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The World Bank

FOR OFFICIAL USE ONLY

Report No. 16201-MA

IMPLEMENTATION COMPLETION REPORT

MALAYSIA

HIGHWAY REHABILITATION AND IMPROVEMENT PROJECT(LOAN 3145-MA)

DECEMBER 30, 1996

Infrastructure Operations DivisionCountry Department 1East Asia and Pacific Region

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

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CURRENCY EQUIVALENTS

Currency Unit = Ringgit (RM)U$1.00 = RM2.70RMl.OO - US$0.37

(As of November 1989, SAR Year)

U$1.00 RM2.497RM1.00 = US$0.40

(As of June 1996, Closing Date)

FISCAL YEAR

January 1 - December 31

WEIGHTS AND MEASURES

km = kilometer (0.62 miles)mile = mile (1.6093 kilometers)sq mi = square mile (2.5900 square kilometers)

ABBREVIATIONS AND ACRONYMS

EPU = Economic Planning UnitERR = Economic Rate of ReturnHPU = Highway Planning UnitJKR = Department of Public WorksJPJ = Road Transport DepartmentMOW = Ministry of WorksVOC = Vehicle Operating Cost

Acting Vice President :Haug, MarianneDirector :Khalilzadeh-Shirazi, JavadDivision Chief :Shivakumar, J.Task Manager :Robitaille, Denis

Table of Contents FOR OFFICIAL USE ONLY

PagePreface ............... iEvaluation Summary .............. ii

PART I. IMPLEMENTATION ASSESSMENTA. Background .B. Statement and Evaluation of Objectives .2C. Achievement of Objectives .2D. Implementation Record and Major Factors Affecting the Project . 3E. Project Sustainability .7F. Bank Performance .7G. Borrower Performance .8H. Assessment of Outcome .8I. Future Operation .9J. Key Lessons Learned .9

PART II: STATISTICAL ANNEXESTABLE 1: Summary of Assessments . ......................................................... 11TABLE 2: Rel ated B ank Loans ........................................................... 12TABLE 3: Proj ec t Tim etable ........................................................... 13TABLE 4: Loan Disbursements: Cumulative Estimates and Actual ................. 13TABLE 5: Key Indicators for Project Implementation ....................................... 14TABLE 6: Key Indicators for Project Operation .. ............................................. 15TABLE 7: Studies Included in the Project ........................................................ 15TABLE 8A: Project Costs .................................................. 16TABLE 8B: Project Financing .............................................. 16TABLE 9: Summary of Economic Costs and Benefits ............................. ........ 17TABLE 10: Compliance with Operational Manual Statements ........................... 17TABLE 11: Status of Legal Covenants .......................................................... 18TABLE 12: Bank Resources: Staff Inputs .......................................................... 19TABLE 13: Bank Resources: Missions .......................................................... 19

APPENDICES:TABLE Al: Highway Rehabilitation and Strengthening Program. ................... 21TABLE A2: Replacement of Sub-Standard Bridges ........................................... 22TABLE A3: Replacement of Timber Bridges .................................................... 23TABLE A4: Truck Weight Control Program ..................................................... 24TABLE A5: Highway Improvement Program .................................................... 25TABLE A6: Hazardous Locations - Details .................................................... 26TABLE A7: Overhead Pedestrian Bridges - Details ........................................... 27TABLE A8: Consulting Services, Technical Assistance and Training ............... 28TABLE A9: Budget Allocations for Road Maintenance ..................................... 29Mission's Aide-Memoire ..................................................... 30Map IBRD 21488 ..................................... ................ 34In Project File: Borrower's Final Evaluation Report

Tliis docutment has a restricted distribution and may be used by recipients orly in the performance of theiroff icial duties, Its contents may not oLherAise be disclosed withiout World Bank authorization.

IMPLEMENTATION COMPLETION REPORTMALAYSIA


Preface

i. This is the Implementation Completion Report (ICR) for the HighwayRehabilitation and Improvement Project in Malaysia for which Loan No. 3145-MA in theamount of US$83,200,000 was approved on December 14, 1989 and became effective onMarch 1, 1990.

ii. The loan was closed on June 30, 1996, one year later than the original closingdate of June 30, 1995. It was fully disbursed, and the last disbursement took place onOctober 29, 1996.

iii. The ICR was prepared by Maurizio Melegari, Consultant, and reviewed by:Denis Robitaille, Task Manager; J. Shivakumar, Chief, Infrastructure OperationsDivision; and Walter Schwermer, Project Advisor, Country Department 1, East Asia &Pacific Region.

iv. Preparation of this ICR was initiated during the Bank's last mission in March1996. It is based on material available in the Project file. The Borrower contributed tothe preparation of the ICR by preparing its own evaluation report (45 pages). A summarywas not provided. The report was received on October 31, 1996, and is available fromAsia Information Center.

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Evaluation Summary

Introduction

1. The Highway Rehabilitation and Improvement Project (Loan. 3145-MA, US$83.2million) was the sixth and, most likely, the last Bank-financed operation in the transportsector in Malaysia. The total cost of the six projects was RM932.6 million (aboutUS$379 million), of which the Bank financed US$242.3 million. The lending strategythat the Bank used in designing the first five projects focused on the provision oftransport infrastructure in accordance with Government policy aimed at supporting theproductive sectors in West Malaysia and improving accessibility in East Malaysia.Following the economic downturn of 1985-86, and the Government's fiscal constraints,the Government and the Bank agreed that efforts be directed towards optimizing the useof available capital and increasing the efficiency of transport operations. The Project wasinitiated on this basis.

Project Objectives

2. The objective of the Project was to assist the Government in preserving andimproving the federal highway network to meet the rapidly increasing traffic demandsafely and adequately. To this end, the Project was designed to improve: (a) roadmaintenance capability and operations on the federal road network and, in the process, toimprove maintenance planning, programming and management, and to enhance the cost-effectiveness and timeliness of maintenance operations; (b) coordination of highwayplanning at the state and federal levels; (c) existing network of national highways; (d)truck-weight control to reduce damage to the roads; and (e) road safety.

3. The Project's components were: (a) rehabilitation and strengthening of 562 km ofroad; (b) replacement of 67 bridges; (c) construction of 35 weigh stations; (d)improvement of two trunk highway of 56 km; (e) improvement of 42 hazardous roadsections; (f) construction of 27 pedestrian bridges; (g) computerization of road design; (h)provision of consulting services for design and works supervision; (i) provision oftechnical assistance to strengthen Government capability to plan, coordinate andsupervise road projects and to evaluate their environmental impact; and (j) provision oftraining.

Implementation Experience and Results

4. The Project objective has been largely achieved. All components were completedwithout major problems except for the Maintenance Improvement Program component

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which was achieved partially (see para. 5). At appraisal in 1989, the Project's cost hadbeen estimated at US$239 million. At the end of 1993, the total Project cost wasestimated at US$304 million. The following year, at the Borrower's request, anamendment to the Loan Agreement was approved in order to reduce the roads to berehabilitated. As a result, Project's cost was reduced by about 25%. Total cost of theProject are now estimated at US$242 million. The Project was expected to be completedin four years with design, preparation of bidding documents and land acquisition startingin mid-1989. When the Loan was closed on June 30, 1996, one year later than originallyplanned, works under some components were not yet finished, and the scope of theProject was somewhat smaller.

5. Most of the cost overruns and delays occurred under the Highway Rehloilitationand Strengthening Program, a sub-component of the Maintenance Improvement Program.Cost ovenruns originated for two main reasons. First, at Project appraisal, cost estimatesfor this component were only based on "current unit rates" since pavement evaluation anddesign, as well as detailed engineering, had not been done. Second, the boonlingeconomic situation of the country induced high inflation in civil works. Due to the costescalation, the Loan Agreement was amended in 1994 in order to reduce the total lengthof roads to be rehabilitated under this sub-component (from 526 km to 326 km). Delaysoccurred mainly for two reasons. First, the Government deferred provision of thenecessary funds on the grounds that costs were higher than the appraisal estimates, hencethe allocations to the budget were no longer sufficient. Second, the implementingagency, JKR, was beset by staff shortages and frequent changes due to the boomingeconomic situation and lower salaries paid in public sector. As a result of this very highturnover of staff, the implementation of the Project slowed down.

6. Improvement of Highway Maintenance Operations, the second sub-component ofthe Maintenance Improvement Program, was not sufficiently monitored by either theBank or the Borrower. It appears that neither party showed much interest anddetermination in monitoring Loan covenants on road maintenance. As a result,evaluation of the sustainability of the Project in this area is rather difficult.

7. In project identification, preparation and appraisal, the Bank performance can berated as satisfactory. However, the Bank was somewhat deficient in Project supervision.Over the six and a half year duration of the Project, the Bank carried out only tensupervision missions of which some were very short -- not quite enough for a large andcomplex Project which encountered some problems. In addition, supervision reports donot always cover the quality of works, procurement and other information adequately. Inaddition, ratings were often too optimistic.

8. The implementing agency's overall performance can be rated satisfactory.However, its efficiency was affected by shortages and frequent changes of staff. TheBorrower's performance regarding compliance with Loan covenants has not been fullysatisfactory nor have measures of the Action Plans agreed upon with the Bank alwaysbeen taken. In particular, the Borrower did not provide funds for some programs as

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promptly as needed and did not take the necessary steps to (a) give JKR total authorityover its personnel, (b) reinforce JKR's district offices with qualified staff, and (c) makeHPU responsible for the coordination of investments in highways. These were importantsteps required to improve the quality of construction supervision, maintenance operationsand highway planning.

9. The Project is likely to be sustainable since: (a) the Government has increased itsallocation for routine and periodic maintenance of roads; (b) the Government iscommitted to take the necessary steps to ensure the enforcement of axle load limits; and(c) JKR is committed to the full development on the Pavement Management Systems.

