdienst (DED) gGmbH (German development service), the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH (German technical cooperation) and InWent – Capacity Building International, Germany.

26 Appendix 5



Schedule Para No. out throughout Project implementation. report submitted.

5 29 The Borrower shall ensure that ADB's Anticorruption Policy is followed throughout Project implementation, it being understood that ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project. The Borrower shall ensure that (a) periodic inspections on the contractor's activities related to fund withdrawals and settlements are carried out, (b) relevant provisions of ADB's Anticorruption Policy are included in all bidding documents for the Project, and (c) all contracts financed by ADB in connection with the Project include provisions specifying the right of ADB to audit and examine the records and accounts of LGED and all contractors, suppliers, consultants and other service providers as they relate to the Project.

Complied with.

5 30 The Borrower shall cause the PMO to make available on the LGED's website the information on the use of Project funds. The website will present financial statements and track procurement contract awards, and include information on, among others, the allocation and utilization of the Project funds at the district and sub-district levels, the lists of participating bidders, names of the winning bidders, basic details on bidding procedures adopted, amounts of the contract awarded, the lists of the Goods, Works and consulting services procured, their intended and actual utilization, and the project implementation progress

Complied with.

5 31 The Borrower shall ensure that LGED engages an external auditor, whose qualifications, experience and terms of reference are acceptable to ADB, to monitor the physical performance under the Project. Monitoring reports shall be prepared and submitted to ADB on an annual basis.

Complied with.

Loan Agreement Article IV

Section 4.03

The Borrower shall enable ADB's representatives to inspect the Project, the Goods and Works, and any relevant records and documents.

Complied with.


Section 4.02 (b)

The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Borrower pursuant to Section 4.02(a) hereby, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. Article iv, section 4.02

Complied with. Separate imprest accounts opened for ADB loan and DFID grant.


Section 4.02 (a)

The Borrower shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing

Appendix 5 27



Schedule Para No. standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the financial covenants of this Loan Agreement as well as on the use of the procedures for imprest account and/or statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. Article iv, section 4.02

28 Appendix 6

CONSULTING SERVICES (person-months)

Component Appraisal Estimate Actual 1. Management, design, and supervision consultants

i. International 152 154 ii. National 1,504 1,504

2. Institutional training consultants i. International 0 0 ii. National 138 138

3. Capacity building consultants i. International 36 130 ii. National 552 723

Total (International) 188 284 (National) 2,194 2,365


Appendix 7 29

IMPLEMENTATION OF GENDER ACTION PLAN A. Introduction 1. The project was carried out by LGED under the LGD of the Ministry of Local Government, Rural Development, and Cooperatives from January 2007 to June 2013. The impact as stated in the report and recommendation of the President (RRP) was to “reduce rural poverty through sustainable economic growth, rural development, and improved infrastructure.”1 B. Project Description

2. The project envisaged the following outcomes: (i) enhanced accessibility to basic services, (ii) increased farm income, and (iii) enhanced women’s empowerment. The project aimed to reduce poverty in 23 districts of northeast and central Bangladesh. Poverty reduction was intended to be achieved by targeting poor areas, involving the poor and other stakeholders in implementing subprojects and maintaining rural infrastructure, and strengthening the capability of local institutions. The project consisted of four interlinked components. Component 1 included improved rural roads for improvement of (i) subdistrict and union roads, (ii) village roads, (iii) submersible roads, and (iv) road safety improvements. Component 2 included improved rural infrastructure to improve (i) growth center markets (GCMs), (ii) union council complexes (UCC), (iii) jetties, and (iv) flood refuge shelters. Component 3 included improved local governance and LGED capacity for (i) local government institutions and (ii) LGED staff. Component 4 provided support for project management. C. Gender Action Plan Features 3. A GAP was developed to mainstream gender design features across project components. The GAP was revised by the GIZ technical assistance (TA) team to fit into the timeline and components of GIZ TA support to the project. During the revision process the indicators and targets that were addressed in the GAP of the RRP were not dropped or modified; they were reorganized. This is reflected in the GAP implementation achievements matrix (Table A7). A gender specialist was recruited and field staff were in place to support implementation and capacity building through coaching and monitoring from 2007 to 2010 (3 years out of the 6-year project duration). The project aimed to empower rural women through (i) increasing women’s participation to at least 30% of total membership in project planning, implementation, monitoring, evaluation, and maintenance; (ii) generating employment opportunities for women by involving them in construction, maintenance, and tree plantation activities through labor contracting societies (LCSs) and pursuing enforcement of occupational health and safety issues; (iii) facilitating rural women’s livelihood through LCS work and access to markets; (iv) developing the entrepreneurship of women by reserving women’s market sections (WMSs) in GCMs and linking them with microfinance institutions; and (v) promoting women members’ participation in local governance and the management of UCs and markets. 4. The capacity-building component incorporated gender aspects by training women in (i) skills for income-generating activities; (ii) off-pavement maintenance, tree planting, and tree care as members of LCSs; and (iii) shop management and trade skills development. Under the project, women’s access to market was created through reserving 15% of the space for trading

1 ADB. 2006. Report and Recommendation of the President to the Board of Directors: Proposed Loan and

Administration of Department for International Development of the United Kingdom Grant to the People’s Republic of Bangladesh for the Second Rural Infrastructure Improvement Project. Manila.

