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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 59560-LK
PROJECT PAPER
ON A
PROPOSED SECOND ADDITIONAL FINANCING (CREDIT)
IN THE AMOUNT OF SDR 63.6 MILLION
(US$ 100 MILLION EQUIVALENT)
TO THE
DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
FOR THE
ROAD SECTOR ASSISTANCE PROJECT
March 15, 2011
Sustainable Development Department
Sri Lanka Country Management Unit
South Asia Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective: February 28, 2011)
Currency Unit = Sri Lankan Rupees (LKRs)
LKRs 110.81 = US$1
1.57305 US$ = SDR 1
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank LKR Sri Lanka Rupees
AF Additional Financing MIS Management Information System
AG Auditor General of Sri Lanka MMC Maintenance, Management &
Construction Division
AP Affected People MOFP Ministry of Finance and Planning
BOT Board of Trustees MOPH Ministry of Ports and Highways
CAS Country Assistance Strategy NPV Net Present Value
DA Designated Account NRMP National Road Master Plan
EA Environment Assessment NSC National Steering Committee
EIRR Economic Internal Rate of Return NTC National Transport Commission
EMP Environmental Management Plan ORAF Operational Risk Assessment
Framework
ESMF Environmental and Social Management
Framework PAD Project Appraisal Document
FM Financial Management PCU Project Consulting Unit
FR Financial Regulations PDO Project Development Objective
GDP Gross Domestic Product PMU Project Management Unit GOSL Government of Sri Lanka RAP Resettlement Action Plan
GRSF Global Road Safety Facility RDA Road Development Authority
HDM-4 Highway Development & Management
Model-4
RMTF Road Maintenance Trust Fund
ICTAD Institute for Construction Training and
Development
RSAP Road Sector Assistance Project
IDA International Development Association SA Social Assessment IOC Incremental Operating Cost SBD Standard Bidding Documents
IRI International Roughness Index SDR Special Drawing Rights
IUFR Interim Unaudited Financial Report TAC Technical Advisory Committee
JICA Japan International Corporation
Agency
VOC Vehicle Operating Costs
Vice President: Isabel M. Guerrero, SARVP
Country Director: Diariétou Gaye, SACSL
Sector Manager: Michel Audige, SASDT
Task Team Leader: Amali Rajapaksa, SASDT
Table of Contents
Page
DATA SHEET .......................................................................................................................... i
Basic Information - Additional Financing (AF) ...................................................................... i
Basic Information - Original Project ...................................................................................... i
AF Estimated Disbursements (Bank FY/US$m) ..................................................................... i
Project Development Objective and Description ................................................................... ii
Safeguard and Exception to Policies ..................................................................................... ii
Conditions and Legal Covenants: ......................................................................................... iii
I. Introduction ..........................................................................................................................1
II. Background and Rationale for Additional Financing in the amount of US$100 Million. ........1
III. Proposed Changes ..............................................................................................................6
IV. Appraisal Summary .......................................................................................................... 10
Annex 1: Results Framework and Monitoring ..................................................................... 14
Annex 2: Operational Risk Assessment Framework (ORAF) ................................................ 17
Annex 3: Supervision by RDA............................................................................................. 20
Annex 4: Financing of Periodic Maintenance ....................................................................... 23
Annex 5: Revised Estimate of Project Cost ......................................................................... 29
Annex 6: Revised Implementation Arrangements and Support.............................................. 30
Annex 7: Economic Analysis ............................................................................................... 40
Annex 8: Procurement Arrangements................................................................................... 44
Annex 9: Peace and Reconciliation assessment .................................................................... 52
Map
IBRD 38325
i
SRI LANKA
ROAD SECTOR ASSISTANCE PROJECT - SECOND ADDITIONAL FINANCE
DATA SHEET
SOUTH ASIA
BASIC INFORMATION - ADDITIONAL FINANCING (AF)
Country Director: Diariétou Gaye
Sector Manager/Director: Michel Audige/ John Henry
Stein
Team Leader: Amali Rajapaksa
Project ID: P116742
Expected Effectiveness Date: May 12, 2011
Lending Instrument: SIL
Additional Financing Type: Scale-up Financing
Sectors: Roads and Highways
Themes: Transport
Environmental category: B
Expected Closing Date: September 30,
2014
BASIC INFORMATION - ORIGINAL PROJECT
Project ID: P086411 Environmental category: B
Project Name: Road Sector Assistance Project Expected Closing Date: September 30,
2011
Lending Instrument SIL :
AF Project Financing Data
[ ] Loan [ X ] Credit [ ] Grant [ ] Guarantee [ ] Other:
Proposed terms:
AF Financing Plan (US$m)
Source Total Amount (US$ m)
Total Project Cost:
Cofinancing:
Borrower:
Total Bank Financing:
IBRD
IDA
New
Recommitted
110.00
10.00
100.00
0.00
100.00
Client Information
Recipient: Democratic Socialist Republic of Sri Lanka
Responsible Agency: Road Development Authority
Contact Person: Mr. S. Meihandan, Project Director. Telephone No.: 0094-11-2869530, 0094-
11-2884594, 0094-11-2884595
Fax No.: 0094-11-2884610
Email: [email protected]
AF ESTIMATED DISBURSEMENTS (BANK FY/US$ M)
FY FY11 FY12 FY13 FY14 FY15
Annual 1 19 35 35 10
Cumulative 1 20 55 90 100
ii
PROJECT DEVELOPMENT OBJECTIVE AND DESCRIPTION
Original project development objective: - The development objective of the proposed project
is to lower transportation costs through sustainable delivery of an efficient national road system.
Project Outcomes: The sustainable reduction in transport costs will be measured by : (a) Reduction in average network Vehicle Operating Costs (VOC) for standard commercial vehicle;
(b) Reduction in Average Network Roughness (IRI);
(c) Reduction in percentage of the Network in poor and bad condition;
(d) Progressive Increase in annual road maintenance expenditure;
(e) Improved level of satisfaction of road-users.
Project description: The project includes two components:
Rehabilitation of Priority National Roads in the East-West corridor providing connectivity to the
Eastern and Northern Provinces. This component will consist of re-surfacing and improvement of
approximately 134 km of “A” class road.
Institutional Strengthening and improvements in Asset Management Practices. This component will
provide technical assistance and strengthening of the systems within the RMTF and RDA relating to road
maintenance. It will also include a 3-year periodic maintenance program of prioritized roads.
SAFEGUARD AND EXCEPTION TO POLICIES
Safeguard policies triggered:
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Forests (OP/BP 4.36)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Indigenous Peoples (OP/BP 4.10)
Involuntary Resettlement (OP/BP 4.12)
Safety of Dams (OP/BP 4.37)
Projects on International Waters (OP/BP 7.50)
Projects in Disputed Areas (OP/BP 7.60)
[X]Yes [ ] No
[ X ]Yes [ ]
No
[ ]Yes [X] No
[ ]Yes [X] No
[ ]Yes [X] No
[ ]Yes [X] No
[X]Yes [ ] No
[ ]Yes [X] No
[ ]Yes [X] No
[ ]Yes [X] No
Does the project require any exceptions from Bank policies?
Have these been approved by Bank management?
[ ]Yes [X] No
[ ]Yes [X] No
iii
CONDITIONS AND LEGAL COVENANTS:
Financing Agreement
Reference
Description of Condition/Covenant Date Due
Schedule 2, Section IV,
B.1(b)
Approval of the Deed of Trust for the
RMTF and Key staff position of the
RMTF (Secretary, Engineer and
Finance manager) to be appointed.
Prior to the first
disbursement for
RMTF component.
Schedule 2, Section I, F.1 Budgetary allocations of LKR 5; 5.5
and 6 Billion for the years 2011, 2012
and 2013.
Before 31st December
of each calendar year.
Schedule 2, Section 1, F.2
RMTF to prepare and publish an
annual report for each year, The
annual report will include the audited
financial statements of the RMTF,
criteria for selection of road for
maintenance, budget allocation and
the results of the RMTF‟s technical
and financial audits.
Before 30, June each
year commencing the
year ended 31st
December 2012.
Schedule 2, Section II, A.3 RDA to provide the annual
maintenance program approved by
the Board of Trustees
Before 31st January
each year.
Schedule 2, Section II, A.3 RDA to provide the annual road
condition and traffic survey Report
for the national network
Before 31st August
each year.
Schedule 2, Section I, H.1 RDA to carry out an annual technical
audit and a review of the civil works
and consultancy contracts in
implementation under component 1.
Before 31st August
each year.
1
I. INTRODUCTION
1. This Project Paper seeks the approval of the Executive Directors to provide a second
additional credit in an amount of US$ 100 million to the Sri Lanka Road Sector Assistance
Project (RSAP; Project ID: P086411; original financing: Credit number: 4138-CE; and first
additional financing P110324; credit number 4429-CE), the extension of the project closing date
from September 30, 2011 to September 30, 2014 and the reallocation of expenditure under Cr
4138-CE.
2. The proposed second additional credit would help finance the costs associated with
scaled-up activities to enhance the impact of a well-performing project - details are discussed
below. There would not be major changes to the original design of the project.
II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING IN THE AMOUNT OF
US$100 MILLION.
3. Consistent with the Country Assistance Strategy (2003-2006), the parent project was
approved by the Board of Directors in December 2005. Due to unprecedented oil price increase
and policy level changes, the first Additional Finance Credit was approved on July17, 2008.
4. Key project data are tabulated below (Key Performance Rating as of 02/16/2011):
Key Project Data Key Performance Rating
Original Credit – Cr-4138 –CE
Board Date December 15, 2005 - Last Now
Effectiveness Date March 16, 2006 Development Objective
(DO)
S S
Amount US$ 100 million Safeguards Compliance S S
Closing Date September 30, 2011 Fiduciary Compliance S MS
First Additional Credit – Cr-4429-CE
Board Date July 17, 2008 - - -
Effectiveness Date December 12, 2008 Implementation Progress
(IP)
S S
Amount US$ 98.1 million Legal Covenants
Compliance
S MS
Closing Date September 30, 2011
Cr-4138 & Cr-4429
Project Age 60 months Risk Flags None None
Disbursement US$ 156.78 million
(79%)
QAG Rating (December
08)
2
5. The Project Development Objective (PDO) of the parent project (RSAP and First
Additional Financing- P086411 and P110324) will continue to be the same for this project.
Therefore, the PDO of this Second Additional Financing (AF) is also to lower transportation
costs through sustainable delivery of an efficient national road system.
2
6. The parent project has provided financing for the: (i) rehabilitation of the national roads;
(ii) strategy and rehabilitation of rural roads through a pilot and; (iii) sustainable maintenance
finance through institutional strengthening and policy support. The rehabilitation of national
roads was completed within a four year period whilst the other components are ongoing. The
first additional finance was provided to finance the cost overrun associated with the fuel price
increases pertaining to the national roads component. The second additional finance will finance
the scale up of the national roads component whilst retaining the sustainable maintenance
component within the project.
7. Rationale for Additional Financing: The approval of the Road Sector Assistance
Project (RSAP) by the Board in December 2005 saw the Bank re-engaged in the transport sector
in Sri Lanka after an absence of almost a decade. The RSAP has supported and it will continue
supporting Sri Lanka‟s development strategy with particular focus on growth by improving
connectivity of the different regions.
8. The Bank will continue supporting initiatives to achieve sustainable maintenance
financing. This is an area where the Bank has considerable expertise above and beyond that held
by other donors involved in the sector in Sri Lanka. This also supports the priorities of the
Country Assistance Strategy (CAS) (2009-2012) to improve social and economic inclusion of the
poor and facilitate broad-based economic growth. These priorities were identified in a process of
consultation done with the communities and stakeholders.
9. The ability of the implementation of the Second Additional Finance credit to be carried
out through the same institutional arrangements as the Parent Project using the already
established implementation mechanism makes it an ideal candidate for additional finance.
Furthermore, it will also provide an opportunity to the borrower to achieve quick results on the
ground given the level of priority attached to the selected interventions which is believed to be
key for the development of the Northern and Eastern Provinces. In addition, given the relatively
quick implementation of the Parent project, it will also provide the borrower the ability to
comfortably implement the scaled-up project during the extended project period.
10. The borrower is extremely eager to ensure that the scaled-up components are
implemented as quickly as possible to reap the benefits of the cessation of the conflict and its
impact on the development of the previously conflict affected areas. Hence the GOSL has
already obtained approval from its Cabinet of Ministers for the rehabilitation of these road
sections through financing from the Bank.
11. Country Context: The Government of Sri Lanka (GOSL) is targeting an annual
economic growth rate of eight percent over the next six years, and infrastructure development is
paramount in supporting this growth target (Mahinda Chintana, 2010). In this context, the GOSL
has set forth a broad agenda for the road sector, including connecting lagging regions and
production centers to domestic and international markets, extending the national highway system
and an integrated road network, and enhancing road safety.
12. Road Sector Institutions: The Ministry of Ports and Highways (MOPH) has overall
responsibility for policies and programs concerning the national road network and ports. The
3
Road Development Authority (RDA), a statutory institution assigned to MOPH, is responsible
for planning and managing the development and maintenance of expressways and national roads.
Provincial roads are the responsibility of Provincial Councils (PCs) and local roads the
responsibility of Local Authorities. The Ministry of Transport (MOT) has overall responsibility
for policies concerning land transport services, including bus transport services and railways.
The National Transport Commission (NTC), a regulatory body under MOT, is responsible for
policy formulation and subsidy disbursement. In 1998, the Road Safety Council was established
under the Motor Traffic Act to guide national policies and actions on road safety.
13. Road Sector Strategy: A medium-term sector reform framework was agreed between
Asian Development Bank (ADB) and GOSL as part of ADB‟s Road Sector Development
Project, currently being implemented. This framework provides guidance on how the reform in
the sector would proceed and serves as a roadmap for future lending to the sector. The World
Bank, Japan International Cooperation Agency (JICA) and ADB agreed in November 2004 to
coordinate their activities in the sector within the context of this medium-term framework.
Sector reform is being undertaken around three pillars as follows: (i) Re–engineering of the
RDA; (ii) establishing a mechanism and providing sustainable funding for road maintenance; and
(iii) developing the domestic private sector in the road industry. The World Bank agreed to take
the leadership in addressing the issue of sustainable road maintenance financing. JICA agreed to
take forward the issue of private sector development in the road construction industry, and ADB
to continue taking the lead in institutional strengthening and capacity building of the RDA.
14. The National Road Master Plan (NRMP) was finalized in December 2007 and it was
approved by the Board of Directors of RDA in August 2008 and; it defines the most efficient
core network, and assesses the needs for road investment, including new construction,
improvement, rehabilitation, and maintenance. The NRMP also includes a 10 year investment
plan which aims to address issues in the sector. The plan is to implement a comprehensive road
network development program in parallel with sector reform.