Summary of Findings. Future Operation and Key Lessons Learned

10. Despite failure by all parties to follow up on Loan covenants adequately, theoverall rating of the Project is satisfactory. The Project reinforced JKR's, the localcontractors' and the consultants' capability in the maintenance, rehabilitation andstrengthening of roads and therefore, achieved its objective to assist the Government inpreserving and improving the federal highway network. Also, the Project created safetyawareness, provided the tools to control overloading and to preserve the road network,and helped develop road management systems.

11. The Government has not shown much interest in borrowing from the Bank forfuture infrastructure operations. Therefore, in line with Government interest, no futureBank's operation is being considered in the transport sector.

12. The main lessons to be drawn from project implementation are:

a) more supervision resources should be allocated for projects as large andcomplex as this. It is not sufficient to carry out a good appraisal and providelong-term action plans, introduce covenants and reach agreement with theBorrower on many points during negotiations if follow-up during supervisioncannot be assumed, and in particular, if not supported by properly staffedmission in the field; and

b) Cost estimates of major civil works components should be based on solid andup-to-date feasibility studies and detailed designs prepared during projectpreparation and appraisal.

13. A lesson can also be drawn from the experience of carrying out thisImplementation Completion Report:

Proper evaluation of achievement of objectives and sustainability of highwayprojects is difficult within six months after the closing of the loans. Muchinformation is not yet available, such as reliable data on traffic, maintenanceoperations, and quality of works.


HIGHWAY REHABILITATION and IMPROVEMENT PROJECT(LOAN 3145-MA)

PART I: IMPLEMENTATION ASSESSMENT

A. Background

1. The Federation of Malaysia consists of 13 states with a land surface of about 337,000 km2 and apopulation of about 19 million. It covers the southern part of the Malay Peninsula (West Malaysia) andthe eastern part of Borneo (East Malaysia), separated from West Malaysia by 650 km of the South ChinaSea. West Malaysia consists of 1 1 states with an area of about 135,000 km2 and a population of about 15million, whereas East Malaysia consists of 2 states with an area of about 202,000 km2 and a populationof about 4 million.

2. During the 1970s and the first half of the 1980s Malaysia's economy grew rapidly making itnecessary to improve and extend the transport system. During the four five-year development plansfrom 1966 to 1985, the Government made large investments (US$5.5 billion) in the transportinfrastructure. Some of these investments were somewhat premature, or were more costly thanestimated, but most of them supported economic growth.

3. The transport system of Malaysia is well developed for the country's size and income level,though it is not evenly balanced between West and East Malaysia. It consists oe some 60,700 km ofroads, of which about 45,300 km are paved roads and 15,400 km are unpaved roads, as well as 1,650route-km of railway, 29 airports (four of which are for international traffic), 40 airstrips, and 61 ports.

4. Prior to the Highway Rehabilitation and Improvement Project, the Bank financed five projects inthe highway sub-sector from 1972 through 1983: (i) Kuala Lumpur Urban Transport Project, Loan 851-MA for US$16, (ii) Second Highway Project, Loan 931-MA for US$19.5 million, (iii) Second KualaLumpur Urban Transport Project, Loan 1214-MA for US$26 million of which US$4 million wascanceled in 1982, (iv) Third Highway Project, Loan 1376-MA for US$35 million of which US$9.1million was canceled in 1985, and (v) Sabah-Sarawak Road Project, Loan 2291-MA for US$86.2million of which US$15 million was canceled in 1987 and US$ 0.7 million in 1992.

5. Four projects recorded cost overruns ranging from about 6% to 30%, and all five projectsrecorded long delays ranging from 16 to 72 months. Cost overruns were due to inflation, delays andscarcity of materials. Delays were due to right-of-way acquisition and related problems of squatterremoval, relocation of utilities, unsatisfactory contractor perfornance (slow start-up of work due todifficulties in obtaining equipment-import and work permits, lack of experience, personnel andequipment as well as financial problems).

Road Statistics: 1995; other information are as old as 1983-1989.

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6. The lending strategy that the Bank used in designing these five projects focused mainly on theprovision of transport infrastructure in accordance with the Government's policy aimed at supporting theproductive sectors by reducing transport costs in West Malaysia and improving accessibility in EastMalaysia. Following the economic downturn of 1985-86, and the Government's fiscal constraints, theGovernment and the Bank agreed that efforts had to be directed towards optimizing the use of availablecapital and increasing the efficiency of transport operations.

7. In 1987-88, the Bank, at the request of and in cooperation with the Government, carried out aNational Transport Policy Review. The Review identified five general areas where the Bank's supportcould be beneficial. The first two areas concerned road transport (i.e., transport coordination andplanning, and road maintenance, rehabilitation and upgrading). The Bank's approval of the HighwayRehabilitation and Improvement Project reflected this orientation.

B. Statement and Evaluation of Objectives

8. Statement of Objectives - The objective of the Project was to assist the Government in preservingand improving the federal highway network to meet the rapidly increasing traffic demand safely andadequately. To this end, the Project was designed to improve: (a) road maintenance capability andoperations on the federal road network and, in the process, to improve maintenance planning,programming and management, and to enhance the cost-effectiveness and timeliness of maintenanceoperations; (b) coordination of highway planning at the state and federal levels; (c) existing network ofnational highways; (d) truck-weight control to reduce damage to the roads; and (e) road safety.

9. Evaluation of Objectives - The Project objective was an obvious departure from the strategy thatthe Government and the Bank had used from 1972 to 1983 to design the previous five highway projects(para. 6). The Project objectives were clearly defined, realistic and not particularly complex. They wereappropriately reflected in the design of the Project and in accordance with the priorities set out in theMalaysia Fifth Development Plan for the highway sub-sector.

C. Achievement of Objectives

10. The Project's components were:

a) Implementation of a Maintenance Improvement Program, including the rehabilitationand strengthening of 562 km of road pavements and the improvement of maintenanceoperations;

b) Replacement of 43 sub-standard bridges on primary roads and 24 timber bridges onsecondary roads of the federal highway system in Peninsular Malaysia;

c) Construction of 35 weigh stations under a Truck Weight Control Program;

d) Improvement of two trunk highway sections totaling about 56 km;

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e) Improvement of 42 hazardous road sections and construction of 27 pedestrian bridges inconjunction with a Road Safety Improvement Program;

f) Provision of computer hardware and software to improve JKR's Computer-AidedDesign and Drafting (CADD) capability;

g) Consulting services for design and construction supervision of (a), (b) and (d);

h) Technical assistance to: (i) strengthen the capability of the Highway Planning Unit(HPU) to plan and coordinate road investments; (ii) strengthen JKR's capabilities insupervising civil works contracts for both construction and maintenance, disseminatinga Pavement Management System, establishing a Bridge Management System andimproving JKR's maintenance training program; (iii) improve road safety monitoringand analysis; (iv) establish methodologies for determining the environmental impact ofroad works; and (v) improve JKR's CADD capabilities in the highway sector; and

i) Staff training in maintenance programming and operations, computerized design anddrafting, transport planning, and traffic engineering and road safety analysis.

11. The Project objective and most of its components were substantially achieved. Only theMaintenance Improvement Program component encountered some problems and was achieved onlypartially (Chapter D).

12. Economic Evaluation. Based on JKR's calculations, which were carried out in accordance with arecognized methodology, the IRRs for the various components were estimated as follows: (i) RoadRehabilitation Strengthening Program which averages 25%; (ii) Replacement of Timber BridgesProgram which averages 40%; and (iii) Road Improvement Program which averages 29%. However, anindependent evaluation of the IRRs was not possible since separate economic and financial data, updatedVOC and maintenance cost were not available.

D. Implementation Record and Major Factors Affecting the Project

13. The Project was beset with cost overruns and delays similar to those from the previous fivehighway projects financed by the Bank (para. 5). At appraisal, the Project total base cost had beenestimated at RM488 million (US$181 million) and the total cost, including contingencies, at RM645million (US$239 million). At the end of 1993, the revised Project total cost was RM822 million(US$304 million). Most of the cost overruns occurred under the Highway Rehabilitation andStrengthening Program which was scaled down in order to contain costs. The newly revised Projecttotal cost was RM621 (US$242 million). Table 8A gives a summary of Project costs in U.S. dollars.

14. At appraisal, the Project was expected to be completed in four years from 1990 to the end of1993, with design, preparation of bidding documents and land acquisition starting in mid-1989.However, when the Loan Agreement was closed on June 30, 1996, one year later than originallyplanned, works under some components were not yet finished, and the scope of the Project was smaller.

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15. Maintenance Improvement Program. This was the only troubled component. It consisted of foursub-components: (a) road rehabilitation and strengthening; (b) improvement of highway maintenanceoperations; (c) expanded use of a recently introduced Pavement Management System; and (d)introduction of a Bridge Management System.

16. Road Rehabilitation and Strengthening Program (Table A2). This sub-component was affectedwith cost overruns and pavement design problems.