30 Appendix 7

in open sheds for women. The female shop owners (FSOs) are linked to traders’ association and will be represented in market management committees (MMCs) and citizen forums. D. Assessment of Gender-Related Results2

1. Practical Benefits 5. Economic benefits. The project created employment opportunities and supported income-generation activities for women. Women received wage employment for a total of 20,99,877 person-days in construction. A total of 194 women were employed for tree plantation through LCS for 18,501 days in 2010. Another 666 women were employed through LCS in tree plantation and maintenance of 300 km of roads for 2 years. Training and employment opportunities were created for 943 women in flood damage rehabilitation schemes. Economic opportunities were also created for women in 114 GCMs and WMSs in 40 markets. These women are also enjoying economic benefits from business activities. The final performance assessment survey studied 48 FSOs and found them running shops of different trades successfully. Tailoring and clothing and/or garments are the two most significant trades, each constituting 24% of total FSOs. Additionally, 52 women were employed as project staff (out of 691 staff) at different levels. 6. Access to infrastructure services. Women received user rights to separate WMSs constructed in 40 growth center markets with 4–12 shops in each and water and sanitation facilities. A total of 312 shops were constructed and 304 were allocated to women who have started business by the end of the project. Women in one market were yet to start business due to some legal litigation. Around 15% of spaces in open sheds were kept for women traders in the constructed markets and MMCs of 114 markets were motivated to allocate shops and support women traders. However, the number of women traders in the open sheds is not known. Separate sitting arrangements with water and sanitation facilities have been ensured in 55 newly constructed UC complexes. 7. Work environment. Women’s access to clean toilet and water facilities was created in 114 markets and 40 WMSs. Members of all 114 MMCs were oriented on the management and maintenance of sanitation facilities. A total of 94 contractors were oriented on creating a conducive work environment for women laborers (in 8 courses) and the working conditions in the work sites were monitored by the project. The contractors’ contracts included provisions to ensure women laborers’ safety, security, access to safe drinking water, toilet, and shed for resting and lunch facilities. 8. Skills development. Training was provided to 287 FSOs on shop management and business skills. A total of 943 women were trained and employed in Sustainable Flood Damage Rehabilitation. A total of 2,508 women LCS members received training on road maintenance, earthen roads improvement works and tree plantation and/or caretaking. They were also oriented on banking, savings, and on deed entitlement for tree caretaking. Around 90% of them have individual savings at their nearest bank. Signature and business skills training was provided to 1,527 LCS women to improve their counting capabilities. A total of 233 women members of LCS received training on income-generating activities by the contracted nongovernment organizations (NGOs) to efficiently use their savings for income generation in the first 6 months after their LCS contract termination.

2 Sources: Final progress report on GAP implementation (July 2013) and the final performance assessment survey

report.

Appendix 7 31

9. Asset creation. About 90% of the women LCS members had individual savings ranging from Tk5,000 to Tk35,000. The final performance assessment found that 75% of women respondents have improved their housing conditions, and 78% had purchased assets such as furniture, rickshaws, and mobile phones. Almost half (48%) of the women bought cattle (average Tk3,274) and 17% invested in land (Tk9,882). About 59% of women run some kind of income-generating activity from their savings or wages from LCS employment.

2. Strategic Benefits 10. Access to markets. Markets are the heart of the rural economy and generally women do not have access to the markets as sellers or buyers due to social norms. The project has helped in breaking that barrier and enabled women to conduct business in the markets. This has a long-term empowering effect on women and has served an important strategic interest. 11. Voice and decision making. Women’s involvement in different committees and forums has contributed in addressing the strategic benefits of women by including them in different decision-making bodies such as MMCs, selection committees of FSOs, standing committees of UCs, project implementation committees, and traders associations. At least one FSO is included in each traders association of 114 markets, and two women members (1 UC member and 1 FSO) are included in all 114 MMCs, in accordance with government rules. A total of 40 FSO selection boards were established consisting of eight members each, of whom at least two are women. The project ensured participation of women in standing committees and facilitated women chairing at least one-third of project implementation committees in 1,832 UCs to enhance women’s participation in local governance. Women’s opinion and perception were considered in scheme selection through 43 stakeholder meetings in 23 districts where one-third of participants were women (the total number of women being 6,900). 12. Capacity enhancement for local decision making. A total of 4,803 women UC members and 7 women chairpersons were oriented in 199 batches on their role in UC management and GAP implementation. All UC officials including women UC members received coaching to improve competencies and play an active role in UC management. UC management training in 918 batches included 1,571 chairpersons including 7 women. The women UC members of 450 sample UCs were oriented on their roles and responsibilities in GAP implementation within UC activities. Members of 35 FSO selection boards were trained for a transparent and fair selection of FSOs who had the potential to run their business successfully. Women’s knowledge about women’s rights issues and their self-confidence was visible. Women members of 89 UCs received coaching on managing earthen village road maintenance. 13. Traffic safety. Rural people, particularly women, are not normally oriented about road safety. Road safety issues were incorporated as topics for UC and LCS training for 2,508 women. Women’s safety issues within traffic safety principles were addressed through awareness campaigns and 10 different road safety-related booklets, handbills, posters, billboards, cinema slides, and radio talks.

14. Control over resources and changes in livelihood. More than 2 million person-days of employment (23%) were generated for women in construction. A total of 304 FSOs started their own business, increasing their income and improving livelihood. As women were involved in different project activities, they have accessed project benefits and generated some resources and assets. It is assumed that a good proportion of women have control over the resources generated, particularly those who are heads of families. However, the impact that this

32 Appendix 7

may have on their overall control over resources and participation in decision making is clearly not known; this was not included in the final performance assessment. 15. Women’s mobility. The project facilitated greater mobility of women in rural areas. Women’s access to markets, UCs, and other infrastructure has required and enabled women to be more mobile for economic and social causes. Women respondents of the final assessment survey mentioned increased mobility because of improved road connection for services and economic activities. The highest women mobility was for visiting relatives’ houses. Almost 60% women visit marketplaces and more than one-fourth (27%) visit upazila headquarters and almost one-fourth (25%) women visit union offices. However, women come to upazila headquarters not only to visit the upazila offices but also for other purposes like shopping and visiting doctors. More than 29% of women respondents have reported that they visit NGO offices for services regularly though only 4% women have reported that they visit the bank.

