The World Bankdocuments.worldbank.org/curated/en/783531468278046278/... · 2016-07-20 · document...

Document of The World Bank

Report No: 32642-LA

IMPLEMENTATION COMPLETION REPORT(IDA-34810 TF-25724)

ON A

CREDIT

IN THE AMOUNT OF SDR 19.2 MILLION (US$25 MILLION EQUIVALENT)

TO THE

LAO PEOPLE'S DEMOCRATIC REPUBLIC

FOR A

ROAD MAINTENANCE PROJECT

June 30, 2005

Transport UnitEast Asia and Pacific Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 31, 2004)

Currency Unit = Kip Kip 10,344 = US$ 1

US$ 0.00009 = Kip 1

FISCAL YEAROctober 1 - September 30

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankAADT Average Annual Daily TrafficAPL Adaptable Program LoanAWP Annual Work ProgramCAS Country Assistance StrategyCRM Community Road ModelDCA Development Credit AgreementDCTPC Departments of Communications, Transport, Post and ConstructionDOR Department of RoadsDOR-PMD Department of Roads - Project Monitoring Division DOR-PTD Department of Roads - Planning and Technical DivisionDOR-RAD Department of Roads - Road Administration DivisionDOT Department of TransportDOT-TCD Department of Transport – Transport Control DivisionEMP Environmental Management PlanERR Economic Rate of ReturnFMS Financial Management SystemGIS Geographic Information SystemsGOL Government of Lao PDRHDM–4 Highway Development and Management Model (Version 4)HTMP Heavy Transport Management ProgramICR Implementation Completion ReportILO International Labour OrganizationIRAP Integrated Rural Accessibility PlanningIRI International Roughness IndexLBES Labor-Based-Equipment-Supported LRN Local Road NetworkLSRSP-2 Second Lao-Swedish Road Sector ProjectMCTPC Ministry of Communications, Transport, Post and ConstructionMES Monitoring and Evaluation SystemNDF Nordic Development FundNRN National Road NetworkPHRD Japan Policy and Human Resource Development GrantPMS Pavement Management SystemPRoMMS Provincial Road Maintenance Management SystemPRTP Participatory Rural Transport PlanningRMFAB Road Maintenance Fund Advisory Board

RMF Road Maintenance FundRMP Road Maintenance ProgramRMS Road Management SystemRSAP Road Safety Action PlanSida Swedish International Development Cooperation AgencySRMP Sustainable Rural Mobility and ParticipationTHIP Third Highway Improvement ProjectUN- IAPSO United Nations Inter-Agency Procurement Services OfficeVMC Village Maintenance Committees

Vice President: Mr. Jemal-ud-din KassumCountry Director: Mr. Ian C. Porter

Sector Director: Mr. Jitendra N. Bajpai Task Team Leader: Mr. William D.O. Paterson

LAO PEOPLE'S DEMOCRATIC REPUBLICROAD MAINTENANCE PROJECT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 55. Major Factors Affecting Implementation and Outcome 136. Sustainability 147. Bank and Borrower Performance 158. Lessons Learned 179. Partner Comments 1810. Additional Information 29Annex 1. Key Performance Indicators/Log Frame Matrix 30Annex 2. Project Costs and Financing 32Annex 3. Economic Costs and Benefits 34Annex 4. Bank Inputs 38Annex 5. Ratings for Achievement of Objectives/Outputs of Components 40Annex 6. Ratings of Bank and Borrower Performance 41Annex 7. List of Supporting Documents 42

IBRD Map No. 34124

Project ID: P064821 Project Name: ROAD MAINTENANCE PROJECTTeam Leader: William D. O. Paterson TL Unit: EASTRICR Type: Core ICR Report Date: June 29, 2005

1. Project DataName: ROAD MAINTENANCE PROJECT L/C/TF Number: IDA-34810; TF-25724

Country/Department: LAO PEOPLE'S DEMOCRATIC REPUBLIC Region: East Asia and Pacific Region

Sector/subsector: Roads and highways (97%); Central government administration (3%)

Theme: Municipal governance and institution building (P); Rural services and infrastructure (P)

KEY DATES Original Revised/ActualPCD: 02/24/2000 Effective: 07/12/2001 07/12/2001

Appraisal: 10/03/2000 MTR: 04/01/2003 04/04/2003Approval: 03/27/2001 Closing: 12/31/2004 12/31/2004

Borrower/Implementing Agency: Lao People's Democratic Republic/Ministry of Communication; Lao People's Democratic Republic/Transport; Lao People's Democratic Republic/Post and Construction

Other Partners: Swedish International Development Cooperation Association (Sida); Nordic Development Fund (NDF)

STAFF Current At AppraisalVice President: Jemal-ud-din Kassum Jemal-ud-din KassumCountry Director: Ian C. Porter Ian C. PorterSector Manager: Jitendra N. Bajpai Jitendra N. BajpaiTeam Leader at ICR: William D. O. Paterson Denis RobitailleICR Primary Author: Maria Margarita Nunez;

Christopher J. De Serio

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: HL

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: HS

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:Context. At the time of preparation of the Road Maintenance Program (RMP), the International Development Association (IDA) had been supporting the highway sub-sector in Lao People's Democratic Republic (PDR) to improve specific national road sections, to implement routine and periodic road maintenance programs, and to strengthen the overall institutional capacity to manage the road sector. Despite the investments of the 1990’s, the road network in Lao PDR remained under-developed and the existing roads in poor condition. Only about 38 percent of the national road network was considered in good or fair condition, and most of the provincial and district road network were impassable during the rainy season. Moreover, many of the roads rehabilitated or reconstructed previously were deteriorating at a faster rate than expected. Therefore, the sector focus was then shifted to the preservation of roads with priority for preserving the national roads rehabilitated in the past decade. To facilitate this aim, the Government's strategic policy choice was to establish a modern road management system which would assist in mobilizing adequate resources and ensure that funds were used effectively for maintenance. IDA support for such a major shift in focus, arising from the Government’s “Strategic Directions for Development of the Road Sector” of June 2000, sought to utilize the flexibility of an Adaptable Program Loan (APL), assuring a longer-term partnership in the sustainable management of road assets.

As stated in the Development Credit Agreement (DCA), the objective of the Road Maintenance Project (SDR 19.2 million) was to develop and implement financing and management systems for the sustainable maintenance of the National Road Network (NRN) countrywide, and to design and test, in four selected provinces (Champassak, Luang Namtha, Luang Prabang, and Savannakhet), financing and management systems for the sustainable maintenance of the Local Road Network (LRN).

The project's immediate objectives are: (i) mobilize and efficiently allocate additional financial resources for road maintenance; (ii) strengthen capacity of institutions dealing with road maintenance activities at central, provincial and local levels; and (iii) reduce overloading of vehicles.

The overall strategy of the Government of Lao PDR was to reduce poverty and develop its infrastructure and human resource capacity. The RMP was consistent with the Government's strategy and with the World Bank's 2000-2002 Country Assistance Strategy (CAS) objectives in the transport sector. The project objectives were clear and realistic, reflecting the identified priorities for strengthening management capacity and establishing sound sectoral financing and management policies for maintaining the national and local transport network. Through the coordinated support of IDA, the Nordic Development Fund (NDF) and the Swedish International Development Cooperation Agency (Sida), the RMP provided an adaptable framework for enabling the government’s objective of a sustainable maintenance system.

3.2 Revised Objective:The original development objectives of the project did not change during implementation.

3.3 Original Components:There were two primary project components: preservation of the road network, and institutional capacity building.

Part A: Preservation of the Road Network Through Civil Works. (US$24.31 million) This component consisted of the following three sub-components.

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A.1 Periodic Maintenance and Rehabilitation Works, which financed: (i) Annual Work Programs covering 1,100 km of the NRN and 300 km on the LRN. (ii) Technical assistance to relevant agencies for preparation, design, supervision and monitoring of the

related works. (iii) Provision of goods (including vehicles), office equipment and road condition survey equipment; and(iv) Construction of 38 small district offices in the four selected provinces.

A.2 Routine Maintenance and Emergency Work, which financed:(i) Emergency and routine maintenance works on 5,800 kms of the maintainable sections of the NRN

and LRN; and (ii) Technical assistance for preparation, design, supervision and monitoring of the related works.

A.3 Heavy Transport Management Program, which supported the development and implementation of a national strategy to reduce overloading on the road network, through:

(i) Construction of seven (7) permanent axle load weight stations and 17 laybys along strategic points on the NRN;

(ii) Procurement of permanent and mobile weigh-scales, vehicles and related training to be provided to the axle-load control patrols; and

(iii) Training and technical assistance to: strengthen project implementation capacity; facilitate a partnership between the Ministry of Communication, Transport, Post and Construction (MCTPC) and the transport industry; develop and implement related regulations and policy reforms.

Part B: Strengthening Institutional Capacity. (US$0.69 million) This component consisted of the following five sub-components:

B.1 Establishment of Road Management System to cover all aspects of the road planning process for the NRN and LRN. The sub-component financed technical assistance and training to:

(i) Establish a fully operational Road Management System (RMS) for the NRN;(ii) Develop and pilot the RMS for the LRN; (iii) Initiate a framework for the development of a national Rural Transport Policy; and(iv) Conduct road condition surveys.

B.2 Implementation of the Road Maintenance Fund. The subcomponent established a sustainable financing mechanism for the maintenance of the NRN and LRN, including consultant services to assist the efficient operation of the Road Maintenance Fund and the Road Maintenance Fund Advisory Board (RMFAB) and its Secretariat.

B.3 Improve Project Preparation, Execution and Monitoring. Designed to develop institutional capacity for project management, the subcomponent financed technical assistance and training to:

(i) Institutional capacity development;(ii) Manage financial aspects of project management; (iii) Develop internal capacity in carrying out technical and financial audits of project activities; (iv) Support the newly established Information, Archive and Conference Center; and(v) Specific capacity building activities, including fellowships, English language training, study tours,

workshops, and seminars.

B.4 Develop Strategy to Improve Performance of Local Contracting and Consulting Industry. The subcomponent supported facilitation of a strategy for developing the local contracting and consulting industry.

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B.5 Involve Road Users-Beneficiaries in Road Maintenance Activities To foster the involvement of the road users and beneficiaries in the delivery and management of road maintenance activities, this subcomponent aimed to:

(i) Provide technical assistance for establishing associations to represent road users; and (ii) Establish and implement a strategy to involve villages in the maintenance of the LRN and

small-scale community contractors.

The project components were well designed and linked to the project’s objectives. This was the fourth IDA-funded highway project in Lao PDR, which was built on the foundations of GoL’s strategic intentions of placing greater emphasis on systematic maintenance of the maintainable road network and of progressively introducing competitive bidding of maintenance works contracts. The project’s components properly address the key issues related to the civil works focus on preservation of the road assets; institutional and financial capacity; and fiduciary and management frameworks critical to a successful outcome and project sustainability.

3.4 Revised Components:The Development Credit Agreement was amended on January 3, 2003, to permit IDA financing of goods under Component A.3 Heavy Transport Management Program (HTMP). Permanent and mobile weigh scales were to be financed under the NDF Credit; however, the NDF guidelines restricted eligibility of suppliers to Nordic countries. Hence the procurement of the weigh scales resulted in inadequate competition and lack of choice. The minor revision to the sub-component allowed for procurement of equipment using International Competitive Bidding procedures, for an estimated total cost of $0.5 million.

3.5 Quality at Entry:The Bank’s Quality Assurance Group did not review the project at appraisal. The Implementation Completion Report (ICR) rates quality at entry as highly satisfactory. The assessment is based upon Government’s ambitious commitment and resultant actions toward mainstreaming its strategy for maintaining and preserving road assets. With an overall risk rating of modest, the project accurately assessed the appropriate risk mitigation measures identified during project appraisal, thus reinforcing a well designed project. Though no social or environmental impacts were identified during appraisal, the Resettlement and Compensation Guidelines and Environmental Guidelines which applied to the project were deemed appropriate and acceptable to IDA. The following factors contributed significantly to project readiness for implementation:

The project objectives were consistent with the Government's priorities in the transport sector, a.with the CAS, and with previous IDA interventions within the sector; The Deputy Prime Minister, Minister of Finance and the Minister of MCTPC endorsed a b.Letter of Development Program in January 2001; Prime Ministerial Decrees establishing a Road Maintenance Fund (RMF), Road Maintenance c.Fund Advisory Board (RMFAB) and Fuel Levy;The MCTPC Minister signed Memoranda of Agreement between MCTPC and the governors d.of the four selected Provinces in December 2000 to ensure project implementation complied with the Bank's procurement procedures;A Memorandum of Understanding between IDA and Sida provided a framework for ongoing e.coordination and interlinking donor support; Funding from the previous Third Highway Improvement Project (THIP), Sida, and a Japanese f.PHRD Grant (TF25724), facilitated the following preparation activities:

The design of the RMF; i.