17. Cost Overruns. The total length of roads under this program was originally 562 km which, foradministrative purposes, were divided first into seven packages and then into twelve. At appraisal, thissub-component was scheduled to be implemented by December 31, 1993. When the Project wasappraised in 1989, pavement evaluation and design, as well as detailed engineering, were not yet done,so estimates for this program were based on "current unit rates." Pavement evaluation and design, anddetailed engineering for the first two packages, IA and IB, totaling 109.5 km, were prepared by JKR'sResearch and Training Institute. Tenders for these two packages were called for at the end of 1990. Thelowest bid prices for packages 1A and lB were RM41.9 million and RM33.6 million respectively (i.e.,about 120% and 140% higher than the appraisal estimates, including contingencies). Despite thisincrease, contracts were awarded. Works started in the second half of 1991 and were finished about twoyears later, in the second half of 1993. The estimated cost for the remaining ten packages, revised on thebasis of the contract prices of IA and 1B, was RM331 million. Funds originally allocated to the SixthMalaysia Plan under this Program, once reduced by the amount of the contract prices of packages IAand IB, were not sufficient to carry out works for all of the remaining packages. After the mid-termreview of the Plan, fumds became available for three packages, 3A1, 3A2, and 3B, and eventually forthree more, 3C, 7A and 7B. Works on these six packages did not start until the end of 19942. On June30, 1996, the revised closing date of the Loan, they were not yet finished. JKR estimated the percentageof work still to be done from 7% to 33%. The remaining four packages were taken out of the Project

3and financed 100% percent locally3.

18. The total road length improved under the eight packages financed under the Project was 336.5km for a total cost of RM212 million. Works on six of the eight remaining packages was delayed bythree and a half years, mainly because the Government delayed provision of the necessary funds on thegrounds that the anticipated cost was higher than the appraisal estimates, hence the allocations to thebudget were no longer sufficient. The Borrower did not consider that, when the loan was negotiated, ithad requested the Bank to take off the contingencies from the loan amount on the grounds that it wouldfinance any contingent expenses incurred for the project from its own resources. Physical contingencieshad been estimated at 10% or RM48.80 million (US$18.11 million) and price contingencies at 15% orRM81.13 million (US$30.10 million) -- i.e. a total of RM129.93 million (US$48.21 million). The loanamount was reduced accordingly by about US$26 million to US$ 83.2 million.

19. At the end of 1994, following the escalation of the Project cost and the scaling down of the scopeof the Program, the Loan Agreement was amended upon the Borrower's request4 . With this amendment,

2 One year after the original date for Project completion.3 Package 2 was financed with savings from another project, whereas packages 4, 5 and 6 would be financed

under the Seventh Malaysia Plan.The Minister of Finance's letter to the the Bank of December 1994, and Bank's reply of December 29, 1994.

5

the total length of roads to be rehabilitated and strengthened was cut down to 326 km from 562 km, a42% reduction.

20. Pavement Design. At the beginning of 1992, when works were already under way, theconsultants supervising road construction retained an expert in pavement evaluation and design whosefindings were that: pavement evaluation and design were inadequate for the weakest sections of the road,and the drainage of low areas was insufficient. The expert suggested that a thorough revision of thepavement evaluation and of the drainage system (supervision report of January 17, 1992) should becarried out. These suggestions applied also to the pavement evaluation and design of the other packages.One year later, in February 1993, a Bank supervision mission reported that JKR had decided not tofollow the detailed recommendations of the consultants and expert because of the extreme difficultiesencountered in managing traffic, and planned to use a very thick overlay regardless of local conditions.The Mission pointed out, among other things, that simply placing a layer over a known area of weaksub-base or base without rectifying the underlying problem will not prevent differential settlementsbetween the adjacent weak and strong areas leading to a rapid pavement deterioration. The Missionstrongly recommended that JKR should reconsider its approach to this serious problem, howevernothing in the records confirms that JKR eventually adopted the Bank's recommendations. On the otherhand, JKR reported in its April 1993 progress report that in line with the consultants' recommendations,the department had adopted strengthening overlay with a layer of bituminous bound road base (varyingfrom 100 to 200 mm) topped with a wearing course of 90 mm uniform thickness. Areas "showing"severe distress were to be treated prior to laying the bound road base. In places with sub-soil drainageproblems, sub-soil drains had been installed before the laying of the bound road base. Unfortunately,subsequent Bank supervision reports did not follow up on the actual implementation of JKR's actions.

21. = _rovement of Highway Maintenance . Several conditions on road maintenancewere included in the Loan Agreement (Schedule 5, paras. 2a, 2b, 3, and 7; ref.: Table 10), as well as inthe Action Plan for Maintenance Improvement5 agreed by the Borrower. Monitoring parameters andtargets for routine and periodic maintenance, as well as key performance indicators were also included inthe SAR (Annex 3). However, neither the Bank or the Borrower showed much interest anddetermination in getting these conditions fulfilled as the following paragraphs show.

22. The Borrower did not exchange views with the Bank on the allocation of funds for roadmaintenance as required, nor did it allocate sufficient funds. Budget allocations for the maintenance ofthe federal roads in Peninsular Malaysia (Table Al 0) were lower than the anticipated needs in currentterms for four years out of five. It is worth noting that budget allocations would be even lower than theanticipated needs in real terms, and that actual annual expenditures for maintenance were not madeavailable.

23. Compliance with the covenant to reduce the backlog of deferred periodic maintenance by 70% isnot clear. JKR's progress reports do not include sufficient information.

24. The Borrower and the Bank did not review the scope and composition of the maintenanceprogram for federal roads and bridges, as well as the procedure/methods to be applied.

5 SAR, Table 3.2 and Progress Report N° 21, pages 3 1-33.

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25. The Borrower did not provide the Bank with data on monitoring road maintenance. It is also notclear whether the Bank requested such information.

26. The Borrower did not assign a qualified road engineer, a technical assistant and a technician to beresponsible for all maintenance operations, to each district office in Peninsular Malaysia.

27. Pavement Management Svstem. JKR adopted a system called the Pavement Appraisal andManagement Suite (PAMS) produced under the Axle Load Study Phase II. According to ProgressReport N° 21, JKR is still directing its efforts towards implementing PAMS. Data collection and theoperation of PAMS are still only used by JKR's headquarters staff with outputs sent to the state JKRoffices for implementation. At the same time, JKR's staff at the state level was trained to be moreefficient in the use of PAMS.

28. Bridge Management Svstem. The development of software was completed and data on bridgeson major Federal network were also collected. No other information is available.

29. Replacement of 43 Sub-Standard Bridges and 24 Timber Bridges (Tables A3 & A4). Thiscomponent was carried out satisfactorily. All 43 sub-standard bridges were completed at a cost about11% lower than the appraisal estimate. Out of 24 timber bridges, 15 were completed, four were underconstruction by June 30, 1996, four were completed with local funding, and one was dropped because ofalignment problems. Cost per bridge was about 4% lower than the appraisal estimates.

30. Construction of 35 Weigh Station under a Truck Weight Control Program (Table A5). Civilworks for 32 weigh stations were completed under the Project at a cost of RMI.34 million per station(11 stations were completed with local funds). Equipment for 43 stations was procured and installedunder the Project at a cost of RM350,000. The average cost per station was about 8% higher than theappraisal estimates. JKR is no longer responsible for the operation of the stations as the Governmentdecided to transfer the responsibility to the Road Transport Department (JPJ). Thirty-five stations out of43 had been handed over to JPJ by June 30, 1996. The remaining eight stations were expected to behanded over to JPJ by the end of August 1996. This component was carried out satisfactorily.However, its sustainability depends on: (a) adoption of a proper legal framework; (b) improvement ofdivision of responsibilities among MOW, the police and JPJ; (c) proper staffing for weigh stations; and(d) effective implementation by all relevant authorities of axle load limits and associated penalties.

31. Highway Improvement Program (Table A6). The Program consisted of the improvement of theKuantan-Gamgang road (19.38 km) and the Johor Bharu-Kota Tinggi road (36.2 km). At the start of theProject, JKR and the Bank realized that the designs for these two roads were seven years old, henceunusable because the condition of the two roads had further deteriorated. Consultants had to be hired toprepare new designs. Work on the Kuantan-Gamgang road started in October 1992 and was finished inOctober 1994, whereas work on the Johor Bharu-Kota Tinggi road started in May 1993 and was finishedin May 1995. The actual total road length improved was 44.6 km as compared with 55.58 km planned atappraisal. The actual total cost was about RM146 million as compared with RM166 million estimated atappraisal. However, the actual cost per km was 10% higher than estimated at appraisal. This componentwas carried out satisfactorily.

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32. Improvement of 42 Hazardous Road Sections. and Construction of 27 Pedestrian Bridges (Tables6A7 and A8). Three hazardous road sections were taken out of the Project . Of the remaining 39

sections, 31 were completed and eight were under construction by June 30, 1996. The average cost persection was about 25% lower than the appraisal estimates. Of the planned 27 pedestrian bridges, 20were completed and five were under construction by June 30, 1996. The average cost per bridge wasabout 8% higher than the appraisal estimates. Physical improvements have been achieved. However,monitoring data on the reduction of accidents and utilization of pedestrian bridges are not available.Therefore, assessment of the component effectiveness is rather difficult.

33. Consultant Services. Technical Assistance and Training (Table A9). JKR used far moreconsulting services for design and supervision under the Highway Rehabilitation and StrengtheningProgram than were provided for in the SAR. The cost was 158% higher than estimated at appraisal.The cost of consulting services for two other programs, Replacement of Timber Bridges and HighwayImprovement, was 68% and 5.1%, respectively, lower than estimated. The total cost of consultingservices, however, was 58% higher than estimated.

34. Technical assistance was not hired to further develop and disseminate the Pavement ManagementSystem, and to formulate and institute better courses on road and bridge maintenance and constructionsupervision at JKR's Training Institute at Bangi.

35. Several studies were carried out under the Project (Table 7). The studies helped to: (i) prepare amethodology for Environmental Impact Assessment; (ii) prepare transport plans for two towns; (iii)review of the Bridge Management System; (iv) introduce safety awareness and concepts; (v) evaluateslope stability; (vi) evaluate capacity of 200 bridges. In addition, the implementing agency made verygood use of training funds.