3. Other Factors

16. Staff capacity. All project supervisors and Community Organizers and concerned LGED persons received training on LCS support and GAP implementation; among them 754 were male and 25 were female. Trainers’ training on income-generating activities was provided for 147 NGO staff (119 women), while 53 women NGO staff receive trainers’ training on business management.

17. Resources allocated. The GIZ TA supported the recruitment of a local gender specialist for 3 years out of the 6-year project duration. The TA team organized different orientation programs, coaching for UCs, and facilitated training on gender issues. The team also prepared Training of Trainers (TOT manual and several training curricula from gender perspectives. Project resources were allocated for training workshops and orientation programs. Upon TA completion, the project faced problems with regard to gender-related support. A gender focal point was identified to monitor GAP implementation.

18. Monitoring and reporting. The project took the initiative to monitor GAP implementation. Sex-disaggregated data were collected for GAP monitoring purposes but progress reporting could have been improved in terms of a sex-disaggregated presentation. 19. Constraints encountered. GAP implementation was generally on track. Women’s employment and income opportunities in construction and markets improved their living conditions but the challenges to ensure control over their income remain. Women could not be employed as maintenance crew for the roads completed during the last year of the project. Women’s access to financial resources posed barriers in operating their business and they needed to be linked to financing institutions to expand and operate their businesses profitably. Sociocultural barriers in some locations restricted women from conducting business at the market setting and in some places male partners were trying to occupy the shops as women still are shy to sit in the shops. Not having a gender specialist also caused problems in imparting training and GAP monitoring toward the last years of the project as the focal point was not experienced on gender. The project also faced problems after completion of the TA inputs in preparing the GAP implementation report in accordance with ADB’s new reporting requirements because the data managed by the TA team was not available with the PMO.

20. Targets. The GAP targets were consistent with the project outputs and outcomes and have mostly been met by creating jobs, generating income, creating women’s market sections, involving women as laborers in construction programs, assuring women’s participation in MMC

Appendix 7 33

and FSO selection boards, and improving toilet and water facilities for women in the union council and hat bazars. The project ensured women’s participation in infrastructure activities as users, as construction laborers, and in infrastructure management and maintenance. Some targets were modified by the TA team in consultation with the PMO.

21. Contribution of gender results to project outcomes. The objective was to reduce poverty through enhanced accessibility to basic services, women’s empowerment, increased income, and improved local government. The project has substantially empowered women through their involvement in the UC and MMC as members, and employment opportunities in LCSs and in shops. Support to women for accessing markets contributed toward accessing a public male dominated area and contributed toward poverty reduction. The GAP was relevant and consistent with the overall objectives of the project. 22. Lessons. GAP implementation is particularly a challenge in a multi-stakeholder project; therefore, it is important to ensure the involvement, orientation, and capacity development of all stakeholders from the initial stage. Staff turnover, change of leadership in local government, and involvement of new people at various stakeholder levels are common occurrences; therefore, capacity development is a continuous need. Continued staff time for technical support, follow up, and adequate resource allocation are necessary. The collection, collation, maintenance, and use of sex-disaggregated data from the beginning of implementation of activities are important for better reporting.

23. Sustainability. The benefits generated by the project can be sustained if UC and MMCs are vigilant in the use of infrastructure for the right purposes. LGED and its local offices are to monitor the good practices such as those related to core labor standards, infrastructure use, and the use of public spaces by women.

Table A7: Gender Action Plan Achievements Matrix

Key GAP Objectives Activities Indicators and Targets Achievement (as of 30 June 2013)

1. Economic and Social Development in Rural Areas

1.1 To improve rural infrastructure

Activities

Ensure consultation with women for participation in planning, design and implementation

Create employment opportunities for poor women by engaging them as construction laborers

Ensure women’s participation in operation and maintenance of roads

Promote wage parity of women and men for similar work

Orient contractors to employ women laborers and pay equal wage for women and men

Indicators and Targets

Contractors were trained on different aspects of employing women laborers

Women laborers received equal wage; and ensured safety and security of workplace

Women received equal wage from construction and road maintenance work.

Women members of UCs and women from local community participated in subproject selection and project planning and implementation.

Women received wage employment for a total of 2,099,877 person-days in construction.

94 contractors received training on creating congenial work environment for women laborers.

Contractors provided for women’s labor’s safety, security, drinking water, separate toilets, sheds for resting and lunch facilities for women.

1.2 To increase participation of Activities 114 MMCs formed as per

34 Appendix 7


women in the rural market management

Verify the inclusion of representative from FSOs and female UC members in the MMC

Promote inclusion of representative of FSO and female vendors in trade associations


Both FSOs and female UC members participate in 60% of MMC meetings and activities

FSO from WMS included in trade associations, as per LGD policy

government provisions and have regular meetings including FSO and female UC member.

40 FSO selection boards established (8 members each with at least 2 women) and awareness raising training was provided to 40 FSO selection board

114 MMCs activated with two women members each and training conducted.

FSO included in traders associations in 114 MMCs.

308 FSOs started their businesses by project completion.

1.3 To facilitate long-term stay of women in the market

Activities

Awareness raising of MMC on management and maintenance of the water and sanitation facilities in the markets especially for women


Toilets and water facilities for women buyers and/or visitors and vendors are clean and operational in the markets improved

Toilets and water facilities for women buyers and/or visitors and vendors provided in all project markets.