15. Projected Investments in the Road Sector: The investment plan (2007-2017) within
NRMP earmarks a level of investment of US$ 6.1 billion (based on 2006 prices) over a 10 year
period. With about 50 percent of this funding expected to come from the International Financial
Institutions, financing of road improvements and rehabilitation in Sri Lanka continues to be
heavily supported by international and bilateral loans/credits/grants. Local funding is reserved
mainly for counterpart contributions to the foreign funded projects, particularly for land
acquisition and property compensation. The private sector is expected to contribute six percent to
the total level of investment identified in the NRMP through a few selected investments.
16. Project Design: The components to be financed under second AF has been based on the
lessons learnt from the Parent Project whilst providing the implementing agency an opportunity
for capacity building and address some of the implementation issues on the ground.
(a) Engineering designs have been completed by the RDA with a review of the designs by an
independent third party.
(b) Supervision of a pilot section will be carried out by the RDA itself through a dedicated
team.
4
(c) Reconstituted Road Maintenance Trust Fund (RMTF) and financing of road maintenance.
(d) Functions such as procurement, environmental and social safeguards, previously carried
out through the Project Management Unit (PMU), is being mainstreamed within the
RDA.
17. Component 1 (US$ 65.4 million – Base cost): Rehabilitation of Priority National
Roads in the East-West corridor providing connectivity to the Eastern and Northern
Provinces: This component will consist of re-surfacing and improvement of approximately 134
km of “A” class road providing connectivity to Northern and Eastern provinces . It will also
include the design review and supervision of selected sections.
18. The sections financed under this component are:
(a) Phase 1 - Kantale-Trincomalee (43km – from 157th to 200th km)
(b) Phase 2 - Ambepussa –Dambulla (91 km –from 0 to 90.9th km)
19. Component 2 (US$ 14.5 million – Base cost): Institutional Strengthening and
improvements in Asset Management Practices: This component will provide funding for
periodic maintenance, technical assistance and strengthening of the systems within the RMTF
and RDA relating to road maintenance, institutional strengthening of the RDA, addressing of
issues identified through the capacity assessment relating to Road safety, incremental operating
cost of the Project Management Unit (PMU), as well as, the Project Consulting Unit (PCU)
being established for the supervision of selected sections by the RDA.
20. The technical assistance provided for the strengthening of the systems of the RMTF
through the parent project will be continued and extended to the RDA. The financing of
maintenance will be provided based on the strengthened systems and transparent mechanisms
established. Based on the institutional strengthening assessment done for the RDA, sustainable
improvements in the RDA‟s technical, operational and management capacity as well as
upgrading of RDA‟s financial accounting and management systems will be carried out. The
RDA has applied for a grant from the Global Road Safety Fund for a Capacity Assessment. The
Assessment is currently under preparation and it was agreed that the institutional strengthening
component will aim to address the main issues identified through the Road Safety capacity
assessment.
21. Foreseen Risk Factors: The specific risks have been identified in the Operational Risk
Assessment Framework (ORAF) which has been included as Annex 2. The overall project risk
rating during implementation is MI given that the Parent Project has already been successfully
implemented through the same framework where capacity has already been built and the
implementation agency is fully aware of Bank policies. Furthermore the lessons learnt from the
Parent project are being utilized to further strengthen certain areas in order to achieve the overall
objective of the project.
22. The engineering designs of the Parent Project were carried out by external consultants
which has given rise to significant variations although there have been several contributors. It is
intended that the RDA carrying out its own designs would minimize the need for design
5
variations as during the design stage, the design staff and RDA provincial staff have walked the
designs taking all of the considerations into account. Furthermore, the risk of design quality due
to RDA carrying out its own design for both Kantale – Trincomalee and Ambepussa – Dambulla
Road has been mitigated by carrying out two independent reviews. The independent reviewers
were: Central Engineering Consultancy Bureau (CECB) of Sri Lanka and Design Aid, India.
Recommendations were incorporated in the revised designs.
23. Furthermore, with the help of the Environmental and social unit of the RDA,
consultations have been carried out with the communities on either side of the road regarding
their requirements, as well as, local politicians. Furthermore adequate time had been allowed in
order for the design units to complete these designs with independent reviews being carried by
the RDA, as well as, the Bank. It is expected that these third-party design audits will help to
ensure that RDA design standards are followed, as well as minimize cost variations and
construction quality failures. In addition, these designs have been done by the separate design
units that were set up through the re-engineering of the RDA supported by the ADB. It is
envisaged that this initiative will assist the RDA further develop their design capacity.
24. For the parent project the need for Resettlement Action Plan (RAP) was identified during
implementation stage after initiation of civil works. This need was felt due to modifications
made in approved designs to standardize with the National Roads Master Plan approved at a later
stage. Due to inadequate capacity at that stage with the RDA to implement the RAP, project
faced several issues during implementation of RAP. In order to avoid the risks associated with
compliance with social safeguards for the second AF, the road specific SA and RAP have been
prepared in parallel with the designs based on intensive consultations with all stakeholders.
Further provision of intensive training program to create awareness regarding the Project‟s R&R
Policy has been made to enhance the capacity of implementation partners including the
contractors.
25. There is also a risk of the RDA changing the pavement option from flexible to rigid on
the Ambepussa-Dambulla section due to the severe flood damage suffered in Dec 2010-Jan
2011. A decision has been made by the Cabinet of Ministers to construct rigid pavements for
flood damaged road, as well as, in the construction of new roads although certain discretion is
being used in the implementation based on the technical reasoning, as well as, availability of
finance. It has been agreed with the RDA and MOFP that this decision will not apply to this
project due to the advanced stage of preparation except in the cases where it is required and
justified in flood prone areas. However, it has been agreed with the RDA that the project would
support RDA in enhancing its capacity in the construction and supervision of rigid pavements
through exposure visits and experience gained in other countries in the region.
6
III. PROPOSED CHANGES
26. There are no changes in the PDO. The design of the project has addressed the lessons
learnt from The Parent Project whilst providing an opportunity to build further capacity of the
Implementing Agency. The following has been agreed within the second AF:
27. (a) Supervision by RDA: The RDA is expected to carry out its own supervision for the
Kantale-Trinco section of road as a pilot. The RDA is presently experiencing many difficulties
due to poor performance of external design as well as supervision consultants and is seeking
ways to address these issues. It is also felt that more knowledge could be imparted to the RDA
rather than in an arrangement where the supervision consultant walks away leaving the RDA
with very little experience in managing large contracts. It is therefore the intention of the RDA to
progress towards carrying out in-house supervision by establishing a supervision unit within the
RDA to reduce cost of consultancies and help avoid some of the issues being presently
experienced. This will however be implemented as a pilot for phase 1 only.
28. The RDA will establish a Project Consultancy Unit (PCU) as a separate unit within the
RDA to carry out supervision of phase 1. It is the intention of the RDA that this unit will be
further expanded to carry out supervision of projects under other sources of finance. The team
carrying out supervision of phase 1 will be staffed in a similar manner to a supervision
consultant. The capacity of the team leader has been assessed and the qualification criteria for the
remaining positions have been agreed upon. The RDA is expected to set up a laboratory facility
for the four contracts in phase 1 similar to the model laboratory facilities already assessed. The
incremental operating cost of this unit will be financed under component 2. The organization
structure of the PCU and the capacity assessment of this unit are included in annex 3.
29. (b) Financing of Periodic Maintenance: The Road Maintenance Trust Fund has been
established in order to improve transparency in the allocation of resources and disbursement of
funds as well as to carry out efficient monitoring of the maintenance programs. The intention of
this strategy is to ensure a sustainable well maintained road network in the long term by
maximizing the use of resources applied to the rehabilitation of the network. The RMTF has
been reconstituted under the MOPH to ensure ownership in taking the maintenance agenda
forward. In order to assist the successful operation of the RMTF, full time staff is expected to be
recruited and an advisor to the secretariat has already been made available who can be consulted
on the experience in road funds.
30. The rationale behind the IDA funding of maintenance is to assist the RDA adopt efficient
and transparent practices in the maintenance of its assets as well as capacity building for the
various departments within the RDA involved in the carrying out of maintenance. This strategy
is implemented by IDA funding a higher share of maintenance when the maintenance funding by
GOSL is less and progressively reducing as the GOSL funding for maintenance increase.
31. A periodic maintenance program of prioritized roads will be funded over a period of three
years (2011, 2012 to 2014) with IDA financing of US$ 10 million. A program of roads for
periodic maintenance will be identified on an annual basis where the contracting methodology
will be agreed and financed equally by IDA and GOSL. This program of maintenance will be
7
shared with IDA each year after the approval of same by Board of Trustees of the RMTF. The
GOSL financing of US$10 million for this program over the three year period will be channeled
from the annual budgetary allocations. It is however recognized that there will be a capacity
constraint in using the IDA funding in the first year due to the timing of procurement of contracts
and the approval of the credit. It is therefore agreed that the total amount of funding from IDA of
US$ 10 million over the 3 year period from 2011 to 2014 is estimated to be US$ 3, 4 and 3
million respectively.
32. The RMTF will prepare and publish an annual report for each year, no later than 6
months from the end of the calendar year commencing the year ended December 31, 2012. The
annual report will include the audited financial statements of the RMTF, review of performance,
selection criteria and allocation methodology and the results of the technical and financial audits
of the RMTF. It is recognized that the country system already in place for review of public
expenditure will apply for expenditure incurred under the RMTF.
33. The budgetary allocations of LKR 5; 5.5; and 6 billion will be channeled for maintenance
through the RMTF for the calendar years 2011, 2012, and 2013 respectively. The description of
the financing of the periodic maintenance and the RMTF is described in more detail in annex 4.
34. (c) Road Safety: The capacity assessment being funded by the Global Road Safety
Facility (GRSF) will involve discussions with the key agencies and a review of results achieved
to date in the current road safety management system. It will also look at how Sri Lanka plans to
develop and achieve its road safety objectives. The findings will be presented on the aspects of
institutional delivery, the scope and quality of the planned interventions and their alignment with
a safe system approach. Consensus will be reached on a strategy for improving road safety
together with an investment strategy.
35. Proposed Interventions will be identified for the corridor that is being rehabilitated or
maintained through the project. The proposed interventions could be infrastructure measures
such as intersection safety improvements, improved pedestrian crossing treatments, etc, and
behavioral measures mainly from bus drivers, public information campaigns, augmentation of
education programs, etc.
36. Implementation Schedule: The phase 1 civil work contracts are expected to be awarded
by April 28, 2011 and completed by August 2012 as advance procurement has commenced. The
phase 2 contracts are expected to be awarded by December 2011 and completed by December
2013. All of these contracts are expected to have a defects liability period of 12 months.
37. Extension of Original Financing and First Additional Financing: The closing date of
the original financing and the first additional financing will be extended from September 30,
2011 to September 30, 2014. The proposed extension of the closing date is necessary to complete
the scaled-up activities. This will be the first extension of the project as no request has been
made previously.
8
38. Project Cost :
Table 1: Project Cost
IDA
Second AF
Component -1
Rehabilitation of A6 (with 10% physical contingencies, 12.5% price
contingencies) 83 20 103
Design Review and supervision of Phase 2 2.5 2.5
Sub-Total Component 1 0 85.5 0 20 105.5
Component 2
Maintenance Finance 10 10 10
Incremental Operating Cost of:
PMU 1 0.5 1.5
PCU 1 1
RMTF Secretariat 0.5 0.5
Goods 1 1
Technical Assistance for RMTF 1 1
Institutional Strengthening & consultancies 1 0.4 1.4
Road Safety 1 1
Sub-Total Component 2 10 14.5 2.9 0 17.4
Total Project Cost 10 100 2.9 20 122.9
Description GOSL Cr-4138 Cr-4429 Total IDA
Note: Assumptions: VAT exemption, 10% physical contingencies, 12.5% price contingencies
39. Financing Plan: The IDA financing under the second AF will be US$100 million. The
MOFP in principle has committed US$10 million towards the 3-year road maintenance program.
The IDA will finance an equal share (US$10 million) over the three year period. The savings
from the Parent Project will be used to meet the remaining expenditure as indicated in the table
above. In order to utilize the funds available under the original credit, a re-allocation of
expenditures as indicated in Table 2 will be required. Hence, the funds available under Cr 4138
will be used to pay for goods, incremental operating cost and institutional strengthening of RDA
whilst the funds available under Cr 4429 will be used to finance civil works cost. The project
cost will be reviewed in December 2012, and in the event of cost savings being identified, these
funds will be channeled in to periodic maintenance following the same procedure adopted above.
9
40. Category re-Allocation of expenditure under Cr 4138 CE
Table 2: Category re-allocation
Category
The current
Allocation (Expressed
in SDR Equivalent)
Amount to be re-
allocated in SDR
Equivalent)
Works 49,200,000 49,264,665
Goods 592,100 1,409,374
Consultant Services & Training 8,114,265 7,286,022
Incremental Operating Costs 1,317,414 1,263,718
Goods, works, consultants' Services, training,
and incremental operating Costs for North-
Central Province under Part B of the Parent
Project
3,107,893 3,107,893
Goods, works, consultants' Services, training,
and incremental operating Costs for Southern
Province under Part B of the Parent Project
3,107,893 3,107,893
Goods, works, consultants' Services, training,
and incremental operating Costs for Uva
Province under Part B of the Parent Project
3,107,893 3,107,893
Refunding of Project Preparation Advances 552,542 552,542
TOTAL 69,100,000 69,100,000
41. This re-allocation has resulted in an increased allocation for goods with a reduced
allocation for consultancies. The consultancies required for the preparation of the project have
already been funded out of this project and the advance procurement of goods will be undertaken
especially in relation to purchase of lab equipment for the use of the PCU, which is urgently
required due to the advance procurement of civil works.
42. Results Framework and Monitoring Indicators: The same outcome indicators of the
parent project will be monitored. A new indicator to measure the road user satisfaction will be
monitored at the beginning and the end of the project to measure the increased level of road users
satisfaction. These indicators will be shared with IDA through the Road condition traffic survey
reports produced annually by the RDA.
43. The sustainable reduction in transport costs will be measured by key indicators relating
to:
(a) Reduction in average network Vehicle Operating Costs (VOC) for standard commercial
vehicle;
(b) Reduction in Average Network Roughness (IRI);
(c) Reduction in percentage of the Network in poor and bad condition;
(d) Progressive Increase in annual road maintenance expenditure;
(e) Improved level of satisfaction of road-users.