E. Project Sustainability

36. The Project is likely to be sustainable since: (a) the Govermment has increased its allocation forroutine and periodic maintenance of roads; (b) the Govermment is committed to take the necessary stepsto ensure the enforcement of axle load limits; and (c) JKR is committed to the full development on thePavement Management Systems.

F. Bank Performance

37. The Bank identified and appraised the Project well. The only weakness was that the Bank used"current unit costs" to estimate the cost of the road strengthening and improvement components. Lateron, these cost estimates tumed out to be much lower than actual cost, and the scope of the majorcomponent was cut down. The Bank should have: (a) required that JKR carried out pavement evaluationand design in accordance with an intemational recognized methodology; (b) increased physical and pricecontingencies considerably; and (c) refused the Borrower's request to take all contingencies off the loanamount.

6One was taken over by the Malaysian Highway Authority, one was improved by force account and one waspart of a road that was privatized.

8

38. Bank's supervision was relatively weak. The Bank carried out about ten supervision missions, ofwhich some were very short (Table 13) over the six and a half year Project execution period -- not quiteenough for a Project of this magnitude. In addition, these missions consisted often of only a highwayengineer who focused primarily on physical aspects of the Project. As a result, follow-up was not fullyadequate on the following points: (a) implementation of the detailed and well prepared action plansagreed upon with the Borrower, as well as the legal covenants; (b) utilization of performance parametersand targets, as well as key monitoring indicators for maintenance operations; and (c) the method ofreinforcing road pavement actually used by JKR and the quality of the work done. Supervision reportsdo not always cover the quality of works, procurement and other information adequately. Ratings wereoften optimistic.

G. Borrower Performance

39. The Borrower did not comply with some conditions of the Loan Agreement and measures of theAction Plans agreed upon with the Bank (although the Bank itself did not always give sufficientattention and support). In particular, the Borrower did not: (a) provide funds for the Road Rehabilitationand Strengthening Program as promptly as needed; (b) make budget allocations for the Improvement ofMaintenance Operations as anticipated; and (c) take the necessary steps to: (i) give JKR total authorityover the assignment of its personnel; (ii) reinforce JKR's district offices with qualified staff to create aviable maintenance unit in each district office, and (iii) make HPU responsible for the coordination ofinvestments in highways. These were important steps to improve the quality of constructionsupervision, maintenance operations and highway planning. For these reasons, the Borrower'sperformance regarding covenant compliance can be rated as not fully satisfactory.

40. JKR, the implementing agency, was, and still is, beset by staff shortages and frequent changesdue to the booming economic situation and lower salaries paid in the public sector. In addition, the veryhigh turnover of staff contributed to slow down Project implementation. JKR's main weaknessconsisted of poor pavement evaluation and designs. JKR's main strengths consisted of reportingadequately on project execution (except for some performance indicators and monitorable targets),collaborating very well with the Bank and making good use of consultancy services and training funds.All things considered, JKR's performance can be rated satisfactory.

H. Assessment of Outcome

41. Despite some failure by all parties to follow up Loan covenants adequately, the overall rating ofthe Project is satisfactory. The Project helped to reinforce JKR's, the contractors' and the consultants'capability in the maintenance, rehabilitation and strengthening of roads and therefore, achieved itsobjective to assist the Government in preserving and improving the federal highway network in order tomeet the rapidly increasing traffic demand safely and adequately. Also, the Project created safetyawareness, provided the tools to control overloading and to preserve the road network, and helpeddevelop road management systems.

9

I. Future Operation

42. The Government has not shown much interest in borrowing from the Bank for futureinfrastructure operations. Therefore, in line with the Government interest, no future Bank's operation isbeing considered in the transport sector.

J. Key Lessons Learned

43. The main lessons to be drawn from the project implementation are:

a) more supervision resources should be allocated for projects as large and complex as this. Itis not sufficient to carry out a good appraisal and provide long-term action plans, introducecovenants and reach agreement with the Borrower on many points during negotiations iffollow-up during supervision cannot be assumed, and in particular, if not supported byproperly staffed mission in the field; and

b) cost estimates of major civil works components should be based on solid and up-to-datefeasibility studies and detailed designs during project preparation and appraisal.

44. A lesson can also be drawn from the experience of carrying out this Implementation CompletionReport:

a) proper evaluation of achievement of objectives and sustainability of highway projects isdifficult within six months after the closing of the loans. Much information is not yetavailable including reliable and useful data on traffic, maintenance operations, and quality ofworks which are known with certainty only after two or three years have elapsed.

10

PART II: STATISTICAL ANNEXES

IIIMPLEMENTATION COMPLETION REPORT

MALAYSIAHIGHWAY REHABILITATION and IMPROVEMENT PROJECT

(LOAN 3145-MA)

Table 1: Summary of Assessments

A. Achievement of objectives Substantial Partial Negligible Not applicable(X) (X) (X) (X)

Macro-economic policies EEl E- OSector policies E l E DFinancial objectives El s E Institutional development El l E lPhysical objectives F- l E lPoverty reduction El El EGender concerns E- E ElOther social objectives E E ElEnvironmental objectives E E ElPublic sector management E E ElPrivate sector development E E ElOther (to be specified) E El Elo

B. Project sustainability Likely Unlikely Uncertain(X) (X) (X)

0 El ElO

HighlyC. Bank performance Satisfactory Satisfactorv Deficient

(X) (X) (X)

Identification El E Preparation Assistance El ElAppraisal E El1Supervision E El

HighlyD. Borrower performance Satisfactory Satisfactory Deficient

(X) (X) (X)

Preparation l z EImplementation l E lCovenant compliance El ElOperation (If applicable) El l E

HighlyE. Assessment of outcome Satisfactory Satisfactory Deficient

(X) (X) (X)

El El

12


HIGHWAY REHABILITATION and IMPROVEMENT PROJECT(LOAN 3145-MA)

Table 2: Related Bank Loans

FY StatusLoan/Credit Number Project Name Approved PCR/PAR N° (Date)

Preceding Operations

Loan 851 -MA Kuala Lumpur Urban Transport Project 1972 PAR 2573 (6/29/79)Loan 93 1-MA Second Highway Project 1973 PAR 5273 (9/26/84)Loan 1214-MA Second Kuala Lumpur Urban Transport Project 1976 PAR 5424 (1/29/85)Loan 1376-MA Third Highway Project 1977 PAR 7303 (6/22/88)Loan 2291-Ma Sabah-Sarawak Road Project 1983 PCR 12565 (11/30/93)

The Kuala Lumpur Urban Transport Project. It was completed 16 months (44%) later than expected, and cost washigher than estimated (30%). Delays were caused by slow right-of-way acquisition and the associated problem ofsquatters as well as inadequate performance of the contractor during the initial period of the project. This problem couldhave been avoided if right-of-way acquisition and the associated problem of squatters but that should have been knownwhen the contractor was pre-qualified. due to lack of experience in works of the project scale.

The Second Highway Project. It was completed six years later than expected, and cost was higher than estimated (30%).The delays were chiefly due to longer than expected right-of way acquisition procedures, and to slow progress by somecontractors. Staff shortages and changes in the PWD hampered the smooth execution of the Project.Rapid turnover of Bank staff assigned to project supervision and the brevity of supervision missions made it difficult tomaintain the necessary rapport between the Government and the Bank.

The Second Kuala Lumpur Urban Transport Project. It was completed eighteen months (30%) later than expected,excluding the sites and services component which was cancelled. Cost was lower than estimated (4%) but, theGovernment was still negotiating contractors' claims for about US$3 million which, if paid, would make the underrunonly about I%.

Third Highway Project. Implementation of the main component, construction of roads in Sabah, was slow because ofright-of-way acquisition problems combined with unsatisfactory contractor performance. The three road sectionsincluded in the project were completed one, three and five years behind schedule. The cost was moderately higher thanestimated (6.5%).

Sabah-Sarawak Road Project. It was completed three years later than expected, and most construction contractsexperienced cost overruns. A number of problems with the civil works components were mainly due to inexperienceand lack of financial resources of some of the contractors.

I.

13IMPLEMENTATION COMPLETION REPORT


(LOAN 3145-MA)

Table 3: Project Timetable

Steps in Project Cycle Planned Date Actual Date

Identification (Executive Project Summary) Apr-88 Mar-89

Preparation (In house by JKR and HPU) n.a. Jan-89

Appraisal Apr-89 Apr/May-89

Negotiation n.a. November 3, 1989

Board Presentation 08-89 December 14, 1989

Signing n.a. January 11,1990

Effectiveness Jan-90 March 1, 1990

Project completion December 31, 1993 June30, 1996

Loan closing June 30, 1995 June 30, 1996

Table 4: Loan Disbursements: Cumulative Estimates and Actual(US$ million equivalent)

FY1990 FY1991 FY1992 FY1993 FY1994 FY1995 FY1996 FY1997 |

Appraisal Estimates 2.00 10.00 25.00 55.00 81.00 83.20 83.20 83.20Actual 0.00 0.15 5.43 25.69 37.74 59.45 79.79 83.20Actual as % of Estimates 0.00 1.50 21.70 46.71 46.59 71.45 95.90 100.00

Date of final disbursement: October 29, 1996

Implementation Completion ReportMalaysia

Highway Rehabilitation and Improvement Project(Loan 3145-MA)

Table 5: Key Indicators for Project Implementation

Quantity Actual orActual or Completed Adjusted Actual

Component tUllit Appraisal Estimated as Appraisal Actuial or UJnit Cost as Appraisal Actual Appraisal Actual CompletionName of' Total Total Percenitage Unit Cost Adjusted Percentage Iim plemenitationi Implementation Completion Completion 'I'inme

Nicasure Quantity Quantity of Including tJnit Cost of Schedule Dates Time Time asCompleted Appraisal Conting. Appraisal Percentage

by Total tInit Cost of Appraisal06/301/96' Quanitity JS$ tJS$ JUSS Coompletion

°/% million million tmoulsa id Niouthls Nontlhs 'I'ime

IIRSP km 562 295 -47.5 0.225 0.247 9.7 08/90-12/93 07/91-06/96 42 59 40RTB&SSB # 67 62 -7.5 0.876 0.788 -10.0 07/90-12/92 10/90-05/96 30 67 123TWCPi/CV 35 32 -8.5 0,930( 1.340) 44.0) 01/90-06/93 02/90-08/94 41 54 32TWCP/FQ # 35 43 23.0 0.600 0.350 -41.6 01/90-06/93 07/91-03/95 41 44 7.3

fill, kill 55.58 44 6 -19.7 2.980 3.28 10.0 10/90-12/93 04/92-05/9 38 37 -2.6I ILSI' # 42 39 -7.1 1.605 1.198 -25.4 10/90-12/93 na 38 n a. n a.