114 MMC training and/or coaching held to raise awareness on maintenance of water supply sanitation and hygiene.

1.4 To ensure that WMS facilities are kept in good condition

Activities

Awareness raising of FSOs on WMS maintenance

Train female shop owners’ maintenance committees on maintenance of WMS facilities

Clarify and/or enhance supervision responsibility of WMS maintenance


Toilets and water facilities are clean and operational in WMS improved

Toilets and water facilities established in all markets.

Maintenance of water supply sanitation and hygiene discussed in 114 MMC trainings; 35 FSO selection board orientations; and in the business skill training for FSO

1.5 To promote female shop owners

Activities

Orient responsible UC committees and MMC to ensure transparent procedure.

Open declaration of selection and permanent running of shops by female owners

Motivate potential women traders to apply for shops.

Selection of women traders and shops allotment as per selection criteria

Facilitate agreement between selected FSOs and UNO.


Transparent selection procedure (as per survey)

For WMSs improved under the project,

40 FSO selection boards established and 312 FSOs selection completed

All FSO received agreement and started business

Appendix 7 35


copies of agreements are available with the respective FSO and in LGED upazila office.

Allocated shops are run by women constantly after WMS completion

1.6 To improve skills of female shop owners on shop management and WMS management

Activities

Selection of NGOs for imparting training to FSOs.

Prepare curriculum by selected NGOs.

Arrange training for FSOs on business and/or shop management, rules, regulations, and policy of WMSs, rent, tax and license.

Ensure monitoring up to 6 months after training for supervising and strengthening FSOs for running business.


Service contracts with capable NGOs

Curriculum and training manual prepared by NGO and approved

Women in WMS continue their business

Contract signed between Bangladesh Small & Cottage Industries Training Institute (BSCITI) and the project.

BSCITI has conducted 12 Nos. training of trainers (TOT) for business skill training for FSOs

FSOs know and follow the WMS rules and regulations (as per report 6 months after training)

1.7 To support female shop owners in accessing financial resources

Activities

Support the FSOs by establishing links and negotiate credit conditions with microfinance institutions (MFIs) for credit


Identify opportunities for MFIs to support FSOs

Links between FSOs and MFIs are established

FSOs seeking credit are able to get it from various sources

The process of seeking credit was discussed with the FSOs during their business skill training and linkage with MFI was established

Included as topics in FSO selection board orientation and MMC training

1.8 To create access of rural poor women to the mainstream of rural economy

Activities

Motivate market lessees and MMC to allocate space for women vendors

Motivate and encourage poor women to use open sheds for selling their products

Motivate MMC to support women in markets (FSOs, vendors and buyers and/or market visitors)

Conduct information campaign to motivate community, and particularly women, as buyers


Suitable space prepared to be allocated and earmarked for women vendors in the improved markets

Women are using reserved open sheds in the markets

Number of female market vendors and/or

Discussions to earmark 15% of market space for women in open sheds were held during training

Posters and leaflets have been printed for conducting information campaign

In 91 markets (both GCMs and rural hat bazars) 15% of market space are reserved for women in open sheds according to project requirements

36 Appendix 7


buyers and/or visitors increased significantly as compared to baseline

2. Strengthening of Local Self-Governance

2.1 To develop UCCs to promote women’s participation in development

Activities

Promote UCC as venue for consultation, training, networking, good governance practices, coordination for development, establishment of rights

Promoting women’s priorities and opinion


Improved UCCs used by different organizations as venue for development purposes benefiting women

Women’s priorities and opinions are considered (records in the UC resolution book)

In 384 UC meetings, 126 UC scheme selection sessions, awareness raised to improve UCCs to be used by different organizations for benefiting women’s development.

Coaching imparted to 229 UCs to consider women’s priorities and opinions

Promote UCC by celebrating IWD 2009 in 14 unions, IWD 2010 in 38 unions and IWD 2011 in 39 unions. 6 UCs celebrated IWD on their own initiatives.

Road safety was included as topic for UC training

2.2 Include women in earthen road maintenance

Activities

Advise UCs to include women in community-based earthen road maintenance and to ensure their payment


UCs are advised to include women in community-based earthen road maintenance

Awareness and group building training completed for 2,508 LCS women

194 women were employed for tree caretaking and maintenance.

89 UCs were motivated to include LCS women and other women to maintain earthen roads.

Women and men laborers involved in road construction received same wage Tk300/day in earthen road

2,508 LCS women oriented on deed entitlement for tree care, road maintenance. earthen roads improvement works and tree plantation and/or caretaking

2.3 To enhance participation of female UC members in UC governance

Activities

Promote involvement of women in the standing committees

Promote involvement of women in the project implementation committees (PICs)


Women are members in standing committees and PICs as per government rules (records in UC resolution book and reports from female UC members)

Women involved in standing committees in the project UCs

One-third of PICs chaired by women

UC management training completed in 918 batches for 4,803 women UC members and 1,571 chairpersons.

2.4 To expose female UC members to GAD and assist in gender-based activities

Activities

Orient female UC members as per government circular regarding responsibilities of female UC members

229 coaching on gender issues have been done for UCs and UC officials are aware of their role and responsibilities.

Appendix 7 37


Arrange orientation program for female UC members on GAD and their role in GAD implementation within UC activities


Female UC members are aware of their role and responsibilities

Conducted 729 batches of UC management training where gender issues were discussed for 25,648 persons

All UC officials in project areas received training on gender issues

3. Improvement of Rural Infrastructure Maintenance Management

3.1 To ensure that project training for LGED staff includes the GAD perspectives

Activities

Incorporate GAD issues in LGED training under project, with special training modules and hangouts

Review existing LGED training curricula regarding gender perspective

Arrange specific GAD training for LGED staff


Training manuals and handouts integrating GAD and social aspects are available

GAD training courses conducted

3 manuals and/or handouts are prepared

967 LGED staff received GAD training in 31 LGED courses

3.2 To form sufficient savings as capital for self-employment after end of LCS contract and support LCS women for income-generating activities

Activities

Facilitate opening of individual bank accounts for all LCS women.