44. The Revised Results Framework and Monitoring Indicators are described in annex 1.
10
IV. APPRAISAL SUMMARY
45. Economic Analysis: The scaled up activities proposed under the second additional
financial involve new road sections; therefore a new economic analysis was carried out. The
Economic Analysis was carried out for both sections K-T (Phase1) and A-D (Phase 2) using fleet
and traffic forecast data provided by RDA. Results of the cost-benefit analysis of the civil work
for re-surfacing and improvement of approximately 134 km of “A” class road (with an economic
cost of US$90 million) indicate that the proposed investment is justified. For the Ambepussa-
Dambulla section, the Economic Internal Rate of Return (EIRR) is 65% and a NPV is US$ 498
million. For the Kantale-Trincomalee section, the EIRR is 21% and the NPV is US$ 23.6
million. Sensitivities were carried out for the project with cost increases by 20% and decrease in
benefits by 20% as well as decrease in traffic forecast by 20% and found that results yet
remained robust. A detailed description of the Economic Analysis is described in Annex 7.
46. Institutional Arrangements: The executing agency for the entire second AF will be the
Ministry of Ports and Highways (MOPH) whilst the implementing agency will be the Road
Development Authority (RDA). The PMU constituted under the RDA will administer the
project.
(a) Civil works under component 1 (rehabilitation and improvement) of second AF will be
implemented through the same mechanism as the parent project where the implementing
agency is the Project Management Unit (PMU) within the Road Development Authority
(RDA). The supervision of phase I will be carried out through the PCU established as
separate unit under the RDA.
(b) Civil works under Component 2 (periodic maintenance) of second AF will be
implemented through the Provincial Directors of the RDA whilst “works” and
“maintenance” divisions will be involved in the overall procurement and administration of
the contracts.
(c) The Project Director of RSAP however will carry out overall responsibility for the entire
project for purposes of liaising with the Bank.
47. Implementation Arrangements:
(a) Civil works under component 1 - Based on the lessons learnt from the parent project, the
RDA has proposed that the implementation by the RDA will be carried out through the
engineering staff of the PMU that will now be based in the field. This strategy will be
applicable for the implementation of phase 1 and 2. The PMU based in Colombo will be
restricted to the Project Director, Deputy Project Director, Accountant, Environmental
and Social Specialist, Procurement Specialist, and clerical staff, all of whom are already
staffed. In the event the Engineers are unable to relocate to the field, new engineers from
the RDA will be seconded to the project. It was agreed that in view of lessons learnt on
the parent project the provincial directors will cease to be a part of the PMU.
11
(b) Civil works under component 2 – The secretariat of the RMTF will manage this
component. The implementation of the works will be carried out by the provincial
directors based in the field as a part of their normal duties.
48. Supervision Arrangements:
(a) Civil Works of Component 1 (Phase 1) - The Contractors on the four contracts will be
supervised by the PCU formulated within the RDA. The team leader of the PCU,
responsible for phase 1 will report to the project director at the PMU and will be the
“Engineer” on the contracts.
(b) Civil Works of Component 1 (Phase 2) - The four contractors will be supervised by a
supervision consultant selected on a competitive basis. The team leader of the supervision
consultant will be the “Engineer” of the contracts.
(c) Civil works of Component 2 - The sections identified for periodic maintenance will be
supervised by the Provincial Director of the RDA as a part of his normal duties. The
Chief Engineer in the district, under the Provincial Director will be the “Engineer” on the
contracts.
49. Project Coordination and Monitoring: The National Steering Committee (NSC) set up
to monitor the implementation of the Parent project will continue to monitor the components
funded under the second AF. The NSC is chaired by Secretary, MOPH and will be composed of
(i) Chairman of the RDA; (ii) Director General of the RDA; (iii) Representatives from the
Ministry of Finance and Planning; and (iv) Representatives from the RMTF and the Road Safety
Council. Members from other agencies may be co-opted as and when necessary.
50. Engineering Design of Works: The engineering designs have been done in-house by the
RDA and the third party independent review has also been carried out. A Road Safety Audit was
also carried out on K-T Road, recommendations of which have been incorporated in designs.
Designs have been done using RDA‟s own design manuals derived from American Association
of State Highways and Transportation Officials (AASHTO)/British Standard and Specifications
(BSS) and the construction will be carried out in accordance with Standard Specification for
Construction and Maintenance of Roads and Bridges, Second Edition June 2009, published by
Institute for Construction Training and Development (ICTAD).
51. Financial Management: The financial management activities for component 1 and 2
except financing of periodic maintenance and other recurrent expenditure for the RMTF are
expected to be handled by the PMU which is already experienced in handling FM functions
under existing RSAP. The RMTF Secretariat will be held overall responsible for the FM
activities of financing periodic maintenance and administrative expenditures of the RMTF. It is
agreed with GOSL that RMTF Secretariat will have identified and assigned FM personnel to
execute this. As relevant staffing arrangements for RMTF are currently not in place, a
disbursement condition has been incorporated to disallow disbursements into RMTF until the
key staffing positions have been filled which includes the finance manager for RMTF (see
Annex 6 for details).
12
52. The Finance Division under the Director General of the RDA will make all payments
related to periodic maintenance. The FM capacity of this division has been assessed and found to
be satisfactory. Considering the arrangements prevalent in periodic maintenance under
component 2, the overall project FM risk is rated “substantial”.
53. The internal audit of the project (component 1 and 2) would be carried out by the internal
auditors attached to MOPH and RDA. The project‟s (component 1 and 2) external audit will be
performed by the Auditor General of Sri Lanka.
54. Disbursement Arrangements: Two Designated Accounts (DA) will be opened for the
respective activities handled by PMU and RMTF. PMU and RMTF would also need to have
separate Sri Lanka Rupee (LKR) accounts which will be specifically used for the project
purposes. Quarterly Interim Unaudited Financial Reports (IUFR)s which are due within 45 days
will be used by PMU and RMTF for financial reporting and replenishment of the DAs.
55. Procurement Management: All procurement and contracts for goods, works and
consultancy for Component 1 and 2 except for periodic maintenance works will be the
responsibility of the PMU. The Procurement Division of the RDA however will be exclusively
responsible for preparing bidding documents for civil works contracts and the PMU will review
the documents in order to confirm that the documents are in line with the Bank guidelines (see
Annex 8 for more details).
56. All procurement and contracts for civil works (Periodic maintenance) under component 2
will be the responsibility of two Divisions of RDA (see Annex 6 for more details):
(a) Works Division; and
(b) Maintenance, Management & Construction Division (MMC), based on the value of the
contracts.
57. The procurement capacity assessments of the three implementing divisions have been
carried out. While the PMU is conversant with Bank‟s procurement procedure, Works and
MMC Divisions, on the other hand, have no experience with Bank finance projects. The overall
procurement capacity risk assessment is substantial.
58. The procurement plan outlines prior review, procurement methods, estimated costs, time-
frame (see Annex 8).
59. Environmental Safeguards: The RDA has updated the Environmental and Social
Management Framework (ESMF) of the parent project to incorporate the road maintenance
activities proposed under this additional financing and applicable environmental safeguards
policies and processes which has been disclosed on the February 11, 2011. The work proposed
under the project triggers OP/BP/GP 4.01 – Environmental Assessment and OP/BP/GP 4.04 –
Natural Habitats. The project will continue to be a category “B” project.
13
60. The road-specific Environmental Assessments (EAs) for all road segments to be
rehabilitated have been prepared by RDA detailing road-specific environmental mitigation
measures and institutional framework for environmental compliance and they have been
approved by IDA on January 11, 2011. The EAs have been disclosed to public on February 2,
2011. Based on the assessments, the individual civil works contractors are expected to prepare
environmental method statements proposing detailed methodology of implementing
Environmental Management Plans (EMPs). Road specific EMPs will have to be prepared for the
roads identified for periodic maintenance.
61. Social Safeguards: The proposed rehabilitation, improvement and maintenance works
under the project triggers OP 4.12 on Involuntary Resettlement.
62. Civil Works under Component 1 - (Phase 1 and 2): The road specific Social Impact
Assessments (SIA) and Resettlement action Plans (RAP) have been prepared by the RDA. The
documents are in compliance with the requirement of Bank‟s OP 4.12. These documents have
been approved by the Bank and disclosed to public on the February 11, 2011. The RAP shall be
updated, approved and disclosed after finalization of designs for Phase 2.
63. Civil Works under Component 2: The specific road sections for periodic maintenance
will be selected annually and the ESMF includes a screening methodology to identify social
impacts. Using these screening criteria need for resettlement action Plan shall be identified.
64. Reporting: The PMU will provide on a monthly basis a consolidated progress report to
the Bank for the phase 1 and 2. The RMTF will provide a quarterly progress report to the Bank at
the end of each quarter. These progress reports will identify physical and financial progress of
the contracts undertaken by each of these units.
65. Deliverables to be shared with IDA during the Project Implementation Period:
RDA to provide the annual maintenance program approved by BOT by 31st January each
year.
RDA to provide the annual road condition and traffic survey by 31st August each year.
RDA to carry out an annual technical audit and a review of the civil works and
consultancy contracts in implementation under component 1 by 31st August each year.
RMTF to prepare and publish an annual report for each year, no later than 6 months from
the end of the calendar year commencing 2012. The annual report will include the
audited financial statements of the RMTF, the allocation methodology, and the results of
the technical and financial audits.
66. Conditions of Effectiveness: None
67. Disbursement Conditions: The funds under RMTF can only be withdrawn once (i)
IDA has received satisfactory evidence that the Deed of Trust has been approved by the relevant
authority; and (ii) Key positions (Secretary, Highway Engineer and Finance Manager) in the
RMTF have been filled with qualifications and terms of reference agreed between IDA and
GOSL.
14
ANNEX 1: RESULTS FRAMEWORK AND MONITORING
SRI LANKA: Road Sector Assistance Project- Second Additional Financing
Results Framework
Revisions to the Results Framework Comments/
Rationale for Change
PDO
Original (PAD) Proposed
To lower transportation costs
through sustainable delivery of
an efficient national road
system.
No change
PDO indicators
Original (PAD) Proposed change*
Reduction in average network
Vehicle Operating Costs
(VOC) for average vehicle
No change
Reduction in Average
Network Roughness (IRI);
No change
Reduction in percentage of the
Network in poor and bad
condition;
No change
Routine and Periodic
Maintenance Funding for
National Roads Increased
Progressive increase in annual road
maintenance expenditure
The term “progressive” was added
to capture annual improvements
over the life of the project. Unit of
measurement changed from US$ to
LKR.
NA Improved level of satisfaction of road-
users
New indicator
Intermediate Results indicators
Original (PAD) Proposed change*
About 620 km of national
roads resurfaced
About 134 Km of national roads
resurfaced.
Scaled-up activities therefore
baseline and target values will be
revised.
Reduction in network IRI for
Project roads
Reduction in network IRI for Project roads Project baseline and target value
will be revised.
NA Reduced travel time on project roads Under the parent project this
indicator was only measured for
rural roads.
NA About 60 km of national roads on which
periodic maintenance has been carried out
New indicator
NA Annual Road Maintenance program is
approved by the Board of Trustees
New indicator
* Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value .
15
Revised Results Framework and Monitoring Indicators
Project Development Objective (PDO): to lower transportation costs through sustainable delivery of an efficient national road system.
PDO Level Results Indicators1
Co
re
UOM2
Baseline
Original Project
Start
(2010)
Cumulative Target Values3
Frequency Data Source/
Methodology
Responsibility for Data
Collection
Comments 2011 2012 2013 2014
Reduction in average network Vehicle Operating Costs (VOC) for average vehicle
LKR/k
m 14.6 13.6 12.5 11.5 10.5 Once per year
RDA‟s road condition report
RDA
Reduction in Average Network Roughness (IRI); IRI 6.2 6.1 6.1 6.0 5.9 Once per year
RDA‟s road condition report
RDA
Reduction in percentage of the Network in poor and bad condition;
% 38 37 36 36 35 Once per year RDA‟s road condition report
RDA
Progressive Increase in annual road maintenance expenditure LKR bn
44 (US$ mn)
5.0 5.5 6.0 6.6 Once per year RDA‟s road condition report
RDA
Improved level of satisfaction of road-users
% No-
collected
Before the project starts and after the project is completed
Road User Satisfaction Survey
RDA
Baseline and target to be determined after survey is carried out.
1 Please indicate whether the indicator is a Core Sector Indicator (for additional guidance – please see http://coreindicators). 2 UOM = Unit of Measurement. 3 Target values should be entered for the years data will be available, not necessarily annually. Target values should normally be cumulative. If targets refer to annual values, please indicate this in the indicator name and in the “Comments” column.
16
Intermediate Results and Indicators
Intermediate Results Indicators
Core
Unit of Measurement
Baseline Original Project Start (2010)
Progress To Date (2010)
Target Values
Frequency Data Source/ Methodology
Responsibility for Data
Collection Comments 2011 2012 2013 2014
Intermediate Result 1: Rehabilitation of 134 km of Priority National Roads Class “A” is implemented.
About 134 Km of national roads resurfaced.
km New
Baseline 0 0 40
120
134
Once per year
RDA‟s road condition report
RDA
Reduction in network IRI for Project roads IRI
New Baseline
6.0 - - - 2.8 Once per year
RDA‟s road condition report
RDA
Reduced Travel time on project roads hours
New Baseline
2.3 - - - 1.8 Once per year
RDA‟s road condition report
RDA
Intermediate Result 2: Road Maintenance Trust fund in operation and Road Maintenance 3-year program implemented
About 60 Km of national roads on which periodic maintenance has been carried out
km 0 0 0 20 45 60 Once per year
RDA‟s annual report
RDA
Annual Road Maintenance program is approved by RMTF
New
Baseline Approved Approved Approved
Once per year
RMTF RMTF
17
ANNEX 2: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
Project Development Objective(s)
To lower transportation costs through sustainable delivery of an efficient national road system.
Key Results Indicators:
1. A reduction in Average Network Vehicle Operating Cost (VOC) 2. A reduction in Average Network Roughness 3. A reduction in percentage of Network in poor and bad condition 4. Progressive Increase in annual maintenance expenditure 5. Improved level of satisfaction of road-users
ORAF Risk Levels Risk Rating Risk Description Proposed Mitigation Measures
Project Stakeholder Risks
1.1 Stakeholder Risks
MI Risk that some local communities
may not support the activity. Road
users may complain during
construction and may not obey the
road traffic management.
Inclusive, informed consultation will be carried out with all community
groups and provincial agencies along the project area.
There will be a close monitoring of claims and cooperation and law
enforcement with police if required.
Implementing Agency Risks
(including FM & PR Risks)
ML There is a risk of lack of adequate resources in contract management and systems in place to prepare and implement the project successfully. Lack of appropriate decision
making, accountability and
insufficient experience in terms of
implementing quality assurance
could affect the performance of the
project
18
Risk of fraud and corruption, including collusion, coercion and obstruction for contractors and supervision consultants.