OrBSP 27 25 -7.4 0.356 0.384 7.9 10/90-12/93 n.a 38 n.a. n.a.

IIRSP = -lighway Rehabilitation and Strengthening ProgranmRTB&SSB = Replacement of 'I'imber Bridges and of Sub-standard BridgesTWCP/CV = Truck Weigh Control Program: Civil WorksTWCI'/EQ = 'I'ruck Weigh Control lProgram: EquipmentIIIP = llighway Improvement ProgramIILSP = llazardous Locations, Safety ProgranmOPBSP = Overhead Pedestrian Bridges, Safety Program

Revised closing date of the Loan.



(LOAN 3145-MA)

Table 6: Key Indicators for Project Operation

Key Implementation Indicators/Sar Estimated Actual

Not specified

Table 7: Studies Included in the Project

Study Purpose as defined Status Impact ofat appraisaVredefined Study

Environmental Impact Determine Effects of Road Completed. Methodology for EIA AdoptedAssessment (EIA) Construction and Maintenance

Urban Transport Studies Scheduled in SAR Ongoing Transport Plan for Kuantan andfor Transport Planning Seremban Towns

Review of Bridge Development and Training Completed RecommendationsManagement System

Road Safety Audit and Not Scheduled Completed Training, Safety Improvements andAccident Investigation Safer Designs

Hillslope Stability Study Not Scheduled Ongoing Safety Improvements and Safer Designs

Evaluation of Bridge Not Scheduled Completed Evaluation Methodology AdoptedCapacity Bridges Improvements



(LOAN 3145-MA)

Table 8A: Project Costs(US$ million)

Project Components Appraisal Estimate Progress Report NO 21, ICRJune 1996

Local Foreign Total Foreign Local Foreign Total Adjusted% ~~~~~~~~~Total

I. Civil works 120.38 86 2 206.67 40.4 121.52 8E5 203.09 188.13

A. Maintenance Improvement Program 52.72 29.86 82.581 35.0 53.82 28.98 82.80 73.13

B. Replacement of Timber and

Sub-Standard Bridges 9.63 12.59 22.221 55.0 8.86 10.83 19.70 19.08

C. Truck Weight Control Program

Civil Works 7.13 5.09 12.231 40.0 10.09 6.72 16.81 16.81

D. Highway Improvement 32.63 28.24 60.86' 45.0 31.41 25.70 57.12 57.11

E. Road Safety Improvement Program 18.26 10.52 28.78| 35.0 17.33 9.33 26.66 22.00

II. Truck Weight Control ProgramlEquipment 0.00 82 DM 8 1 0 i0 5 89 2

III. Consulting Services, TechnicalAssistance & Training OQ0 14.40 14.4 0 | 100 02 2061 20 61

Sub-Total Cost 120.38 108.88 229.261 46.0 121.52 108.07 229.59 214.62

Land Acquisition 9.94 0.00 9.94: 0.0 13.17 0.00 13.17 13.17

Total Project Cost 130.32 108.88 239.20 45.5 134.69 108.07 242.76 227.79

Column 9, ICR, Adjusted Cost gives the total costs of each component or sub-component adjusted to allow for work not completed.

Table 8B: Project Financing(US$ million)

Appraisal Estimate Actual/Latest EstimatesSource

Local Foreign Total Local Foreign TotalCost Costs Costs Costs

Government 130.32 25 18 155.50 131.45 28.11 159.56World Bank (Loan 3145-MA) 0.00 83.20 83.20 0.00 83.20 83.20World Bank (Loan 2642-MA) 0.00 0.50 0.50 0.00 0.00 0.00

Total 130.32 108588 239.20 131.45 111.31 242.76

17Implementation Completion Report

MalaysiaHighway Rehabilitation and Improvement Project

(Loan 3145-MA)

Table 9: Summary of Economic Costs and Benefits

Highway Rehabilitation and Strengthening Program

Appraisal Evaluation Re-evaluationPackage No Length Estimated NPV B/C Ratio ERR Length Estimated NPV B/C Ratio ERR

(km) Cost (km) CostMR MR million

million

IAlB

3A13A23B3C7A7B

No sufficient information or data are available to re-evaluate the ERR (paras. 12-13).

Table 10: Compliance with Operational Manual Statements

Statement Number and Title Description and Comment on Lack of Compliance

No significant variance with the operational manualsteements based on document in file None



(Loan 3145-ma)

Table 11: Status of Legal Covenants

Loan Section Covenant Present Original Revised Description CommentsAgree- Type Status Fulfill Fulfill of Covenantment Date Date

Article 3.01(a) 10&4 CD 06/30/95 06/30/96 Borrower's commitment to Project objectives,III to carry out Project with due diligence, etc. &

to provide funds promptly as needed.

Article 3.01(b) 10 CD 06/30/95 06/30/96 Project to be carried out according to Implementation PlanIII in Schedule 5.

Schedule 1 12 NC 06/30/90 - Borrower shall make HPU responsible for coordination of5 highways investments, etc.

2a 10 & 4 NC 04/30/90 06130/96 Borrower shall exchange views with Bank on allocation of& thereafter funds for road maintenance, etc. by 04/30/90 and April 30 of

each year thereafter.

2b 10 n.a. 12/31/94 06/30/96 Borrower shall reduce the backlog of deferred periodicmaintenance of roads by at least 70%, etc., by 12/31/94.

3 10 NC 11/30/91 06/30/96 Borrower shall review with Bank scope & procedures, etc.& thereafter for preparation of road maintenance programs by 11/30/91,

and by November 30 of each year thereafter.

4 10 NC n.a. n.a. Borrower shall carry out, in accordance with a program and time-table satisfactory to Bank, improvement of fed. roads & bridges,truck weight control, and road safety improvement

5 10 C 06/30/95 06/30/96 Borrower shall carry out, in accordance with procedures & criteriasatisfactory to Bank, training, etc. under Part B3 of Project.

6 10 CD/CP 06/30/95 06/30/96 Borrower shall implement Project according to action plan andtime schedule satisfactory to Bank.

7 9 NC 06/30/95 06/30/96 Borrower shall include in information provided to Bank, data onmonitoring of road maintenance and pavement rehabilitation, etcas agreed with Bank.

Covenant Type.

4. = Counterpart funding9. = Monitoring, review, and reporting

10. = Project implementation not covered by other categories12. = Sectoral or cross-sectoral policy/regulatory/institutional action

Present Status:

C = Covenant Complied WithCD = Covenant Complied With After DelayCP = Covenant Complied With PartiallyNC = Covenant Not Complied with



(Loan 3145-MA)

Table 12: Bank Resources: Staff Inputs

Stage of Actual/ Estimates US DollarProject Cycle Staff weeks thousands

Through appraisal 23.3 64.2

Appraisal - Board-Effectiveness 7.9 23.3

Supervision 81.4 232.1

Completion 8.0 16.8

Total 120.6 336.4

Table 13: Bank Resources - Missions

Stage of Month/ No. of No. of Days in Specialized Performance RatingProject Year Skills TypeCycle Staff Consultant Field Represented Implementation Development of

s Status Impact Problems

Through 01/89 5 46 EC, HEAppraisal 05/89Appraisal noThrough mission

Board Approval ..Board Approval no

through missionEffectivenessSupervision

1 02/90 1 1 13 EC, HE n.r. n.r. D2 06-07/90 - 1 12 HE I I F3 02/91 l 1 14 EC,HE 1 14 11/91 2 - I HE n.r. n.r. D5 05/92 - I 5 HE I I -

6 11-12/92 - 1 19 HE 2 1 F/T7 11-12/93 - 1 21 HE 2 1 F/L/T8 11/94 - 2 16 HE S s9 11/95 2 6 EC, HE S s10 03/96 I 3 HE n.r. n.r.

Abbreviations

- Specialized skills represented: EC = Economist; EL = Ecologist; HE = Highway Engineer; L = Lawyer; PE = Planning Engineer.Ratings: I = Problem free; 2 = Moderate problems; 3 = Serious problems; S = Satisfactory.

- Type of Problems: E = Ecological or Environmental; F = Financial; L = Legal; M = Managerial; T = Technical; D = Design

19

20

APPENDICES

1-

Highway Rehabilitation and Improvement Project

TableAl: Highway Rehabilitation and Strengthening Program

SAR Estimates Progress Report N° 21, June 30, 1996 ICRCorrespondence Table 3.1, Page 49 Appendix B, Page A2

BetweenSections Road Road Cost Total Cost per Km Total Cost, Contract Adjusted

And Section Length per Km Cost Including Including Package Road Contract Cost WorkContract Conting. Conting. Length Price per km ProgressPackages km RMNOO RM mill. RM'000 RM mill. km RM mill. RM 000s %

Cl " C2 C3 C4 C C6 C7 C* C9 CIO Cli C12 _x C3xC4/0 3C4x1.1xl.l5 C3xC6/103i C10/C9

IA 1 61.00 246 15.0 311 19.0 IA 63.00 41.885 665 100.0 IB 2 41.00 268 11.0 339 13.9 IB 46.50 33.571 722 100.0 *

3C 3 53.00 245 13.0 310 16.4 3AI 38.65 23.744 614 92.83B 4 20.00 500 10.0 633 12.7 3A2 35.35 18.759 531 91.5 *_

3AI & 3A2 5 73.00 247 18.0 312 22.8 3B 20.00 12.635 632 80.0 *3 _ E4 & 5 6 129.00 333 43.0 421 54.3 3C 43.00 22.631 526 81.5

6, 7A 7 7B 7 149.00 336 50.1 425 63.3 7A 55.00 32.282 587 66.7 *

2 8 36.00 500 18.0 633 22.8 7B 35.00 26.47 756 84.9 *

'[otal 562.00 317 178.0 401 225.2 Total 336.50 211.977 630CSTxlO3C T C7TxO-A3/C3T

CIT C2T C3T C4T C5T C6T C7T C8T C9T CIOT C11T 1T I C13U1 C141

Overrun/Underrun or Quantity increase/decrease1. 562 km (8 sections) of roads were planned to be strengthened. Actually, work started on 336.5 km (8 packages) but, whereas 109.5 km (2 packages) were completed

in December 1994, 227 km (6 packages) were still under construction by June 30, 1996.2. Total length of roads strengthened: -47.5 [(C13T-C3T)/C3TxlOO]3. Average cost per km of road strengthened: +58.3 [(C14T/C13T-C6l)/C6Tx 100

- 22 -


Table A2: Replacement of Sub-Standard Bridges

SAR Estimates Progress Report NO 21Table 3.4, Page 53 30-Jun-96

_ Appendix C, Pages A5-A6Total Total

Number Base Cost Number Contractof Cost Including of Price

Bridges Contingencies BridgesRM mill. RM mill. RM mill.

Cl C2 C3 C4 CS: X ~~~~~C2xl.lx 1.15

1 0.70 0.89 1 0.931 0.20 0.25 5 2.061 0.80 1.01 2 0.751 4.00 5.06 1 0.691 0.30 0.38 1 3.221 0.40 0.51 1 1.771 0.60 0.76 1 0.841 2.50 3.16 1 0.991 0.60 0.76 3 1.001 0.20 0.25 2 0.781 0.40 0.5I 1 2.691 0.90 1.14 8 2.341 0.60 0.76 3 1.571 0.70 0.89 2 1.811 0.10 0.13 2 1.181 0.14 0.18 2 1.281 0.30 0.38 2 2.691 0.60 0.76 3 2.471 0.35 0.44 2 1.11 0.30 0.38 0 0.01 0.30 0.38 0 0.001 0.60 0.76 0 0.001 0.30 0.38 0 0.001 0.60 0.76 0 0.001 0.60 0.76 0 0.001 0.60 0.76 0 0.001 0.2 0.25 0 0.001 0.3 0.38 0 0.001 0.2 0.25 0 0.001 0.2 0.25 0 0.001 0.16 0.20 0 0.001 0.55 0.70 0 0.001 0.2 0.25 0 0.001 0.2 0.25 0 0.001 0.3 0.38 0 0.001 0 25 0.32 0 0.001 0.6 0.76 0 0.001 0.6 0.7 0 0.001 3 3.8 0 0.001 0.5 0.63 0 0.001 0.55 0.7 0 0.001 0.7 0.89 0 0.00I 0.7 0.89 0 0.00

43 26.90 34.03 43 30.14C2Txl.lxl.l'i

CI C2T C3 CT C5T--- Z - m4

Overrun/UnderrunCost of replacing 43 sub-standard bridges: -11.4 [(CST-C3T)/C3Tx100J(43 sub-standard bridges were planned to be replaced, and 43 were actually be replaced)

- 23 -


Table A3: Replacement of Timber Bridges

SAR Estimates Progress Report N° 21, June 30, 1996 ICRTable 3.3, Page 52 Appendix C, Page A4

Total Average Completed Under Construction j ICompleted + Under Const.Number Base Cost Cost per Number Number Work Contracti Adjusted Average

of Cost Incl. Bridge of of Progress Price Total Cost perBridges Conting. Incl. Cont. Bridges Bridges % RM mill. Cost Bridge

RM mill. RM mill. RM mill. RM mill. RM mill.Cl C2 C3 C4 CS C =7- C8 C9 - C'10

- 2xl.1x1/15 - - I I C8xC7/100

1 0.80 1.01 3 0 100 3.78 3.781 1.40 1.77 2 0 100 1.20 1.201 1.20 1.52 2 0 100 2.11 2.111 0.30 0.38 2 0 100 1.69 1.691 0.40 0.51 1 0 100 0.71 0.711 0.70 0.89 4 0 100 4.29 4.291 0.90 1.14 1 0 100 2.56 2.561 0.60 0.76 0 4 60 3.93 2.361 1.20 1.52 0 0 0 0.00 0.001 0.80 1.01 0 0 0 0.00 0.001 0.70 0.89 0 0 0 0.00 0.001 0.90 1.14 0 0 0 0.00 0.001 0.40 0.51 0 0 0 0.00 0.001 0.50 0.63 0 0 0 0.00 0.001 1.20 1.52 0 0 0 0.00 0.001 0.60 0.76 0 0 0 0.00 0.001 0.90 1.14 0 0 0 0.00 0.001 0.60 0.76 0 0 0 0.00 0.001 1.70 2.15 0 0 0 0.00 0.001 0.90 1.14 0 0 0 0.00 0.001 1.00 1.27 0 0 0 0.00 0.001 0.80 1.01 0 0 0 0.00 0.001 0.50 0.63 0 0 0 0.00 0.001 0.50 0.63 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.000 0.00 0.00 0 0 0 0.00 0.00

24 19.50 24.67 1.03 15 4 2028 18.70 0.98C3T/ClT I ICT/(C5T +C6T)

CIT C2 I C3T C4T- CST 1 C6T1 C7T C8T c.9ir CIOT

Overrun/Underrun or Quantity Increase/Decrease1. 24 timber bridges were planned to be replaced. Actually, 4 bridges were built with local funding, and one was dropped because of

alignment problems. Of the remaining 19, 15 were completed, and 4 were under construction by 6/30/96.2 Average Cost per Bridge: -4.2 [(CIOT-C4T)/C4TxIOO]


Table A4: Truck Weight Control Program

SummarySAR Progress Report

Cost per Station in RM '000 Cost per Station in RM 060ivil wor-ks EF.quipment T Total Civilworksl Equipment Total

Cl~~~~~~~~~~~~~ I3 C C5 I C6932,486 599,971i 1,532,457 1,344,7811 350,4781 1,695,259

~ & p 4 Progres Report N Juije 30, 1996, Appendix D, Pages ,7 -

t ivil tWork- Equipmlenit C:ivii Works Equipment

Estinma ed Average Estimated Average Average AverageNumiber IsFt,natd T otal Cost Cost per Numilber :stijaSted oial Cost Cosit per Nua;ibti 2 ost Cost Nutnber Cost Cost

of Total Including Station orf Iotal Cost Includinig Station Af per of perStationis Cost Colting. loci. ont. Stations RNI in illion ( ontinug. I icl. Cont. Stationls Station Stations Station

RM mitlioli RMN itiittioii RtN mittion RIM millioni RM miillion RNI million RNIM million RMn million RMN million

7-_te_ ' ~~~~~~C4 *'16 C 9 - (1 C12 l C13 C142-C2xi Ixi 15 CSxIl TXT = 4

35 25.80 32.64 35 16.60 21.00 I 071 24 8.590 000 0.00 0 0.00 0.00 2 2.18 19 6.480 0.00 0.00 0 0.00 0.00 2 1.94 0 0.000 0.00 0.00 0 0.00 0.00 4 3.49 0 0.000 0.00 0.00 0 0.00 0.00 I 0.23 0 0.000 0.00 0.00 0 0.(0 0.00 2 2.73 0 0.000 0.00 0.00 0 0.00 0.00 I 1.46 0 0.000 0.00 0.00 0 0.00 0.00 3 4.51 0 0.000 0.00 0.00 0 0.00 0.00 4 4.11 0 0.000 0.00 0.00 0 0.00 0.00 3 5.75 0 0.000 0.00 0.00 0 0.00 0.00 3 4.62 0 0.000 0.00 0.00 0 0.00 0.00 I 1.80 0 0.000 0.00 0.00 0 0.00 0.00 2 4.60 0 0.000 000 0.00 0 0.00 0.00 3 4.91 0 0.00

35 25.80 32.64 0.93 35 16.60 21.00 0.600 32 43.03 1.34 43 15.07 0350C3T/C I C7T/C5T < I 0T/C9T C 3T/C12 1

l-C2T C3C4T S 6 CTCTC9r T CI IT C712TC13TC14

Overrun/Underrun or Quantity Increase/Decrease1. 35 stations were planned to be built and equipped. Actually, 32 stations were built and 43 equipped.2. Cost ofa complete station (Summary Table): +8.3% [(C6-C3)/C3xlO0]3. Cost of civil works for one station (Details Table): +44.2% [(Cl IT-C4T)/C4Tx100]4. Numberofstations built (Details Table): -8.6% [(C9T-CIT)/CITxlOOI5. Cost of equipment for one station (Details Table): -41.6% [(C14T-C8T)/C8Txl00]