Monthly deposit of forced savings of Tk36 per day in the individual bank accounts of LCS women

Contract NGOs for IGA-oriented training of women during their LCS employment

Engage NGOs to support LCS women to efficiently use their savings for income generation by facilitating meetings of self-help groups in the first 6 months after LCS contract termination


Individual accounts opened for all LCS women

LCS women keep forced savings amount as set by LGED on individual accounts

NGOs contracted for LCS women IGA training

LCS women trained for IGA (as per training report)

Former LCS women used savings and newly acquired skills to establish IGA and/or self-employment (as per survey at least 6 months after LCS contract end)

1,527 women LCS members received business skills, signature and counting capacity training

2,508 LCS women received fundamental awareness training where banking and forced saving was discussed

Road safety issues incorporated during LCS fundamental training for 2,508 women

3.3 To ensure women’s access to resources from tree caretaking

Activities

Ensure issuance of the deeds on the women caretakers’ share in proceeds from sales of trees nursed by them

2,508 LCS women received training where deed entitlement was discussed

38 Appendix 7


Orient LCS members on the contents of the deeds

Indicators

Copy of the deed provided to LCS women concerned

LCS women are aware of their deed entitlement (as per survey at the end of LCS contract)

BSCITI= Bangladesh Small & Cottage Industries Training Institute; GAD= Gender and Development; IGA= Income Generating Activity; IWD= International Women Day; MFI= Microfinance Institution; TOT= Training of Trainers; TA= Trade Association.

Appendix 8 39

ASSESSMENT OF PROJECT IMPACTS AND BENEFITS

1. The objective of the project was to support the ultra-poor living in low-income areas in the northeast, central east, and southeast zones of Bangladesh by enhancing access to basic services through improved rural infrastructure. The project also aimed to strengthen local government units and enable them to plan, manage, and maintain the local infrastructure. The objective has been fully achieved. The project improved 874 kilometers (km) of upazila roads (versus 1,300 km estimated at appraisal); 398 km of union roads (versus 550 km); 48 km of submersible roads (versus 60 km); 105 km of village roads (versus 7,328 km); and 5,335 meters of bridges and structures (versus 4,380 meters), including 90 bridges of which three were longer span bridges (more than 200 meters). 2. The project promoted road safety among the rural community by (i) reactivating 164 upazila and district-level road safety committees; (ii) producing and disseminating 10 types of public awareness materials, short films, TV spots, posters, festoons, booklets, billboards, and reflectors to a range of target groups of rural inhabitants; (iii) conducting 16 workshops to train motorized and nonmotorized vehicle drivers; (iv) organizing 11 rallies to enhance public awareness on road safety; and (v) equipping 223 narrow bridges with reflectors. 3. The positive impact of road development was conspicuous in the project area and the vicinity. According to the benchmark study and final performance assessment conducted by LGED, the growth of annual average daily traffic increased by 46% per annum for motorized traffic and 5% per annum for nonmotorized traffic because of the improved road network. Movement of rural people and goods to agricultural markets and public services also increased. At project completion, the growth of passenger-km on the improved road network was assessed at 70% for motorized and 24% for nonmotorized traffic. The project also contributed to reduced travel time by 72.46% from 6.90 minutes/km to 2.10 minutes/km for motorized traffic, and by 71.52% from 14.75 minutes/km to 4.20 minutes/km for nonmotorized traffic including cycle rickshaw and rickshaw van. This contributed to reduced vehicle operating cost (VOC) and improved value of time for the transport operators leading to increased monthly income for all types of transport operators. 4. The project reduced the incidence of poverty in the project area from 40.4% to 30.6%. This achievement exceeded the target of reducing poverty by 7% as envisaged at appraisal. The average annual household and per capita income increased by 71% and 78%, respectively, (compared with 20% perceived at appraisal). 5. The project improved 130 markets including 38 existing growth center markets (GCMs) and 40 women’s market sections (WMSs); rehabilitated 52 existing village markets; enhanced the effective delivery of public services; built offices and facilities of 90 UC complexes (UCCs) and functional buildings (out of which 55 UCCs were occupied by users at end of project); constructed two boat landings and two flood refuge centers; and support the plantation of trees and maintenance thereof in 300 km of road sections (versus 182 GCMs, 188 village markets, 190 UCCs, 25 jetties and 6 flood refuge centers envisaged at appraisal). These shortfalls in achieving targets at appraisal were also triggered by the withdrawal of DFID financing of $60.9 million, exacerbated by the unforeseen price increase of construction materials. 6. The project increased the market area of the GCMs by 42%. The average annual lease value of GCMs increased by 44% at project completion. The number of shops and/or business enterprises rapidly increased by 67%, generating increased employment in the GCMs by 36% at project completion. The 40 WMSs constructed by the project included 313 shops for female