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An axle load control study to enable adequate design of the Heavy Transport ii.Management Program (HTMP);Project Implementation Plan preparation, baseline data collection of road referencing iii.and condition surveys to populate the proposed road database;The design of an acceptable Financial Management System; and iv.Preparation of the first of three Annual Work Programs (AWP). v.

MCTPC satisfactorily complied with the Bank's safeguard policies throughout preparation; g.The THIP provided pilot experience in the competitive bidding for periodic maintenance; and h.The APL approach properly acknowledged the need to provide long-term assistance while i.enabling an element of flexibility through a staged-implementation with intermediate objectives.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The Road Maintenance Project has been highly satisfactory in developing and implementing a sustainable revenue collection mechanism that ensures adequate financing to maintain the national road network. Lao PDR’s newly established road maintenance fund, one of only a few such funds operating in the region, represents an exemplary model in both its institutional framework and the benefits which can be derived from proper management of resources. The project developed a Road Management System for the entire national road network; introduced institutional changes for identifying and prioritizing maintenance activities; which was focused on periodic and routine maintenance, as well as on capacity building initiatives to effectively manage and implement these activities; and reduced heavy vehicle overloading through an expanded axle-load control program.

The design and piloting of financing and management systems for the sustainable maintenance of the local road network in the provinces of Champassack, Luang Namtha, Luang Prabang and Savannakhet was partially completed. While the RMS is used for the overall road network management, the Provincial Road Maintenance Management System (PRoMMS) was tested in the pilot provinces but is still in the process of development. In addition, the Participatory Rural Transport Planning (PRTP), which is the Lao version of the Integrated Rural Accessibility Planning (IRAP) road prioritization procedure of the International Labour Organization (ILO), and the Community Road Models (CRM) are still under development for its use in the LRN.

The specific objectives of the first Phase of the APL are discussed below (and detailed performance indicators are provided in Annex 1):

Additional financial resources for road maintenance mobilized. Achievement is rated satisfactory. The project effectively established a cost recovery policy based on the users pay principle. GOL, through MCTPC, instituted a road fund dedicated to maintenance, financed by road users’ charges, managed by an advisory board with road users’ representation, and subject to strict auditing requirements.

In April 2001, the RMF and RMFAB, along with a corresponding financing mechanism derived from a fuel levy, became operative. In February 2002 the revenues were transferred into the RMF and in GOL FY2002/03 the RMF became operational, carrying out the first extended program. The initial fuel levy was a moderate LAK 40 per litre and rose once to LAK 60 per litre, effective 1 October 2003. The original performance indicator included an increase of the fuel levy by 50 percent per year, however only one 50 percent increase was authorized and was attributable to the country’s general economic circumstances at the time of the first annual increase. While the fuel levy was increased at a slower rate than originally

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planned, the revenues from road tolls and fines exceeded the original plan, and enabled the annual revenues to increase to LAK 36.9 billion in FY2003/2004, which was equal to the total expenditures on maintenance at the beginning of the project. Following with a second increase to LAK 100 per litre in January 2005, the Government has renewed its commitment to annual increases in the levy to LAK 200 per litre by 1 October 2006, and achieving near full cost recovery of maintenance needs by the end of the second phase of the program.

The RMF represents a steady and adequate, long-term domestic funding source based on the substantial cost recovery from road users. In FY2003/2004, domestic revenues comprised US$4.2 million equivalent out of US$8.7 million total expenditures on road preservation, thus meeting 30 percent of road needs (estimated at US$14.0 million). This compares well with the project target of 35 percent. The RMF provided 86 percent of domestic revenues (US$3.5 million). The RMF is now funding all NRN routine maintenance activities, including required substantial periodic maintenance of the NRN counterpart funding, and 10 percent of the program on maintenance needs for the LRN. Additionally, the financial and institutional frameworks are in place to support the expansion of the maintenance levels. The RMF is growing steadily, however effort is now required to establish and achieve a sustainable level and to further develop its support for the LRN.

Capacity of central, provincial and local level institutions strengthened. Achievement is rated satisfactory. Initiatives to strengthen the capacity of the institutions responsible for road maintenance at the national, provincial and local levels were undertaken to improve effectiveness in planning, budgeting, monitoring and executing of the necessary activities in a decentralized framework. However, there were some missed opportunities for on-the-job training through the technical assistance which MCTPC was reluctant to incorporate. Some of the envisaged technical assistance activities were not thoroughly pursued and marginally impacted the program's outcomes. Capacity enhancement activities included technical assistance, workshops, seminars, fellowships, English language training, and study tours. See details in Section 4.2 below. Regional workshops covering project supervision, procurement standards, financial management, and English-language training enabled participants from the center and the provinces to gain experience in preparation for an expanded, national road maintenance agenda.

Overloading of Vehicles Reduced. Achievement is rated highly satisfactory. An axle load control program, to reduce overloading in heavy vehicles and to reevaluate the current regulations on licensing fees and overloading fines, was implemented through the development of a national strategy. A Heavy Transport Management Program (HTMP) to inspect and detect overloading of heavy vehicles has had a substantial impact, both in terms of reducing the share and amount of vehicles that are overloaded and generating income from fines. In March 2002, the Department of Transport (DOT) revised the regulation on Maximum Permissible Gross weight of trucks from 8.2 tonnes per axle load to 9.1 tonnes per axle load. DOT reports that the share of vehicles overloaded has fallen from 91 percent to 28 percent and the share of heavily overloaded vehicles has also declined from 24 percent to 1 percent of those vehicles weighed, indicating a remarkable decline in the extent of overloading at the weigh stations. With the expansion of the program introduced at the end of RMP1, the effectiveness and sustainability of the HTMP will be reviewed and strengthened.

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4.2 Outputs by components:COMPONENT A: PRESERVATION OF THE ROAD NETWORK

Component A.1: Periodic Maintenance. (US$29.31 million, [appraisal]; US$32.08 million, [completion]). This component is rated satisfactory.

As of October 2004, actual works completed were 1,938 km of periodic maintenance on NRN (including four bridges and road signage) compared to 1,100 km estimated at appraisal. For the LRN, the project completed 855 km of periodic maintenance, compared to 300 km at appraisal. A total of 55 contracts for periodic maintenance of the NRN for US$22.5 million, and 43 contracts on the LRN amounting to US$3.89 million, were completed. The nearly doubling of the periodic maintenance works on NRN and the almost tripling increase in the periodic maintenance works on LRN is indicative of the commitment and capacity of the implementing agency, MCTPC.

The road sections under periodic maintenance were resealed on the existing road surface with localized rehabilitation of pavement and drainage on severely deteriorated sections. During implementation, the technical audit after completion showed variably satisfactory quality of construction. The Department of Roads (DOR) reported its concerns over the quality and quantity of works performed under the maintenance program, citing inadequate capacity in contract administration, pre-qualification requirement, acceptance of sub-standard quality, and weak supervision among the contractors and the provincial DCTPCs. DOR recommended key actions such as training, closer monitoring of bid evaluation and pre-qualification compliance, and stronger oversight by RAD and RMF technical manager. A comprehensive training program, which included contract administration, financial management and procurement, was implemented under the project and DOR proposed stricter oversight rules under RMP2.

Additional activities financed by IDA under this component include support to the local DCTPCs responsible for project implementation through: the construction of 38 office buildings for approximately US$0.42 million; the provision of 25 vehicles and 100 motorcycles for approximately US$0.16 million; and office equipment and supplies amounting to approximately US$0.05 million.

NDF financed US$1.16 million towards civil works on the NRN under the third year Periodic Maintenance Program, as well as US$0.87 million in technical assistance to RAD for contract preparation and monitoring activities under the component. Sida actively contributed approximately US$3.03 million to the program with support to detailed engineering and construction supervision services for the LRN.

Component A.2: Routine Maintenance. (US$13.41 million, [appraisal]; US$5.72 million, [completion]). This component is rated satisfactory.

The component carried out routine maintenance works (including vegetation control, drainage clearing, pothole patching and edge repair) and emergency works (including accident removal and landslide clearing); all funded entirely through the RMF. Against a three-year routine maintenance target on national roads of 12,477 kms, some 19,343 kms were completed, exceeding the target by 55 percent and reaching 98 percent of the NRN in the final year. For local roads, of the planned maintenance on 2,750 km of the four selected Provinces under RMP, 6,000 km were completed, exceeding the target by almost 46 percent.

During the 2002 and 2003 rainy seasons, many sections of road were damaged and only limited funding was available under the GOL consolidated budget. The emergency maintenance needs were substantially

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higher than the 15 percent provided in the project’s planned routine maintenance. Along with additional donor assistance from IDA, ADB and Sida, the RMF was able to contribute US$5.72 million to an expanded maintenance program.

As 93 percent of the routine maintenance contracts were village-based, the program was highly effective in generating income at the village-level. Other emergency works were done through local small contractors under National Competitive Bidding procedures.

Component A.3: Heavy Transport Management Program (HTMP). (US$3.08 million, [appraisal]; US$2.96 million, [completion]). This component is rated satisfactory.

HTMP successfully introduced and supported various reforms to the institutional structures and legislative policy necessary for implementation of a national axle load control strategy. The Transport Control Division (TCD) of the DOT was responsible for implementation of the component. The construction of 24 weighing stations (of which 7 were permanent stations and 17 mobile stations) were completed and handed over in June 2004. Twenty-one (21) scales were delivered and were fully operational by December 2004. The RMF is currently collecting tolls at 28 locations in 16 provinces.

The provision of related technical assistance for capacity strengthening activities for implementation of the overloading reduction strategy and training axle-load control patrols did not take place. Only one bid was received that was found to be non-responsive, and selection was not pursued further. The program would have benefited considerably if the envisaged technical assistance had been mobilized to support this objective. The project also provided vehicles and office equipment to DOT to facilitate implementation of the component. The equipment included 13 Toyota pick-ups, 19 motorcycles and office items (a computer, printer, photocopy and fax machine).

NDF contribution to this component was US$2.18 million for civil works related to the construction of the permanent and layby weigh stations, as well as US$0.57 million for vehicles to assist with administering the program. During implementation, DOT requested the weighing scales equipment be procured internationally under the IDA credit in order to obtain more suitable technology and adequate competition than eligibility requirements under the NDF Credit would have permitted (only two suppliers were eligible, of which one was non-responsive in preliminary correspondence and the products of the other were incompatible with parts of the specification and operational support requirements). The component was modified during implementation to allow for IDA financing, and the procurement of vehicle weighing equipment was fully successful.

The NDF credit also financed traffic safety equipment for the Government’s traffic safety plan, which includes the deployment of two vehicles and 41 motorcycles for traffic enforcing activities in Vientiane and four provinces. The Road Safety Action Plan (RSAP) is part of a series of priority actions being implemented as part of the ASEAN initiative. A multidisciplinary partnership approach is followed to encourage all actors to contribute to the reduction of road fatalities and injuries. The RSAP will be launched and carried out with support from the RMP-2.

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COMPONENT B: STRENGTHENING INSTITUTIONAL CAPACITY

Component B.1: Establishment of Road Management System. (US$0.63 million, [appraisal]; US$1.11 million, [completion]). This component is rated satisfactory.

The key output, development of the Road Management System (RMS) integrates several modules (pavement management system, routine maintenance management system, bridge management system, and a monitoring and evaluation system) for analyzing a comprehensive collection of data on the national network. After some delays in completion of the Pavement Management System, the RMS was implemented in 2003 and became fully operational in June 2004.

To populate the RMS, a ‘Location Referencing Survey’ was conducted in 2001. Initial data on inventory, roughness and pavement conditions were collected and input into the RMS for planning and operational use. This survey was updated in May 2004 for national and provincial roads and was extended to include the funding of priority bridge interventions. Information on traffic volume, bridge conditions, and socio-economic data was collected. The introduction of the HDM-4 model during the latter stages of project implementation prevented a comparative economic analysis of pre- and post-project impacts; however, the RMS was an integral aspect in the Borrower’s capacity to develop a 10-year Strategic Expenditure Plan, another key project output. Although the HDM-4 model has been extensively used by the Planning and Technical Division of DOR, consultants prepared the fourth maintenance program (MP-4) and there is little in-house capability at DOR or by local experts for preparation of future work programs. Though some need for additional development of local expertise and capacity for HDM-4 modeling exists, the RMS provides MCTPC with a strong analytical framework and supporting data for preparing estimates of future investment needs and inventories of road, bridge and traffic conditions.

In terms of outstanding work, the Geographic Information System (GIS) for mapping all road data is partially operational, and the links to the local roads PRoMMS and to the Monitoring and Evaluation System need to be completed. RMS was piloted in one province, Vientiane Province. However, this experience and the role of the PRoMMS, lead to a review of how to optimize road maintenance programming capacity at the provincial level. As a result, the operation of the two systems will be harmonized under RMP2, with focus on the capacity and roles of both central and provincial levels, respectively.

For rural accessibility under the LRN, the PRoMMS was populated with data and applied in seven provinces. The system was used on a trial basis to produce annual plans for routine maintenance works in the maintainable provincial, district and rural roads. However, PRoMMS is not suitable to derive medium or long-term programs and expenditure planning and its application in the Lao context is for provincial and district roads only. For rural roads, a community participatory processes addressed under a separate methodology based on PRTP, the CRM, is being integrated in the program for the LRN implementation plan, based on community participation. Both these systems are in the process of development.