3.1 Capacity Risk
L
Inadequate resources and systems in place to prepare and implement the project successfully.
The project will strengthen the capacity of RDA in their functions and it
will mainstream the systems into RDA. It will also further strengthen
the capacity of the PMU and other relevant staff in the identified areas
such as contract management and procurement.
It is agreed that RMTF secretariat will have suitable FM staff including
a finance manager to handle the relevant FM activities of component 2
of the project. A disbursement condition has been incorporated to
disallow disbursements into RMTF until the key staffing positions have
been filled which includes the finance manager for RMTF. Detailed
operation manual including FM guidance has also been prepared by the
consultants for RMTF.
3.2 Governance Risk
3.3
3.4 ML Lack of appropriate decision
making, accountability and
insufficient experience in terms of
implementing quality assurance
could affect the performance of the
project.
Capacity building for the staff of the IA, supervision consultant and
contractors will be carried out during the preparation and
implementation of the project on quality assurance. Efforts will be
made to clearly identify roles and responsibilities within the quality
assurance framework. These actions are also being coordinated with the
ADB and JICA.
Project Risks
4.1 Design Risk
ML
Risk of poor quality design due to
RDA carrying out their own design
and supervising the civil work.
The Detailed Designs will be reviewed by two independent agencies.
Consultations will be carried out with the community to take their
concerns into the design so it is flexible to respond to the needs.
The requests for approvals from other agencies will commence during
project preparation.
Training and strengthening capacity on procedures will be carried out.
Independent process auditing will be carry out semiannually for the
pilot sections.
4.2 Safeguards Risk ML Inadequate involvement of Preparation of ESMF, EA,SA and road specific EMPs and RAPs have
19
community in design, construction
and maintenance of roads
Risk of loss of infrastructure and
livelihood due to land acquisition
and involuntary resettlement.
addressed the issue of loss of assets and livelihood and involvement of
communities through stakeholders consultations and have made
provisions for continued consultation during implementation stage.
Further, provision of training and awareness building of staff and
community with regard to RAP has been made.
Further provision of internal and third party monitoring of
implementation of ESMF, EMPs and RAPs have been made.
4.3 Program & Donor Risk
L
Risk of lack of coordination with
other donors.
A three pronged strategy agreed with the ADB and the JICA and
regular discussions are held periodically. The National Road Sector
Forum is held by the MOPH on a quarterly basis where participation is
invited from the development partners to discuss sector issues.
4.4 Delivery Quality Risk
MI Risk associated with the
operationalisation of the Road
Maintenance Trust Fund (RMTF)
through the restructuring.
Risk associated with the inadequate
funding and delay in its contribution
for Road Maintenance.
Risk associated with weak contract
management.
The contribution to the RMTF through the Bank will be subject to the
restructuring and staffing of RMTF.
The dialogue with the government will be strengthen to encourage and
ensure that the funding for road maintenance are progressively
increasing.
The supervision arrangements from the RDA will be strengthened by
having more presence in the field. The pilot will provide the RDA the
opportunity to carry out its own supervision with more ownership.
Capacity building will be provided to RDA and the PMU in contract
management. There is also an identified M&E system in the project and
it has been successfully implemented during the Parent Project.
Note: Ratings: L (Low Impact Low Likelihood); ML (Low Impact High Likelihood); MI (High Impact Low Likelihood); and H (High Impact High Likelihood).
Overall Risk Rating at Preparation Overall Risk Rating During Implementation
Comments
L MI
20
ANNEX 3: SUPERVISION BY RDA
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
1. The experience of supervision through consultants in civil contracts under the parent
project as well as other projects in RDA portfolio has not been satisfactory. The RDA therefore
proposes to carry out its own supervision for the Kantale-Trinco section (four contracts) as a
pilot. This has been attempted with an objective to build in-house capacity of RDA staff in
managing large contracts.
2. A field based Project Consulting Unit (PCU) has been created, consisting of key staff
drawn from the RDA. In the event some of the expertise is not available in RDA, staff would be
recruited externally. For day to day coordination of the PCU with various RDA divisions as well
as other industry stakeholders, a small unit at Head Office, comprising of a Chief Executive
Officer and a support staff will be constituted. However, for all contract management purposes of
the K-T section, the PCU will directly report to the Project Director. The PCU will be headed by
a Team Leader, who will act as the “Engineer” under the contracts. The Team Leader will be
supported by two Resident Engineers (REs). Please refer to the organization structure of the PCU
below.
3. The agreed contractual framework ensures quality assurance by the contractor. In
addition, the PCU will also carry out, minimum of 10% independent quality control tests. These
tests will be undertaken in a regional quality control lab (other than those being provided by the
contractor). The lab to be set up for the use of the PCU will consist of all basic equipments
required for road works, which will be procured through the project. These equipments have
been selected and procurement process has been initiated. In addition, lab technicians (Research
Assistants) from RDA‟s trained pool will also be assigned to this lab. The team has also visited
and inspected RDA‟s standard laboratory at Ratmalana and found that adequate lab facilities for
soil, aggregate, concrete and bitumen testing were available. Trained staff, including engineers
and technicians were undertaking these tests. It was concluded that the RDA has capabilities to
carry out site and laboratory testing including required destructive and non destructive testing.
4. There has been good progress in identifying staff for the PCU. Candidates for the Team
Leader have been identified, while REs positions are yet to be filled. It has been agreed that by
March 28, 2011, RDA will recruit all PCU staff.
5. The supervision capacity assessment of RDA has been done, which indicates that RDA,
as an organization has considerable experience of in-house supervision of contracts ranging from
US$ 10-20 million, which are based on FIDIC (Fédération Internationale des Ingénieurs
Conseils) frameworks. Some of these projects include - Kuwait Fund for Arab Economic
Development (KFAED) for Construction of 32 Bridges and a By Pass (US$ 20 million); Saudi
Fund for Development (Kinniyai Bridge and Improvement of Kinniyai - Thampalagamam Road
(US$ 10 million) and Austrian Assistance for construction of Five Steel Bridges (US$ 16
million). In addition, RDA staff also has considerable experience of supervising and managing
domestically funded projects which are also based on FIDIC framework.
21
6. An interaction with the Team Leader indicates that he is an officer of the rank of chief
engineer and has minimum experience of more than 20 years in the field of highway engineering.
His prior experience and responsibilities have included contract administration, construction
supervision and quality control of roads and bridge contracts. He also possesses experience of
dispute management and progress monitoring. The capacity assessment, however, indicates the
need of a customized series of training to all key professional staff of the PCU on contract
management. The RDA has identified resource persons, and first training has already been
scheduled in April 2011, when all staff is likely to be in place. In addition, training on quality
control tests also needs to be organized.
7. In addition, sensitization of PCU staff on environment management and social develop
management will also be required, which will be undertaken by the PMU‟s nodal safeguards
person. Such training plan and modules have already been prepared.
22
23
ANNEX 4: FINANCING OF PERIODIC MAINTENANCE
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
1. Establishment of the Road Maintenance Trust Fund (RMTF) under the original
Deed of Trust: The Road condition in Sri Lanka has deteriorated over several years and to
address this issue the GOSL set up a sustainable maintenance finance mechanism by establishing
a Road Maintenance Trust Fund (RMTF) dedicated to the maintenance needs of the National
Roads in 2005. This RMTF was established under the Ministry of Finance and Planning (MOFP)
through a Deed of Trust to be managed by a Board of Trustees (BOT). In parallel, a Technical
Advisory Committee (TAC) was set up providing support to the BOT. The Secretariat of the
RMTF was set up under the MOFP to carry out and coordinate the functions under the Deed of
Trust and was supported by an advisor providing technical and financial inputs. The technical
assistance necessary to implement this mechanism was provided under the Parent Project.
2. The RMTF set up under the MOFP was not fully operationalised due to administrative
difficulties and functions of the BOT and the TAC were carried out to a limited extent. As a
result, very few meetings of the BOT or TAC were convened. Therefore the prioritization of
road sections for maintenance were neither contested nor approved, and the funding channeled in
to RDA through the RMTF. Furthermore, the Advisor to the RMTF lacked capacity to provide
the required direction to achieve the stated objectives and was poorly managed by the Secretariat
of the RMTF. This resulted in the RMTF not functioning in the manner it was set up to function.
3. Financing of Road Maintenance: The funding for Road Maintenance is channeled to
the RDA through the RMTF and it is provided under an annual budgetary allocation. Although it
was originally envisaged that cess from the sale of petrol and diesel would be made available to
the RMTF, the funding for road maintenance was provided as a budgetary allocation. The annual
cess collected from sale of fuel was only US$ 8-10 million. The budgetary allocation together
with the actual disbursements for the period 2006-2010 is indicated in the table below:
4. Table: Road Maintenance Budgetary allocation and actual received.
Year ( calendar year) 2006 2007 2008 2009 2010 Total
Allocation Target (US$ mn) 30 34.8 38.3 42.2 37 182.3
Actual Received/disbursed 27.8 31.4 24.9 30.7 58 172.8
% Achievement 93% 90% 65% 73% 156% 95%
5. Importantly, part of the RDA labor force that carries out routine maintenance was made
permanent in 2008 and therefore entered the cadre of the RDA. Their salaries were removed
from RMTF and incorporated into RDA budget. Taking into account this amount (approximately
US$11 million), the percentage achievement in 2009 reaches the allocation target. The GOSL
allocations for maintenance for 2011, 2012, and 2013 are LKR 5.0 billion, LKR 5.5 billion and
LKR 6.0 billion, respectively.
6. Re-constitution of the RMTF: In April 2010, the RMTF was re-established under the
Ministry of Ports and Highways (MOPH), in order to provide the necessary impetus to the
24
MOPH to take the maintenance agenda forward. The GOSL has been supportive of putting in
place a transparent mechanism for the selection and disbursement of funding for maintenance
and the Deed of Trust is expected to be amended accordingly.
7. The MOPH has taken the recent decision forward by establishing the secretariat for the
RMTF within the MOPH and the Additional Secretary of MOPH has been temporarily appointed
as the head of the Secretariat until a full time appointment is made. The team leader of the
Consultant providing Advisory services to the RMTF has been replaced and negotiations have
commenced for the restructuring of the consultancy in consultation with the Bank. Furthermore,
amendments to the existing Deed of Trust have been proposed and are being discussed with the
relevant stakeholders. Proposed organizational chart of the RMTF is depicted below:
8. With the appropriate procedures in place, it is intended that the RMTF will ensure
allocation of funding for maintenance on a transparent basis without duplicating the asset
management functions of the RDA and monitor the funding being channeled in to maintenance.
In order to facilitate this, necessary improvements to the systems within the RDA as well as
capacity building of officers engaged in these functions will also be carried out.
9. The RMTF Secretariat together with the BOT and the TAC will be involved in the
approval of the selection of roads for maintenance, allocation of funding, disbursing funds to the
RDA for maintenance as well as monitoring of expenditure for maintenance.
10. Present system of fund allocation for maintenance: The Planning Division obtains
current visual condition data from the provincial directors in the field and the priority is decided
based on the HDM-4 analysis using the visual condition data. The province-wise road list is
identified through the HDM-4 analysis applicable to all categories under maintenance and is
shared with the maintenance division of the RDA. The allocation of funds for routine
maintenance is then made to the provinces in proportion to the number of km in a particular
province. Allocation of funds for periodic maintenance is made based on provincial priorities.
Once the total allocation from the MOFP for maintenance is received, it is allocated amongst the
25
provinces in proportion to the budget. It can therefore be reasonably concluded that the current
system is not fully scientifically based and there is ample scope of improvements.
11. Budgetary allocation for Maintenance: The budget request for “maintenance” for the
year 2010 has been LKR 5.5 billion although the Allocation has been LKR 4.2 billion with actual
expenditure of LKR 6.4 billion. The 2010 allocation and actual for maintenance is depicted
below.
Intervention Allocation
(LKR Mn)
Actual
(LKR. Mn)
Periodic maintenance (sand sealing, overlay
etc)
1640 1695
Routine maintenance 1280 1333.5
Emergency work 419 2840.1
Maintenance of structures (bridges, etc.) 170 63
Traffic and Road
markings
60 186
Continuation work from previous year 630 271
Light bills to CEB 5 4
Total 4200 6392.6
12. For the years 2011, 2012 and 2013 LKR 5.0, 5.5 and 6.0 billion have been earmarked for
maintenance.
13. Selection of Road sections for Periodic Maintenance: Periodic Maintenance consists
of works such as resealing and road resurfacing that are required at intervals of several years
depend on surface type/pavement design life, without adding any capacity/widening but
including strengthening in specific areas.
14. The Planning division of the RDA includes all road sections that require improvements
and periodic maintenance in the HDM-4 analysis which separates roads under these two
categories. The road sections that require improvements are then separated out. Of the remaining
sections that require periodic maintenance, the following interventions are identified based on
the IRI value of the road section.
IRI Intervention
2.5 -4 Routine maintenance only
4- 7 Thin Overlay
Over 7 Complete rehabilitation
15. Based on the above, a list of roads with IRI value between 4 and 7 based on the priority
will be selected for investment through the project. However if a road section that has an IRI of 4
to 7 requires capacity improvement, then it will not be considered for inclusion within the project
for maintenance. It is also agreed that the period 2011/12 to 2013/14 will be considered in order
to identify corridors for maintenance in the first year. This will then be followed on a 3 year
rolling basis.
26
16. Funding for Periodic Maintenance: The financing of maintenance by IDA is with the
intention to support the RDA to build capacity in order to optimize the selection of roads for
maintenance and align its processes towards minimizing the life cycle cost. The IDA financing
of US$ 10 million will be provided over the 3 year period from 2011 to 2014. The IDA financing
of maintenance will be on the understanding of continuous increased maintenance financing
from GOSL. It is intended that GOSL will continue to provide the forecast allocation and the
IDA amounts for maintenance will be provided in addition to the funding from GOSL.
17. The principle behind the IDA funding of maintenance will also be to fund a higher share
of maintenance when the maintenance funding by GOSL is less and progressively reduce as the
GOSL funding for maintenance increase. It is however recognized that there will be a capacity
constraint in using the IDA funding in the first year due to the timing of procurement of
contracts. It is therefore agreed that the total amount of funding from IDA of US$ 10 million
over the 3 year period from 2011/12 to 2013/14 is estimated to be US$ 3, 4 and 3 million
respectively.