Hlighway Rehabilitation and Improvement Project

Table A5: Highway Improvement Program

SAR, 'Iable 3.5, Page 54 Progress Report NO 21, June 1996Appendix E, Page A9

Average Cost Cost per Km ContractRoad Names & Road Estimated Cost Including Including Package Road Contract Cost

L.engthi Cost per km Contiilig. Conting. ILength P'rice per kmPackages kin RNI mill. RMNI mill. RNI inillioii RNI'000 kimi RMI niil. RIM OOOs

Cl C 3 C 4 C5 C6 C7 C8 C

2x3 3x1.1xI.15 C5/C2 C9/C8

Kuantan-Ciambang

I'ackage 1 2.91 26.70 9.18 33,78 11.61 i 2.90 26.90 9.28i'ackagc 2 8019 2870 3 55 36.31 4 49 2 8.10 35 20 4.35 UlPackage 3 8.38 26 50 3.16 33.52 4.00 3 7.80 35.80 4.59Sub-Total 19.38 81 90 4.23 103.60 5 35 18.80 97.90 5.21

Jor-Bliaru-kota inaggi

Package 1 900 17 60 i .96 22.26 2 47 4 8.80 30.70 3.49I'ackage 2 272(0 31.60 i 1t6 39 97 I 47 17.00 17 60 1.04Sob- iYotl 36 20 49.20 1 36 62.24 1 72 25.80 4830 1 87

-otal 55.58 131 1I 2.3) 165.84 29 44.60 11620 328

CIT C-2-T,- 1-' 4 77r *S*7T___T¶ ,_r7T, = IC9-T I

Overrun/Ulnderrun or Quantity Increase/Decrease1. 55.58 km or road were planded to be inpoved, but 44 6 kmi were actually irnproveJ2. lotal length of the two roads improved. -i9,8 [(('Jl-C5T)/C5T1Xl 00]3. Averagecostper kmorroadimilproved +9.9 I(C 1C0l'6T)/C61xl00]

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Road Safety Improvement ProgramTable A6: Hazardous Locations - Details

SAR Estimates Progress Report NO 21, June 30, 1996,Table 3.6, Pages 55-61 Appendix F, pages A10-A12

Total Total Average Completed Under Construction Completed + nder onst.Number Base Cost Cost per Number Number Work Contract Adjusted Average

of Cost Incl. Section of of Progress Price Total Cost perSections Conting Inc. Cont Sections Sections Cost Section

RM mill. RM mill. RM mill. % RM mill. RM mill. RM mill.Cl C2 C3 C4 C5 C6 C7 Cs C9 CIO

-2x-.1x -.15 - C8xC7/100

1 0.20 0.25 4 0 100.00 2.59 2.591 0.35 0.44 2 0 100.00 1.99 1.991 0.75 0.95 1 0 100.00 1.23 1.231 0.80 1.01 5 0 100.00 2.14 2.141 0.15 0.19 2 0 100.00 1.50 1.501 0.40 0.51 2 0 100.00 3.34 3.341 0.40 0.51 1 0 100.00 1.25 1.251 0.90 1.14 4 0 100.00 5.57 5.571 0.80 1.01 2 0 100.00 2.77 2.771 0.30 0.38 1 0 100.00 2.20 2.201 2.00 2.53 1 0 100.00 0.97 0.971 1.80 2.28 1 0 100.00 3.76 3.761 1.30 1.64 2 0 100.00 2.89 2.891 0.40 0.51 2 0 100.00 2.08 2.081 0.65 0.82 1 0 100.00 1.53 1.531 1.50 1.90 0 1 50.00 1.27 0.641 2.00 2.53 0 1 33.00 2.70 0.891 0.65 0.82 0 1 17.00 3.67 0.621 1.15 1.45 0 1 25.00 3.41 0.851 1.40 1.77 0 1 77.00 4.98 3.831 1.20 1.52 0 1 90.00 1.33 1.201 2.00 2.53 0 1 58.00 1.17 0.681 6.00 7.59 0 1 75.00 2.96 2.22I 1.40 1.77 0 0 0.00 0.00 0.00I 1.00 1.27 0 0 0.00 0.00 0.001 1.20 1.52 0 0 0.00 0.00 0.001 1.80 2.28 0 0 0.00 0.00 0.001 3.00 3.80 0 0 0.00 0.00 0.00I 1.80 2.28 0 0 0.00 0.00 0.001 3.00 3.80 0 0 0.00 0.00 0.001 2.00 2.53 0 0 0.00 0.00 0.001 0.40 0.51 0 0 0.00 0.00 0.001 2.00 2.53 0 0 0.00 0.00 0.001 0.50 0.63 0 0 0.00 0.00 0.001 0.80 1.01 0 0 0.00 0.00 0.00I 1.20 1.52 0 0 0.00 0.00 0.001 1.70 2.15 0 0 0.00 0.00 0.001 0.50 0.63 0 0 0.00 0.00 0.001 1.40 1.77 0 0 0.00 0.0 0.001 1.80 2.28 0 0 0.00 0.00 0.001 0.20 0.25 0 0 0.00 0.00 0.001 0.50 0.63 0 0 0.00 0.00 0.00

42 53.30 67.42 1 605 31 8 0.82 57.29 46.74 1 198C3T/CIT C9T/C8T C9T/(CST+C6T)

CIT Cr2T C3T C4T CST CT C C8t C9tCIO

Overrun/Underrun or Quantity Increase/Decrease1. 42 sections were planned to be improved. Actually, 31 were completed, and 8 were under construction by 6/30/96.2. Numberofsections improved: -7.1 [(C5T+C6T-CIT)/ClTxl00]

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Road Safety Improvement Program

Table A7: Overhead Pedestrian Bridges - Details

SAR Estimates Progress Report N° 21, June 30, 1996 ICRTable 3.7, Page 62 Appendix F, pages A13-A14

Average Completed Under Construction Completed+Under ConsL

Number Base Cost Cost per Number Number Work Contract Adjusted Averageof Cost Including Bridge of of Progress Price Total Cost per

Bridges Conting. Incl. Cont. Bridges Bridges Cost BridgeRM mill. RM mill. RM OOOs % RM mill. RM mill. RM OOOs

CI C2 C3 C4 CS C6 C7 C8 C9 C122x lxl.15 x C

3 1.04 1.32 1 1 100.00 0.59 0.592 0.36 0.46 1 1 100.00 0.44 0.444 1.02 1.29 1 1 100.00 0.46 0.463 1.07 1.35 1 1 100.00 0.30 0.302 0.46 0.58 1 1 100.00 0.42 0.428 2.10 2.66 1 0 100.00 0.52 0.523 0.85 1.08 1 0 100.00 0.44 0.441 0.30 0.38 1 0 100.00 0.53 0.531 0.40 0.51 1 0 100.00 0.34 0.340 0.00 0.00 I 0 100.00 0.28 0.280 0.00 0.00 I 0 100.00 0.24 0.240 0.00 0.00 I 0 100.00 0.75 0.750 0.00 0.00 1 0 100.00 0.30 0.300 0.00 0.00 1 0 100.00 0.36 0.360 0.00 0.00 1 0 100.00 0.38 0.380 0.00 0.00 I 0 100.00 0.41 0.410 0.00 0.00 I 0 100.00 0.28 0.280 0.00 0.00 I 0 100.00 0.86 0.860 0.00 0.00 1 0 100.00 0.39 0.390 0.00 0.00 I 0 100.00 0.65 0.650 0.00 0.00 1 1 30.00 0.29 0.090 0.00 0.00 1 1 0.00 0.60 0.000 0.00 0.00 1 1 50.00 0.51 0.260 0.00 0.00 I 1 50.00 0.34 0.170 0.00 0.00 I 1 50.00 0.31 0.15

27 7.60 9.61 356 20 5 87.41 10.97 9.59 384

C3T/C1T I C9T/C81 C9T/(C5T+C6T)

CI C2 C3 1T C4T | CST C6T C7T C8T C9T CIOT

Overrun/Underrun or Quantity increase/decrease1. 27 overhead pedestrian bridges were planned to be built. Actually, 20 were completed, and 5 were under construction on June 30, 1996.2. Numberofbridges built: -7.4 [(C5T+C6T-CIT)/ClTxlOO]3. Average adjusted cost per bridge: +7.8 [(ClOT-C4T)/C4Txl100


Table A8: Consulting Services, Technical Assistance and Training

Appraisal Estimates Progress Report N0 21, June 1996_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ A p p e n dipe n d i ess B,, C,,C ost

Cost Cost Cost Cost OverrunItem Man-Months Base Cost Including Base Cost Including Man-Months or

Conting. Conting. UnderrunRM mill. RM mill. US$ mill. US$ mill. RM million US$ million °

Cl C2 C3 r- C4- C5 C- 6 - C7 C C9 CIOC3x1.Ixl.I5 C3xl/2.7 C4x1I2.7 - - 1/2. (C8-C4)/C4*100

I Consulting Services 2750 20.40 25.81 75 956 40.70 15.07 57. 1- Road Rehabilitatio & Strengthening Progra 1200 9.00 11.39 3.33 4.22 n.a. 29.32 10.86 157. 5 rr- Replacement of Timber Bridges 400 2.90 3.67 1.07 1.36 n.a. 1.18 0.44 -67. 8oo- Highway Improvement Program 1150 8.50 10.75 3.15 3.98 n.a. 10.20 3.78 -5.1

. Technical Assistance 252 6.95 8.79 2457 La n.a. 5.45 2.02 -38.

. Training: Fellowship, Training & Study Tour 1.00 1.27 0Q37 0.47 n.a. 2 59 0.96 105.0

. Software, Hardware & Books 0.85 1.08 Q. 31 040 n.a. 4.02 1 49 273.6

otal 3002 29.20 36.94 10.81 13.68 52.76 19.54 42.