Component B.2: Assistance to Road Maintenance Fund (RMF). (US$0.54 million, [appraisal]; US$0.17 million, [ICR]). This component is rated marginally satisfactory. The following activities were undertaken: The RMF and related Advisory Board and Secretariat were set up and operational within a year of authorization; the Advisory Board held its first monthly meeting in March 2001; the RMF collected the first revenues in February 2002; the RMF presented the FY2002/2003 Annual Report to the Advisory Board on January 2004 – this report was released in March 2004, together with the accounts and the FY2003/2004 budget and business plan, with a copy to the local media. Also, the

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Board and the Secretariat have had an active program of public dissemination as well as monitoring of field issues.

The RMF advisor mobilized in February 2001, and assisted with the organization of the first monthly meeting of the Advisory Board, staffing issues, revenue collection, establishment of the financial and accounting procedures and other administrative issues. The advisor resigned due to poor health and no action was taken to appoint a replacement for the remainder of the RMP1. The operation and performance of the RMF Secretariat and Advisory Board could have been stronger with additional support, in undertaking the institutional appraisal and training needs assessment and the capacity building of those parts of MCTPC administering the RMF and those road administrations receiving money form the RMF. Moreover, the program of public dissemination could be further strengthened with increased involvement of road users. Twinning arrangements with similar road fund organizations did not take place. And the development of a long-term strategy for strengthening performance of the local contracting and consulting industry was not prepared, as reported under Component B.4.

The RMF initiation, development and operation progressed reasonably well over the project period. The framework now exists to further institutionalize the principles endowed in the Advisory Board and Secretariat's mandates which are to be supported under RMP2.

Component B.3: Strengthening preparation, execution and monitoring of projects (US$0.76 million, [appraisal]; US$0.31 million, [completion]). This component is rated satisfactory.

MCTPC has played an active role in managing the road sector, including policy and decision making, planning budgetary allocations, procurement, and program implementation. RMP supported the Government's decentralization plan and the overall capacity building consolidated this strategic choice. The responsibilities for implementation and supervision of the construction and maintenance activities has been gradually transferred to the DCTPCs supported by the District CTPCs. Separate accounts for all expenditures under the project were established. The accounts were reviewed by independent auditors annually and the financial management performance was satisfactory. However, it is evident that the DCTPCs and District CTPCs require considerable assistance and strengthening to take on the new responsibilities in the sector.

Technical audits were conducted every year during implementation. The audits indicate the RMP brought maintenance activities to the forefront of the road sector and provided informed contributions to the RMP's establishment of the long-term financing and management systems for the maintenance of the Lao road network. They also highlighted the challenges facing the RMP: the overall quality of maintenance works was in some cases below expected standards; and the low progress on capacity building, partly a result of reluctance by DOR to engage consultants to provide technical assistance. The auditor made recommendations to address the main issue of quality. The steps for improvement included actions at the planning, bidding and implementation stages, and were endorsed by the MCTPC.

Under the project, the newly established Information, Archive and Conference Center was supported through the provision of a central database catalogue and library repository, intranet access and equipment, as well as related training of 56 staff. Outfitted with departmental and project reports, magazines, technical papers and more than one hundred textbooks (financed under the LSRSP2), the library and cataloguing system is fully operational and updated with reports and relevant information. The center is providing MCTPC with in-house training and intranet accessibility opportunities.

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Four hundred thirty four (434) staff from both MCTPC (322 staff) and provincial authorities (112 staff) completed an array of training and capacity enhancement activities. Nearly one-fourth of the training activities were for technical skills development, including high-level coursework on road construction, road safety, and routine maintenance programs. More than 60 percent of the activities were for intermediate and pre-intermediate English language training. MCTPC staff conducted study visits to Australia, with attention to traffic management, as well as to Vietnam for job analysis and staffing evaluation. Three fellowships to Thailand were granted to candidates identified for advanced degrees in Environmental Studies, Transport Engineer and Business Administration. Sida provided Technical Assistance for financial management, installing the accounting system in all Provinces, not only the seven RMP and LSRSP-2 provinces. Technical and financial audit services were provided. However, technical assistance related to Project Management and Monitoring did not materialize. Further development of the agencies capacities to report on the projects accounting is required.

Component B.4: Development of a strategy for strengthening performance of the local contracting and consulting industry (US$0.02 million, [appraisal]; US$0.0 million, [completion]). This component is rated marginally satisfactory.

RMP aimed to progress the commercialization of all MCTPC construction and maintenance agencies and to promote competitive procurement of contractors and supervision consultants. Strong competition was evident from reviewing bid prices, which were progressively lower than estimates. However, less progress was made on organizational structure. Although a preliminary strategy was prepared and a foundation outline for a Lao Business Construction Group was drafted, no association for the contracting and consulting industry has yet been established. The technical assistance for this component did not materialize and, therefore, a strategy for strengthening the performance of the local contracting and consulting industry was not completed.

In establishing current baseline industry data, it is apparent that there is a large pool of small enterprises operating within a fragmented industry. Local contractor capacity has improved in the number of contractors available, with steady growth each year. Figures indicate that more than half (68 percent) of construction companies have an annual turnover of less than US$500,000, with 40 percent having annual turnovers less than US$200,000. Nevertheless, the contracting industry does not have adequate access to financial markets and encounters difficulties in securing guarantees, which would increase opportunities for growth and competition.

Component B.5: Involvement of road users and beneficiaries in road maintenance activities (US$0.5 million, [appraisal]; US$0.00 million, [completion]). This component is rated marginally satisfactory.

Road users have achieved basic levels of participation through representation on the RMFAB, and through the consultation process conducted through road trips by the RMF Secretariat and Board representatives. However, no formal association to represent road users has been formed as yet.

The RMP, supported by a parallel LSRSP-2, strengthened the technical and managerial capacity in MCTPC and the selected four pilot DCTPCs. Technical assistance to the LRD and DCTPCs for the development and implementation of a rural transport planning strategy was only partially completed. Villages located in the pilot provinces participated in routine maintenance contracts and fostered development of small-scale community contractors. The CRM was developed for the sustainable management of basic access in rural areas. Planning based on the PRTP is implemented using labour-based/ equipment-supported methods (LBES), and maintenance procedures employing Village Maintenance Committees (VMC). A program and implementation plan for community-based activities and

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participation in road maintenance is being integrated with a Japanese Social Development Fund grant for a Sustainable Rural Mobility and Participation (SRMP) project that was approved in June 2004. Experiences from the SRMP will provide inputs to the development of the Rural Transport Infrastructure Policy.

4.3 Net Present Value/Economic rate of return:Periodic Maintenance. The economic evaluation undertaken during project appraisal for national roads was limited to an economic evaluation of the first year works program and to provide guidelines on threshold values for DOR for the preparation of later stages of the multi-annual program. The appraisal selection of contracts was based upon the 10-year Rolling Maintenance Plan, which used economic selection criteria based on the World Bank-endorsed Highway Design and Maintenance Standards Model (HDM-III). Selection of contracts in the Local Roads Network for MP-1 was based on experience and knowledge of the territory.

The intention expressed in the PAD was that selection of contracts to be executed under MP-2 and MP-3 would be based on the output of the pavement management system to be made operational during the first year of the project. The introduction of the pavement management system was however delayed and it was only made operational during 2004, and therefore unavailable for evaluating MP-3. The road pavement management system was utilized for the MP-4 preparation, in mid 2004. A list of the road sections evaluated at appraisal, the periodic maintenance road works costs, and the typical road user unit cost are presented in Annex 3.

The ex-ante economic evaluation yielded an overall Economic Rate of Return (ERR) of 30 percent, with three projects having a marginal rate of return between 13 percent and 15 percent. The ex-post economic evaluation shows a satisfactory economic justification of the project road investments, due to the fact that the lower ex-post traffic was somewhat compensated by the lower ex-post intervention costs. All road sections have an ERR higher than 12 percent including the three projects with marginal rates of return. The economic rates of return vary from 14 percent to 103 percent and the overall project ERR is 33 percent.

The Local Roads Network first year periodic maintenance component extend to some US$0.6 million across 9 projects; however the individual projects were not subject at appraisal to economic evaluation. The average intervention cost was less than US$4,000 per kilometer. No pre-project economic evaluation was undertaken for routine maintenance works, because of the nature of these low cost interventions and their predictablt high levels of economic benefits.

4.4 Financial rate of return:N/A

4.5 Institutional development impact:The institutional development impact was substantial. The project fostered the establishment of a "maintenance culture" within the responsible institutions at the national and local levels, and established the proper tools and capacity enhancement programs for developing public management and private sector delivery of services. Routine and periodic maintenance is now a primary focus of MCTPC. Allocation of funds for routine and periodic maintenance activities has increased significantly as a direct result of the revenue generated from the RMF. MCTPC recognizes that reapportioning the RMF to increase the allocations for emergency and reconstruction works, as well as dedicating more to the local road network is necessary. Though MCTPC recognizes that maintenance remains a priority over network expansion, to effectively shift its policies towards the goals of its Long Term Strategy Plan entails stronger endorsement

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from national government. MCTPC has enhanced its ability to prepare road investment plans; conduct procurement activities through a small but increasingly competitive private road sector industry; expanded its axle-load control program; and increased its capacity for project implementation. It has sound accounting practices and has conducted regular technical audits.

The restructuring of the Environmental and Social Division (ESD) in 2001 instituted a framework for improving inter-agency coordination for identifying and mitigating environmental and social inequities. MCTPC and DOR can further develop the Division’s capacity to carry out its objective of ensuring all works conform to the Environmental Guidelines for Road Projects so that any adverse environmental impacts are effectively addressed in a timely and satisfactory manner.

MCTPC displayed some reluctance with recruiting and engaging consultants for certain aspects of the project's technical assistance. Under the second phase of the program, additional focus on technical advisory activities for both the RMF Secretariat and RMFAB will contribute to strengthening the framework towards sound financial and economic decision-making in the operation and performance of an efficient management system.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:Adverse climatic conditions. Particularly heavy and prolonged rainy seasons in 2002 and 2003 resulted in significant damage to the country’s road network. As the emergency maintenance needs were substantially higher than the projected 15 percent under the RMF budget provided for routine maintenance, and the limited funding available under the GOL consolidated budget, the RMF increased its annual routine and emergency works allocation to US$5.3 million.

5.2 Factors generally subject to government control:Annual Increase to the Fuel Levy. The GOL authorized only one fuel levy increase during the life of the project. In FY 2002/2003, the revenues from the fuel levy were LAK 13.8 billion, or 52 percent of the total revenues to the RMF of LAK 26.7 billion. For FY 2003/2004, following the 50 percent increase in the fuel levy in October 2003, the revenues from the fuel levy were LAK 21 billion, about 56 percent of the total revenues to the RMF of LAK 37 billion, which represents about 24 percent of the estimated road preservation needs. The fuel levy target at the end of RMP1 was LAK 135 per liter, this amount could have generated about 45 percent of road maintenance needs.

Revenue Transfers from the Provincial Accounts. The transfer of revenues from provincial accounts to the RMF account remains very slow, taking an average of 3-4 months, as the provincial treasuries appear to make use of the funds as a float. This matter needs serious attention by the Ministry of Finance, as about LAK 3 billion of the fuel levy revenues is usually held back by the provinces and the full increase does not produce benefits in the short-term.

National Banking Constraints. The local contracting industry is constrained by insufficient access to capital markets due to the current national banking sector regulations. Also, contractors are unable to secure local bank guarantees as required for contract execution, under a deposit or collateral in the full amount of the required guarantee.

5.3 Factors generally subject to implementing agency control:Overall Quality of Maintenance Works. The technical audit concluded that the quality of maintenance works being executed was sometimes below expected standards, revealing sub-standard construction materials as the primary culprit, as well as poor construction practices and shortcomings of related works

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supervision. The suitability of available materials and over-design of the specifications for periodic maintenance of the NRN and LRN resulted in assertions of inadequate construction quality in some road sections. In the case of rehabilitation of selected sections of the national roads, the design standard should ensure that the improved road section is of higher standard than the original road, so that the overall condition of the roads improve over time. This would imply higher rehabilitation costs for the improved section, but would yield longer-term benefits.

The ongoing maintenance program, planned to provide periodic maintenance on 1100 km of the NRN and 300 km of the LRN, was expanded threefold, covering significantly more than the projected lengths, at 1940 km of the NRN and 822 km of the LRN, all within the original budget allocation. This is a result of the cost effective competitive bidding procedures followed for the contracting of the periodic maintenance works, and the much lower bid prices of maintenance works compared to the engineer’s estimate. MCTPC should ensure that the proposed bid prices realistically reflect the unit cost per item.