18. In order to crystallize GOSL commitment to the improvement in maintenance strategy, it
is expected that the part of the GOSL funding that is provided currently as a budgetary allocation
to RMTF will be channeled as co-finance to fund the roads selected for maintenance under the
identified criteria. It is expected that the funding of the prioritized road list meeting the IRI 4 to 7
will be shared equally between IDA and GOSL. Hence, for the first year it is expected that
GOSL will contribute US$ 3 million from its budgetary allocation to meet the maintenance
funding by IDA for an amount of US$ 3 million. It is however intended that the remaining
funding from the annual budgetary allocation of IDA will go towards funding other components
under maintenance. It is also intended that about 70% of the amount of funding channeled
towards maintenance will need to be allocated based on the agreed methodology in the future.
19. It is expected that the prioritized road list will be offered for periodic maintenance
through contracts and will not be funding force account.
20. The flow chart below depicts the functions of different agencies in the process of
financing maintenance.
27
28
29
ANNEX 5: REVISED ESTIMATE OF PROJECT COST
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
Project Cost By Component and/or Activity Local Foreign Total CR 4138 CE CR 4429 CE second AF
US$ million US$ million US$ million US$ million US$ million US$ million
1. Component 1 - Rehabilitation of priority National Roads
Civil Works - Phase 1 6.36 14.84 21.20 20.00 1.20
Civil Works - Phase 2 18.51 43.19 61.70 61.70
Design Review and Supoervison - phase 2 0.75 1.75 2.50 2.50
sub total Component 1 25.62 59.78 85.40 - 20.00 65.40
2. Component 2 -Institutional Strengthenning and improvements
in asset management practices
Financing of maintenance 6.00 4.00 10.00 10.00
TA for RMTF 0.30 0.70 1.00 1.00
Road Safety 0.30 0.70 1.00 1.00
Goods - 1.00 1.00 1.00
Incremental Operating Costs - PMU 1.50 - 1.50 0.50 1.00
PCU 1.00 - 1.00 1.00
RMTF 0.50 - 0.50 0.50
Instituational Strenthenning & Consultancies 0.42 0.98 1.40 0.40 1.00
sub total Component 2 10.02 7.38 17.40 2.90 - 14.50
Total baseline cost 35.64 67.16 102.80 2.90 20.00 79.90
Unallocated(10% physical contingencies & 12.5% price contingencies) 6.03 14.07 20.10 20.10
-
Total Project Cost 41.67 81.23 122.90 2.90 20.00 100.00
30
ANNEX 6: REVISED IMPLEMENTATION ARRANGEMENTS AND SUPPORT
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
A. IMPLEMENTATION ARRANGEMENTS:
1. Component 1 -Rehabilitation and Improvements to “A” Class roads – The
implementation of this component will be carried out by the PMU established within the RDA in
the same manner as in the Parent Project. Based on the lessons learnt however, the engineers
from the PMU, each in charge of a construction package will be based in the field.
2. Supervision of phase 1 (K-T Section) will be carried out as a pilot by the Project
Consultancy Unit (PCU) established under the RDA (see annex 4 for further details on the
supervision arrangements by the PCU).
3. Supervision of Phase 2 (A-D Section) will be carried out by a supervision consultant
selected through a competitive process and will act as the “engineer” to the contract.
4. Component 2 – (i) Financing of periodic maintenance – The RMTF secretariat will be
responsible for the management of the funding for periodic maintenance for the RDA as well as
incremental operating cost of the RMTF; (ii) Road Safety and Institutional strengthening -The
PMU will be responsible for the implementation of Road Safety and Institutional strengthening.
The funding for Incremental operating cost of PMU and PCU will also be managed by the PMU.
5. The civil works under component 2 will be implemented by the Provincial Directors of
the RDA in the field.
6. Presently, the periodic maintenance work is carried out through the Works and MMC
divisions of the RDA based on the following distinctions.
(a) Works Division – Executes widening and improvement work and high value periodic
maintenance. The maintenance work falls within DBST and AC overlays. The value of
work handled by this division amounts to SLRs. 20 Billion of which 80% would be
maintenance and 20% of widening and improvement. All of the works is carried out
through contracts.
(b) MMC Division – Executes lower value periodic maintenance, routine maintenance and
maintenance of weak bridges. The periodic maintenance intervention executed by this
division will be restricted to sand sealing. Currently carries out work that is funded only
through GOSL. Only 5% of the work executed by this division is through contracts. The
work is executed by the provincial directors in the field.
7. Based on the present system at RDA, the implementation of all of the maintenance
contracts will be carried out by the Provincial Director‟s office in the field regardless of which
division carries out the procurement as the RDA‟s implementation unit in the field is the
Provincial Director.
31
B. FINANCIAL MANAGEMENT ARRANGEMENTS:
8. PMU:
(a) Component 1 – The existing PMU under the Parent Project will handle all activities
under this component which consist of Rehabilitation of “A” class roads under phase 1
and 2 and design review and supervision of phase 2.
(b) Component 2 – The PMU will handle the incremental operating costs of the PMU, PCU,
requirements under the “Road safety” identified through the capacity assessment and
institutional strengthening and goods required for the PMU, PCU, RDA, MOPH and the
MOFP. The PMU will handle all agreed costs related to PCU and hence a FM assessment
of PCU is not required as PCU will not be involved in any FM activities. The staff of
PCU would mostly consist of RDA staff and few externally recruited staff.
(c) A total estimated amount of US$ 89.5 million will be handled by the PMU under
component 1 and 2. The existing Project Accountant of PMU would be the focal point in
overall financial management activities.
9. RMTF - It is proposed that the newly formed RMTF Secretariat will handle(i) IDA
funding for periodic maintenance and GOSL funds allocated for all maintenance; (ii) Other
recurrent costs of the RMTF which will include the cost of externally recruited staff of RMTF
Secretariat.
(a) The total amount of IDA financing that would be handled by RMTF Secretariat will be
an amount of US$ 10 million for financing of periodic maintenance and estimated
amount of US$ 0.5 million for recurrent cost of the RMTF. Hence, RMTF will be
responsible for FM arrangements for identified activities under component 2 only.
(b) RMTF Secretariat would handle IDA funds of US$ 10 million along with other funds
(GOSL funds at the moment) that are channeled through RMTF for maintenance.
However, RMTF would only be a channel to direct funds for maintenance as per agreed
programs to the respective beneficiaries (e.g. RDA). However, it is agreed that the
ultimate spending unit with regard to the US$ 10 million of IDA funds will be the
Finance Division of RDA.
(c) The FM capacity of Finance Division of RDA was assessed at appraisal and found to be
satisfactory. The focal point of contact at RDA for this purpose is the Accountant at RDA
who has been assigned to handle FM activities of IDA financing of periodic maintenance
under the Director Finance of RDA. The Finance Manager appointed for RMTF would
also co-ordinate with RDA finance unit to have suitable FM arrangements required for
IDA financing that flows into RDA from RMTF.
(d) A separate operations manual also covering FM procedures and guidelines are prepared
for RMTF by consultants to handle overall FM arrangements of the funds handled by
32
RMTF. The Finance Manager appointed for RMTF would be the focal point of contact in
coordinating FM arrangements relevant to RMTF.
10. Strengths. PMU has a well established fully functional finance unit headed by an
Accountant and consists of experienced Financial Assistants and some support staff whoare
conversant with IDA guidelines and procedures.
11. Weaknesses and Action Plan. Documentation of expenditure for civil works in IUFR
and replenishment of DA experiences significant delays due to delays in contract updation and
variance in contract values in the disbursement system. PMU should continuously monitor the
contracts and ensure the IUFR & WA submission happens when all relevant contract values are
approved and duly updated in the disbursement system.
12. Staffing
(a) Component 1: The existing staff at the PMU will manage the FM activities of the
component 1 and prescribed activities of component 2. PMU is equipped with a project
accountant and other FM support staff and had been performing satisfactorily under
parent project and first AF.
(b) Component 2: the RMTF that would be set up under MOPH will have identified staff to
handle FM activities of the RMTF. The same staff would manage and handle the FM
arrangements for the US$10.5 million that would be given by IDA into RMTF. In
addition, the Director Finance of RDA will be responsible for FM activities related to the
IDA funding and the relevant portion of GOSL funding which flows into RDA through
RMTF.
13. Accounting Policies and Procedures: The project would follow the accrual basis of
accounting. The project would adopt the accounting policies laid out in the Financial and
Administrative Regulations of the Government of Sri Lanka. In addition, the project would be
guided by the Circulars issued by the MOFP and the MOPH. The FM manual prepared by PMU
for parent project would be updated to reflect the payment procedures involved in the PCU.
Detailed accounting procedures and disbursement approval systems for RMTF are also laid out
in the operations manual that has been prepared by consultants for RMTF.
14. Accounting System: The PMU would use its existing MIS to record and report financial
transactions of the project. The Finance Division of RDA would use their existing Government
accounting system to record activities funded by IDA. An off the shelf accounting system has
been recommended by the consultants for RMTF. This system is proposed to be used to record
and report financial transactions of the RMTF. The proposed system is capable of identifying
and recording different sources and classification of uses of funds according to components and
activities. The identified sources of funds for RMTF currently are IDA funds, Domestic Funds,
and proceeds through investment of treasury bills. Expenditures would be recognized in RMTF
when the incurred expenditures by the ultimate beneficiaries (e.g. RDA) are reported back to
RMTF.
33
15. Budgeting: The IDA credit amounts allocated to PMU and RMTF will have to be
included in the overall budget of MOPH as separate budget lines (as separate programs).
16. PMU would receive budget allocations from Treasury under foreign aid related domestic
fund, and foreign aid loan. Internally, a detailed project budget would be prepared to clearly
specify the funding available for the related activities. This would include the costs incurred on
behalf of the PCU as well and it is proposed that at the beginning of each year, PMU prepares a
master budget and a separate budget for the PCU costs also to be included in this so that it gets
monitored against their actual expenditure.
17. RMTF would receive budget allocations from Treasury under foreign aid related
domestic fund, foreign aid loan and domestic funds. RMTF would submit a consolidated budget
request for road maintenance from the proposals submitted by all beneficiaries (e.g. RDA).
GOSL would channel all of its budgetary allocations to national road maintenance through
RMTF. At the beginning of the year, GOSL budgetary allocations will be published, including
funds allocated to RMTF. RMTF will make an estimate of the funds available for the year and
decide on the allocations to be made to beneficiaries along with an identified list of prioritized
roads selected for maintenance programs. This information will have to be submitted to IDA in
order to identify which programs would receive IDA funds along with GOSL funds for periodic
maintenance. RMTF based on this criteria would disburse the relevant portion of IDA funds and
GOSL funds to RDA for maintenance of identified programs. IDA funds would only be used for
periodic maintenance.
18. Fund Flow: There will be 2 Designated Accounts (DA‟s) in USD that needs to be
opened for PMU and RMTF for the activities they would respectively handle. The DA of PMU
for the second AF will be separate from the existing DA‟s under the curren t credits. IDA
financing will include taxes and duties.
19. Allocation of credit proceeds
Category
Amount of the
Credit Allocated
(US)
Percentage of Expenditures to
be Financed (inclusive of Taxes)
(1) For PMU Portion Works, goods,
consultant services, non-consultant services,
training and incremental operating costs*
89,500,000 100%
(2) For RMTF portion
a) Works for road maintenance 10, 000,000 100%
b) Goods, consultant services, training and
incremental operating costs* 500,000 100%
TOTAL AMOUNT 100,000,000 100%
*IOC will include allowances to staff in accordance with MS Circular 33 C but excluding salaries of State
Sector.
34
(a) PMU: One Designated Account (DA) in USD will need to be opened for the project.
The DA would be managed and handled by PMU to fund their respective activities under
component 1 and 2. IDA funds would be advanced to the DA. A separate Rupee account
also needs to be opened by the PMU to receive funding through the DA. This is to easily
track the inflow and outflow of the credit funds. All payments related to activities
identified under PMU would be executed and effected by PMU. Replenishment of the
DAs would be based on the Interim Unaudited Financial Reports (IUFRs) prepared and
submitted by the PMU Project Accountant.
For large payments, the project has the option of requesting a direct payment to the
supplier by: (a) Central Bank using the proceeds in the DA; (b) IDA against the credit.
The allocations under direct foreign aid would be utilized for this mode of payment.
Please refer Fund Flow Chart 1.
(b) RMTF: For periodic maintenance activities identified under RMTF, the allocated
amount will flow from RMTF to the respective beneficiaries. For IDA funds for
maintenance, the ultimate beneficiary would be RDA.
(c) One DA in US$ will need to be opened for RMTF. The DA would be managed and
handled by RMTF to fund related activities. IDA funds would be advanced to the DA. A
separate local Rupee account is proposed to be opened for the RMTF to receive funding
through the DA for periodic maintenance and for recurrent costs of RMTF. This is to
easily track the inflow and outflow of the credit funds. Replenishment of the DAs would
be based on the IUFRs prepared and submitted by the RMTF Finance Manager. IUFRs
would be sent to IDA quarterly by the project for the replenishment of the respective DA.
The RDA will also open a specific Rupee account to receive IDA funds from the RMTF
for identified road maintenance programs under IDA financing. The related GOSL
contribution for these programs would flow from RMTF to the same rupee account at
RDA. RDA would then use this Rupee account to make payments to contractors for
agreed programs that is eligible for IDA financing.
Please refer Fund Flow chart 2.
20. All Rupee accounts that need to be opened as in paragraphs 18 and 19 above will have to
be opened with the approval of Department of Treasury Operations.
21. Disbursement Condition: The funds under RMTF can only be withdrawn once (i) IDA
has received satisfactory evidence that the Deed of Trust has been approved by the relevant
authority; and (ii) Key positions (Secretary, Highway Engineer and Finance Manager) in the
RMTF have been filled with qualifications and terms of reference agreed between IDA and
GOSL.
22. Internal Controls: The Project will follow the central government Financial
Regulations (FRs). Government FRs are quite comprehensive and address all aspects of
procedures and controls necessary for authorizing, approving, executing, recording, and
35
reporting expenditure. The FM arrangements of the credit will be aligned with the existing FM
arrangements of the MOPH. The MOPH is governed by the Government regulations.
23. Internal Audit. PMU & RMTF: According to the usual practice in the government, the
internal audits of PMU and RMTF would be conducted by the internal audit unit of the
MOPH/RDA headed by a qualified Internal Auditor, and assisted with experienced audit staff.
The internal audit will report directly to the Secretary, MOPH. Separate internal audit reports for
PMU and RMTF would be shared with IDA upon request. The RMTF would also perform
technical audits on the operations of beneficiaries to verify that outputs or outcomes achieved are
in accordance with specifications which gives the assurance that funds have been utilized for
intended purposes.
24. External Audit
(a) PMU: The external audit would be carried out annually by the Auditor General of Sri
Lanka (AG). The AG is the supreme audit institution of Sri Lanka and has been accepted
by IDA. An audit opinion would be submitted to IDA on the Annual Financial
Statements of the credit within 6 months from the end of each financial year.