C1T CT -- rF 5 CT ICT CT C9T CIOT



(Loan 3145-ma)

Table A9: Budget Allocations for Road Maintenance

1990 1991 1992 1993 1994 1995

Anticipated budget allocations in current terms 125 155 155 160 165 n.a.for Federal highways in Peninsular MalaysiaI

Actual budget allocations for Federal highways 105 113 135 113 168 167in Peninsular Malaysia2

Actual budget allocations for Federal highways 150 152 170 181 215 223in the whole country 2

In current tenns, SAR, Table 2.11, page 45.

Progress Report N° 21, Action Plan for Road Maintenance Improvement, A2, page 31.

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MALAYSIA

HIGHWAY REHABILITATION AND IMPROVEMENT PROJECT (LN. 3145-MA)

PROJECTION COMPLETION REVIEW MISSION

AIDE - MEMOIRE(December, 1996)

GENERAL

1. A World Bank mission comprising Anil Bhandari (Senior Transportation Engineer,EAIIN) visited Malaysia December 17-19, 1996 to conduct a completion review of the.Highway Rehabilitation and Improvement Project and follow up on the preparation of theimplementation completion report (ICR). Mission met and held discussions with Ir. NeohCheng Aik, Senior Superintending Engineer Design Department, PWD); Ir. George George,Director (Highway Planning Unit, MOW); and other officials of Jabatan Kerja Raya (JKR).Mission is grateful to the otficials of JKR and MOW for their kind cooperation and hospitalityduring the visit.

2. The main objectives of the were: to review the implementation completion of the maincomponents of the project and to discuss with the Government of Malaysia (GOM) theperformance of implementing agencies and the Worid Bank during all phases of the project -fonn preparation to implementation completion.

3. This aide-memoire which is subject to endorsement by JKR and Bank management,summarizes the main findings of the mission and records the understandings reached duringthe visit.

Project Components and Status of Implementation

4. Mission reviewed the progress report endirig June 1996 (number 21) and theFinal Evaluation Report (October 1996) prepared by JnR The main components ofthe project are: (a) Highway Rehabilitation and Strengthening; (b) Bridge Replacement;(c) Tiuck Weight Control; (d) Highway Tmprovements; (e) Road Safety Improvement;(f) Equipment; (g) Consulting Services, Technical Assistance and Training; (h) LandAcquisition. Highlights of the implementation status are given in the following sections.

5. Highway Rehabilitation and Strengthening. Under the program, 562 km ofselected Federal Roads in various States were to be rehabilitated by strengthening ofthe pavement and widening where necessary. The original cost estimate of this programwas RM 178 miilion (not based or detailed engineering designs) and the likelycompletion cost is RM 404 million. A total of 12 e ivil works packages were defined ofwhich 2 have been completed, 8 are under construction, I has been tendered and 2 areawaiting authorization for additional funds before tenders can be invited.Notwithstanding the start up delays, progress of civil works and the quality ofconstruction are judged satisfactory.

- 31 -

6. Bridge replacement. This component involves replacement of 20 timber bridgesand 43 substandard bridges on the federal road network in Peninsular Malaysia. A totalof 61 bridges have been completed and 2 are under construction. The quality ofconstruction is judged satisfactory.

7. Truck Weigtht Control. The proposed projects under this program involveconstruction of 43 weighing stations at strategic locations on the Federal trunk roadnetwork. To date 42 stations have been constructed (eleven with own finds) andhanded over to the control of the Road Transport Department (JPJ) and the remainingone stations is under construction. The overall implementation program was delayed bytwo years due to problems of land acquisition and construction delays. The operationof the weigh stations is managed by JPJ in collaboration with the Police. JKR isresponsible for maintenance of physical facilities. The legal framework for enforcing theaxle and gross vehicle weights is in place, but some difficulties remain with assigningqualified staff and housing them in remote areas. JPJ is seeking further powers underthe legal framework to permit unloading of excess loads at the weigh stations withoutbeing liable for damage or loss.

8. Highway Improvement Tllis component comprised improvement andupgrading of two critical sections on Kuantan-Gambang road and Johor Bahru-KotaTinggi road to control flooding and relieve congestion, respectively. Both sections havebeen completed satisfactorily and traffic flow has improved significantly.

9. Road Safety Improvement. This component consisted of improving 42hazardous locations and construction of 27 pedestrian bridges. Of the 42 hazardouslocations originally identified, two locations were taken over by other agencies and onewas improved under force account. The remaining works were packaged into 27contracts of which 16 have been completed and I I are on-going. Overall success andeffectiveness of the safety improvements in reducing number of accidents remains to beseen in the long run, although some reduction has been reported at 7 sites. The 27 sitesfor pedestrian crossing (mainly school children) were packaged into 25 contracts ofwhich 15 have been completed and 20. The pedestrian crossings have greatly reducedaccidents involving pedestrians, but GOM has recognized the need for more publiceducation and encouragement to use the pedestrian crossings.

10. Equipment. Equipment, including computers. for all 43 weighing stations hasbeen procured under the project.

I. Consultin, Services, Technical Assistance and Traiinig. This componentcomprised consultant services for design, engineering and construction supervision;provision of technical assistance through experts (pavement and bridge managementspecialists, training specialist; transport planner, road safety expert, computer aideddesign and drafting, and EIA specialist); and training through fellowships, study tours,short courses, seminars and conferences. Under this program, JKR engineers and theDepartment have benefited greatly through acquiring and being exposed to newtechnologies and gaining further knowledge and experience from hands on training byintemational experts. The program also enabled over 50 road engineers attendprofessional courses, seminars, conferences. etc.

- 32 -

12. Land Acquisition. Approximately RM 26 million were spent by GOM inacquiring land and compensating for other assets required for road construction andimprovement.

Overall Project Cost and Financing

13. The total cost for the project at appraisal was estimated as RM 515 million (orUS$ 191 million), including land acquisition cost. At mid-term review December1993), this was revised to RM 822., million. The actual cost to complete the variousprograms in the revised project as at June 30, 1996 is expected to be RM 620.4 million.The underestimation of costs at appraisal was largely a result of the following mainfactors: (a) costs were not based on detailed engineering designs, nor any extensivefeasibility study; (b) the economy was in a recession at the time and prevailing tenderrates were rather low; and (c) the sudden boom in the economy in the 90s led to higherdemand, short supply and high inflation. The preparation of the project was done ratherfast - the significant changes in land use pattems, higher than normal growth in trafficvolumes, and the high incidence of services and utilities required to be relocated(requiring involvement of a number of outside agencies) were not anticipated.

Performance Ratings

14. Bank's Perforrance. Notwithstanding the shortcomings outlined in para. 13above, JKR agreed that Bank's performance in project identification was highlysatisfactory, and in project preparation and appraisal it was satisfactory. However, withregard to supervision, the ICR prepared by the consultant, has rated Bank'sperformance as deficient. This is mainly due to inadequate number of supervisionmnissions (only 10 missions in six and a half years), lack of timely intervention whenproject was facing implementation delays, specialists were not included in the missionteams when required, there was inadequate follow up on non-compliance with legalcovenants and agreed action plan, and key performance indicators and targets were notclosely monitored, nor reported. Supervision reports do not cover adequately issuesrelated to quality of civil works and procurement problems. However, JKR expressedits satisfaction with Bank's supervision, particularly with the timely response to Client'squeries and requests for clearances and the mission's understanding of the practicaldifficulties in implementing some of the legal covenants and agreed action plan.

15. Borrower's Performance. Borrower did not comply with some of the loancovenants and Aith some measures that were required to be undertaken as per theagreed action plan. This was particularly true with regard to the timely provision offunds for the road strengthening component and the improvement of maintenanceoperations. With regard to Borrower's inability to reinforce JKR's district offices withqualified staff, JKR explained the difficulties in recruiting staff at a time when thecompeting demand and incentives from the private sector were high. JKR emphasizedthe need for flexibility during implementation on the part of the Bank in considerationof practical realities and unique circumstances prevailing during implementation.

- 33 -

16. With regard to the preparation and implementation of the project, theBorrower's performance was judged as satisfactory, notwithstanding the start updelays and mid-termn adjustments required to be made in project scope. Missionreviewed and discussed the quality of reports submitted by JKR during projectimplementation and concluded that the reports were of high quality and adequatelydetailed except for reporting of performance indicators and monitorable targets.

Post-construction Economic Evaluation

17. Mission explained to JKR that Bank needed further information and data tocompute post-construction economic rates of retums on the major investments madeunder the project. This was particularly true with regard to: (a) financial versuseconomic costs; (b) current unit costs of maintenance; and (c) traffic volumes.

18. Financial versus Economic Costs. Mission reviewed two recent feasibilityreports prepared by JICA. As per the reports, the conversion factor used in obtainingeconomic costs from financial costs ranged from 0.85 to 0.95. It is recommended thatfor construction and maintenance costs, the factor 0.90 and for vehicle operating costs0.88 be used in the absence of any further information.

19. Mission requested JKR to send urgently to Washington updated information ontraffic volumes on the project roads already completed and the latest available unitcosts for routine and periodic maintenance costs per km.

Borrower's Comments on the draft ICR

20. Mission stressed the importance of receiving and including in the ICRBorrower's comments. This would enable the Borrower to clarify any mis-understandings provide a balanced view of project performance. Since the ICR has tobe presented to Bank's Board before December 31, 1997, JKR agreed to provide abrief summary of their comments to the Bank by December 23.

Anil BhandariSenior Transportation Engineer(World Bank)

Kuala LumpurDecember 19, 1997

IBRD 21488

0o0 102' M A LAYS I A 104'

HIGHWAY REHABILITATION ANDIMPROVEMENT PROJECTFederal Highway Network

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