5.4 Costs and financing:At appraisal, the total project costs were estimated at US$47.8 million (including contingencies of US$7.27 million), of which the IDA Credit was to finance US$25 million equivalent. Due to exchange rate fluctuations, IDA ultimately financed US$26.6 million of the US$42.35 million total project completion cost.

Periodic maintenance was estimated to cost US$26.66 million at appraisal, while the actual cost was nearly on target at approximately US$32.08 million (of which IDA financed US$25.13 million). In the case of routine maintenance of the NRN, however, appraisal estimates were for US$13.35 million, whereas actual costs only amounted to US$5.72 million (of which US$4.85 million was financed by counterpart contribution from GOL). This is explained by the higher coverage of periodic maintenance which reduced the needs for routine maintenance on some sections. Institutional development was estimated to cost US$2.0 million at appraisal; and its total actual cost amounting to US$1.59 million (with IDA financing US$0.68 million). Goods were estimated to cost US$1.34 million at appraisal, while actual costs amounted to US$1.96 million (of which IDA contributed US$0.99 million). The IDA contribution for goods increased US$0.5 million, and Credit amended accordingly, to enable internationally competitive procurement of weigh scales. Annex 2 summarizes project costs by item.

Sida and NDF co-financing arrangements were to contribute US$1.12 million and US$5.16 million, respectively. By project completion, Sida and NDF had financed US$3.03 million and US$5.34 million, respectively. Counterpart contributions from GOL amounted to US$7.39 million, against an appraisal estimate of US$16.51 million, to be used primarily for routine maintenance of the NRN.

The Credit closed as originally scheduled on December 31, 2004.

6. Sustainability

6.1 Rationale for sustainability rating:Sustainability is rated highly likely as the revenue collection mechanism is established and fully operational. The rating is based upon the following expectations remaining consistent:

a) The Government demonstrates continued commitment to the principle of fully funding maintenance

priorities, and providing budgetary support to the RMF to meet all maintenance needs;b) Demonstrated commitment to the requisite increases in the fuel levy to achieve the levels that will

enable attainment of a fully sustainable cost recovery mechanism;

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c) Effective collection and utilization of traffic count, road condition, and other road data to evaluate options in prioritizing investments;

d) Institutional capacity enhancements across the multiple agencies involved in the sector; ande) The growth and efficient operation of the Fund encourages donors’ participation in an identified

sector-wide approach for the medium-term, contributing to improved coordination towards more effective and sustainable planning.

The purpose of the RMF is to establish a steady and adequate funding source for road maintenance based on substantial recovery from road users. Under the second phase of the program, MCTPC’s strategic goals include an Asset Management Plan, outlining the objectives for cost effective and long-term investment scenarios, as well as the implementation of an important capacity building component. These have been developed to better integrate the coordination of management, financial, economic, and engineering resource capabilities in identifying maintenance priorities for future annual work programs.

6.2 Transition arrangement to regular operations:The RMP supported the Government in instituting: a funding mechanism for road maintenance; a road management system for the entire national road network; enhanced abilities of the institutions which deal with road maintenance at the central, provincial and local levels; and successfully introduced and supported the implementation of a national axle load control strategy. In addition, it supported three years of maintenance programs. The civil works were properly performed, with some shortcomings on quality as reported in B.3 and 5.3 above, the roads are fully operational and assumed by the provincial departments. The private sector participated through national competitive contracting procedures and village-based contracts.

The RMF confronts a difficult challenge, one that will require GOL commitment in the need to address a substantial financing gap in the medium term. Although the RMF has grown steadily, the current estimated revenues constitute only 24 percent of the US$15 million estimated annual road preservation needs. The target is LAK 120 billion, or 75 percent of road maintenance needs, at the end of FY2008. The Road Maintenance Program was envisioned as having a two-phase implementation, with the first stage establishing the foundations of a road maintenance system and a functioning financing mechanism. The Bank and the donor community has pledged its continued involvement on the Governments road maintenance initiative, to bring the road cost-recovery-based financing closer to a sustainable level, to enhance the management systems, to control heavy transport and road safety, and extend their coverage over the whole country. In order for GOL to meet all its networks maintenance needs, incremental additions to the fuel levy will ensure the funds growth to increasingly sustainable levels by the end of the program in 2009.

A national Rural Transport Policy is currently under development and will facilitate implementation and provide a framework for sustainability of the preservation of the district and rural road networks. Funding for local roads (provincial, district and rural) is particularly scarce compared with the needs, and an improved mechanism for sharing and distributing funds will be developed and piloted under RMP-2.

7. Bank and Borrower Performance

Bank7.1 Lending:IDA's performance during lending was highly satisfactory.

During identification, the task team ensured that the development objectives and project scope were consistent with both the Government's sectoral priorities and IDA's CAS. The APL approach was

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correctly identified and set a successful foundation for the envisaged two-phase implementation arrangements for the program’s realization. The project team, during preparation,was highly qualified for the assignment. It consisted of highly qualified professionals with a relevant skills mix to properly assess and design an effective program for implementing both a national Road Management System, accompanied by the establishment of a sustainable revenue collection mechanism in a road user based fuel levy. Additional expertise was lent to ensure that a solid institutional capacity base would be developed and nurtured. The project complied with all relevant safeguard policies even though it triggered no immediate safeguard issues. The appraisal rightly indicated viability of the project's major works. Monitoring indicators were carefully identified at the time of appraisal and provided measurable performance outcomes. The project’s main risks and benefits were identified correctly. IDA maintained a strong working relationship with the Borrower.

7.2 Supervision:IDA's performance in supervision is rated satisfactory. IDA conducted eight biannual supervision missions between May 2001 and October 2004. The regularity of mission timing and uniformity in the composition of team members contributed to providing a consistent message and effective monitoring of the project’s technical, fiduciary and procurement aspects. Close cooperation and open dialogue with MCTPC increased ownership and coordination, and enabled timely and attentive responses to client needs.

The task team demonstrated its responsiveness and flexibility in addressing two modifications during project implementation. The team expeditiously advised on the how to best respond to the emergency maintenance needs which arose from the damage caused by the torrential rains of August 2002 and 2003. Additionally, the team was quick to make the necessary DCA amendment to accommodate the financing of the goods packages originally envisaged as part of the NDF support.

7.3 Overall Bank performance:Overall IDA performance is rated satisfactory.

Borrower7.4 Preparation:The performance of the Borrower during the preparation stage was highly satisfactory. The central Government demonstrated strong commitment towards achieving sustainable maintenance of the road system as reflected by the establishment of the RMF in 2001 and by promoting sound policy initiatives for decentralization and procurement that were positive for the sector. MCTPC staff led preparation, and the participating departments and DCTPC teams assigned were committed and assumed ownership of the project. A detailed Project Implementation Plan created the proper framework to support the related implementing arrangements including timing, procurement, technical, financial, and monitoring and reporting aspects. The relevant GOL agencies involved understood and embraced the requisite institutional and policy reforms introduced under the Project. Commitment to project objectives and readiness for implementation was demonstrated in the Borrower’s achievement of the requisite conditions of negotiation and effectiveness outlined in the Project Appraisal Document.

7.5 Government implementation performance:The Government’s implementation performance was satisfactory. Sustained commitment to the longer-term institutional objectives of the road maintenance fund remains a positive development and promotes a sound policy approach to properly managing financial resources for the sector. Although the original commitment by GOL to increase the fuel levy during each year of project implementation did not reach the intended target of LAK135, the RMF has demonstrated its effectiveness in generating sufficient revenue to fund maintenance needs once the proper rate is achieved. GOL reluctance to utilize international

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expertise to support certain technical assistance and implementation activities curtailed the impact of the capacity enhancement objectives of the subcomponents.

7.6 Implementing Agency:Performance of the project implementation agency was satisfactory. MCTPC assumed responsibility to ensure proper supervision and quality outputs during implementation. As a result of little attention to materials testing and quality control on some of the road sections, the periodic maintenance works of the national roads were not always to expected quality standards. The quality of maintenance works being executed would have to improve in order to ensure the sustainability of the program. MCTPC and the DCTPCs complied substantially with the legal covenants of the Credit and project agreements.

Social and Environmental Safeguards. The Environmental and Social Division (ESD) was reformed in 2001 and is now an integral department in DOR and MCTPC. Project activities have generally not had significant adverse effects on the environment; most issues are minor and localized, are adequately addressed by the project guidelines relating to environmental impacts, road safety, resettlement, and land acquisition. Strong positive impacts were observed as a result of the improved roads. Some villages have moved closer to improved roads for better access to social and economic services, which in turn has helped in poverty alleviation. The project has also provided employment opportunities and skills generation through routine maintenance contracts to villagers working on the roads. Contract-provided work has generated some local employment of unskilled labor.

The institutional framework and inter-agency coordination for addressing environmental and social issues require substantial strengthening in order to become more effective. Concerns were noted in the following areas: (i) Staffs have limited familiarity with the Bank’s safeguard requirements; (ii) Although Environmental Management Plans (EMPs) have been made available, no system of recording contractor performance and compliance with social and environmental conditions has been observed; (iii) The limited capacity and performance on supervising and monitoring social and environmental issues in the project is mirrored by a similar weakness at the provincial and project site levels; and (iv) Lack of a budget allocation in the project for monitoring and implementation of the EMP and limited awareness of environmental and social issues on the part of engineers, contractors, and villagers are critical factors affecting monitoring and evaluation and ensuring the adequacy and effectiveness of mitigation plans.

7.7 Overall Borrower performance:The overall performance of the Borrower is rated satisfactory.

8. Lessons Learned

Giving maintenance priority. A paradigm shift in GOL policy where the preservation of the existing network would receive priority over its expansion is fundamental to the success of the program. The modification in GOL policy means that the unbalanced allocation of resources between new investment/rehabilitation and maintenance would be corrected on the basis of optimal socio-economic and affordability criteria. To achieve this objective, MCTPC recognizes that reapportioning the RMF to increase the allocations for emergency and reconstruction works, as well as dedicating more to the local road network is necessary. The RMP emphasized preservation of the assets which were rehabilitated during the last decade. MCTPC acknowledges that there are still considerable needs to increase accessibility, especially in rural areas, and is formulating a strategy to ensure the concern is addressed properly. Furthermore, the RMP underscored to MCTPC that additional increases in capital investments in upgrading (rather than maintaining the existing network) without an appropriate maintenance financing and management system in place jeopardizes the sustainability of the new and past investments. Though

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MCTPC recognizes that maintenance remains a priority over network expansion, the Long Term strategy still requires sufficient endorsement from the national government to effectively shift its policies towards that aim.

Realizing the benefits of enforcement of axle loading regulations. Appropriate axle load legislation, effectively enforced, offers considerable advantages to network sustainability. The RMF has improved measures for controlling the management of toll stations. The enhancement of this program under RMP2 should further discourage overloading, however success in doing so will require capacity development of key staff as well as continued enforcement of the trucking industry for the foreseeable future. Consideration should be given to installing automatic traffic (and axle) counters in the vicinity of major weigh stations to verify the number and types of vehicles passing by. Improvement in financial monitoring and leakage prevention would enhance the prospects for more sound management practices. Additional RMF revenue can be generated through the redirection and enhancement of previously limited revenue from road tolls and from fines imposed on overloaded vehicles, including a new annual surcharge on heavy vehicles and fees on international road traffic transiting the country.

Results oriented Capacity Enhancement promotes sustainability and ownership. While focusing capacity building on training of individuals’ in-house technical capabilities remains important, addressing institutional incentives and defining organizational responsibilities is necessary to achieving sustainable capacity. Closely aligning capacity building assistance to project outcomes aims to encourage efficient allocation and use of project resources. Identification of capacity building needs by both MCTPC and the DCTPCs encourages ownership in the design and implementation of interventions and promotes monitoring of the resultant outcome indicators.

Continued commitment to program objectives is vital to long-term success. A second phase of the APL is under implementation and will (a) bring the road cost-recovery-based financing closer to a sustainable level; (b) enhance the management systems and extend them to cover the management of both national and local road networks over the whole country; and (c) expand the coverage of heavy transport control throughout the country. The benefits of the first Phase will therefore only be fully realized through Phase 2, thereby contributing to the sustainability of the intervention.

9. Partner Comments

(a) Borrower/implementing agency:EXECUTIVE SUMMARY

The Ministry of Communication, Transport, Post and Construction (MCTPC) supported by an International Development Association (IDA) Credit and with additional assistance provided by the Nordic Development Fund (NDF) has implemented the Road Maintenance Programme Phase 1 (RMP-1). The intervention aimed to establish a modern road management system, which would assist in mobilizing adequate resources and guarantees that funds are being used effectively for maintenance management.

The RMP-1 was launched in 2001 and closed at the end of December 2004. The intention to initiate and develop the procedures and institutions which would support the new approach to road management has largely been achieved. Physical implementation and all capacity building activities are well advanced. Overall the project is meeting its development objectives satisfactorily and all three trigger criteria required for preparation of the subsequent RMP-2 have been achieved.

There are, however, a number of important lessons learned from the implementation of RMP-1 that should

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be addressed in the RMP-2.