(b) RMTF: The external audit would be carried out annually by the Auditor General of Sri
Lanka (AG). An audit opinion would be submitted to IDA on the entity Annual Financial
Statements of the credit within 6 months from the end of each financial year. This
external auditing will verify that funds have been spent in accordance with the allocations
made by RMTF.
(c) The following audit reports would be monitored in Audit Reports Compliance System
(ARCS).
Audit Reports
Implementing Agency Audit Report/Opinion Auditor Date
PMU Project Annual
Financial Statements
Auditor General June 30
RMTF Entity Financial
Statements
Auditor General June 30
(d) The entity audit report will have a separate disclosure on RMTF activities funded by
IDA. There are no ineligible expenditures or overdue audit reports for the ongoing project
or any other project that is being implemented by MOPH.
25. Financial Reporting: Quarterly IUFRs would be submitted to IDA within 45 days from
the end of each quarter. There would be two IUFRs that would be submitted to IDA by PMU and
RMTF on the format that has been agreed with the relevant agencies. The reporting formats of
RDA also would be developed by the consultants and this would be attached to the operations
manual of RMTF. RDA would need to submit the required reports to RMTF for consolidation
purposes within 30 days of end of each quarter. RDA would also need to submit statements of
36
expenditure to RMTF as and when the payments occur for expenditure recognition by RMTF.
The details of this process would be laid out in operations manual of RMTF.
(a) PMU: The Secretary, MOPH, would be responsible for the appropriate and diligent use
of project finances. The Project Director would report regarding the use of project funds
through the Secretary, MOPH.
(b) RMTF: The Secretary, MOPH, would be responsible for the appropriate and diligent use
of project finances. The Secretary, RMTF, would report regarding the use of project
funds through the Secretary, MOPH.
26. Supervision Plan: The proposed project has a “Substantial” overall FM risk rating.
Consistent with the risk-based approach to supervision, a substantial portion of the supervision
activities would consist of desk reviews of internal and external audit reports, quarterly financial
reports, supplemented by dialogue with the project staff as needed, especially in the initial years.
As and when required, other FM supervision tools and resources such as SOE reviews, site visits,
and joint missions with procurement should be used in an effort to periodically m onitor the
adequacy of FM systems.
37
38
39
27. Environmental and Social Safeguards: Component 1 - The overall implementation
support for the Environmental Assessments (EA) will be undertaken by the Environmental and
Social Specialist in the PMU, who will also conduct regular audits to ensure compliance by the
contractors. Implementation of Environmental Management Plans (EMPs) will be the
responsibility of contractors and in order to ensure this, EMP will form an integral part of the bid
documents. The Environmental and Social Officer of the PCU will provide supervision support
to phase 1. In addition, the Supervision Consultant identified for phase 2 will provide
environmental and social officers at the site level for environmental and social compliance. The
supervision consultants should ensure that the contractors prepare the Environmental Methods
Statements based on the EMPs that will have to be reviewed and approved by the PMU,
Environment and Social Division (ESD) of RDA and IDA and disclosed to public.
28. Component 2 – The PMU will prepare road-specific EMPs and RAP‟s as required for
the roads according to the ESMF of the project to be identified for maintenance. Similar to
component 1, EMPs will be implemented by contractors. The RAP will be implemented by the
Provincial Director. The ESD will take the responsibility of supervising and monitoring the
implementation of EMPs and RAP.
29. PMU in close collaboration with ESD will organize field level capacity building and
awareness creation for field-based RDA staff and contractor staff on environmental and social
safeguards.
40
ANNEX 7: ECONOMIC ANALYSIS
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
A. Methodology
1. The economic analysis was carried out for the civil works to rehabilitate and improve the
two sections Ambepussa - Dambulla (A-D) and Kantale - Trincomalee (K-T). It comprised an
assessment of costs and benefits of the project investments for A-D and K-T as compared to a
rationale “without-project” scenario and covered a period of 20 years. A residual value was
included to cover the remaining life of the facilities after the 20 year appraisal period.
2. The economic evaluation of this component was carried out using the Highway
Development and Management Model (HDM-4), a globally accepted key analytical tool for
economic analysis for highways with investment alternatives, which simulates life cycle
conditions and costs and provides economic decision criteria for multiple road design and
maintenance alternatives. The main project economic benefits are savings in vehicle operating
costs, travel time costs, and maintenance costs resulting from the road improvements.
3. The following table presents the economic analysis summary.
Ambepussa-Dambula
Ambepussa-Kurunegala 34.43 221 78.0%
Kurunegala-Galewela 40.68 215 62.4%
Galewella-Dambula 15.78 61 44.0%
Total A-D Section 90.89 498 65.1%
Kantale-Trincomalee
A06 Kantale-A15 Junction (157.3-193.45) 36.45 15.7 19.5%
A06 A15 in A12 (193.45-195.8) 2.35 3.3 30.7%
A06 A12 in Trincomalee (195.8-199.81) 4.01 4.6 28.9%
Total K-T Section 42.81 23.62 21.0%
Total Project (A-D and K-T sections) 133.7 521.51 51.0%
(*) EIRR it is a averaged weighted by number of km
Internal Rate of
Return (%) (*)NPV (US$ Million)Km
B. Data and Main Assumptions
4. Data on the cost of vehicles and tires were collected from the manufacturers and dealers
located in Sri Lanka. The data was provided by RDA. All the transfer payments such as sales tax
and excise duty were deducted from the financial cost to arrive at the economic cost.
5. Classified Traffic Volume Surveys were carried out by RDA in September 2010.
Average Daily Traffic (ADT), traffic composition and Annual Average Daily Traffic (AADT)
were provided by RDA showing the traffic composition. The contribution of freight vehicles to
41
the total traffic ranged from 12% for the K-T section and 20% for the A-D section. All type of
motorized traffic were incorporated in the economic analysis including motorcycle, small car,
medium car, delivery vehicle, four wheel drive, light truck, medium truck, heavy trucks and
articulated truck.
6. The traffic growth rates for different vehicles types and different horizon periods have
been estimated by RDA based on projections of road transport demand and vehicle class-specific
supply to meet that demand. The table below shows the estimated traffic growth rates.
Table: Growth Rates per annum (in %) for Ambepusa- Dambulla Section
MGI MG
7.7 6.8 6.1 2.8 2.8 2.8 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1
9.3 6.8 8.2 3.7 3.7 3.7 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2
7.1 4.3 7.3 3.3 3.3 3.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3 9.3
5.3 2.8 5.1 2.9 2.9 2.9 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4 5.4
4.3 2.0 3.9 2.8 2.8 2.8 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.22027 - 2032
Growth Rates per annum (in %)
2010 - 2012
2012 - 2017
2017 - 2022
2022 - 2027
LGVR2
HG3 AG3MCL TWL CAR VAN MBU LBU AG4 AG5 AG6 FVH
Table: Growth Rates per annum (in %) for Kantale-Trincomalee Section
MGI MG
9.1 8.0 7.2 3.3 3.3 3.3 7.2 7.2 7.2 7.2 7.2 7.2 7.2 7.2 7.2
9.9 7.3 8.7 4.0 4.0 4.0 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7 8.7
7.1 4.3 7.4 3.4 3.4 3.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4 9.4
6.1 3.2 5.9 3.4 3.4 3.4 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2 6.2
5.2 2.5 4.8 3.4 3.4 3.4 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3 6.3
2022 - 2027
2027 - 2032
Growth Rates per annum (in %)
2010 - 2012
2012 - 2017
2017 - 2022
CAR VAN MBU LBU AG6 FVHLGVR2
HG3 AG3 AG4 AG5MCL TWL
7. Given that the traffic data can be disaggregated into three subsections for the Ambepussa-
Dambulla section and three subsections for the Kantale- Trincomalee section, each one of the
subsection was evaluated using HDM-4. All links have flexible pavements with varying
pavement width, condition, strength and traffic characteristics. The table below presents the
length, traffic, road width and roughness of the twenty five links.
42
Table: Basic Road Characteristics
Avg Motorized (*) Avg Average (*)
Length Width Traffic Roughness
PackageLink Name (km) (m) (AADT) (IRI)
A-D Ambepussa-Kurenagala 34.4 7.0 24,344 14.2
Kurenagala-Galewella 40.7 6.0 28,783 13.8
Galewella-Dambulla 15.78 6 19,038 12.62
K-T Kantale- AA15 Junction 36.45 6 8,704 12.79
AA15 Junction-AA012 Junction 2.35 6.8 22,977 12.75
AA012 Junction - Trincomalee 4.01 6.8 30,802 11.57
Total 133.7
(*) Average was calculated for the 20-year period without a project. The economic cost applied to the A-D section was US$ 50 million and for the K-T was US$26
million.
8. The economic evaluation has been done for an analysis period of 20 years and a discount
rate of 12%. A residual value was included to cover the remaining life of the facilities after the
20 year appraisal period.
9. The road works standards considered for the analysis include: (i) without project
alternative, routine and periodic maintenance; and (ii) with project alternative, rehabilitating and
improving the existing carriageway followed by routine maintenance and periodic maintenance.
C. Results
10. Results from the cost-benefit analysis of the civil work for re-surfacing and improvement
of approximately 134 km of “A” class road indicate that the proposed investments are justified.
For the Ambepussa-Dambulla section, the Economic Internal Rate of Return (EIRR) is 65% and
a NPV is US$ 498 million (at an economic discount rate of 12%). For the Kantale-Trincomalee
section, the EIRR is 21% and the NPV is US$23.6 million (at an economic discount rate of
12%). The weighted average EIRR for the total project (including AD and KT sections) is 51%.
11. The economic evaluation was subjected to a sensitivity analysis carried out by increasing
costs by 20%, decreasing benefits by 20% and increasing costs by 20% plus decreasing benefits
by 20%, decreasing traffic growth rate by 20% and assuming zero traffic growth rate. Main
results are described in the table below.
43
Table: Main results from Sensitivity Analysis
BASIC 134 521.5 51%
Cost increases by 20% 507.1 46%
Benefits decrease by 20% 134.0 19%
Cost increases by 20% & Benefits decrease by 20% 119.5 17%
20% decrease in trafiic 396.2 44%
0% increase in traffic 258.4 40%
Km NPV (US$ Million)
Internal Rate of
Return (% ) (*)
Note: Weighted average for both sections Ambepussa-Dambulla and Kantale-Trincomalee.
12. The results from the sensitivity analysis show that these results are reasonably robust
even given reductions in traffic forecasts and increased costs. Therefore, it can be concluded that
economic viability from the investment is feasible.
44
ANNEX 8: PROCUREMENT ARRANGEMENTS
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
1. Procurement for the proposed project will be carried out in accordance with the World
Bank‟s "Guidelines: Procurement under IBRD Loans and IDA Credits " dated May 2004, and
revised in October 2006 and May 2010 (Procurement Guidelines); and "Guidelines: Selection
and Employment of Consultants by World Bank Borrowers" dated May 2004, and revised in
October 2006 and May 2010 (Consultant Guidelines) and the provisions stipulated in the
Financing Agreement. The expenditure categories are described in general below.
2. Procurement of Works under Component 1: Works to be procured under this project
include rehabilitation and maintenance of roads. Works procurement under Component 1 will be
carried out using the Bank‟s Standard Bidding Documents (SBD) irrespective of International
Competitive Bidding (ICB) or National Competitive Bidding (NCB). Bids will be invited in two
phases as follows:
(a) Phase 1: Four individual NCB packages to be launched in parallel with a bidding period
of 3 weeks. Evaluation of bids for the four contracts will be done concurrently. In order
to address the qualification and price concerns, the bidding document of each NCB
contract will specify that in case lowest responsive bidder is in one or more contracts, the
award will be based on the satisfaction of the aggregate qualification requirement for
those respective contracts. The bidding documents will also specify that bidders may
offer cross discounts.
(b) Phase 2: Single ICB in four slices/lots with the possibility for bidders to submit bids for
more than one slice/lot and offer cross discounts. Award will be made to the combination
of bids offering the lowest cost to the Employer and meeting the aggregate qualification
requirement for the respective slices/lots.
3. Procurement of Works under Component 2: These works contracts, in general costing
around LKR 150 million, will be invited under NCB procedure. The NCB procedure could be
adopted for a ceiling of up to US$ 5 million per contract. Small value contracts costing less than
LKR 5 million will be procured under shopping procedure. Following country specific Standard
Bidding Documents (SBD), as agreed by the Bank, will be used for works contracts under
periodic maintenance activities.
ICTAD/SBD/ 2 will be used for those contracts over LKR 100 million
ICTAD/SBD/ 1 will be used for those contracts between LKR 10 million and 100 million
ICTAD/SBD/ 3 will be used for those contracts less than LKR 10 million
4. The periodic maintenance contracts under Component 2 will be for value over LKR 10
million which will be under the purview of works division. Provision will be made to introduce
contracts of less than LKR 10 million which will be under the purview of the MMC Division and
procured by the MMC Division.
45
5. Procurement of Goods: No major procurement of goods is envisaged under this
additional financing. Procurement of goods will be carried out using the Bank‟s SBD for all
ICB, and national SBD agreed with the Bank for procurement of goods under NCB procedures.
Goods estimated to cost more than US$50,000 and less than US$600,000 equivalent per contract
may be procured following NCB procedures. Goods estimated to cost US$50,000 equivalent or
less per contract will be procured on the basis of Shopping.
6. Procurement of non-consulting services. Non-consulting services required under the
project will be procured under NCB or Shopping procedures, following the same thresholds as
for goods.
7. Requirements under National Competitive Bidding (NCB). In order to ensure economy,
efficiency, transparency and broad consistency with the provisions of the Procurement
Guidelines, goods, works, and non consultant services procured under the National Competitive
Bidding (NCB) method shall be subject to the following requirements:
(i) Only the model bidding documents for NCB agreed with the Bank shall be used for
bidding;
(ii) Invitations for bids will be advertised in at least one widely circulated national daily
newspaper, and bidding documents will be made available at least twenty one (21) days
before, and issued up to, the deadline for submission of bids;
(iii) Qualification criteria will be stated in the bidding documents, and if a registration process
is required, a foreign firm declared as the lowest evaluated responsive bidder shall be
given a reasonable time for registering, without let or hindrance;
(iv) Bids will be opened in public in one location, immediately after the deadline for the
submission of bids, as stipulated in the bidding document (the bidding document will
indicate the date, time and place of bid opening);
(v) Except in cases of force majeure or exceptional situations beyond the control of the
implementing agency, the extension of bid validity will not be allowed;
(vi) Bids will not be rejected merely on the basis of a comparison with an official estimate;
(vii) Except with the prior concurrence of the Bank, there will be no negotiation of price with
bidders, even with the lowest evaluated bidder;
(viii) A bidder's bid security will apply only to the specific bid, and a contractor‟s performance
security will apply only to the specific contract under which they are furnished; and
(ix) Bids will not be invited on the basis of percentage premium or discount over the
estimated cost, unless agreed with the Bank.