40 Appendix 8

shop owners to increase the mobility and empowerment of women and encourage women entrepreneurs to increase interaction with the market network. 7. The social benefits generated by the improvement of rural infrastructure, combined with the benefits from the improvement of roads, have been robust. The dependency ratio was reduced to 26.0 from 29.6, average household size was reduced from 5.04 to 4.83, school enrollment rate increased from 87.3% to 93.1%, and continuation of schooling increased from 85.4% to 88.2%. The project improved the overall living conditions of people in the project area by contributing to better housing with 2.2 rooms per house with 97.5% households (compared to 1.78 rooms per house with 94.8% households in pre-project period) having access to safe drinking water, and increased numbers of households with electricity connection from 34.7% to 46.9%. The improved infrastructure also triggered an increase in the value of assets per household by 93% compared to the pre-project value. Overall, the project immensely helped the beneficiaries in taking a leap forward to a changed and better life. 8. The project strengthened LGED’s capacity in road maintenance management, market development, road safety, local government, gender action plan (GAP) implementation, and benefit monitoring and evaluation. The project supported LGED’s rural infrastructure management unit at Dhaka and strengthened the capacity of 23 district executive engineers in road maintenance management. 9. The project trained 420 UCs on administrative and financial management and good governance, including tax assessment, budget preparation, selection of schemes, and coordination of citizens’ participation, which led to an improved collection of holding taxes from 56.6% to 65.9%. Gender development training for 229 UCs strengthened the role and functions of 672 women and 1,840 men. Training on UC management and gender empowerment was imparted to 25,648 persons comprising UC chairpersons, members, and secretaries. As assessed during the final performance assessment survey, 63% of households received services delivered by the UCs (versus 23% of households assessed by the benchmark study). 10. Gender and development stood out prominently among the targets of the project with a well-defined GAP. It integrated activities that were targeted to benefit women economically, enhance their access to community resources including infrastructure, and increase their participation in decision-making processes. The project generated 2,099,877 person-days of employment for women in construction with 194 women employed for tree plantation through the LCSs for 18,501 days in 2010. The project employed 666 women through LCSs for 2 years for tree plantation, maintenance of 300 km of upazila and union roads, and construction of 100 km of village roads.

Appendix 9 41

ECONOMIC REEVALUATION A. General

1. Economic reevaluation and analysis was conducted for 16 sample project roads, as planned at appraisal. The methodology employed in the reevaluation of project components followed the Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB and the Guidelines for the Economic Analysis of Projects.1 Development projects are generally appraised based on the economic internal rate of return (EIRR) if these are not tolled roads or bridges. The reevaluation of project roads involved recalculating three major investment criteria: the EIRR, net present value, and benefit–cost ratio. 2. The project comprised four major components: (i) rural roads improvement (RRI) including upazila roads (874 km), union roads (398 km), village roads (150 km), submersible roads (48 km), and construction of bridges and structures (5,335 meters); (ii) improvement of rural infrastructure including growth center markets (GCMs) and rural hat bazars (130), women market section (40), boat landing jetties (2) and flood refuge centers (2); (iii) local governance capacity enhancement through construction of union council complexes (90) including functional buildings; and (iv) institutional development of and training support to LGED for road maintenance, market management, road safety, gender action plan, and benefit monitoring. RRI, being the biggest component of the project, involved more than 82% of the total investment outlay with defined and measurable benefits as reevaluated. The methodology and assumptions adopted for economic reevaluation of the project components generally followed the ones used at appraisal. The benefits were quantified through a comparison of the subproject conditions with and without the project for reconstruction, upgrading, and widening of roads along with bridge and drainage structures. The costs and benefits are measured in terms of border price equivalent values, using the world price numeraire, and expressed in 2012 prices of Bangladesh. 3. The calculation of vehicle operating cost (VOC) and travel time cost (TTC) followed the Roads and Highways Department (RHD) road user cost manual and 2005 annual report considering vehicle categories, both for motorized and nonmotorized vehicles, at different levels of international roughness index (IRI). The costs and benefits for nontraded components were converted into economic price using the standard conversion factor of 0.85. The project life was considered 20 years after the completion with major periodic maintenance after 5 years and no salvage value at the end of the project life. B. Economic Costs 4. The project cost was estimated to be $260.0 million at appraisal, which was reduced to $216.0 million because of the reduction in cofinancing. The construction cost for RRI was $213.5 million (equivalent to Tk13,877 million at 2005 exchange rate), excluding physical and price contingency. Project implementation was delayed leading to extension of the project completion date by 2 years. The construction costs of civil works include the cost of design, supervision, and monitoring consultants, but exclude interest and other charges during construction. All financial costs were converted to economic costs by deducting taxes and duties on tradable and using standard conversion factor of 0.9 for non-tradable. Table A9.1 presents the cost breakdown and comparison (original and revised) for the 16 sample RRI roads.

1 ADB. 2002. Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB.

Manila; ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.

42 Appendix 9

Table A9.1: Cost Breakdown and Comparison (Original versus Revised)

Project Road District Length

(km)

Original Cost

(Mill. Tk)

Revised Cost

(Mill. Tk)

Traffic AADT

MT NMT 1. Dimla–Sutibari–Kakrabazar Nilphamari 12.7 66.8 67.2 802.0 1,800 2. Nagar Katgora–Laxmipur

GC Gaibandha 19.2 111.1 111.1 1,227 1,500

3. Patgram GC–Burimari GC Lalmonirhat 10.1 89.3 70.1 599 1,400 4. Nawabganj–Bhaduri GC via

Daria Road Dinajpur 13.1 113.1 113.2 945 1,320

5. Rangpur Bus Terminal–Shaympur GC

Rangpur 14.0 77.9 88.9 1,737 2,570

6. Ghoir UZ–Shingur GC Manikganj 4.8 46.4 58.3 3,725 1,376 7. Dhamria–Dhantara–

Kashura GC Dhaka 9.4 28.9 60.4 516 628

8. Sreenagar–Goalimandra GC

Munshiganj 5.2 31.9 31.9 733 881

9. Madhabdi–Gapaldi GC Narsingdi 9.1 62.9 62.9 1,209 1,151 10. Baschara GC–Jamalpur–

Chechua–Moktagacha Jamalpur 12.9 138.7 150.9 665 1,081

11. Tarakanda GC–Shyamganj GC, Phulpur

Mymensingh 10.1 87.2 87.1 1,080 900

12. Sakhipur–Mohnandapur Tangail 13.9 103.5 100.9 818 350 13. Nasirnagar GC–Chatian GC Brahmanbaria 14.9 140.9 147.9 876 350 14. Daudkandi–Botakandi GC Comilla 13.3 61.6 86.9 659 282 15. Sarail UZ–Aorail GC Brahmanbaria 13.5 143.9 176.4 1,533 779 16. Mohamaya GC–Rampur UC Chandpur 9.4 64.5 64.5 1,034 390 Total 185.63 1,368.8 1,478.8 18,158 16,758 AADT = annual average daily traffic; MT = Motorized Traffic; and NMT = Nonmotorized Traffic. Source: Road Users’ Study 2011.

5. Incremental maintenance costs were calculated as the difference in cost of routine and periodic maintenance between with- and without-project cases in 2010 prices. The economic costs were derived from financial costs excluding taxes and duties for traded items and world numeraire for non-traded items. The annual operation and maintenance costs were derived on the basis of information collected from LGED. Routine maintenance cost was estimated at 3% of the construction cost per km/year “with project” while periodic maintenance at 10% at an interval of 5 years. C. Economic Benefits

1. General 6. The economic benefits were based on the comparison of life cycle costs in with-project and without-project cases. In the without-project case, roads would generally be earthen road or poorly maintained, increased road roughness or of narrow width with slightly fair condition, accommodating low vehicle speeds only, leading to high VOC and travel time. For the with-project case, roads would be in good condition with smooth surface, allowing high vehicle speeds, and thereby reducing VOC. VOC is generally calculated for normal, generated, and diverted traffic. Travel time savings for passengers and freight can be added benefits for improved roads. The life cycle costs also include higher maintenance costs for both routine and periodic maintenance in the without-project case due to weak structure of roads.

Appendix 9 43

2. Traffic Forecast 7. The PCR mission collected data from LGED’s project management office (PMO) in aggregated form. This was supplemented by data collected for final performance assessment of the project in 2013 by the monitoring consultants. Most of the field surveys were done in 2010 during benchmark and updated in 2013. In spite of delayed implementation, motorized traffic increased to 7%–8% in the main sections of project roads. The economic reevaluation considered the VOC and TTC savings and benefits; nonquantifiable benefits were not considered. Traffic growth was assumed at 8% in 2013–2018 and 2018–2023, and 7% in 2023–2028, and 6% in 2028–2033.

3. Vehicle Operating Cost Savings 8. The economic VOC used in the reevaluation followed the RHD’s user cost manual and 2005 annual report, which was subsequently updated by the Economic Circle in RHD in 2011. The manual included VOC for motorized vehicles for corresponding IRI ranging from 0–15 m/km. The annual road roughness survey of RHD carried out in 2012 by the Highway Development and Maintenance (HDM) Circle found IRI to be more than 10 m/km on average. However, average IRI was assumed at less than 10 m/km for the overall RHD network. On that basis, sample project roads under LGED were assumed to have an IRI of 10 m/km on average. The project was intended to improve roads to the standard of maintaining IRI at 4 m/km after project implementation. Table A9.2 presents typical HDM vehicle operating costs.

Table A9.2: Typical Vehicle Operating Costs With and Without Road Improvement

Vehicle Type With project

(IRI = 4 m/km) Without project (IRI = 10 m/km)

Without project (IRI = 15 m/km)

Car Microbus Minibus Large bus Small truck Medium truck Heavy truck Auto tempo CNG/battery run auto Motorcycle NMT

5.7 8.0 6.7

10.5 9.0 9.8

15.7 6.9 3.4 1.1 1.6

9.1 12.9 7.4

11.9 10.3 14.3 22.9 11.3 5.5 1.8 2.5

13.0 18.5 8.6

14.0 12.3 18.1 28.8 16.1 7.8 2.6 3.6

CNG = Compact Natural Gas; IRI = international roughness index in meters per kilometer. Source: Road Users’ Study 2011.

4. Travel Time Cost Savings

9. TTC savings for passengers of all vehicle categories were calculated at appraisal. The economic TTC for passengers was studied by the Economic Circle of RHD and documented in the road user manual, 2005 and subsequently updated and used for reevaluation. Economic analyses were done for individual project roads or sections of roads grouped under construction contracts. An overall economic analysis was also done for road improvement components implemented under the project. Table A9.3 presents the value of passenger and cargo time.

44 Appendix 9

Table A9.3: Value of Time (Tk per vehicle-hour)

Vehicle Type Passenger Time Cargo Time Car Microbus Minibus Large bus Small truck Medium truck CNG/Auto rickshaw CNG/Autobike Motorcycle NMT

33.3 30.0 14.4 18.4

- - 9.7

10.3 11.5 8.3

- - - - 6.7

15.6 - - - -

CNG = Compact Natural Gas Source: Road Users’ Study 2011.

5. Results of Economic Analysis

10. The recalculation of overall EIRR for the 16 sample roads was 24.9% based on the streams of costs and benefits over the construction period plus 20 years after project implementation. During appraisal the project was considered a sector project and only three sample roads were studied for economic analysis. The EIRR at appraisal was 26.79% for Mominpur–Keranirhat, 60.43% for Churkhai–Dapunia, and 59.27% for Tarakandi–Shyamganj. Implementation suffered a setback because of the withdrawal of grant funds by DFID and other donors, which subsequently reduced the size of the project. The PCR mission’s calculation of combined sample roads (selected randomly from four regions) shows that although EIRR is lower than appraisal (assessed for three roads), it is still considered robust with an average of 24.8%, and much above the opportunity cost of capital at 12%. The net present value was Tk1,623 million and benefit–cost ratio was 2.39 resulting from the satisfactory performance of the project although values of criteria are lower than appraisal. 11. Table A9.4 summarizes the recalculation of EIRR and net present value for each sample subproject at PCR and appraisal.

Table A9.4: Economic Assessment – Compared with Base Case

Project Road Appraisal EIRR (%)

a

PCR Reassessment

EIRR (%) NPV

(Tk million) BC Ratio 1. Dimla–Sutibari–Kakrabazar

Not Done

38.1 160.0 3.6 2. Nagar Katgora–Laxmipur GC 43.4 285.0 5.3 3. Patgram GC–Burimari GC 24.3 65.0 2.3 4. Nawabganj–Bhaduri GC via Daria Road 18.3 48.0 1.6 5. Rangpur Bus Terminal–Shaympur GC 42.7 263.0 5.1 6. Ghoir UZ–Shingur GC 36.9 138.0 4.3 7. Dhamria–Dhantara–Kashura GC 16.8 20.0 1.5 8. Sreenagar–Goalimandra GC 34.1 63.0 3.7 9. Madhabdi–Gapaldi GC 39.3 166.0 4.7 10. Baschara GC–Jamalpur–Muktagacha Road 13.4 14.0 1.1 11. Tarakanda GC–Shyamganj GC, Phulpur 59.27 18.3 38.0 1.6 12. Sakhipur–Mohnandapur Not Done 15.3 22.0 1.3

Appendix 9 45

a Base case EIRR available for three sample roads: Mominpur–Keranirhat (26.79%), Churkhai–Dapunia (60.43%), and Tarakanda–Shyamganj (59.27%); only the last one was included in the PCR reassessment.

Source: PCR mission’s estimate.

12. A combined HDM analysis was used on 16 sample roads, which were selected randomly from four regions. The selection represents more than 100 roads (1,500 km) in more than 500 contract packages. The reevaluation of combined benefits shows that EIRR is 24.8%, net present value is Tk1,623 million and benefit–cost ratio is 2.39; the results seem robust in all respects. Sensitivity analysis was performed for combined roads using critical elements influencing the outcomes—EIRR was (i) 22.2% when investment increased by 15%, (ii) 21.7% when traffic was reduced by 15%, and (iii) 19.3% with a combination of both impacts; all above the cutoff rate of 12%. Therefore, the investment in rural road improvement does not have risk of insufficient return in terms of economic benefits.

6. Sensitivity Analysis 13. Sensitivity analysis was performed to assess the risk of the individual subproject investment. Three impact assessment tests were done based on (i) increased investment expenditure by 15%, (ii) reduced traffic benefits by 15%, and (iii) combined impact of increased cost by 15% and reduced benefits by 15%. Table A9.5 presents the PCR sensitivity results.

Table A9.5: Sensitivity Analysis (%)

Project Road

PCR Base Case

PCR Sensitivity (EIRR)

Investment Cost +15%

Benefit Reduced by –15%

Investment +15% and

Benefit –15% 1. Dimla–Sutibari–Kakrabazar 38.1 34.4 33.9 30.5 2. Nagar Katgora–Laxmipur GC 43.4 39.5 38.8 35.1 3. Patgram GC–Burimari GC 24.3 21.7 21.3 18.8 4. Nawabganj–Bhaduri GC via Daria Road 18.3 16.1 15.7 13.6 5. Rangpur Bus Terminal–Shaympur GC 42.7 38.8 38.1 34.5 6. Ghoir UZ–Shingur GC 36.9 33.5 32.9 29.7 7. Dhamria–Dhantara–Kashura GC 16.8 14.7 14.3 12.4 8. Sreenagar–Goalimandra GC 34.1 30.8 30.2 27.2 9. Madhabdi–Gapaldi GC 39.3 35.7 35.1 31.7 10. Baschara GC–Jamalpur–Muktagacha

Road 13.4 11.5 11.2 9.4

11. Tarakanda GC–Shyamganj GC, Phulpur 18.3 16.1 15.8 13.7 12. Sakhipur–Mohnandapur 15.3 13.3 13.0 11.1 13. Nasirnagar GC–Chatian GC 20.0 17.7 17.4 15.3 14. Daudkandi–Botakandi GC 23.8 21.3 20.9 18.5 15. Sarail UZ–Aorail GC 27.2 24.5 24.0 21.5 16. Mohamaya GC–Rampur UC 30.0 27.1 26.6 23.9

G. Conclusion 14. From the post-implementation assessment of the project and recalculation of EIRR, the project performance is considered satisfactory even with a shortfall in targeted outputs. The risk

13. Nasirnagar GC–Chatian GC 20.0 87.0 1.8 14. Daudkandi–Botakandi GC 23.8 81.0 2.3 15. Sarail UZ–Aorail GC 27.2 224.0 2.8 16. Mohamaya GC–Rampur UC 30.0 101.0 3.2

46 Appendix 9

analysis and sensitivity tests confirmed that the investment was effective and generated quantifiable benefits by increasing traffic on the roads as projected. All sample roads except one (Baschara GC–Jamalpur–Muktagacha Road) passed the first two tests. For the third test of combined risk assessment, all but two roads (Baschara GC–Jamalpur–Muktagacha Road and Sakhipur–Mohnandapur) passed the tests. In PCR base case their EIRRs were 13.4% and 15.3% respectively, well above 12% cutoff rate. 15. Overall, the investment is considered efficient in terms of its appropriate and robust quantitative traffic growth and economic benefits during and after project implementation. Qualitatively the project would generate substantial social and environmental benefits to the community having long-term positive impacts on poverty reduction and gender equity, which was not included in economic assessment.

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