The summary of outputs from RMP-1 is presented in annex 7. For further details on any aspect, please refer to sections 11: Lessons learned, and 12: Conclusion.

Overall, the Government has made a strong start towards achieving sustainable maintenance of the road system, as shown by the establishment of the Road Maintenance Fund (RMF) in 2001 and the successful implementation of three years of maintenance programmes with support from the Road Maintenance Project. The RMP1, supported by a parallel financed Second Lao-Swedish Road Sector Project (LSRSP-2), strengthened the technical and managerial capacity in the Ministry of Communication, Transport, Post and Construction (MCTPC) and in selected provincial Divisions of Communication, Transport, Post and Construction (DCTPC). The approach to management and delivery of maintenance was established through three successive annual work programmes for periodic and routine maintenance on the NRN and on the LRN in the selected provinces, and the participation of the private sector through the development of national competitive contracting procedures and village-based contracts. The purpose of the RMF is to establish a steady and adequate domestic funding source for road maintenance based on the substantial recovery of costs from road users. The Government currently meets an estimated 45 percent of road maintenance needs, of which nearly one third is sourced from the RMF, mainly for national roads. The RMF is growing slowly and effort is now required to establish and achieve a sustainable level, and to develop its role for the LRN. Steps have been taken to protect the road assets by reducing the overloading of heavy vehicles, but much more effort is needed for improving the safety and administration of road transport.

With the support from RMP for growth and efficient operation of the Fund, other donors are showing willingness to provide matching funds, making a programmed sector-wide approach viable in the medium-term, thus contributing to improved coordination and better impact from future interventions in terms of effectiveness and sustainability. Funding for local roads (provincial, district and rural) is particularly scarce compared with the needs, and an improved mechanism for sharing and distributing funds needs to be developed and piloted under RMP2.

National and provincial roads make up an important part of the overall road network in Lao PDR, and significant investments are necessary to maintain and improve this network. Hence there is a need for powerful tools to support an integrated decision making process for these roads. This can ensure that decisions are taken on network level considerations.

While RMS will be used as the overall road management framework, PRMMS and CRM are still under development for use on local roads.

PRMMS has been applied in the 7 provinces covered by RMP-1 and LSRSP-2 but has not yet received the necessary formal assessment to confirm its adequacy and effectiveness in systematically planning and programming maintenance works on provincial, district, and rural roads. It does not include any time dimension; hence the PRMMS is not suitable for expenditure planning over a time period of more than a single year. Thus PRMMS cannot be used to derive expenditure planning for the medium or long terms. Furthermore, the use of the PRMMS methodology, when it is extended down to the district and rural road levels, for which it was not originally designed, begins to diverge from the stated policy aims of GOL, which aim to focus on community responsive pro-poor interventions.

CRM would probably gain increased importance as a new poverty-focused management approach for rural transport infrastructure. It covers both maintenance and investment management and has been both

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formally evaluated and approved by DOR to be used until such time the Lao Rural Transport Policy has been developed. Much remains however in terms of awareness raising, capacity building, and mainstreaming before the system is fully operational and internalized.

The quality of maintenance works implemented during RMP-1 is below expected standards, especially on the local road network. This could jeopardize the sustainability of the whole programme. The foremost weakness in implementation of the RMP is the poor/ sub-standard quality of construction materials being used’

Even though implementation of project components at the Transport Control Division and the RMF Secretariat and Road Maintenance Fund Advisory Board has progressed reasonably well over the project period, it is believed that the performance could have been much stronger with planned TA support mobilized.

While this report clearly shows that RMP-1 has been very effective in pursuing a relevant program design, impact remains to be evaluated while efficiency could be improved. Low quality works and inadequate management and insufficient enforcement could jeopardize the sustainability of the whole program if no remedial measures are taken. Mobilization of planned TA, strengthened project planning, implementation and monitoring, as well as a continued focus on improved capacities and institutions of the public and private sectors during the subsequent RMP-2 are considered crucial in this respect.

SUMMARY OF MAJOR FACTORS AFFECTING IMPLEMENTATION AND OUTCOME

This section provides a summary of major factors affecting implementation and outcome; including factors outside the control of Government or Implementing Agency, factors subject to Government control, factors subject to implementing agency control and cost and financing (ToR Outputs, task 3). Details are provided in previous sections in the main report.

Factors Outside The Control Of Government Or Implementing Agency

Major factors affecting implementation

Out of necessity large portions of the funds allocated to routine maintenance have been requisitioned in recent years for emergency works to repair damage caused by landslides.

Major factors affecting outcome

Provision of technical assistance and training to the Road Maintenance Advisory Board commenced but was curtailed due to the ill-health of the appointed Adviser.

FACTORS SUBJECT TO GOVERNMENT CONTROL


For the strengthening of the preparation, execution and monitoring of Projects, human resources are needed, both in sufficient number and in sufficient quality.

A number of Skills Shortages are becoming apparent, including managerial Skills Shortages, which might need a centralized approach to resolve.

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In order to fund the necessary network maintenance expenditures a series of phased increases in the fuel levy are required.


Critical staffing vacancies remain unfilled e.g. at the Secretariat of the Road Maintenance Fund.

Development of Strategy for Strengthening Performance of the Local Contracting and Consulting Industry; develop framework for private sector development.

Overloading is a multi-dimensioned issue that would seem to require a holistic approach; a thorough review of the industry and the forces active therein. This requires a cross-sectoral approach and would require careful planning possibly with broad stakeholder participation.

At present no rural transport policy has been defined for Lao PDR and local road interventions have proceeded without an overarching overall planning framework. The CRM has attempted to highlight poverty alleviation and local participation in the planning process but this methodology has not yet been mainstreamed.

FACTORS SUBJECT TO IMPLEMENTING AGENCY CONTROL


Periodic Maintenance, Rehabilitation Works and Routine Maintenance Works were all completed according to schedule, however it was recorded that final contracted intervention costs were, in general, lower than the Engineers estimates, which in turn flagged some quality issues, which were discussed and reported during the Technical Audit.


The planned strengthening of the project implementation capacity of the Department of Transport, included provision of technical assistance and training to support the Implementation of a strategy to reduce overloading on the road network. All physical works were completed; however no TA were engaged. It has been generally accepted that RMP-1 implementation would have benefited quite considerably, if the planned TA would have been procured and mobilized, as per original plans and agreements.

PTD still has no designated (local) Transport Economist, who could be fully trained in HDM-4 operations and its associated data management activities. Training in the economic evaluation of bridge interventions is lacking. (Since the planned TA for RMP-2 excludes any substantial transport economics input or support in the use of HDM-4, future sustainability of road and bridge project economic evaluation appears in doubt).

LRD should develop evaluation practices for local roads (particularly district and rural roads) that can also reflect social equity, in particular the poverty alleviation objectives of the government (NGPES).

In the case of rural transport infrastructure the Community Road Model (CRM – developed by the LSRSP) provides a bottom-up process that can indicate the worth of a project. There is some confusion and delay over its implementation schedule.

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FACTORS RELATED TO COSTS AND FINANCING


Several factors are noteworthy in this section.

Whilst not a specific cost/financing but related issue is the provision of timely external audit services to World Bank projects. Disbursements Division have informed the consultants that a specified international auditing firm with an office in Vientiane is to be used for the external financial audit of all World Bank Projects in Lao PDR. Whilst this is fully supported by the consultants and is paramount to good governance and sound financial monitoring there appears to be time delays in audits occurring related to the physical resources available to the auditing firm. It is preferable if audits can be undertaken expediently to assist governance and financial reporting and management. Some discussions and insistence by the implementing agency/Bank may need to be undertaken to ensure tighter audit scheduling across all future Bank projects and RMP 2.

Additionally, it is vital that all funds provided by donors are allocated and disbursed in a timely manner in accordance with agreed work schedules to ensure full disbursement to the benefit of the country and future project commitments. This also ensures that extensions to project closing dates are not necessary as has occurred in relation to the NDF component.

The third factor is the strengthening of the operation of the Road Maintenance Fund and Secretariat activities. This has been identified in the Preparation Mission undertaken from March 18 to April 1 2004 and incorporated into the PAD for RMP2, clearly this is the key strategic factor in developing a sufficient flow of funds for self financing and managing road maintenance activities well beyond RMP 2.

The final factor of note is the exchange differential (loss) of USD 366,365 which has occurred throughout the life of the project to September 30 2004 – whilst we have not undertaken any analysis of this item, and in project percentage terms it is small, it does represent nevertheless, funds which are not available for physical or capacity building activities.


A cost-sharing system for community management of rural transport infrastructure needs to encompass both maintenance and investments in order to ever becoming sustainable and helpful in supporting the poverty reducing efforts of the Government.

A guaranteed and adequate source and flow of funds needs to be secured, to cover annual maintenance subsidies for rural communities, or else a fully paid system should be applied.

PERFORMANCE

Bank’s Performance

Following discussions with key Ministry officials conducted by the consultants there were no adverse comments received about the Bank’s performance throughout the duration of the contracted period.

World Bank missions were conducted in a professional, skilled and constructive manner and comprised

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people with a sound knowledge of contractual issues and ‘in-country’ knowledge. The timing of missions was appropriate and comments received from MCTPC staff indicated a respectful working relationship and flexible approach by staff. Cross donor co-operation was also evident at each mission within the wider strategic government framework of poverty alleviation across sectoral development.

It was also noted that Aide Memoires were generally completed in a timely manner with clear reference points to actions required with timelines noted. Successive Aide Memoires and associated reports consistently related to project deliverables and follow up for action items. Planning for the second phase of the Road Maintenance Project succinctly identified lessons learned from RMP1 and incorporated these learnings into the Project Appraisal Document for RMP2.

The Bank’s performance is rated as highly satisfactory.

Borrower’s Performance

The Government of Lao PDR and the implementing agency – the MCTPC have contributed significantly to the success of RMP1. The first phase was intended to initiate and develop the procedures and institutions which would support the new approach to road management, managed by the MCTPC and funded by the Road Maintenance Fund through costs recovered from road users. Both the government and the implementing agency have readily adopted measures and initiatives by the Bank throughout the contractual period to meet the objectives of RMP 1.

Significant physical outputs have resulted along with recognisable capacity building at both the central and decentralized levels. Various sections of the MCTPC and DCTPCs along with additional donor agencies have been involved in implementation and signification co-ordination has occurred involving the GOL at policy and strategic levels and the staff of the implementing agency. This co-ordination has allowed the project to substantially meet its development objectives and trigger points for RMP2 as well as satisfying Key Performance Indicators.

With strengthened project planning, implementation and monitoring, as well as a commitment from all parties to achieving the project objectives, it is expected that significant development and strengthening of procedures and institutions, and physical progress will occur throughout RMP2.

The Borrower’s and Implementing Agencies performance is rated as satisfactory.

CONCLUSIONS

In general, the implementation of RMP – 1 proceeded well. Evidence for this is provided in Aide Memoire for the World Bank Supervision Mission for RMP – 1, 18 March to 1 April 2004. Paragraph 2 states that, “Physical implementation and all capacity building activities are well advanced”. Also, in Paragraph 3, it is further stated that, “Most Key Performance Indicators (KPI) have met the targets for this stage, and the others are expected to achieve the ultimate targets with some delay”.

COMPLETE THE ESTABLISHMENT OF RMS

Substantial input to the development and establishment of Road Management System (RMS), which will be the principal system for DOR and its Divisions in the future. RAD assisted by TA has provided input to unit rates, has tested and commented on various subsystems, and worked closely with the RMS Consultant(s) and the PTD with the aim to provide a successful implementation of the system. Continuation

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of the dissemination of detailed knowledge of the RMS, and its subsystems, to PTD and to RAD staff will be an important future requirement. For the long-term sustainability of the system, it is of great importance to train as many staff as possible to avoid lapses, such as when trained personnel are transferred to other divisions, or are absent for other reasons. Appropriately 4 – 5 persons in its division should have adequate knowledge to run and use the basic RMS features, in order to achieve the desired results. Some further development work on PRMMS and CRM will most probably be necessary.

ASSIST IMPLEMENTATION OF RMF

The purpose of the RMF is to establish a steady and adequate domestic funding source for road maintenance based on the substantial recovery of costs from road users. The Government currently meets an estimated 45 % of road maintenance needs, of which nearly one third is sourced from the RMF, mainly for national roads. The RMF is growing slowly and effort is now required to establish and achieve a sustainable level, and to develop its role for the LRN. Steps have been taken to protect the road assets by reducing the overloading of heavy vehicles, but much more effort is needed for improving the safety and administration of road transport

With the support from RMP for growth and efficient operation of the Fund, other donors are showing willingness to provide matching funds, making a programmed sector-wide approach viable in the medium-term, thus contributing to improved coordination and better impact from future interventions in terms of effectiveness and sustainability. Funding for local roads (provincial, district and rural) is particularly scarce compared with the needs, and an improved mechanism for sharing and distributing funds needs to be developed and piloted under RMP-2.