8. Selection of Consultants Firms: Selection of a supervision consultant for phase 2 would
be the only large value consultancy contract, which is envisaged under this additional financing.
This contract estimated to cost more than US$ 200,000 will be selected under Quality and Cost
Based Selection (QCBS).
9. Short lists of consultants for consultancy services estimated to cost less than US$200,000
equivalent per contract may be comprised entirely of national consultants.
46
10. Selection of Individual Consultants: Individual consultants will be hired for specific
assignments, and for key project implementation support positions either through competitive
basis or sole source basis.
11. Review by the Bank: (i) All works contracts, estimated to cost more than US$ 4 million
and the first NCB contract procured by each implementing agency; (ii) All goods and non
consultancy services estimated to cost more than US$600,000; (iii) All direct contracting for
goods, works, and non-consultancy; (iv) All consulting contracts for firms costing more than
US$ 500,000; (v) All consulting contracts for individuals costing more than US$ 200,000; (vi)
All SSS contract for firms and ; (vii) All sole source contracts for individuals will be subject to
the Bank‟s prior review.
The procurement capacity assessments of implementing agencies:
12. An assessment of the capacity of the PMU to implement procurement actions for the
project was carried out. The assessment of the PMU reviewed the organizational structure for
implementing the project and the interaction between the staff responsible for procurement.
PMU have been involved in parent project and the procurement specialist attached to the PMU
has experience in Bank procurement.
13. The procurement capacity assessment of the Works Division was carried out. The Works
division has no experience in Bank procurement guidelines. It revealed that Works Division
handles large contracts in volume and value but has very limited resources to ensure procurement
compliance.
14. The MMC Division will be responsible for maintenance contracts including sand sealing
and maintenance of bridges and culverts. The procurement assessment was carried out at the
maintenance division which showed no experience in carrying out Bank financed projects. The
assessment of procurement capacity at provincial director‟s level will be carried out on a sample
basis taking into account the roads selected for periodic Maintenance.
15. The overall procurement capacity assessment: The overall procurement risk under this
additional financing is rated as „substantial.‟ Bank will provide continuous assistance to build the
procurement capacity of the implementing agency. Capacity building program(s) will be
launched for the Works and MMC Division of the RDA once the procurement plan for the
periodic maintenance is prepared and cleared by the Bank. The overall project procurement risk
will be upgraded to moderate once the remedial measures, as listed above, are in place.
16. Procurement Plan: The PMU has developed the initial procurement plan for the first 18
months of project implementation on the basis for the different procurement methods or
consultant selection methods, the need for prequalification, estimated costs, prior review
requirements, and time-frame. The procurement plan for the first 18 months of project
implementation is enclosed herewith. This plan has been agreed between the PMU and the Bank
Team on February 28, 2011 and these plans will be available at the implementing units of the
RDA. It will also be available in RDA website and in the Bank‟s external website. The
47
procurement plan will be updated annually or as and when required to reflect the actual project
implementation.
17. Post Review: All contracts not covered under prior review by the Bank will be subject to
post review during Implementation Support Missions and/or special post review missions
including missions by consultant hired by the Bank.
18. Frequency of Procurement Supervision: Two missions in a year each at an interval of
six months are envisaged for procurement supervision of the proposed project.
48
Procurement Plan for Works Country/Borrower:
Project Name:
Implementing Agency:
GPN # and Date Published:
Prior Review Thresholds: Component 1 - Works: >US$ 4 million
Original Plan Approved Date (at Appraisal/Negotiations) :
* ICB-International Competitive Bidding; NCB-National Competitive Bidding; NS-National Shopping; DC-Direct Contracting
LKR(Mn) USD(Mn)
Date Currency Original
Amount
Final
Amount
(amendm1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Planned 3-Feb-2011 21-Feb-2011 4-Ari-2011 2-May-2011 26-May-2011 25-Jun-2011
Revised 24-Feb-2011 1-Mar-2011 4-Mar-2011 18-Apr-2011 2-May-2011 12-May-2011 26-May-2011 25-Jun-2011
Actual 3-Feb-2011
Planned 3-Feb-2011 21-Feb-2011 4-Ari-2011 2-May-2011 26-May-2011 25-Jun-2011
Revised 24-Feb-2011 1-Mar-2011 4-Mar-2011 18-Apr-2011 2-May-2011 12-May-2011 26-May-2011 25-Jun-2011
Actual 3-Feb-2011
Planned 3-Feb-2011 21-Feb-2011 4-Ari-2011 2-May-2011 26-May-2011 25-Jun-2011
Revised 24-Feb-2011 1-Mar-2011 4-Mar-2011 18-Apr-2011 2-May-2011 12-May-2011 26-May-2011 25-Jun-2011
Actual 3-Feb-2011
Planned 3-Feb-2011 21-Feb-2011 4-Ari-2011 2-May-2011 26-May-2011 25-Jun-2011
Revised 24-Feb-2011 1-Mar-2011 4-Mar-2011 18-Apr-2011 2-May-2011 12-May-2011 26-May-2011 25-Jun-2011
Actual 3-Feb-2011
Planned 18-Jul-2011 1-Aug-2011 4-Aug-2011 15-Sep-2011 7-Oct-2011 21-Oct-2011 5-Nov-2011 5-Dec-2011
Revised
Actual
Planned 18-Jul-2011 1-Aug-2011 4-Aug-2011 15-Sep-2011 7-Oct-2011 21-Oct-2011 5-Nov-2011 5-Dec-2011
Revised
Actual
Planned 18-Jul-2011 1-Aug-2011 4-Aug-2011 15-Sep-2011 7-Oct-2011 21-Oct-2011 5-Nov-2011 5-Dec-2011
Revised
Actual
Planned 18-Jul-2011 1-Aug-2011 4-Aug-2011 15-Sep-2011 7-Oct-2011 21-Oct-2011 5-Nov-2011 5-Dec-2011
Revised
Actual
Planned
Revised
Actual
10 Sub-Total of
Component 1
9
1,600 14.41 PriorOmaragolla -
Dambulla
ICB
Prior
1,742 15.69Ibbagamuwa -
OmaragollaWB/ RSAP
II/AD 03
ICB
8
Thambalaga
muwa -
Sardapura
Sarpura -
Trincomalee
2,080 18.74
9,823
4
7
88.49
Prior
WB/ RSAP
II/AD 04
ICB
WB/ RSAP
II/KT 04
Pothuhera -
Ibbagamuwa
NCB
Ambepussa -
Pothuhera5 WB/ RSAP
II/AD 01
6 WB/ RSAP
II/AD 02
NCB
15.34 PriorICB
789 7.11 Prior
1,703
2 WB/ RSAP
II/KT 02
Ganthalawa -
Thambalaga
muwa
NCB
3 WB/ RSAP
II/KT 03
Prior
597 5.38 Prior
666 6.00
647 5.83 Prior
Pu
blis
h
IFB
in
Nat
ion
al
new
spap
er
Dea
dlin
e
for
sub
mis
sio
n o
f b
ids
Let
ter
of
Acc
epta
nc
e
Stage
Ban
k's
N/O
for
DB
D
wit
h IF
B
Su
bm
it
BE
R f
or
Ban
k's
N/O
Ban
k's
N/O
for
BE
R
1 WB/ RSAP
II/KT 01
Kantale -
Ganthalawa
& Kantale -
Peratuweli
Road
NCB
Signing of contract
Pri
or/
Po
st
Rev
iew
by
Ban
k**
Source of Funds:RSAP Second Additional Finance (Component 1)
Update as of : 28-Feb-2011
** For post review, fill in columns 1 to 7, 10 & 11, 13 to 16, and 18 to 21
Road Development AuthorityP
acka
ge
No
.
Des
crip
tio
n Su
bm
it
DB
D w
ith
IFB
fo
r
Ban
k's
N/O
Met
ho
d o
f
Pro
cure
me
nt*
Estimated Cost
*** Indicate extensions/modifications etc.
Ser
ial N
o.
Credit/Grant #:
Government of Sri Lanka
Road Sector Assistance Project II
49
Procurement Plan Goods
Prior Review Thresholds: Component 1 - Goods: >US$ 0.6 million
* ICB-International Competitive Bidding; NCB-National Competitive Bidding; IS-International Shopping; NS-National Shopping; DC-Direct Contracting
LKR (Mn) USD (Mn) Date Currency Amount
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Planned N/A N/A 31-Oct-10 22-Nov-10 N/A N/A 03-Mar-11
Actual
Planned N/A N/A 25-Feb-11 04-Mar-11 N/A N/A 18-Mar-11
Actual
Planned N/A N/A 04-Mar-11 25-Mar-11 N/A N/A 08-Apr-11
Actual
Planned 04-Mar-11 17-Mar-11 20-Mar-11 11-Apr-11 25-Apr-11 09-May-11 10-May-11
Actual
81.5 0.734
Post
5
Sub Total (4138-CE)
60.00 0.541
0.104 Post
4
WB
/RS
AP
II/G
D/0
4 Procurement of Lab Equipment for PCU NCB 02 Sets
0.045 Post
3
WB
/RS
AP
II/G
D/0
3 Procurement of Office Equipment (under
different packages) for RSAP site offices, PCU
and RMTF
NCB/NS Item 11.5
2
WB
/RS
AP
II/G
D/0
2 Procurement of Office Furniture for RSAP site
offices, PCU and RMTF
NS Item 5
Dead
lin
e f
or
su
bm
issio
n o
f
bid
s
Ban
k's
N/O
fo
r
BE
R
Post
Pu
blish
IF
B in
Nati
on
al
new
sp
ap
ers
an
d U
ND
B
1
WB
/RS
AP
II/G
D/0
1 Procurement of 29nos. Computers, 33 nos.
Moniters, 29 nos. UPS, one Laptop,one
Scanner, one Printer and one Digitel Camera to
Planning Dev., Training Dev., Highway Design
Dev. And PMU
NCB Item 5 0.045
Signing of contract
Descri
pti
on
Qu
an
tity
(Nu
mb
er)
Estimated Cost (Million)
Pri
or/
Po
st
Revie
w b
y
Ban
k**
Stage
Su
bm
it D
BD
wit
h IF
B f
or
Ban
k's
N/O
Meth
od
of
Pro
cu
rem
en
t*
Su
bm
it B
ER
fo
r
Ban
k's
N/O
Ban
k's
N/O
fo
r
DB
D w
ith
IF
B
Source of Funds: CREDIT 4138-CE
Original Plan Approved Date (at Appraisal/Negotiations) :
Update as of : 28-Feb-2011
** For post review, fill in columns 1 to 8, 11 & 12, 14 to 17, and 19 to 22
*** Indicate extensions/modifications etc.
Seri
al N
o.
Packag
e N
o.
50
Procurement Plan for Consultancy Services Country/Borrower:
Project Name: Road Sector Assistance Project II
Implementing Agency: Road Development Authority
GPN # and Date Published:
Original Plan Approved Date (at Appraisal/Negotiations) :
Prior Review Thresholds: Consultancy servicess: Firms >$500,000, IC>$200,000 and all SSS contracts* QCBS-Quality & Cost Based; QBS-Quality Based; FBS-Fixed Budget; LCS-Least Cost; CQ-Consultant's Qualifications; SSS-Single Source Selection; IC-Individual Consultant; IC(S)-Sole Source IC
LKR (Mn) USD (Mn) Date Curren
cy
Original
Amount
Final
Amount
(amendmen
ts)1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Planned 4-Aug-2009 9-Sep-2009 14-Oct-2009 30-Mar-2010 22-Apr-2010 13-May-2010 28-May-2010 18-Jun-2010 mn/dd/yr mn/dd/yr mn/dd/yr
Revised 1-Sep-2010 15-Sep-2010 21-Sep-2010 18-Oct-2010 25-Feb-2011 11-Mar-2011 25-Mar-2011 30-Mar-2011 12-Apr-2011 11-May-2011
Actual 4-Aug-2009 7-Sep-2010 30-Sep-2010 1-Oct-2010 01.Nov-2010
Planned N/A N/A N/A 22-Sep-2009 12-Oct-2009 N/A N/A 27-Oct-2009 N/A N/A 10-Dec-2009
Actual N/A N/A 22-Sep-2009 12-Oct-2009 N/A 27-Oct-2009 N/A 10-Dec-2009 LKR 1,115,000.00 Mr. A G
Amarasingh
e / Srilankan
N/A 03.28.2010 669.000.00 Contract
completed
Planned N/A N/A N/A N/A N/A N/A N/A N/A N/A 8-Dec-2009 4-Mar-2010
Actual N/A N/A N/A N/A N/A N/A 08-Dec-2009
(SSS
Clearance
form)
4-Mar-2010 LKR 309,626.24 National
Building
Research
Organization
N/A 04.30.2010 30,963.00 Contract
completed
Planned N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 24-Jun-2010
Actual N/A N/A N/A N/A N/A N/A N/A 24-Jun-2010 LKR 12,043,584.00 Central
Engineering
Consultancy
Bureau
Contract
completed
Planned N/A N/A N/A N/A N/A N/A N/A N/A N/A 13-Dec-2010 21-Dec-2010
Actual 13-Dec-2010
(SSS
Clearance
form)
1-Feb-2011 University of
Moratuwa
Contract
Awarded
Planned N/A N/A N/A N/A N/A N/A N/A N/A N/A 15-Mar-2011 29-Mar-2011
Actual
Planned 19-Apr-2011 N/A N/A 23-May-2011 6-Jun-2011 N/A N/A 27-Jun-2011 N/A N/A 12-Jul-2011
Actual
Planned
Actual
Planned
Actual
Planned
Actual
WB
/RS
AP
II/P
R/C
S/0
1
Consultancy
Servicers for
Design Review,
Construction
Supervision and
Contract
Administration of
National Road -
QCBS TB
Pu
blis
hN
oti
ce
for
EO
I
2.5 Prior
Credit #:
Pu
blis
h
Co
ntr
act
Aw
ard
inU
ND
B&
Nat
ion
al
280
Ban
k's
N/O
for
TE
R
Ban
k's
N/O
for
sho
rtlis
tan
d
dra
ft R
FP
Estimated Cost
Su
bm
itC
ER
&
init
iale
dd
raft
neg
oti
ated
con
trac
t fo
r
Su
bm
itsi
gn
ed
con
trac
tco
py
to B
ank
Nam
e/n
atio
nal
it
yo
fth
e
con
sult
ant
Dea
dlin
efo
r
sub
mis
sio
no
f
pro
po
sals
Op
enin
go
f
fin
anci
al
pro
po
sals
N/A
Prior
Post
Prior
Prior
Post
0.0090
0.0180
0.0108
0.0027
2
1
1
Co
ntr
act
Co
mp
leti
on
Sta
tus/
Rem
ark
s **
*
Signing of Contract
Su
bm
itT
ER
for
Ban
k's
N/O
Des
crip
tio
n
Su
bm
it
sho
rtlis
tan
d
dra
ftR
FP
for
Ban
k's
N/O
Issu
eR
FP
to
sho
rtlis
ted
firm
s
** For post review, fill in columns 1 to 8, 10, 12 & 13, 15, 17 to 20, and 22 to 25
RF
P N
o.