RMF management. With regard to RMF management, it is recommended that RMF should:

(a) Upgrade the current accounting system to support management understanding and decision making;

(b) Implement more streamlined handling of information and associated improvements in management information systems;

(c) Strengthen decision making and auditing to ensure that expenditures are made only for works permitted under the RMF’s establishing decree;

(d) Ensure documentation of the reasoning behind key or controversial decisions; (e) Ensure that RMF staff and the Advisory Board are aware of the rights and obligations conferred

by the Prime Minister’s decree that established the RMF and subsequent decisions under the Decree;

(f) Increase staffing of the RMF Secretariat to support its growing programme; and (g) Purchase independent and other specialist advice from the private sector using its own funds.

Finally, it is recommended that the RMF should, in keeping with its intended role, achieve a greater level of independence from MCTPC, with the RMFAB having leadership of its policies and practices, greater emphasis being placed on revenue generation and management of spending, and the RMF office establishing contractual relationships with DOR to provide necessary assistance.

RMF revenue. Raising the fuel levy is the best means for increasing funding for road maintenance. This Review recommends that the fuel levy be increased to LAK 100 per litre commencing on 1 October 2004, and by a further LAK 50 per litre per annum thereafter. The RMF will need to develop a sound, sensitive and persuasive case for the proposed rises in the fuel levy that is convincing to both politicians and the community at large.

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Other sources of income. It is recommended that the RMF should review the merit of other current revenue sources (e.g. consider not collecting tolls at locations that generate low net revenue), and examine introduction of a broad-based annual registration fee as part of a balanced cost-recovery charge for roads and as a replacement for the yet to be implemented heavy vehicle surcharge.

IMPROVE PROJECT PREPARATION, EXECUTION AND MONITORING

The RMP has brought maintenance activities to the centre stage of Lao PDR’s road programme which is a positive development. The programme has contributed to the establishment of a long-term roads maintenance funding source (RMF), which is now funding all routine maintenance activities and the required counterpart funding for the periodic maintenance. Periodic maintenance is now the main focus of IDA and SIDA road sector programmes. Allocation of funds for periodic maintenance activities has increased significantly during the past 3-4 years. The financial and institutional frameworks are in place to support the maintenance activities. The physical targets for road maintenance established under RMP 1 are being achieved/ exceeded.

National and Provincial Roads. The Transport Sector Issues Review Report recommended that economic evaluation remain the principal decision-making tool for justifying road investment, i.e. construction of new roads and upgrading existing roads beyond their original design standard. The Planning and Technical Division (PTD) of DOR should develop expertise in investment analysis to aid decision-making. This capability should be reflected in the ToR’s for the forthcoming RMP-2 and the LSRSP-3 Implementation Phase and staff assigned to support.

Local Roads. The Transport Sector Issues Review Report stated that, in the case of low level roads, other evaluation methods will also be required. The Community Road Model (CRM – developed by the LSRSP) provides a bottom-up process that can indicate the worth of a project. It is also recommended that the LRD should develop evaluation practices for local roads (particularly district and rural roads) that can also reflect social equity, in particular poverty alleviation, objectives of the government, etc.

These tasks/ elements should be reflected in the ToR for the LSRSP-3 Implementation Phase and staff assigned to support.

Results Oriented Capacity Building. Capacity Building is on track with a structured Transfer Knowledge Plan including formal training and on-the-job training. Excellent team work has been developed with RAD staff with priority given to Director, Deputy Director’s and Chief Maintenance Engineer. During the project period key staff members from RAD have undertaken International Project Management training in Sweden and Denmark. This training was funded through Sida and Danida. On top of this, a comprehensive training programme for MCTPC/DOR staff amounting to US$ 179,100 was financed by IDA.

Inadequate human resource capacity often prevents project achievements meeting targets even when appropriate policy changes have been implemented and financing has been adequate. Focusing capacity building on training individuals and on technical assistance without addressing also more fundamental issues of institutional incentives and organisational responsibilities usually fails to achieve a sustainable capacity and capability. Closely aligning capacity building assistance to project outcomes helps to achieve more disciplined use of, and stronger client ownership, of project resources. Therefore RMP-2 should be designed such that MCTPC and DCTPC’s will be closely and systematically involved in the identification of capacity building needs, the design and implementation of capacity-building interventions and the monitoring of the outcomes with an agreed set of indicators.

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DEVELOP STRATEGY TO IMPROVE PERFORMANCE OF LOCAL CONTRACTING AND CONSULTING INDUSTRY

One of the development objectives of RMP1 as part of a long term strategy was the development and implementation by MCTPC, the Road Maintenance Advisory Board and the local contracting and consulting industry of a strategy for the strengthening of the local contracting and consulting industry.

Progress has been made throughout the project but no association for the consulting industry has yet been established. A draft set of rules was developed and forwarded to the RMF in 2000. Included in the rules are sections on roles and duties, membership criteria, name – Lao Consulting Companies Group, etc. The rules provide an effective basis for further development but further development of a strategy and facilitation is required.

INVOLVE ROAD USERS-BENEFICIARIES IN ROAD MAINTENANCE ACTIVITIES

Both World Bank and Sida support the Government’s efforts to eradicate mass poverty and to exit from the group of the Least Developed Countries in the world by 2020 (NGPES). The donor community is committed to helping the Government eradicate so-called ‘social labour’. The system that DOR has developed under the support of RMP-1 and LSRSP-2 for constructing and maintaining basic access in a sustainable manner is named the Community Road Model (CRM) and integrates planning through a structured community dialogue (i.e. PRTP), implementation using labour-based equipment supported methods, and maintenance using the DOR Maintenance Procedures.

The system is based on the fundamental assumption that only by involving the villagers at an early stage – and using a structured community dialogue, i.e. PRTP – as well as providing them opportunity to be part of the decision-making process and implementation can community involvement in road maintenance ever help reduce poverty in a sustainable manner.

The CRM allows local communities help themselves out of poverty. Capacity will be strengthened mainly at district level, accessibility to markets and social services will improve for rural communities and democracy will be strengthened by increasing transparency and participation in the planning system for road development at district level.

The system adds in-built mechanisms for job creation, poverty alleviation through empowerment of communities, and cost optimization. It is fully in line with current Government policy framework particularly the NGPES and was therefore approved by DOR to be used for maintaining and else managing district and rural roads, as well as undesignated access until such time the Lao Rural Transport Policy has been approved.

Subsequently, the conclusion is that the piloted CRM approach under RMP-1 should be firmly established in the 7 provinces whereafter it should be spread to other provinces as well.

The two most crucial issues are to ascertain continued support to the 228 VMCs comprising almost ¼ million rural people who have signed the new VMC agreement (based on CRM) in June 2004, with subsequent extension to new provinces; and to guarantee a steady, safe and adequate flow of funds from the RMF for covering annual maintenance subsidies for all existing VMCs. If these latter funds cannot be guaranteed, cost-sharing arrangements should not be made but instead a fully paid system should be applied (equivalent to a 100% subsidy).

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VEHICULAR WEIGHT CONTROL AND ROAD SAFETY

The enforcement programme has increased from 14 weigh station sites in 5 provinces to 27 sites in 14 provinces. The axle load control programme has made good progress over the past three years. However, with the delivery of new weigh scales and stations under the RMP1 and RMP2 projects the level of enforcement should be stepped up so that overloading is virtually eliminated in the country. Funds should be made available for operations and maintenance of the scales and stations so that the full potential of the significant investments are realized.

The heavy vehicle monitoring programme shows a remarkable decline in the extent of overloading. Both the share of vehicles stopped and weighed that are overloaded fallen, and the share of overloaded vehicles that are heavily overloaded also having declined. A challenge with such programmes is that they be seen to be fair. With regard to improving the programme, this Review recommends that: (a) all trucks should be stopped at weigh stations and the weighing charge should be eliminated to avoid the impression that the programme is oriented to revenue generation; (b) overload fines should be paid by the person or business that was responsible for the overloading rather than, necessarily, the driver; (c) DOT should not play an operational role in the programme; (d) a transparent monitoring system should be implemented by DOT to indicate the efficiency and equity of the inspection system; and (e) to overcome mixed accountability in the programme, a contractual relationship should be established between RMF and DOT regarding the conduct and financial management of the programme or, alternatively and far less desirably, responsibility for the programme should be transferred to DOT with revenues and costs accruing entirely to the DOT.

Finally, it is believed that the most effective Road Safety Project within RMP-2 would: a) ensure the effective use of the road safety enforcement equipment ordered in RMP-1; b) apply road safety engineering techniques and publicity campaigns, particularly on rural roads and train local staff in the techniques; and c) ensure all key players in Road Safety are co-ordinating their initiatives to optimise their effectiveness.

(b) Cofinanciers:Comments of Sida -

1. Overview. In RMP1 there was cooperation between Sida and the World Bank loosely outlined in a Memorandum of Understanding. According to this, Sida, through LSRSP2, would support road management development and capacity building in seven provinces and fund part of the maintenance of provincial, district and rural roads in four of the seven common target provinces. LSRSP2 would also develop a model for community participation in development and maintenance of basic access. Thus, the LSRSP2 had three main purposes.

2. Road Maintenance Fund. In support of the establishment of the RMF, Sida made a condition for financing of the Road 8 Project that the tolls collected at Nam Theun bridge were devoted to maintenance of Road 8 together with the condition that the revenues should be transferred to RMF as soon as it was operational, which was done. Similarly, the weighbridges should be transferred to RMP 1 HTM component. This was also done.

3. Financial Management. Sida is very satisfied with the development of the FMS. It is now being introduced in all 18 provinces. On top of that it has been adopted by MCTPC Department of Budget and Planning as the financial system for the entire ministry. FMS is currently in the process of being certified by the Ministry of Finance. FMS has been introduced at the RMF Secretariat, but is not used fully. This may be attributed to shortage of staff as stated in FIR, but there are also (informal) indications of hesitance

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to cooperate. It may be worth noting that Disbursement Division has not received other technical assistance than local consultants during the last two years.

4. Road Management System Analysis. The LSRSP2 maintenance management system is referred to as PRMMS. PRMMS or as it was renamed PRoMMS is the supporting system used on the provincial level for yearly planning of routine and periodic maintenance of all maintainable local roads. As such, it is part of the now approved Maintenance Procedures for the Lao Road Network that comprises procedures for maintenance management. The parts that were developed and introduced through LSRSP2 support include procedures especially suitable for management of unpaved (gravel) roads and the supporting systems: PRoMMS, Financial Management System (FMS) and Monitoring and Evaluation System (MES). The Maintenance Procedures also includes parts for off-carriage way maintenance of paved roads and the Road Management System (RMS). The RMS is a much more complex and advanced system that provides overall time based planning tools. The RMS and PRoMMS complement each other in excellent way if only the purposes of the two systems are kept in mind.

The PRoMMS requires yearly condition surveys, carried out by provincial staff, of roads under maintenance and naturally roads in good condition will not be considered for periodic maintenance. However, over time roads will deteriorate and then the PRoMMS is the tool to make the yearly maintenance plan within the funding framework for the road category, which the provinces hopefully will be provided from the RMS. Also, the PRoMMS is intended to be used for all maintainable local roads, including district and rural roads.

The original intention in the LSRSP 2 Project Document was that the PRoMMS (RMMS) would be replaced by RMS. During inception, the TA-team found that RMMS had severe shortcomings and there was a need for systematically organised guidelines/manuals for capacity building combined with a tool for prioritisation. The development of the Maintenance Procedures and the supporting software PRoMMS became a necessity for capacity building in the provinces. The procedures and the software were implemented in the seven provinces during RMP 1 and are accepted as part of the overarching management system. The full benefits remain to be harvested when the systems are harmonised and benefits are understood at central and provincial levels.

A late input by the Sida-financed TA is that the MES software has been redesigned to a new platform for increased stability and to avoid data inconsistencies.

A problem encountered is that PTD never took the expected leading role in managing the development of the systems, and the TA teams from different firms themselves were unable to coordinate their work.

LRD came on board late in the project and capacity-building objectives were not achieved during the course of the project.

5. Community Participation. Community participation in road maintenance has been ensured in the Maintenance Procedures by providing subsidies to local communities when undertaking responsibility for routine maintenance of a specified section of a road. The subsidies are performance-based under contracts concluded with Village Maintenance Committees (VMC). The VMCs are part of the Government structure and represents a cluster of villages along a road. VMC-based routine maintenance is introduced on all maintainable local roads in the seven provinces. VMCs, who so wish and are able, can also undertake labour-based periodic maintenance on roads with low traffic volumes.

A supplementary model named Community Road Model (CRM) is being developed for improvement,

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rehabilitation, or construction of means of basic access (roads/tracks or river-based), taking into account the aspect of right-based approach, community participation, transparency, true sense of ownership, and bottom-up approach. CRM assumes that the communities are willing to provide substantial inputs of labour into improvement and future maintenance of their basic access. CRM builds on the road module of the Integrated Rural Accessibility Planning (IRAP) of ILO for planning and prioritisation and is referred to as Participatory Rural Transport Planning (PRTP). PRTP measures perceived benefits of the population in the influence area of a potential road and rank the road candidates. This makes CRM a potentially excellent model for developing and sustaining basic access for communities where no or only limited and light through-traffic can be anticipated.

6. Project Related Documents and Joint Supervision. Sida’s impression is that exchange of information from all parties has improved over time, but is still more ad hoc than regular. Mission schedules have been exchanged regularly and a few joint field supervisions have been made. Tripartite meetings have been held. Sida has had problems to cope with the work of the large bank teams. Both joint supervision and the meetings would benefit from being more efficiently structured in the future.

(c) Other partners (NGOs/private sector):

10. Additional Information

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Management Effectiveness. Percentage of vehicles overloaded on the NRN is less than 40%

Overloaded vehicles reduced to 27% of vehicles weighed.

27%

Financial Sustainability. Domestic revenues, including those recovered directly from road users, allocated for the maintenance of the maintainable NRN and LRN maintenance meets the needs at 35% by end of project.

23% 30%

Physical Conditions - Road Users Satisfaction. Average International Roughness Index (IRI) of the current maintainable NRN (3,700 km) does not increase by more than 10%

No increase in IRI (sample of First Year Periodic Maintenance Roads - baseline data of 4.7 IRI; end-of-project data of 4.7 IRI)

Output Indicators:

Indicator/Matrix

Projected in last PSR1


The initial fuel levy of 40Kips/liter is increased by 50% per year, plus inflation, for the first three years.

Kip 135/liter Partially completed. One increase from 40 Kip/liter to 60 Kip/liter was approved during project implementation in October 2003 and from 60 Kip/liter to 100 Kip/liter at the end of the project (January 2005).

1,100 km of national roads and 300 km of local roads in four selected provinces are subject to periodic maintenance.

Periodic Maintenance: 1,940 km on NRN; 822 km LRN

Completed. Periodic Maintenance: 1,940 km on NRN; 822 km LRN

Maintainable sections of the NRN (3,700 km during MP-1; 4,100 km during MP-2, 4,700 km during MP-3) and LRN (750 km during MP-1; 900 km during MP-2, 1,100 km during MP-3) are subject to routine maintenance works

Routine Maintenance:NRN (6,105 km during MP-1; 6,316 km during MP-2; 7,012 km during MP-3; Total of 19,343 km)LRN (1,685 km during MP-1; 1,895 km during MP-2; 2,105 km during MP-3; Total of 5,685 km)

Completed. Routine Maintenance:NRN (6,105 km during MP-1; 6,316 km during MP-2; 7,012 km during MP-3; Total of 19,343 km)LRN (1,685 km during MP-1; 1,895 km during MP-2; 2,437 km during MP-3; Total of 6,017 km)

Percentage of vehicles overloaded on the NRN is less than 40%

Overloaded vehicles reduced to 27% of vehicles weighed.

Completed. Overloaded vehicles reduced to 27% of vehicles weighed.

GOL FY2003/2004 routine and periodic maintenance programs are prioritized using the Road Management System

RMS was applied in evaluating the MP-4 program for FY2004/2005.

Partially completed. The system was not in place to conduct a full economic evaluation for the preparation of the MP-3 program (FY2003/2004). An updated planning and programming system was utilized in preparation of the MP-4 program (FY2004/2005).

Annual maintenance program for FY2002/2003 is reviewed and approved by the Road Maintenance Fund Advisory Board

The RMFAB makes public its FY2001/2002 annual report including its financial audit.

Annual maintenance program for MP-4 generated from the RMS was reviewed and approved by the RMFAB.

Publication of the 2002/2003 RMFAB accounts and audits were released.

Completed. Annual maintenance program for MP-4 generated from the RMS was reviewed and approved by the RMFAB.

Completed. Publication of the 2002/2003 RMFAB accounts and audits were released.

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The Project Monitoring Report (PMR) are produced by the financial management system.

Quarterly Reports were prepared and submitted to IDA.

Completed. FM Reports were submitted regularly throughout; and full Project Quarterly Reports were submitted from 2003 onward.

Monitoring and Evaluation System (MES) is operational in the four selected provinces.

The system is operational in four provinces, further improvement is provided under the RMP2.

Partially completed. The system is operational in four provinces, further improvement is provided under the RMP2.

National strategy for development of the domestic contracting and consulting industry is developed

Village Maintenance Committees are established in at least one district in the four selected provinces.

Discussion note prepared.

Four (4) Village Maintenance Committees established.

Not completed. A framework exists for the development of an Association for the domestic contracting and consulting industry, but has not been operationalized due to political constraints.

Completed. Four (4) Village Maintenance Committees established.

1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate


Percentage of Appraisal

Component US$ million US$ millionA.1 Periodic Maintenance 25.09 32.08 122.1A.2 Routine Maintenance 10.69 5.72 45.4A.3 Heavy Transport Management 2.85 2.96 95.8B.1 Road Maintenance System 0.61 1.11 139.3B.2 Road Maintenance Fund 0.50 0.17 34B.3 Project Preparation, Execution & Monitoring 0.72 0.31 43.7B.4 Contracting & Consulting Industry 0.02 0.00 0B.5 Road Users 0.05 0.00 0

Total Baseline Cost 40.53 42.35 Physical Contingencies 3.40 Price Contingencies 3.87

Total Project Costs 47.80 42.35Total Financing Required 47.80 42.35

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 25.66 0.34 14.92 40.92(0.00) (23.10) (0.31) (0.00) (23.41)

2. Goods 0.00 0.00 0.51 0.82 1.33(0.00) (0.00) (0.46) (0.00) (0.46)

3. Services 0.00 0.00 0.71 4.02 4.73(0.00) (0.00) (0.71) (0.00) (0.71)

4. Operating Cost 0.00 0.00 0.82 0.00 0.82a. Auditing Servicesb. Other

(0.00) (0.00) (0.42) (0.00) (0.42)

Total 0.00 25.66 2.38 19.76 47.80(0.00) (23.10) (1.90) (0.00) (25.00)

Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 0.00 27.06 0.00 7.90 34.96(0.00) (25.06) (0.00) (0.00) (25.06)

2. Goods 0.51 0.18 0.30 0.97 1.96(0.51) (0.18) (0.30) (0.00) (0.99)

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3. Services 0.00 0.00 0.38 4.75 5.13(0.00) (0.00) (0.38) (0.00) (0.38)

4. Operating Cost 0.00 0.00 0.16 0.14 0.30a. Auditing Servicesb. Other

(0.00) (0.00) (0.16) (0.00) (0.16)

Total 0.51 27.24 0.84 13.76 42.35(0.51) (25.24) (0.84) (0.00) (26.59)

1/ Figures in parenthesis are the amounts to be financed by the IDA Credit. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

IDA Govt. CoF. IDA Govt. CoF. IDA Govt. CoF.A.1 Periodic Maintenance 24.11 2.75 2.45 25.13 2.48 4.47 104.2 90.2 182.4A.2 Routine Maintenance 0.04 13.37 0.00 0.00 4.85 0.87 0.0 36.3 0.0A.3 Heavy Transport Management

0.16 0.33 2.58 0.78 0.00 2.18 487.5 0.0 84.5

B.1 Road Maintenance System

0.17 0.02 0.45 0.24 0.02 0.85 141.2 100.0 188.9

B.2 Road Maintenance Fund

0.27 0.03 0.24 0.13 0.04 0.00 48.1 133.3 0.0

B.3 Project Preparation, Execution & Monitoring

0.26 0.01 0.49 0.31 0.00 0.00 119.2 0.0 0.0

B.4 Contracting & Consulting Industry

0.00 0.00 0.02 0.00 0.00 0.00 0.0 0.0 0.0

B.5 Road Users 0.00 0.00 0.05 0.00 0.00 0.00 0.0 0.0 0.0

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Annex 3. Economic Costs and Benefits

The economic evaluation undertaken as part of the Project Appraisal Document (PAD) was limited into an economic evaluation of the first year periodic maintenance works program on the National Roads Network plus guideline on threshold values for DOR to refer to in the preparation of later stages of the multi-annual program. The PAD selection of contracts in the National Roads Network was based upon the 10-year Rolling Maintenance Plan prepared during project preparation and which used economic selection criteria based on the Bank-endorsed Highway Design and Maintenance Standards Model (HDM-III). Selection of contracts in the Local Roads Network for MP-1 was based on experience and knowledge of the territory.

The intention in the PAD was that selection of contracts to be executed under MP-2 and MP-3 would be based on the output of the pavement management system to be made operational during the first year of RMP-1 operation. The introduction of the pavement management system was however delayed and it was only made operational during 2004, the latest year of MP-3. The road pavement management system was therefore utilized for the MP-4 preparation, in mid 2004.

First Year Periodic Maintenance Works Program for the National Road Network

The National Roads Network first year periodic maintenance works program (MP-1) economic evaluation presented on the PAD appraised nine roads with a total length of 320 km and an average length of 36 km. Table 1 presents the road section evaluated at appraisal.

Table 1 First Year Periodic Maintenance Works Road Provincial Length No. Region DCTPC Section From/To (km) 1B North Phongsaly Paknamnoy-Banyo Km : 64+000 – 109+000 Ban. Bouantai - Ban. Yo 45 17 North Louangnamtha Namtha-Meuangsing Km : 9+000 – 34+000 30 13S Central Bolikhamsay VMUC bdr.-Khammouane bdr. Km : 94+000 - 144+000 50 1C Central Louangprabang Pakmong-Houaphanh Bdr. Km : 80+000-112+000&125+000-144+000 50 4 Central Sayabouly Saybouly-Paklay Km : 45+000 - 60+000 and Km : 89+000 - 109+000 40 10 Central Vientiane VTE-Phonhong Km : 78+000 - 93+000 15 13S South Khammouane Bolikhamsay bdr.-Savannakhet bdr. Km : 320+960 - 351+250 20 16E South Champasak Pakse-Paksong Km : 30+000 - 50+000 20 5B Central Saisomboun Houay Mor-Saisomboun Km : 0+000 - 50+000 50 Total 320

Three roads are unpaved roads resurfaced with gravel and six roads are paved roads resurfaced with reseals. The total cost for the nine sections was estimated at appraisal at US$ 5.0 million (US$ 1.4 million for regravelling works and US$ 3.6 million for resealing works). The program costs were dominated by the VMUC Bdr.-Khammouane Bdr. and the Pakmong-Houaphanh Bdr projects with some 37 percent of the program value. The average cost at appraisal for regravelling works was US$ 10,350 per km and for resealing works was US$ 19,750 per km.

Table 2 presents the costs estimated at appraisal and the actual costs estimated for the ICR taking into consideration bid prices, corrections for domestic inflation (8.6 percent in 2001 and 10.6 percent in 2002) and some cost overruns throughout the years of RMP-1 operation. The ex-post costs are on average 16 percent lower than the appraisal costs, in 2004 US$ terms, due mainly to bid prices that have been lower than the intervention costs that were calculated during appraisal. The average actual cost for regravelling works is US$ 8,588 per km and for resealing works is US$ 16,686 per km.

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Table 2 First Year Periodic Maintenance Road Works Costs

Ex-Ante Ex-Post Ex-

Post/

Road Cost Cost Cost Cost Ex-Ante

Section Work (MUS$) (US$/km) (MUS$) (US$/km) Ratio Paknamnoy-Banyo Regravelling 0.41 9,044 0.34 7,482 0.83 Namtha-Meuangsing Resealing 0.70 23,333 0.65 21,828 0.94 VMUC bdr.-Khammouane bdr. Resealing 0.86 17,200 0.71 14,289 0.83 Pakmong-Houaphanh Bdr. Resealing 0.98 19,500 0.81 16,199 0.83 Saybouly-Paklay Regravelling 0.44 11,000 0.37 9,139 0.83 VTE-Phonhong Resealing 0.29 19,500 0.24 16,214 0.83 Bolikhamsay bdr.-Savannakhet bdr. Resealing 0.39 19,500 0.31 15,355 0.79 Pakse-Paksong Resealing 0.39 19,500 0.32 16,208 0.83 Houay Mor-Saisomboun Regravelling 0.55 11,000 0.46 9,143 0.83 Total 5.00 4.21 Average 16,620 13,984 0.84

Table 3 presents the Average Annual Daily Traffic (AADT) estimated at appraisal and the estimated traffic in 2004 for five roads where current traffic counts are available. The program included a mix of highly trafficked and low trafficked roads, lowest AADT being 56 vpd (for a gravel road) and highest being 1,795 vpd (for a paved road). The average traffic estimated at appraisal was 500 vehicles per day across nine projects, but this was skewed by the very high traffic on a single project (in Vientiane Province). The average traffic estimated at appraisal was 388 vehicles per day, if this single project (VTE-Phonhong) is excluded from the total. A strict traffic comparison, section by section, of the 2004 traffic data and the PAD estimates can not be made because the PAD traffic have been taken from simplified counts as proper traffic counts were only introduced in 2001, in connection with the Road Condition Survey. Before that period, counts were carried out on an ad hoc basis and generally for specific purposes. Globally, the traffic in 2004 is on average 90 percent of the appraisal estimates on the five roads where a comparison is somewhat possible, which indicates that the daily traffic or the traffic growth rate was somewhat overestimated at appraisal.

Table 3 First Year Periodic Maintenance Works Daily Traffic Ex-Ante Ex-Post Ex-Post/ 2000 2004 Ex-Ante Section AADT AADT Ratio Paknamnoy-Banyo 75 71 0.95 Namtha-Meuangsing 222 109 0.49 VMUC bdr.-Khammouane bdr. 900 932 1.04 Pakmong-Houaphanh Bdr. 225 Saybouly-Paklay 80 VTE-Phonhong 1,795 1,171 0.65 Bolikhamsay bdr.-Savannakhet bdr. 850 1,169 1.38 Pakse-Paksong 300 Houay Mor-Saisomboun 56 Average 500 690 0.90

No comprehensive economic evaluation was prepared by DOR to assist with an estimation of post-project economic performance for the first year work program. It was found that, although the Highway Development and Management Model (HDM-4) had been extensively utilized by the Planning and Technical Division (PTD) consultants to prepare MP-4 and later years’ works programs, there is little in house capability of HDM-4 by local experts at DOR and the HDM-III model output used for the pre-project preparation of MP-1 is unavailable. Therefore, a simplified ex-post economic evaluation was done for the ICR by the Bank by first replicating the PAD ex-ante economic evaluation on an Excel workbook model, considering the project costs, daily traffic, expected roughness reduction and

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corresponding road user costs savings (vehicle operating costs plus passenger’s time savings). The second step was to rerun the Excel economic evaluation model with ex-post actual project costs and daily traffic set to 90 percent of the appraisal estimates to take into account the indication that the actual traffic is less than what was estimated at appraisal. Unit road user costs with and without the project were evaluated using the HDM-4 relationships. Table 4 presents current typical unit road user costs for Lao.

Table 4 Typical Unit Economic Road User Costs (US$/vehicle-km) Roughness Light Medium Heavy Articulated

(IRI) Motorcycle Car Pickup Bus Truck Truck Truck Truck 2 0.03 0.20 0.18 0.38 0.17 0.27 0.45 0.59 4 0.03 0.20 0.18 0.39 0.17 0.28 0.47 0.62 8 0.03 0.23 0.22 0.49 0.21 0.34 0.57 0.73 10 0.03 0.25 0.25 0.56 0.24 0.38 0.63 0.81 12 0.04 0.28 0.27 0.64 0.26 0.42 0.70 0.89 14 0.04 0.30 0.30 0.71 0.28 0.45 0.76 0.97 16 0.04 0.33 0.32 0.78 0.31 0.49 0.83 1.05

Roughness surveys have been undertaken by DOR on National Roads in 2001 and in 2004. Table 5 presents the measured roughness in 2001 and 2004 for the six paved roads. The remainder three roads are unpaved roads where roughness measurements are not available. A strict comparison of pre- and post-projects IRI’s for the MP-1 sections has not in all cases been possible. For the six MP-1 projects, there was no real net change in IRI’s over the three years; some projects had improved IRI’s whilst other had slightly worsened IRI’s. The average roughness in 2004 is 4.7 IRI, which is about the same as the average roughness in 2001, despite the fact the normal roughness progression over time from 2001 to 2004 due to traffic and the environment. This indicates the positive impact of the project in reducing overall the roughness progression of pave roads with resealing works.

Table 5 First Year Periodic Maintenance Works Roughness Ex-Ante Ex-Post Ex-Post 2001 2004 per Section IRI IRI Ex-Ante Paknamnoy-Banyo Namtha-Meuangsing 7.4 5.0 0.68 VMUC bdr.-Khammouane bdr. 2.7 2.5 0.93 Pakmong-Houaphanh Bdr. 7.7 9.4 1.23 Saybouly-Paklay VTE-Phonhong 3.5 4.7 1.34 Bolikhamsay bdr.-Savannakhet bdr. 3.9 3.7 0.94 Pakse-Paksong 3.2 2.7 0.84 Houay Mor-Saisomboun Average 4.7 4.7 0.99

Table 6 presents the ex-ante and ex-post economic evaluation results. The ex-ante economic evaluation yielded and overall Economic Rate of Return (ERR) of 30 percent, with three projects having a marginal rate of return between 13 percent and 15 percent. The ex-post economic evaluation shows a satisfactory economic justification of the project road investments, due to the fact that the lower ex-post traffic was somewhat compensated by the lower ex-post intervention costs. All road sections have an ERR higher than 12 percent including the three project with marginal rates of return. The economic rates of return vary from 14 percent to 103 percent and the overall project ERR is 33 percent.

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Table 6 First Year Periodic Maintenance Works Economic Evaluation

Ex-Ante

Ex-Post

Ex-Post/

ERR ERR Ex-Ante

Section (%) (%) Ratio Paknamnoy-Banyo 48% 53% 1.11 Namtha-Meuangsing 15% 14% 0.98 VMUC bdr.-Khammouane bdr. 24% 27% 1.12 Pakmong-Houaphanh Bdr. 13% 15% 1.16 Saybouly-Paklay 51% 55% 1.10 VTE-Phonhong 95% 103% 1.08 Bolikhamsay bdr.-Savannakhet bdr. 44% 51% 1.15 Pakse-Paksong 15% 17% 1.15 Houay Mor-Saisomboun 27% 31% 1.13 Overall 30% 33% 1.11

First Year Periodic Maintenance Works Program for the Local Road Network

The Local Roads Network first year periodic maintenance component extend to some US$ 0.6 million across 9 projects; however the individual projects were not subject at appraisal to economic evaluation. The average intervention cost was less than US$ 4,000 per kilometer. No pre-project economic evaluation was undertaken for routine maintenance works, because of the nature of these low cost interventions and their high levels of economic benefits.

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/Preparation12/21/1999 4 HIGHWAY ENGINEER (1);

TRANSPORT ECONOMIST (1); FINANCIAL MANAGEMENT SPECIALIST (1); ENGINEER (1)

04/05/2000 6 HIGHWAY ENGINEER (1); TRANSPORT ECONOMIST (1); FINANCIAL MANAGEMENT SPECIALIST (1); PROCUREMENT SPECIALIST (1); PAVEMENT MANAGEMENT SPECIALIST (1); TRANSPORT ECONOMIST (1)

Appraisal/Negotiation11/13/2000 5 SR. HIGHWAY ENGINEER

(1); TRANSPORT ECONOMIST (1); FINANCIAL MANAGEMENT SPECIALIST (1); PAVEMENT MANAGEMENT SPECIALIST (1); PROGRAM ASST. (1)

Supervision

05/04/2001 3 LEAD HIGHWAY ENGINEER (1); TRANSPORT ECONOMIST (1); HIGHWAY ENGINEER (1)

S S

09/21/2001 2 TASK TEAM LEADER (1); HIGHWAY ENGINEER (1)

S S

05/18/2002 2 TASK TEAM LEADER (1); TRANSPORT SPECIALIST (1)

S S

10/15/2002 3 TASK TEAM LEADER, ENG (1); TRANSPORT SPECIALIST (1); LEAD ECONOMIST (1)

S S

04/04/2003 2 TASK TEAM LEADER (1); TRANSPORT SPECIALIST (1)

S S

10/23/2003 5 TTL, HIGHWAY ENGR, PAS (1); TRANSPORT SPECIALIST (1); RURAL INFRASTRUCTURE S (1);

S S

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HUMAN RESOURCE DEVEL (1); SOCIAL SPECIALIST (1)

04/01/2004 11 TASK TEAM LEADER (1); TRANSPORT SPECIALIST (1); SR. TRANS. SPECIALIST (1); SR. HWY ENGINEER (1); SR. SOCIAL SPECIALIST (1); SR. ENVIRON SPLST (1); INSTITUTIONAL SPECLST (3); SR. TRANSPORT SPCLST (1); FINANCIAL MGMT SPCLST (1)

S S

ICR10/26/2004 2 TASK TEAM LEADER (1);

TRANSPORT SPECIALIST (1)

S HS

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 26.5 196.8Appraisal/Negotiation 27.6 195.0Supervision 23.6 145.7ICR 5.7 24.1Total 83.4 561.6

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Country Assistance Strategy for Lao People's Democratic Republic. World Bank Report No. 19098-LA. March 30, 1999.

Project Appraisal Document. Road Maintenance Project. World Bank Report No. 21773-LA. January 31, 2000.

Technical Audit 2002. Road Maintenance Project/Third Highway Improvement Project. Ministry of Communication, Transport, Post and Construction. June 2003.

The Road Maintenance Procedures for Road Networks - Introduction. Ministry of Communication, Transport, Post and Construction. Department of Roads. December 2003.

Project Appraisal Document. Road Maintenance Program (Phase 2). World Bank Report No. 29024-LA. June 8, 2004.

Implementation Completion Report. Third Highway Improvement Project. Credit No. 2943-LA. World Bank Report No. 27285-LA. June 22, 2004.

Local Roads in LSRSP and RMP Provinces - Results from Road Condition Survey 2004. Ministry of Communication, Transport, Post and Construction and Swedish International Development Cooperation Agency. August 14, 2004.

Final Implementation Report. Road Maintenance Programme Phase 1 (RMP-1). Ministry of Communication, Transport, Post and Construction. Department of Roads. December 31, 2004.

Institutional Capacity Building - Executuve Summary. Road Maintenance Program (Phase 2). NDLea Consultants. January 2005.

Technical Audit 2004. Road Maintenance Project. Ministry of Communication, Transport, Post and Construction. January 2005.

World Bank Aide Memoires and Project Status Reports (April 2000 - October 2004).

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1A

1B

17

2W

4B

4A

3

7

1D

8

1E

1F

1G

1H

15

15

16

16

20

1I

1J

9A

9B

9

12

6

5

4

11

10

19

2E

1C

13N

13N

13S

16B

13S

18B18A

A12

(M16)

(M17)(M15)

(M14)

(M13)

(M12)

(M10)

(M11)

(M9)

(M8)(M6)

(M7)

(M4)

(M3)

(M2) (M1)

(M5)

(P5)

(P7)

(P6)

(P4)

(P1)

(P3)

(P2)

G2

G1

G3

G4

G5

G6

G7

G8 G9

G10

VIENTIANE

SAYABOURY

OUDOMSAI

HOUAPHAN

BOKEO

PHONGSALY

BOLIKHAMSAIXAISOMBOUN

KHAMMOUANEPREFECTURE OFVIENTIANE

SALAVANE

SEKONG

ATTAPEU

XIANG KHOANG

LUANG PRABANG

LUANGNAMTHA

SAVANNAKHET

CHAMPASAK

VIENTIANE

Phongsaly

LuangNamtha

BanHuaisai

LuangPrabang

XiangKhoang

Xisomboun

Paksane

Thakhek

Salavane

ChampassakAttapeu

Sekong

Savannakhet

SamNeua

MuangSai

Sayaboury

PoneHong

ChiangKong

Pak Beng

Kenethao

Sanakham Thanaleng

Namkading

Seno

Khong

Ban Laksamsipha

Keng Kabao

BanNongsu

Vang Vieng

VIETNAM

CHINA

THAILAND

MYANMAR

CAMBODIA

VIENTIANE

Phongsaly

LuangNamtha

BanHuaisai

LuangPrabang

XiangKhoang

Xisomboun

Paksane

Thakhek

Salavane

ChampassakAttapeu

Sekong

Savannakhet

SamNeua

MuangSai

Sayaboury

PoneHong

ChiangKong

Pak Beng

Kenethao

Sanakham Thanaleng

Namkading

Seno

Khong

Ban Laksamsipha

Keng Kabao

BanNongsu

Vang Vieng

VIETNAM

CHINA

THAILAND

MYANMAR

CAMBODIA

102°100° 104°

106°

102° 104°

20°

22 ° 22 °

21°

18°

16°

14°

18°

14°

16°

GULF

OF

TONKIN

Nam NgumReservoir

Mekong

Mekong

Mek

ong

Mek

ong

M

eko

ng

0

0 25 50 75 100 Miles

50 100 150 Kilometers

LAO PEOPLE'S DEMOCRATIC REPUBLIC

ROAD MAINTENANCE PROJECTPERMANENT WEIGHSTATIONS

MOBILE WEIGHSTATIONS

EXISTING WEIGHSTATIONS

PROJECT PROVINCES

PRINCIPAL HIGHWAYS

HIGHWAYS

OTHER ROADS

BORDER CROSSINGS

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endorsemen t or a c c e p t a n c e o f s u c h boundaries.

AIRPORTS

SELECTED TOWNS

PROVINCE HEADQUARTERS

NATIONAL CAPITALS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

IBRD 34124

JULY 2005

Gulfof

Thailand

Andam

an Sea

Gulfof

Tonkin

10°

100° 105° 110°

100° 105° 110°

15°

20°

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Vientiane

LAO PEOPLE'SDEM. REP.

MYA

NM

AR

CAMBODIA

THAILAND

CHINA

VIETNAM

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