12 [GOSL
Funding]
1.2
0.3
Ser
ial n
o.
2 LS
WB
/RS
AP
II/P
R/C
S/0
2W
B/R
SA
P/P
R/C
S/0
3
4
Road Safety Audit
for Kantale
Trincomalee Road
SSS
7
LS
WB
/RS
AP
/PR
/CS
/06
LS
WB
/RS
AP
/PR
/CS
/04 LSConsultancy
Services for
Design Review of
National Road
from Kantale to
Trincomalee
3 Obtaining Baseline
Data from the
NBRO to Prepare
Environment for
Nochchiyagama -
Trincomalee Road
SSS
Road User
Satisfaction
Survey
SSS 6
WB
/RS
AP
/PR
/CS
/05
Source of Funds: CREDIT 4138-CE
Source of Funds: GOSL
5
10
LS
0.04054.5
9
8
Safety Awareness
Campaign
FBS
Proposals
under
evaluation
Update as of : 28-Feb-2011
*** Indicate extensions/modifications etc.
Government of Sri Lanka.
Met
ho
do
f
Sel
ecti
on
*
Sta
ge
Lu
mp
sum
/Tim
e
Bas
ed
Pri
or/
po
st
revi
ewb
y
Ban
k**
Exp
end
itu
re
incu
rred
to
dat
e
Ban
k's
N/O
for
CE
R&
init
iale
d
dra
ft
neg
oti
ated
Source of Funds:RSAP Second Additional Finance
Source of Funds: CREDIT 4138-CE
IC
Source of Funds:RSAP Second Additional Finance (Component 2)
Sub Total (Additional Financing
Component 1)
Sub Total (Additional Financing
Component 2)
LS
Preparation of
Social
Assessments and
Resettlement
Action Plan for
new Road
Sections -RSAP II
SSS
20
Sub Total (Credit 4138-CE)
WB
/RS
AP
/PR
/CS
/07
2.5
0.180220
0.1802
280
51
Procurement Plan for Non-consultancy Services Country/Borrower:
Prior Review Thresholds: Non-Consultancy Services: >US$ 0.6 million
* ICB-International Competitive Bidding; NCB-National Competitive Bidding; IS-International Shopping; NS-National Shopping; DC-Direct Contracting
LKR (Mn) USD (Mn) Date Currency Value
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Planned N/A N/A 4-Oct-11 18-Oct-11 N/A N/A 01-Nov-11
Actual
Planned N/A N/A 4-Oct-11 18-Oct-11 N/A N/A 01-Nov-11
Actual
Planned N/A N/A 4-Oct-11 18-Oct-11 N/A N/A 01-Nov-11
Actual
Planned
Actual
4 Sub Total
(Component 2)
32 0.288
3
WB
/RS
AP
II/N
CS
/03 Safety Awareness
Campaign through
Outdoor Advertising
NS 5 0.045 Post
2
WB
/RS
AP
II/N
CS
/02 Safety Awareness
Campaign through
Electronic Media
NS 20 0.180 Post
1
WB
/RS
AP
II/N
CS
/01 Safety Awareness
Campaign through Print
Media
NS 7 0.063 Post
Signing of contract
Su
bm
it
DB
D w
ith
IFB
fo
r
Ban
k's
N/O
Pu
blis
h IF
B
in N
atio
nal
new
spap
er
s an
d
Dea
dlin
e
for
sub
mis
sio
n
of
bid
s
Ban
k's
N/O
for
BE
R
Ban
k's
N/O
for
DB
D
wit
h IF
B
Su
bm
it
BE
R f
or
Ban
k's
N/O
Update as of : 28-Feb-2011
** For post review, fill in columns 1 to 8, 11 & 12, 14 to 17, and 19 to 22
*** Indicate extensions/modifications etc.
Ser
ial N
o.
Pac
kag
e
No
.
Des
crip
tio
n
Met
ho
d o
f
Pro
cure
me
nt*
Estimated Cost
Pri
or/
po
st
revi
ew b
y
Ban
k**
Sta
ge
Source of Funds:RSAP Second Additional Finance (Component 2)
Government of …………………….
Project Name: Credit/Grant #:
Implementing Agency:
GPN # and Date Published:
Original Plan Approved Date (at Appraisal/Negotiations) :
52
ANNEX 9: PEACE AND RECONCILIATION ASSESSMENT
Sri Lanka: Road Sector Assistance Project – Second Additional Finance
1. The Peace and Reconciliation Assessment for the project has been carried out as part of
Social Assessment of the project. Overall the project is expected to benefit the community by
accelerating the ongoing development programmes of the conflict affected Northern and Eastern
provinces. Consultations have been carried out with all stakeholders to ascertain their views and
concerns. In the process of consultation special attention was paid to consult women, youths,
ethnic groups and other vulnerable groups. The key issues identified under the project are a) need
to ensure equal attention to all ethnic minorities, poor and vulnerable groups among project
affected persons and b) minimize potential social tension between contractor and community
during construction period. These are generic concerns of road projects doing rehabilitation of
existing roads and are being addressed through ESMF, EMPs and RAPs.
Peace & Reconciliation Assessment Based on the application of the Reconciliation and Conflict Filter Assessment Guidance
4
Key Issues
Description of Issues Risk
Rating
Measures to address the Issues Rating of
residual
risk
I. Project Context
Main social and
political risks and
conflict generated
needs:
1.Loss of physical
assets or access to
property during site
clearance for road
construction
2.Traffic delays,
accidents pollution and
immigration of labour
during construction
Improvement of the two sections
of A006 would help to accelerate
the development process of the
conflict affected area as well as the
rest of the country.
The project will also provide funds
for selected national roads located
nationwide for maintenance, and
therefore, project interventions
will be country wide.
The most significant stakeholder
who is negatively affected by the
Project are those who are likely to
lose land, assets, access to
property and livelihood . The
direct beneficiary groups at the
local level include all kinds of road
users.
Medium Resettlement action Plans are
prepared to compensate/-restoration
of the likely loss of assets and
restoration of access to property
under the project.
Environment management Plan are
prepared to minimize and contain
the issues during construction
within prescribed limits.
Contractors will be preparing road
specific Environmental Method
Statement to manage the same.
Low
Risks & opportunities
relating to
reconciliation and
inter-ethnic trust:
1 The project would
benefit all.
The road sections traverse over
different ethnic regions. All the
ethnic groups; use these road
sections together. Therefore all
groups should understand alike the
place name, road safety sign
boards.
The provisions under the R&R
Policy should be equally applied to
all social groups including
Medium Consultations were carried out with
the road users and other direct and
indirect stakeholders.
In respect of gender and age groups,
32% of the key informants were
female and nearly half of the
respondents belonged to youth and
senior citizens‟ category.
Consultations also included in the
sample to represent different ethnic
Low
4 Refer to Reconciliation and Conflict Assessment Guidance: Sri Lanka, Application of Reconciliation and Conflict Filter to Ope rations
53
Key Issues
Description of Issues Risk
Rating
Measures to address the Issues Rating of
residual
risk
minorities, poor and other
vulnerable.
groups. Strategy adopted to address
the diversity among stakeholders
are below:
1. APs will be systematically
informed and consulted about
the project, and the RAP will
be made available in all local
languages and English to the
affected persons and
communities.
2. Name boards in all three
languages along the road
where necessary.
3. Directions boards to important
places
4. Special bus halting places for
religious places
5. Slogans boards to develop
personal attitudes and inter
cultural knowledge
Concerns raised by
stake-holders and non-
stakeholders:
1. Disruption
caused during
construction
period.
1. Expect reasonable
compensation payments for all
affected properties such as
lands, structures, trees etc.
2. Interruption to routine life may
occur due to demolition of
structures.
3. During construction period
there can be disturbances due
to traffic congestion, dust,
noise and vibration.
4. The authorities need to take
precautions to minimize
disturbances to our day today
activities and livelihoods
Medium The concerns are addressed as part
of EMP, RAP and civil contracts
management.
The consultative process shall
continue and include not only those
affected, but also the neighboring
communities, community leaders,
local government, and community-
based organizations (CBOs) and all
vulnerable groups.
Low
Issues in project
management and
administration:
1. Low Capacity
of RDA
1. Currently the access to RDA
for raising community level
concerns is limited.
2. Delay in restoration of affected
assets by contractor
3. Delay in completion of road
construction
Medium Provision of Grievance Redressal
Mechanism, placing of complaint
register at RE office and setting up
of monitoring and audit mechanism
would help minimize and avoid the
implementation management issues.
Supervision consultants are being
placed to ensure timely completion
of construction works.
Low
Key Design Features
aiming at Inclusion and
Transparency:
Grievance would be minimized
through careful sub-project design
and implementation by ensuring
active participation and consultation
with APs, establishing rapport
between the community and RDA
through frequent interactions and
54
Key Issues
Description of Issues Risk
Rating
Measures to address the Issues Rating of
residual
risk
monitoring to measure the
effectiveness of implementing the
RAP and EMP.
II. Outcome level
Project impact on
equity in access and
outcome across
different communities:
The project will be used by all
communities equally. No user
charges are planned under the
project. The groups that are
expected to benefit from the roads
are school children, school
teachers, drivers, farmers, traders
and all other types of road users.
One of the project outcome
indicators to be measured under the
project is lower transportation costs.
Low
Other social and
political risks, incl.
public perceptions of
project:
The proposed project will boost
the economy of the area. However,
are concerned about the road
quality and poor site management
during construction.
A Road User satisfaction survey
shall be conducted both at the start
and end of the project to measure
the satisfaction levels.
Low
III. Overall Conflict and Reconciliation rating Low
N O R T H E R NN O R T H E R N
C E N T R A LC E N T R A L
N O R T H C E N T R A LN O R T H C E N T R A L
N O R T H N O R T H W E S T E R NW E S T E R N
U V AU V A
S O U T H E R NS O U T H E R N
WESTERNWESTERN
E A S T E R NE A S T E R N
SABARAGAMUWASABARAGAMUWA
MataraMatara
KegallaKegalla
AmparaAmpara
KillinochchiKillinochchi
VavuniyaVavuniya
ManakulamManakulam
RambewaRambewa
GalkulamaGalkulama
MahoMaho
HabaraneHabarane
KataragamaKataragama
MonaragalaMonaragala
WellawayaWellawaya
KandyKandy
BadullaBadulla
RatnapuraRatnapura
AnuradhapuraAnuradhapura
KurunegalaKurunegala
CP 08
CP 07
CP 11
CP 12
CP 13
CP 02
CP 03
CP 01
CP 04
CP 09
CP 10
CP 05CP 06
CP 01
CP 02
CP 03
CP 04
CP 05CP 06
CP 07CP 08
Matara
KegallaAmbepussa
Pothuhera
Dambulla
Omaragalla
Ibbagamuwa
Kalutara
Hambantota
Tangalla
Kumana
Ampara
Killinochchi
Mullaittivu
Pulmoddai
Mutur
Elephant Pass
Mannar
Vavuniya
Point Pedro
ManakulamTalaimannar
Rambewa
Galkulama
Maho
Kalpitiya
Habarane
Chilaw
Negombo
Moratuwa
Kataragama
MonaragalaPottuvil
Kalmunai
Kattankudi
Wellawaya
Trincomalee
Kantale
Thambalagamuwa
Puttalam
Sri Jayewardenepura Kotte
Galle
Kandy
Badulla
Ratnapura
Anuradhapura
Jaffna
Batticaloa
Kurunegala
COLOMBO
N O R T H E R N
C E N T R A L
N O R T H C E N T R A L
N O R T H W E S T E R N
U V A
S O U T H E R N
WESTERN
E A S T E R N
SABARAGAMUWA
INDIA
Gulf of
Mannar
L a c c a d i v e
S e a
B a y o f B e n g a l
I N D I A N
O C E A N
Pa
l k S
t r
a i t 10°N
9°N
8°N
7°N
6°N
8°N
7°N
6°N
80°E 81°E 82°E
81°E 82°E
SRI LANKA
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.
0 20 40
0 10 20 30 40 Miles
60 Kilometers
IBRD 38325
MARCH 2011
SRI LANKAROAD SECTOR ASSISTANCE PROJECT (RSAP)
SECOND ADDITIONAL FINANCING
PROJECT ROADS: FIRST PHASE SECOND ADDITIONAL FINANCING
SELECTED CITIES AND TOWNS
PROVINCE CAPITALS
NATIONAL CAPITAL
RIVERS
MAIN ROADS
RAILROADS
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES
Ingiriya - Ratnapura A 008Nittambuwa - Kandy A 001Bandarawella - Haliela A 016Bandarawella - Welimada B 044Galle - Deniyaya A 017Denagama - Mulatiyanna B 098Hakmana - Talahanduwa B 142Galkulama - Rambewa A 009Madawachchiya - Punewa A 009Madawachchiya - NCP Boundary A 014Wellawaya - Siyambalanduwa A 009Siyambalanduwa - Ampara A 025Ampara - Karakativu A 031Maradakadawela - Jayanthipura A 011Jayanthipura - Trikkandimadu A 011Padeniya - Puttalam A 010
CP 01CP 02CP 03CP 04CP 05CP 06
CP 07CP 08
CP 09CP 10
CP 11CP 12CP 13
Ambepussa - Pothuhera (0 - 23 km.)Pothuhera - Ibbagamuwa (23 - 47 km.)Ibbagamuwa - Omaragalla (47 - 69 km.)Omaragalla - Dambulla (69 - 90.06 km.)Kantale - Gantalawa (156.94 - 167.28 km.)Gantalawa - Thambalagamuwa (167.28 - 178 km.)Thambalagamuwa - Sardapura (178 - 190 km.)Sardapura - Trincomalee (190 - 199.365 km.)
CP 01CP 02CP 03CP 04CP 05CP 06CP 07CP 08
SECOND PHASE CONTRACT PACKAGE SECTIONS:
FIRST PHASE CONTRACT PACKAGE SECTIONS:
