World Bank Document · 2017. 11. 2. · 1989 US$1.00 YR12.00 1990 US$1.00 YR12.00 1991 US$1.00 YR12.00 1992 US$1.00 YR12.00 1993 US$1.00 YR12 ... Abbreviations and Acronyms CAS -Country

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 15752

PERFORMANCE AUDIT REPORT

YEMEN

FOURTH HIGHWAY PROJECT

(CREDIT 1267-YAR)

FIFTH HIGHWAY PROJECT

(CREDIT 1413-YAR)

MARIB-SAFIR ROAD

(CREDIT 1726-YAR)

SANA' A-HODEIDAH ROAD

(CREDIT 1848-YAR)

FOURTH HIGHWAY PROJECT

(CREDIT 1617-YDR)

FIFTH HIGHWAY PROJECT(CREDIT 1823-YDR)

June 12, 1996

Operations Evaluation Department

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

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Currency Equivalents (annual averages)

Currency Unit Country Currency (Yemeni Rial, YR)

1985 US$1.00 YR2.901986 Us$1.00 YR7.251987 US$i.00 YR7.251988 US$1.00 YR12.001989 US$1.00 YR12.001990 US$1.00 YR12.001991 US$1.00 YR12.001992 US$1.00 YR12.001993 US$1.00 YR12.001994 US$1.00 YR1O3.00 (official rate YR12.00)1995 US$1.00 YRI 15.00 (official rate YR50.00)1996 US$1.00 YR135.00

Abbreviations and Acronyms

CAS - Country Assistance Strategy

ERR - Economic Rate of ReturnFIDIC - Fed6ration Internationale des Ing6nieurs ConseilsGCRB - General Corporation for Roads and BridgesGSTA - General Secretariat for Transport AffairsGOY - Government of Yemen

HA - Highway AuthorityICB - International Competitive BiddingLCB - Local Competitive Bidding

MOC - Ministry of Construction, Housing, and Urban PlanningMOF - Ministry of Finance

MPD - Ministry of Planning and DevelopmentMOT - Ministry of Transport

MTPW - Ministry of Transport and Public WorksMPWH - Ministry of Public Works and HousingOED - Operations Evaluation DepartmentOPEC - Organization of Petroleum Exporting CountriesPCRC - Public Corporation for Road ConstructionPDRY - Peoples' Democratic Republic of YemenPCR - Project Completion Report

PMS - Pavement Management SystemRMF - Road Maintenance Fund

ROY - Republic of Yemen

VOC - Vehicle Operating Costs

YAR - Yemen Arab Republic

YRFB - Yemen Road Fund Board

WB - The World Bank, referred to as the Bank

Fiscal YearGovernment: January 1 - December 31

FOR OFFICIAL USE ONLYThe World Bank

Washington, D.C. 20433U.S.A.

Office of the Director-GeneralOperations Evaluation

June 12, 1996

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Performance Audit Report on YemenFourth Highway Project (Credit 1267-YAR), Fifth Highway Project (Credit 1413-YAR), Marib-Safir Road Project (Credit 1726-YAR), Sana'a-Hodeidah RoadProject (Credit 1848-YAR), Fourth Highway Project (Credit 1617-YDR), andFifth Highway Project (Credit 1823-YDR)

Attached is the Performance Audit Report (PAR) on six Yemen highway projects: FourthHighway project (Credit 1267-YAR, approved in FY82), Fifth Highway project (Credit 1413-YAR, approved in FY84), Marib-Safir Road project (Credit 1726-YAR, approved in FY87),Sana'a-Hodeidah Road project (Credit 1848-YAR, approved in FY88), Fourth Highway project(Credit 1617-YDR, approved in FY86), and Fifth Highway project (Credit 1823-YDR, approvedin FY88) prepared by the Operations Evaluation Department. The two Yemens - the Yemen ArabRepublic (YAR) and the Peoples' Democratic Republic (PDRY) - united in 1990 when theRepublic of Yemen (ROY) took over the implementation of the projects. A total of US$56.0million was disbursed and US$23.2 million was canceled.

The objectives of the projects in the former YAR had to do, successively, with institutionbuilding at both Ministry and road administration levels, maintenance and rehabilitation of importantmain roads, access to industrial and agricultural areas, development of local construction industry, andimproved cost recovery. Project components included maintenance or rehabilitation of roads, acquisitionof equipment, training and technical assistance. These objectives were achieved and are being sustained.Institutional and organizational development has been substantial. Training of both road administrationstaff and private sector contractors was successful. The upgraded roads meet the growing travel demandand improved access. Estimated ex-post economic rates of return (ERR) range from 18 to 59 percent(vs. 13 to 33 percent at appraisal).

In the former PDRY, project objectives were to improve access to agricultural areas and costrecovery from users, and to create a dependable maintenance organization and well-trained work force.These were to be achieved by building an important road to an agricultural area and maintenancefacilities, acquiring equipment, financing a share of the maintenance program, and technical assistanceand training. The projects accomplished many of their physical objectives but not the institutional onesas technical assistance and training for maintenance were not carried out successfully. The ex-post ERRfor the Nisab-Beihan Road is 18 percent (vs. 15 percent at appraisal). No ex-post ERR could becalculated for the second project because the three year time-slice program for maintenance was notcarried out.

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

The composite outcome of the entire program of road projects in Yemen is rated as satisfactory,sustainability as likely, and institutional development as substantial, although the outcome for the PDRYcluster is rated as unsatisfactory. The ratings are generally consistent with the ICR/PCR ratings (someindividual project ratings for the YAR have been upgraded) and are also supported by the new sectorplan which consolidates the institutional development achieved in the YAR over the now unified countryand establishes a road fund to provide improved cost recovery and sustainable funding for the roadmaintenance program. Bank performance is rated as satisfactory in all the projects except the Fourth andFifth Highway projects (PDRY): quality at entry for these was unsatisfactory and lax supervision duringearly implementation affected their outcome; a large part of the Fifth Highway credit was canceled.More recent intensive Bank supervision strove to improve the performance of these projects in spite of aturbulent environment.

The experience of the projects suggests that an appropriate sequence for successful institutionaland capacity development in a country may be to: (i) establish a (new) policy framework and agree onnear-term objectives; (ii) formulate a project in which the Borrower can utilize existing skills, and begintraining the management and work force in activities consistent with near-term objectives; (iii) conductstudies together with the Borrower on the organization's core processes and project priorities, and beginto implement them; (iv) undertake more complex activities when ready. These steps set into motion aprocess wherein significant portions of project decision making and their execution are carried out withthe Bank and the Borrower working in common. Such a process involves extensive communication,collaboration, participation and flexibility.

Attachment

FOR OFFICIAL USE ONLY

Contents

Preface ... 3.....................3

Basic Data sheets.. .................... 5

Evaluation Summary ....................................... ........ 17

1. Introduction and Background ............................... ....... 23

The Country Context ............................................ 23

The Transport Sector Context ........................................ 23

Bank Role ................................................. 24

2. Project Objectives and Preparation.......... .................... 25Program Coherence .................................. ......... 25Borrower Participation and Ownership ....................... ........ 26

3. Project Implementation................................ .............. 29

PCR/ICR Findings ..................... ................ 29Procurement Issues................. ................. .......... 30Technical Assistance ........................................... 31

4. Achievement of Project Objectives ...................................... 33

Physical Objectives........................................... 33Institutional Development and Policy Reforms ................................33Sustainability ....................... ................ 34A Look Forward.................. ..................... ..... 34

5. Bank and Borrower Performance ....................................... 37

6. Conclusions and Lessons Learned.....................................41Ratings .................. ................................ 41Lessons Learned....... ......... ............................ 43Issues and Recommendations ............................. ........ 45

AnnexComments from the Borrower ........................................... 49

This report was prepared by Mr. Antti Talvitie (Task Manager), who audited the projects inMarch 1996. Ms. Maryvonne Mauprivez provided administrative support. The report wasissued by the Infrastructure and Energy Division (Mr.Yves Albouy, Chief) of the OperationsEvaluation Department (Mr. Francisco Aguirre-Sacasa, Director).

This document has a restricted distribution and may be used by recipients only in the performance of theirofficial duties. Its contents may not otherwise be disclosed widiout World Bank authorization.

3

Preface

This is a Performance Audit Report (PAR) on six road projects in Yemen. Four of themwere in the former Yemen Arab Republic (YAR) involving Bank Credits 1267-YAR, 1413-YAR, 1726-YAR, 1848-YAR, and two in the former Peoples' Democratic Republic of Yemen(PDRY), involving Bank Credits 1617-YDR, and 1823-YDR. In 1990 the unified Republic ofYemen took over the implementation of five out of the six still ongoing projects. The first fourcredits (designated YAR) totaled US$48 million; US$38.2 million were disbursed and US$9.8million were canceled. The two credits (designated YDR) totaled US$31.2 million; US$17.8million were disbursed and US$13.4 million were canceled.

Project Completion Reports (PCRs) and Implementation Completion Reports (ICRs)were issued as follows: for Credit 1267-YAR, on April 20, 1990 (Report No. 8540); for Credit1413-YAR, on January 15, 1993 (Report No. 12034); for Credit 1726-YAR (Report No. 10643),on May 15, 1992; for Credit 1848-YAR, on July 3, 1995 (Report No. 14639); for Credit 1617-YDR on October 20, 1994 (Report No. 13593); and for Credit 1823-YDR on July 12, 1995(Report No. 14635).

The Operations Evaluation Department (OED) prepared this report. To do so, OED staffreviewed the President's Reports, Staff Appraisal Reports (SARs), PCRs, ICRs, transcripts ofBoard proceedings, project correspondence files, Bank documents on other transport projects,and other Bank material. In March 1996, an OED mission traveled to Yemen where it helddiscussions with representatives of the Ministry of Planning and Development (MPD), Ministryof Construction, Housing and Urban Planning (MOC), the General Corporation for Roads andBridges (GCRB), and the Yemen Road Fund Board (YRFB). OED also consulted Bank staff incharge of the projects.

The PAR had four objectives: (i) to examine project development from identification tocompletion, including Borrower participation and readiness to implement; (ii) to assess thequality of policy dialogue and its continuity with the Bank; (iii) to evaluate sustainability of theinvestments and institutional development; and (iv) to draw lessons for the future.

Following standard procedures, copies of the PAR were sent to the Borrower and theExecuting Agencies concerned for comments. Comments received from the Ministry ofConstruction, General Corporation of Roads and Bridges are attached to the report as an Annex.

5

Basic Data Sheet

FOURTH HIGHWAY PROJECT (CREDIT 1267-YAR)

Key Project Data (amounts in US$ million)Appraisal Actual or Actual asestimate current estimate % of

appraisalestimate

Total project costs 18.0 19.8 109Credit amount (SDR million) 6.2 100Cofinancing 1.7 2.1 123Cancellation 2.5Date physical components completed 3/31/84 02/86Economic rate of return, Construction 33 40Economic rate of return, First Year Return 18% 28%

Cumulative Estimated and Actual Disbursements

FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89

Appraisal estimate (SDR .53 3.53 5.66 6.20 6.20 6.20 6.20 6.20million)

Actual (SDR million) 2.72 3.74 4.63 4.63 4.63 5.94

Actual as % of appraisal 48.1 60.3 74.7 74.7 77.9 95.8

Date of final disbursement: April 27, 1989

Project DatesOriginal Actual

Negotiations 5/25/82 5/25/82Board approval 6/17/82 6/17/82Signing 7/05/82 8/11/82Effectiveness 10/31/82 8/19/83Closing date 6/30/85 6/30/88

6

Staff Inputs (staff-weeks)

FY88 FY89 FY90 FY91 FY92 FY93 Total

Preappraisal .2 .6 .1 6.7 3.2 21.2 31.9

Appraisal .1 20.8 .6 21.5

Negotiations .1 4.1 4.2

Supervision 5.2 8.5 13.3 6.2 4.8 4.1 42.1

Other .1 .2 1.5 .3 2.0

Total .2 .6 .3 6.9 3.3 47.5 5.8 8.5 13.3 6.5 4.8 4.1 101.7

Mission DataDate No. of Specializations represented'

(monthlyear) persons

Identification/Prep 5/10-21/80 2 ENG/ECartionl 1/7-15-81 2 EC/FA(C)

Appraisal 11/20-12/12/2/81 4 ENG/EC/FA/ME

Supervision I 8/4-13/82 4 ENG/EC/DC/PR(C)Supervision II 11/15-30/82 2 ENG/ECSupervision Ill 10/1-15-83 3 ENG/EC/FASupervision IV 3/7-27/84 1 ENGSupervision V 5/4-11/84 2 D.C/ECSupervision VI 11/26-12/11/84 3 ENG/EC/PR(C)Supervision VII 6/29-7/12/85 3 ENG/EC/DDCSupervision VIII 11/29-12/17/85 3 ENG/EC/DCSupervision IX 4/8-25/86 2 ENG/FASupervision X 11/23-12/4/87 3 ENG/EC/ENV.(C)Supervision XI 3/12-22/88 3 ENG/ECSupervision XII 9/19-10/7/88 3 ENG/EC/DCSupervision XIII 2/20-3/3/89 2 ENG/ECSupervision 6/2-15/89 2 ENG/ECXIV/CMPCompletion 06/1988

1. ENG = Engineere; EC = Economist; FA = Financial Analyst; DC= Division Chief; DDC= Deputy Division Chief;ME = Mechanical Engineer; (C) = Consultant; ENV = Environmentalist; PR = Document Specialist

Other Project Data

Borrower: Government of Yemen Arab Republic

Executing Agencies: Highway Authority and Department of Transport

FoLLoW-oN OPERATIONS

Operation Credit No. Amount Board Date

(SDR million)

Fifth Highway Project 1413 12.0 12/30/92

7

Basic Data Sheet

FIFTH HIGHWAY PROJECT (CREDIT 1413-YAR)

Key Project Data (amount in US$ million)Appraisal Actual or Actual as % ofestimate current estimate appraisal estimate

Total project costs 35.5 17.17 48.4Loan amount (SDR) 12 11.06 99.2Cancellation (SDR) .04Date physical components completed 28/02/87 12/30/92Economic rate of return 22% 18%


FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91FY92

Appraisal estimate (US$M) .50 4.00 9.20 12.10 13.00 13.00 13.00 13.0013.00

Actual (US$M) 1.42 2.29 4.79 6.24 8.22 9.52 13.8015.18

Actual as % of appraisal 35.2 24.9 39.6 48.0 63.2 73.2 106.2 116

Date of final disbursement: 5/08/1992

Project Dates

Original ActualInitiating memorandum 01/1983 01/1983Negotiations 05/15/83 05/16-23/83Board approval 08/09/83 09/13/83Signing 08/09/83 10/17/83Effectiveness 12/1983 11/01/84Closing date 02/28/87 12/31/91

8


Total

Supervision 54.1

Total 54.1

Mission DataDate No. of Staff days infield Specializations represented

(month/year) persons

Identification/ 12/1982 2 7 Econ, Eng. & AnalystPreparation

Appraisal 01/1983 2 7 Econ, engineer

Supervision 1 12/1984 2 2 Economist/Engineer

Supervision 2 12/1985 2 5 Economist, Engineer



Supervision 5 11/1989 1 5 Engineer



Completion 12/30/1992

Other Project Data

Borrower: Government of Yemen Arab Republic

FOLLOW-ON OPERATIONS

Operation Credit No. Amount Board date

(US$ million)

Marib-Safir Road 1726-YAR (SDR8.6) 07/08/1986

9

Basic Data Sheet

MARIB-SAFIR ROAD PROJECT (CREDIT 1726-YAR)

Key Project Data (SDR million)Appraisal Actual or Actual as % ofestimate current estimate appraisal estimate

Total project costs 8.6 8.6 100Loan amount 8.6 100Date physical components completed 12/31/1990Economic rate of return 13% 63%


FY87 FY88 FY89 FY90

Appraisal estimate (US$M) .86 2.58 5.16 8.60

Actual (US$M) 2.62 5.68 6.68 7.62

Actual as % of appraisal 305% 220% 129% 89%


Project Dates

Original ActualInitiating memorandum 07/01/85 07/01/85Negotiations 04/28/86 05/05/86Board approval 07/08/86 07/08/86Signing 09/05/86 09/05/86Effectiveness 12/24/86 12/10/86Closing date 06/30/90 12/31/90

10


Actual

Preappraisal 10.0

Appraisal 28.5

Negotiations 2.9

Supervision 25.3

Total 66.7

Mission Data

Date No. of Staff days infield Specializations represented(month/year) persons

Identification/ 07/85 1 10 EGRPreparation

Appraisal 11/85 2 18 ECN, EGR

Supervision 1 4/87 2 17 EGR, OPA

Supervision 2 11/87 3 11 ECN. EGR, ENV

Supervision 3 03/88 2 10 ECN, EGR



Supervision 6 10/89 1 10 EGR

Supervision 7 12/90 1 18 EGR

Completion 03/91 1 12 EGR1. ECN = Economist; EGR= Engineer; EV= Environmental Specialitst; OPA = Operations Assistant

Other Project Data

Borrower: Government of Arab Republic of Yemen


Operation Credit No. Amount Board Date(US$ million)

Sana'a-Hodeidah Road Rehabilitation 1848-YAR 18 10/20/87Project

11

Basic Data Sheet

SANA'A-HODEIDAH ROAD REHABLITATION PROJECT (CREDIT 1848-YAR)

Key Project Data (amounts in USS million)Appraisal Actual orestimate current estimate

Total project costs 57.0 68.3Loan amount 18.0 18Cancellation 10.387 10.387Date physical components completed n/a 08.0Economic rate of return 29 21


FY89 FY90 FY91 FY92

Appraisal estimate (US$M) 4.9 11.5 13.6 14.0

Actual (US$M) 0.4 1.7 5.4 6.8

Actual as % of appraisal 4 22 50 60


Project Dates

Original ActualInitiating memorandum 3,7,11/84 3,7,11/84-9/86Negotiations 4/87 6/87Board approval 9/87 10/87Signing 11/87 11/87Effectiveness 1/88 10/88Closing date 12/31/91 5/31/94

12


Actual Weeks

Preappraisal 57.8

Appraisal 18.8

Negotiations 10.5

Supervision 46.2

Other 08.0

Total 141.3

Mission DataDate No. of Staff days Specializations Performance rating - Performance rating -

(month/year) persons infield represented Implementation Developmentstatus (1) objectives (2)

Appraisal 11/86 2 14 HE, EC

Re-appraisal 4/86 2 17 HE, FA

Post-appraisal 7/87 1 7 HE

(flood damage)

Supervision 1 11/87 2 14 HE, EC

Supervision 2 3/88 2 10 HE, EC 2 2



Supervision 5 10/89 1 14 HE 2 1




Supervision 9 9/93 1 21 HE + 4C' 2 2

Supervision 10 2/94 1 21 HE, C 2 2

HE = Highway Engineer; EC = Economist; FA= Financial Analyst1. = Problem Free; 2 = Moderate Problems

Other Project Data

Borrower: Government of Republic of Yemen


Operation Credit No. Amount Board Date

(US$ million)

Multi-Mode Transport Project 2177-YAR 30 01/1990

13

Basic Data Sheet

FOURTH HIGHWAY PROJECT (CREDIT 1617-YDR)

Key Project Data (amounts in US$ million)Appraisal Actual or Actual as % ofestimate current estimate appraisal estimate

Total project costs 39 38.70 100Loan amount(SDR) 14.6 14.6 100Cancellation .5Date physical components completed 06/30/93Economic rate of return 15% 18.5%


FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93

Appraisal estimate (US$M) 1.9 6.2 9.7 12.5 14.4

Actual (US$M) 2.29 2.29 4.41 8.92 12.04 12.95 14.83 17.68

Actual as % of appraisal 120 37 46 71 84 90 103 123

Date of final disbursement: October 31, 1993

Project Dates

Original Actual

Initiating memorandum 03/1982 03/1982Negotiations 05/1985 05/1985Board approval 06/1985 06/1985Signing 09/1985 10/04/1985Effectiveness 10/1985 01/1986Closing date 06/1990 06/1993

14

Staff Inputs (staff-weeks)FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 Total

Preappraisal 18.1 11.5 13.5 43.1

Appraisal 31.6 31.6

Negotiations 9.4 9.4

Supervision 1.3 17.0 10.5 7.2 7.3 8.7 7.7 7.0 5.3 72.0

Total 18.1 11.5 55.8 17.0 10.5 7.2 7.3 8.7 7.7 7.0 5.3 72.0

Mission Data

Date No. of Specializations represented

(month/year) persons

Identification/Preparation 1980-1984 Mission of economists and engineers

Appraisal Oct./Nov.1984 14 3 Engineers/Economists

Supervision I 12/1985 14 2 Engineers

Supervision 2 11/1986 15 2 Engineers


Supervision 4 03/1989 6 2 Engineers/Economist





Supervision 9 09/1993 6 2 Engineers/Economist

Completion 10/31/93

Other Project Data

Borrower: Government of Peoples' Democratic Republic of Yemen



Fifth Highway Project 1823-YDR 16.8 06/17/87

15

Basic Data Sheet

FIFTH HIGHWAY PROJECT (CREDIT 1823-YDR)

Key Project Data (US$ million)Appraisal Actual or Actual as % ofestimate current estimate appraisal estimate

Total project costs 10.88 8.178Loan amount 16.8 16.8 100Cancellation 13.356Date physical components completed 06/30/90 not completedEconomic rate of return 76% n.a.


FY88 FY89 FY90 FY91 FY92 FY93 FY94

Appraisal estimate (US$M) 3.8 11.4 15.8 16.6 16.8

Actual (US$M) 2.7 5.1 6.0 6.0 7.1 7.1 7.1

Actual as % of appraisal 71 45 38 36 42


Project DatesOriginal Actual

Initiating memorandum 12/85-06/86Negotiations 04/87Board approval 06/17/87Signing 09/09/87Effectiveness 02/09/88Closing date 12/31/91 12/31/93


Planned Actual

Weeks Weeks

Preappraisal N/A 18.9

Appraisal N/A 55.1

Negotiations N/A 4.7

Supervision 63 48.7

Other 8 9.3

Total 71 136.7

16

Mission Data

Date No. of Staff days Specializations Performance Rating trend

(month/year) persons infield represented rating

Appraisal 12/85 2 14 HE, EC

Supervision 1 10/87 2 5 HE, LO 1 2




Supervision 5 01/90 1 5 EC N.A. N.A.

Supervision 6 05/90 1 6 HE N.A. N.A.





Supervision 11 01/94 2 3 HE, C 3 31. HE = Highway Engineer; EC= Economist; LO= Loan Officer2. 1/ Problem Frre; 2/ Moderate Problems

Other Project Data

Borrower: Republic of Yemen



Multi-Mode Transport Project 2177-YEM 30 01/90

17

Evaluation Summary

The Context

I. The Bank began a dialogue on transport issues with Yemen in the early 1970s, soon afterthe formation of the Yemen Arab Republic (YAR) and the independence of the Peoples'Democratic Republic of Yemen (PDRY). The first highway project for the PDRY was approvedin 1970, and for the YAR in 1972. The objectives of these projects were to develop institutionalcapacity, particularly for maintenance, expand the then-modest road system,I and conductstudies. A quarter century later, only a few years after the unification of YAR and PDRY as theRepublic of Yemen (ROY) in 1990, the six audited projects, most of them just recentlycompleted, reflect these objectives (paras. 1.2, 1.5, 2.1).

Bank Role

2. Initially the Bank's role was to help establish the Government's framework for the roadsector and identify the constraints to development of an appropriate highway system in Yemen.These constraints were: (i) institutional capacity to plan and manage an economically justifiedconstruction program, and (ii) ability to maintain the expanding network. The Audit concludesthat IDA has fulfilled the role it set out to play to remove the constraints as the objectives of itsprojects have been substantially achieved. The post-unification Country Assistance Strategy(CAS) affects the road sector and requires redrafting of the current policy framework, recastingthe roles of the private and public sectors, and developing a new funding mechanism (paras. 1.8and 4.10).

Preparation

3. Formulation of objectives and project preparation were done well for the highwayprojects in YAR. Borrower participation was effective, and there was a consensus on objectiveswith the Bank. Perhaps a large part of the explanation for this consensus and commitment lay inthe leadership in the YAR Highway Authority (HA). In the PDRY the story was different.Although there was Borrower participation in the preparation and design of the Fourth and FifthHighway projects, there was disagreement about the sequence in which the objectives were to beachieved, and "less owned" objectives and their components were glossed over and ultimatelynot implemented. IDA was also accommodating of Borrower wishes and did not enforce thecovenants of the previous operation (Fourth project) on which it had insisted, to the detriment ofthe Fifth Highway project. All the projects received cofinancing either from the Arab Fund, theOPEC Special Fund, the Kuwait Fund, or from the Islamic Bank for Reconstruction andDevelopment.

The Yemeni road network has expanded rapidly in recent years, from 2900 km in 1980 to 5734 km in 1993.

18

Implementation and Achievement of Project Objectives

4. The objectives of the YAR-Highway projects relating to institution building, maintenanceor rehabilitation of important main roads, and access to industrial and agricultural areas wereachieved and are being sustained. The upgraded roads meet the growing travel demand andimproved access to agricultural and industrial areas. Institutional and organizationaldevelopment has taken place. In training, good results were obtained for both the HighwayAuthority staff and the private sector contractors. Each project in the YAR had satisfactory re-estimated ex-post economic rate of return (ERR). In the SARs the ERRs were estimated to bebetween 13 and 33 percent; the PCR/ICRs re-estimate them to be between 18 and 59 percent.

5. In the PDRY, the two projects (Fourth and Fifth Highways) achieved many of theirphysical objectives. The maintenance organization obtained better facilities and equipment.Access to agricultural areas was improved through the construction of the Nisab-Beihan Roadwith a re-calculated ex-post ERR of 18 percent (vs. 15 percent at appraisal). Flood damagedroads were repaired, but the three-year time-slice program of routine and periodic maintenancewas not carried out and no ex-post ERR could be calculated for the Fifth Highway project. Theinstitutional objectives for strengthening the maintenance organization by training maintenancestaff and improving cost recovery were not achieved. The training centers were not put into usefor want of trainers and training plans. In fairness, it must be said that the Fifth Highway projectwas negatively affected by unification, civil unrest and, later, by the civil war. One of thebenefits from the unification of the two road administrations is that the physicalaccomplishments are likely to be sustained because of the consolidation of institutionaldevelopment over the now unified country and the establishment of the road fund for sustainedfunding of road maintenance.

6. Taken together, however, institutional and organizational development and training arethe most impressive achievements of IDA's long-term involvement in Yemen. The merger ofthe two road administrations has been accomplished without disruption. The unified roadadministration, the GCRB, has emerged as a competent, professional organization with goodleadership. This is a good omen for the sustainability of both the physical facilities and theinstitutional development that has taken place. The situation is, however, fragile. IDA and otherdonors need ingenuity and expertise to be of continued constructive assistance to theGovernment regarding institutional and human resources development which underlie alltechnical physical progress (paras 3.10-3.12, and 4.3-4.7).

Ratings

7. For the projects in the YAR cluster as a whole, the outcome is rated as satisfactory; theobjectives were achieved and often exceeded. Sustainability is rated as likely, and institutionaldevelopment as substantial. These are broadly consistent with the ICRIPCR ratings, althoughsome individual ratings for the Sana'a-Hodeidah Road project have been upgraded. For thePDRY cluster as a whole, the outcome is rated as unsatisfactory, and institutional development israted as negligible because none took place; however, sustainability is rated as likely since theseprojects, after unification, are now under the same road administration as the YAR projects andthere is a road fund which improves cost recovery and ensures sustained funding of roadmaintenance. Taken individually, some PCR/ICR ratings for the Fourth Highway project(PDRY) have been downgraded, and some for the Fifth Highway project (PDRY) have beenupgraded (paras 6.1-6.4, and Table 6.1).

19

8. The composite outcome of the entire program of road projects in Yemen is rated assatisfactory, sustainability as likely, and institutional development as substantial. Bank andBorrower performance is rated as satisfactory. These ratings are broadly consistent with theICR/PCR ratings; although, as explained above, some individual ratings have been upgraded andthe outcome of the (smaller) PDRY cluster is rated as unsatisfactory (paras. 4.5, 4.6, 5.6, and6.4).

Bank and Borrower Performance

9. Performance of IDA project staff in the YAR cluster was satisfactory. IDA had asubstantial and positive impact on the Yemen highway sector from organization to thedevelopment of institutional and professional capacity. IDA's perceptions of, and responses to,problems have been good. The strategy of gradual progress with relatively small, well definedprojects has worked well.

10. IDA's performance in the PDRY cluster was mixed. The sound administrative structureIDA assisted in creating was envisioned to be developed further under the Fourth andFifthHighway projects. However, agreement on the projects' objectives was tenuous. Priorities werereversed and implementation was slow. IDA was well aware of both the lack of progress in theFourth Highway project and its impact on the Fifth. The current IDA project team, who tookover in 1993, made serious attempts to resurrect the Fifth Highway project. But, after two IDAsupervision missions found grave problems, IDA terminated the project and decided to pursuelater those objectives which still remained valid. Overall, Bank performance is rated asunsatisfactory in both projects (paras 5.2 - 5.6).

1. Borrower performance was satisfactory for the YAR projects. It worked with IDA in anaffirmative way, complied with covenants, implemented the projects well, exercised goodleadership and made significant progress in developing institutional capacity. For the formerPDRY projects the original Borrower no longer exists and the PCR/ICR ratings have not beenchanged: satisfactory for the Fourth project but unsatisfactory for the Fifth project.

Lessons Learned

12. The experience of the projects suggests that an appropriate sequence for successfulinstitutional and capacity development in a country may be the following (paras 6.5, 6.6):

* establish a (new) policy framework and agree on a contract for near-term objectives;* formulate a project in which the Borrower can utilize existing skills, and begin training the

management and work force in priority activities consistent with near-term objectives;* conduct studies (the Borrower together with the Bank and other donors) on the

organization's core processes and prioritization of projects, and begin to implement them;* recycle to step one with more complex activities when ready.

2. This hypothesis needs to be validated in Bank projects elsewhere. The counterfactual case for this model is presented by theaudited projects in the PDRY. There a policy framework was successfully established in the early projects and skills weredeveloped (or they existed) to build roads by the parastatal construction company PCRC. However, unlike in the YAR, studies werenot conducted on future priorities by the client - to prepare the client mentally for priority maintenance - and there was a lack of defacto contract about the new near-term objectives for maintenance in the Fourth and Fifth Highway projects. Concurrently, whileexisting skills were employed to build agricultural access roads, training of work force for the important maintenance objectiveswas neglected (paras 5.2-5.5).

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These steps set into motion a process wherein significant portions of project decision making andtheir execution are carried out with the Bank and the Borrower working in common, notseparately. Such a process involves extensive communication, collaboration, participation andflexibility. It is multi-faceted multi-staged and involves continuous feedback loops. For the sakeof shorthand, this is referred to as the work in common in a process framework. In Yemen, thisprocess has been cycled once and is now beginning its second cycle.

13. This model, when used in a participatory way, allows for identification of problems andtheir resolution through (project) work in common in a process framework. The operation of themodel is deceptively simple: a project is agreed and implementation begins; when a problem isencountered it is examined in detail and solved together by the Borrower and the donor (or theconsultant). This process of constant problem solving and learning is continued throughout theproject. For example, the following specific issues were encountered - and the attendantadjustments recognized or made - during the six projects audited:

* Consultant availability and selection. Yemen has no domestic consulting industry in thetransport field because of the small existing market. This issue must be addressed in futureprojects with the aim of creating a market for local consulting industry.

* (Sub-)contracting procedures. The issue of contracts emerged in projects when currentexchange rates were used and there were no price escalation clauses. This was addressedand (sub-)contracting has increased steadily. A larger, institutional procurement problemremains (footnote 20).

* Project flexibility. In several projects equipment acquisition was substituted for expandingthe civil works to spend the monies saved in civil works contracts. The substitution, whichmay have adversely affected the development of private contractors, was attributed toinflexible project design. There should be flexibility in project design because there arenumerous good road projects that should have higher priority-and a better ERR-thanequipment.

* Management training. The training component of the IDA credits was executed well.Consistent with the new Country Assistance Strategy, training of management should nowhave priority.

* Flexible technical assistance. Technical assistance, while successful, was limited to theproject life cycle. Progress in technical assistance is not a predictable, linear undertaking,thus it would be better to follow the spirit of the Terms of Reference (TOR) for technicalassistance in a flexible timeline rather than produce the reports prescribed on-time.

Issues and Recommendations

14. The state of the road sector in Yemen is satisfactory. With the exceptions noted above,the pattern in project formulation, preparatiu.i and implementation used by IDA in Yemen wasgood and lends itself to replication elsewhere. This model facilitates continuous learning andgradual improvement of the (road sector) institutions. It is highly appropriate not only in thecontext of IDA's Country Assistance Strategy but also in strengthening the emerging new policyframework in the Yemen transport sector. The Yemen Road Fund Board (YRFB), negotiated aspart of the recently approved Transport Rehabilitation project, is the kernel of that policy

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framework. This development is welcome and must be continued. Specifically, the followingmatters should be examined (para 6.8):

* Development of the policy framework. The Yemen Road Fund Board (YRFB) is a new entityin the policy framework. Will the YRFB jurisdiction cover maintenance or development?

* Definition of the roles of the sectoral institutions. The roles of the sector institutions -MOC,MOT, GCRB, YRFB, MPD- must be clarified in the new policy framework.

* Contracting and procurement. How are maintenance and development contracts bid? Whowill award the contracts? What is the role of MOC in procurement?

* Development of human resources. The GCRB has developed capable professionals, in partbecause of its own salary scales. Its technical skills in maintenance and construction must besafeguarded. Training of management, in particular, and personnel is very important.

* Development of data services and management systems. There is a need to improve currentdata services with regard to traffic counting, axle load information, road condition, and costand price information. Development of a road data bank and pavement management systemshas a top priority if full benefits of the road fund are to be realized.

* Improvement of standards and technical specifications. There are technical standards (fordesign and materials) and specifications. In-house or domestic consultant work should beinitiated to update these standards and specifications.

* Functional classification. Size of the network. The important issue of local roads andexpansion of the Yemen road network necessitates a review of the (functional andadministrative) classification of the road network. Some Bank documents suggest that thelength of Yemen's road network is adequate and more in need of maintenance thanexpansion. This is open to question and should be examined carefully. Resolution of thisissue, and that of funding the local roads, has important implications to the Road Fund andthe management of roads in Yemen.

* Axle load control and enforcement. Weigh bridges were built under the Third Highwayproject, but not put into use because the MOC or the GCRB (or HA) had no jurisdiction onenforcement. This has now been remedied and additional weigh stations are underconstruction. However, the manner in which the axle-load enforcement will be carried out inYemen is not yet clear. Experience shows that weigh bridges are not sufficient or even aneffective means for axle load control. Axle load control must include the truckers, pricing ofcarriage, a system of fines and other enforcement measures, insurance, regulations governingvehicle weights and dimensions, and the management of pavements by the roadadministration. This requires substantial institutional capacity which may not now exist inthe GCRB, MOC, or MOT.

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1. Introduction and Background

The Country Context

1.1 North Yemen had been virtually closed to the outside world until 1962. A republicangovernment took command in the north in 1970 and the Yemen Arab Republic was formed.South Yemen, under British rule for a century and a half became an independent country, thePeoples' Democratic Republic of Yemen, in 1967. IDA's first projects started in the early 1970sin both countries. The design of these projects, while similar, was affected by an importantinstitutional difference: North Yemen relied more on market economy while South Yemen was acentrally planned economy.

1.2 The Republic of Yemen (ROY) was established in 1990 with the unification of theYemen Arab Republic (YAR) and the Peoples' Democratic Republic (PDRY). The six auditedprojects, four in the former YAR and two in the former PDRY, shared common objectives:organization development, improved road maintenance capability through training, betterfacilities and resource allocation; rehabilitation of important roads, building of maintenancecenters and acquisition of equipment and materials; and modest expansion of the road network toprovide access to agricultural areas and an oil field. These objectives have not changed over thetwenty-year period of IDA involvement in Yemen. In the late 1980s cost recovery from usersand the development of local, private contracting and consulting capacity were added to thesectoral objectives. The ongoing transport projects in ROY reflect the recently approvedCountry Assistance Strategy which places an increased role on the private sector and user-financed (road maintenance) funding.

1.3 In 1990 a turbulent unification took place during the projects' execution period (1983-94). In 1990 the Republic of Yemen (ROY) took over all the projects, and 1990-92 was atransition period during which the two countries' administrations were merged. The Gulf War in1990, which resulted in the return of nearly one million Yemenis from the Gulf states to Yemen,and a three-month long Civil War in 1994 between the Northern and Southern armies, had aprofound effect on social life in Yemen with significant economic consequences. Workerremittances from abroad ended, financing from external sources declined, unemploymentincreased substantially, and output in the non-oil sectors decreased.

1.4 Civil service and other current expenditures, many due to unification, crowded outdevelopment expenditures. Fiscal deficits and their Central Bank financing caused highinflation; when the projects started in 1984 one US dollar was equivalent to about three Yemenirials while in 1994 when the projects ended the exchange rate was over 100 rials. Onlysubstantial increases in oil production in 1993 and 1994 counterbalanced these negative trends.

The Transport Sector Context

1.5 The transport sector also underwent a cycle of transformation during execution of theprojects. In the YAR, there were initially two Ministries: the Ministry of Public Works (MPW)and the Ministry of Communications and Transport (MCT). The former supervised the activitiesof the Highway Authority (HA), under a board of directors and with its own budget, income andsalary scales. HA was responsible for the planning, construction and maintenance of the main

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roads. The local roads were under the supervision of the Local Development Associations. TheMCT exercised oversight over the ports, aviation, and land transport. The HA was set up andorganized during the First Highway project, funded jointly by the Bank and the Kuwait Fund. Inthe PDRY, the transport sector was similarly organized, only the names differed: Ministry ofConstruction, and Ministry of Communications. Local roads were initially under the Ministry ofConstruction, but were transferred in the 1970s to the Ministry of Local Affairs. As in the YAR,the Highway Authority was established under a Bank credit as the agency responsible for themain roads with one important difference: a Public Corporation for Road Construction (PCRC)was organized to build the roads while the HA was responsible for maintenance, planning, andsupervision. In both countries, foreign consultants and direct labor were used to start thedevelopment of a modern road system and its administration and management.

1.6 Further administrative development was envisioned, but it materialized in the late 1980sonly in the YAR where the two sectoral Ministries were combined into one: Ministry of PublicWorks and Transport. Following the unification and merging of the two countries'administrative regimes the two Ministries were re-established under the names of Ministry ofConstruction, Housing and Urban Planning (MOC) and Ministry of Transport (MOT) of theRepublic of Yemen. The Highway Authority in YAR subsumed both the PCRC and the HA ofthe PDRY and assumed the name of General Corporation for Roads and Bridges (GCRB), butcontinued the policies and operational practices of the Highway Authority of the YAR. With thereturn to the original model of the Highway Authority as established in the early 1970s, theGovernment decided in 1994 to provide the road sector with its own income by establishing aroad fund for maintenance, and has since then also created the Yemen Road Fund Board (YRFB)to administer it.

1.7 All the projects audited had a basis on several studies and prior dialogue over severalprojects between the Bank and the formerly two countries. For reasons of organization andclarity, the Audit treats the four projects in the YAR as a group, and the two projects in theformer PDRY as a group. Project specific evaluation is undertaken when necessary. ThePCR/ICRs of the projects are informative, well written documents that provided the Audit with agood base.

Bank Role

1.8 Initially, in both Yemens, the Bank role was simply to help establish the government'sadministrative framework for the road sector and coordinate the aid provided by other donors. Inaddition to the sectoral framework, the first projects identified the basic constraints to thedevelopment of an appropriate highway system in Yemen. These were: (i) institutional capacityto plan and manage an economically justified construction program, and (ii) ability to maintainthe rapidly expanding network. Both of these called for continued capacity and institutionbuilding, extensive training, and IDA participation in civil works to develop the highway system.These objectives, and the components that pinned them on the ground, were refined during thepreparation of the audited projects. During project preparation, cooperation between Yemen andIDA became well established. The six audited projects demonstrate that the Bank has fulfilledthe role it set out to play and the objectives associated with it have been substantially achieved.

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2. Project Objectives and Preparation

Program Coherence

2.1 In Yemen, both North and South, the most important issues facing the road sectoradministration were; (i) organization and financing and (ii) training of staff and management.These issues, especially with regard to maintenance, constituted the objectives and componentsin all the six projects (Table 2.1). All the projects received cofinancing either from the ArabFund, the OPEC Special Fund, the Kuwait Fund, or from the Islamic Bank for Reconstructionand Development.

2.2 The formulation of objectives and project preparation was done well for the highwayprojects in YAR. In the 1970s-assisted by IDA and regional donors-the basic organizationalstructure for the highway sector in YAR was established in the first two highway projects. Thiswas followed by effective vocational training and institution building in the Third Highwayproject. During the first three projects an agreement on the objectives for a first round ofdevelopment for the highway sector was also reached: (i) institutional development and training;(ii) improved maintenance and rehabilitation of existing roads; and (iii) selective expansion of

highway capacity. These were further supported by studies and country dialogue. Physicalcomponents were prioritized, geographically balanced, and designed to support the objectives.There was continuity and overlap in project objectives. The project components becameprogressively more challenging and they were prepared with apparent cooperation and supportfrom the YAR Highway Authority.4

2.3 The first two IDA projects in the PDRY, in the 1970s, established the organizationalstructure of the road sector and the next two (one of them an emergency project) financed roadprojects by force account because only one responsive but over-priced bid was received. Thesubsequent highway projects, the Fourth and the Fifth, were initially one project but for reasonsof credit availability they were split into two projects. The design of the Fourth Highwayproject, was a compromise and consisted of two parts: Part A focused on maintenance, trainingof the work force and conducting a road user cost study aimed at improving cost recovery; andPart B built a new road to improve access to agricultural areas. The process leading to Bankapproval of the project was not characterized by unanimity. IDA staff was apprehensive ofgoing ahead with a credit in which a large part was devoted to road construction, and not tomaintenance and training as they thought it should have. 5 One of the last memos recommendingthe credit approval had a note on the margin to the effect that "what happens if the institutionaldevelopment [that is Part A] fails?" Covenants, with early due dates, were imposed on setting-up the training program for road maintenance to prepare for the Fifth Highway project, and on a

3. National Highway Master Plan (prepared as part of the Third Highway project, 1985); MOP Transport Sector Review (1986),IDA's Transport Sector Memorandum (1986), and MOP/IDA joint identification of priority areas (undated, probably 1986).

4. The objectives of the YAR highway projects, shown in Table 2.1, closed in, progressively, upon road strengthening andmaintenance, institutional support for maintenance, capacity building in road design, development of local construction industry,and cost recovery and resource allocation. These were embedded in building physical products: maintained, strengthened andupgraded roads, improved maintenance facilities and equipment, all with a well-rounded geographical distribution.

5. Previous road projects in the PDRY had run into considerable difficulties because of a lack of trained professionals. Expatriateprofessionals and artisans were imported from the Philippines, but - unlike in the YAR - the issue of training domestic personnelwas never satisfactorily solved.

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road user charges study and its implementation. These covenants were not complied with andwere a problem in preparing the Fifth Highway project (paras. 2.4 and 5.3).

2.4 The Fifth Highway (PDRY) project had the objective of completing the maintenanceorganization and creating a well trained work force for the HA. The main component was athree-year time slice of the maintenance program. A condition of effectiveness of this projectwas to have a consultant to develop the training manuals and program for maintenance personnelin the then ongoing Fourth Highway project. In order to approve the project in FY87, IDA staffrecommended that the signing of the consultant contracts for the training manuals and thetraining programs was sufficient evidence of reasonable progress. As it turned out, it was not.No useful output was obtained from this consultant or its successor; both contracts were canceledfor non-performance. Thus, a key ingredient to project success was missing from the start.During negotiations a covenant was added to the Credit Agreement that gave IDA the right tostop disbursement if the maintenance funding or training of the maintenance work force was notimplemented as planned. But, covenants are never a good substitute for agreed plans of action:maintenance training did not take place and maintenance funding was inadequate until IDAstopped disbursement in late 1993.

Borrower Participation and Ownership

2.5 Borrower participation in the YAR Highway projects was effective. A common threadthrough all the projects in the YAR was Borrower determination - which in procurement matterseven defied the Bank - and a consensus on objectives with the Bank. Perhaps a large part of theexplanation for this consensus and commitment lay in the leadership in the HA where there wasa strong motivation to become a good road administration.

2.6 In the PDRY, although there was Borrower participation in the preparation and design ofthe Fourth and Fifth Highway projects, there was less ownership on the sequence and relativeimportance in which the objectives were to be achieved and components executed. This mayalso signal disagreement because the agreement on objectives and components was undefined.The main issue concerned the sequencing of the objectives. IDA wanted a project that focusedon maintenance and training because of a good (though not painless) recent experience in theYAR. The PDRY Highway Authority wanted to build new roads, in particular the Nisab-BeihanRoad, and accepted the maintenance component reluctantly. Lengthy correspondence anddialogue ensued between IDA and PDRY officials. The budget of the HA had been cut that yearand they wanted a construction project that would keep the force account construction company,

6. The objectives and components for the two PDRY credits are shown in Table 2.1. Briefly, the Fourth Highway project sought tostrengthen the maintenance organization and cost recovery and improve access to agricultural areas. The Fifth Highway project'sobjectives were to complete the maintenance organization reform and create a well trained work force. Prior IDA projects haddemonstrated that there was a sore need for professional staff at all levels, particularly for maintenance, design and management.The parastatal road construction organization, PCRC, had demonstrated some ability to build roads, but organization and trainedstaff for maintenance were absent.

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the PCRC, employed. IDA resisted this, but finally agreed in order to get the credit approved inFY85 (which did not quite succeed).

Table 2.1: Objectives, Components and Credit Amounts of Six Audited Road Projects in Yemen

Project Name, Objectives Components Credit OutcomeCredit No. Amount, rating in

Disbursed PCR/ICR(US$,

million)

Highway Four 1. Continue to support selective road 1. Overlay Taiz-Al Mafraq Road. 7.0C1267-YAR strengthening program. 2. Technical assistance by expatriate 6.7 satisfactory

2. Improve management and experts.administration.

Highway Five 1. Assist in building priority roads. 1. Upgrade lbb-AI Udayn Road. 13.0C1413-YAR 2. Institutional support, especially 2. Expatriate support in key areas. 12.96 satisfactory

maintenance. 3. Train maintenance staff3. Try new construction procedures.4. Improve quality of local roads.

Marib-Safir 1. Development of oil fields through 1. Build and pave Marib-Safir Road. 10.0Road C 1726- better access. 10.0 Highly satisfactory

YAR 2. Road access to agricultural areas.3. Improve capacity in road design.

Sana'a- 1. Assist in rehabilitating main roads. 1. Rehabilitation of Sana'a-Hodeidah 18.0Hodeidah 2. Develop dynamic contracting. Road. 8.54 unsatisfactory

Road 3. Institutional development. 2. Rehabilitation of flood damaged roadsCl 848-YAR 4. Better cost recovery and resource and bridges.

allocation. 3. Technical assistance.Highway Four 1. Strengthen maintenance 1. Build maintenance facilities. (Part A) 14.1C1617-YDR organization. 2. Provide equipment. (Part A) 14.1 satisfactory

2. Improve access to agricultural 3. Technical assistance for maint. (Part A)areas. 4. Build Nisab-Beihan Road. (Part B)

3. Improve cost recovery.Highway Five 1. Complete maintenance 1. 3-yr time slice maintenance program. 16.8Cl 823-YDR organization. 2. Training and technical assistance. 3.4 unsatisfactory

2. Create well-trained work force. 3. Repair flood damaged roads.4. Master Plan and Road User Charge

Study.

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3. Project Implementation

PCRICR Findings

3.1 The preparation of the Marib-Safir Road project overlooked the nearby ruins of theancient kingdom of Saba and the Marib Dam, both archeologically important sites, and noenvironmental impact assessment was prepared. However, the historical monuments became theobject of an early IDA supervision mission. Subsequently, the Credit provided monies for anAction Plan which included the preparation of the "Master Plan Marib". Steps were also takento help preserve these historically valuable areas as well as to provide access to them. Historicalpreservation became an important objective and component of the project. From writtenaccounts this seems to have been handled well. It is unclear if the preservation of importanthistorical sites has been sustained.

3.2 With the exception of the Marib-Safir Road project, the projects closed two to four yearsbehind schedule as shown in Figure 3.1. In the former YAR the delays were due to severalinterrelated causes. Among them were: the expansion of the project due to cost savings and theirre-allocation to new but eligible components; procurement disagreements; and, difficulties intechnical assistance. Cost savings--due to unexpectedly low bids-and the Gulf war causedinstability in contractor and consultant performance and resulted in slow execution or acontractor leaving the site and a new one (as a rule the Highway Authority) taking over theproject with attendant delays. Nonetheless, project implementation in the former YAR may stillbe characterized as uneventful, that is, the surprises were what "normally" can be expected inany country. This applies to both physical components and technical assistance. A possibleexception is procurement disagreements which are discussed later (paras. 3.4 - 3.7).

3.3 In the former PDRY, the Fourth Highway project was closed four years and the FifthHighway project was canceled two years after the planned closing date. In both projects newconstruction works and repair of flood damaged roads were completed, though the PCRC-theparastatal construction company-constructed section of the Nisab-Beihan Road (in the FourthHighway project) was still under way at project closing. The time slice of the maintenanceprogram (in the Fifth Highway project) was not completed and the lack of progress on thiscomponent ultimately led to project cancellation. Implementation of technical assistance andstudies was arduous and failed in both projects.

Figure 3.1: Project Time Line

+ Highway VI. Cl267-YAR

+ Highway V, C1413-YAR

+ Marib-Safir, CI 726-YAR

Sana'a-Hodeidah, Cl 848

+ Highway VI Cl617-YDR

+ Highway V, Cl823-YDR

year82 83 84 85 86 87 88 89 90 91 92 93 94 95

Legend: +: approval date - : from effective to closing

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3.4 The ratings on the outcome of these projects (based on the PCRs and ICRs) are shown inTable 2.1. All those for which physical objectives were prominent were rated satisfactory. Thelast ones, both in YAR and YDR, which had important policy and institution building objectivesthat were not met were rated unsatisfactory. The main findings and lessons included in thePCRs/ICRs deal with the procurement process and technical assistance.

3.5 These findings are supported and amplified by the Audit, and occasionally looked from adifferent perspective. As a result, some changes are made in the ratings. In addition, the Auditsuggests a model for institutional development which, if properly applied, will enable the Bankto assist the Borrower in resolving the above and other issues in a timely manner before theybecome time-consuming problems (as they infrequently did in Yemen). The Audit alsodiscusses several topics which are likely to emerge as important issues in the near future.

Procurement Issues

3.6 The Bank managed the procurement process in unnecessary detail. For example, in theFourth Highway project (YAR) there were savings of SDRI million from the rehabilitation ofthe Taiz-Al Mafraq Road. HA requested to use these funds to strengthen the same road beyondMafraq toward Hodeidah. IDA could not approve this because it was not part of the appraisalbut instead supported acquisition of equipment, spare parts and materials. The road, animportant segment of the coastal road, was then improved using funding from another donor.The same pattern of substituting equipment for road strengthening was followed in the FifthHighway and the Sana'a-Hodeidah Road projects (both in the former YAR). IDA agreed to fundequipment in all these projects on the basis of questionable justification.7

3.7 In the Fourth Highway project (PDRY) a part of the equipment funds became availablebecause the training part of the technical assistance was not carried out; however, this trainingprogram was thought to be very important and was bound by three covenants, two of which werenot complied with. Instead of addressing the weaknesses in the procurement process in Yemen,which surfaced again later and some of which still exist, IDA chose to deal with procurementproblems as isolated events. An opportunity for change was lost.

3.8 In the Marib-Safir Road project, the issue of contention was pavement thickness. TheHA wanted to build a 7 cm thick pavement. This was reduced to 4 cm at appraisal because apipeline was to be built for the oil products and, in the absence of heavy traffic, the thinnerasphalt layer was calculated to be most economical. As it turned out, traffic growth exceededexpectations-by a factor of 5-and the pavement life was reached in 1992. Perhaps local "gut"feelings about desired pavement thickness were more accurate than consultant calculations.Traffic growth was also underestimated for the Sana'a-Marib Road and, consequently, theoverlay was underdesigned. But, it should be noted that, for overlaying that road segment, notoriginally part of the credit, IDA allowed a project amendment to use savings from the Marib-Safir Road project.

7. In the Fifth Highway (YAR) project initially US$.5 million was allocated for equipment and materials for training purposes.Savings in civil works, which derived from the usage of current exchange rate - instead of fixed - in conflict with IDA guidelines,were allocated to equipment so that at the project's close more than US$4 million was spent under that category on bulldozers,graders, loaders, etc. In the Sana a-Hodeidah Road project IDA declared misprocurement for rehabilitating the road and canceledUS$5.7 million but increased the equipment budget from US$2.9 to US$4.5 million. The misprocurement was occasioned due to adispute - which was initiated by one of the losing bidders after an initial 'no objection' by IDA - over an acceptable bid bond. Thebid bond was delayed by one day due to a religious holiday, but the contractor assured that it would be forthcoming - as it did. Itwould appear that IDA's withdrawal of 'no objection' was an attempt to establish a standard not congruent with the environment.IDA then reversed itself by reallocating some of the monies to (government) equipment purchases, while, concurrently, trainingdomestic contractors to gain a greater role in the construction market.

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3.9 The procurement disagreements quite likely had some undesirable or unintendedconsequences. When the HA acquired more and better equipment it also wanted to use them -and not by leasing them out -for maintenance, rehabilitation and construction. The developmentof the local private sector was crowded out. However, over the long run, and starting with theSana'a-Hodeidah Road project, the development of the local private construction industry wasan important objective. Implicitly it was an objective all along in IDA's insistence for ICBcontracting of the civil works. Although no formal survey of equipment availability wasundertaken in this Audit, there appeared to be plenty of private equipment available for hire inthe cities, towns and villages. Discussions with local professionals confirmed this observation.

Technical Assistance

3.10 Technical assistance in the YAR projects was very successful. For more than twentyyears IDA has helped develop a solid highway organization, seemingly from scratch, train itswork force, establish technical procedures, and provided assistance in improving road network tomodern standards. This, no doubt, is not solely due to IDA or other donors, but, and perhapscritical , to the existence and consistency of leadership in the HA (and its successor theGCRB) , which values professionalism. The overlapping design of small projects, though notwithout drawbacks, suited Yemen well because it fostered gradual development of capacity.Growth of domestic construction capacity provides a good example. Initially, foreigncontractors were used in donor projects, and HA force account built projects funded by thegovernment. Concurrently, the force account personnel was trained and equipment was bought.Then followed training for the domestic construction industry, and training on supervision,design and feasibility studies.

3.11 As a result of Bank-and donor-financed training, the domestic construction industry hasgradually assumed a larger share of the market, now slightly more than one-half of the annualroad program and increasingly difficult undertakings. For example, a Yemeni contractor iscurrently rehabilitating a 160 km segment in a highly demanding terrain. The increase followeda pattern: first individual machine operators (presumably trained by IDA-sponsored vocationaltraining) were employed on a contract basis, followed by small subcontracts for HA or for aninternational contractor, followed by small independent contracts, and finally, contract size wasincreased. Looking at it from another perspective, the sequence first provided the HA with acapacity in (maintenance and small) project implementation processes; that was followed bydevelopment of capability in supervision, design and feasibility studies, and finally incontracting. In this way the HA supervisors were able to "train" and advice the fledglingcontractors for them to eventually emerge as viable enterprises.

3.12 In the former PDRY, TA was not successful. IDA wanted to follow the same pattern asin the former YAR, but the Borrower mainly wanted funding for the parastatal construction unitand to acquire equipment for it. It was less interested in maintenance or development ofinstitutional capacity. Consequently, the sequence was reversed (de facto): a project wasdesigned to support the parastatal construction organization, and development of capacity inmaintenance was to follow. It is not clear if this sequence could have succeeded because it was

8. According to the Region's view the (excess) supply of equipment was due to the aftermath of the Gulf war. The returningYemenis brought the equipment with them from Kuwait and Saudi Arabia.

9. The GCRB and HA are in essence the same organization. The former was established after unification from the HighwayAuthorities of the two countries. The names are used interchangeably depending on the context.

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disrupted by social unrest and country unification. Partial evidence does suggest that IDAshould have maintained its position: first organization, then institutional support formaintenance and training, then support for other capacity development, and finally, improvementof private domestic construction capacity.

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4. Achievement of Project Objectives

Physical Objectives

4.1 The objectives of the YAR Highway projects relating to maintenance, rehabilitation andconstruction of main roads, and access to industrial and agricultural areas were achieved. Theseresults are being sustained. The upgraded roads meet the growing travel demand and allowfaster travel and heavier trucks, and have improved access. Each project in the YAR had asatisfactory (calculated) ex-post ERR. In the SARs, the ERRs for the YAR projects wereestimated to be between 13 and 33 percent. The PCR/ICRs re-estimate them to be between 18and 59 percent; for two projects the ex-post ERR is slightly less than the ex-ante value, and forthe two other projects it is substantially more. Some of the ERRs were affected by theunification which delayed traffic growth.' 0

4.2 In the PDRY, the two projects achieved many of their physical objectives. In the FourthHighway project, the maintenance organization obtained better facilities. Access to agriculturalareas was improved through the construction of the Nisab-Beihan Road with a calculated ex-post ERR of 18 percent (vs. 15 percent at appraisal). In addition, because of lower constructioncosts and because the training part of the technical assistance was not carried out, the thenavailable funds - USD7.0 million - were used to purchase road maintenance equipment andspare parts to be utilized in the Fifth Highway project. In that project, flood damaged roads wererepaired, equipment was acquired and workshops were constructed, but the three year time-sliceprogram for routine and periodic maintenance was not carried out. No ex-post ERR could becalculated. In fairness it must be added that the Fifth Highway project was affected byunification, civil unrest and, later, by the civil war. One of the benefits from the unification ofthe two road administrations is that the physical accomplishments are likely to be sustained.

Institutional Development and Policy Reforms

4.3 In the YAR, institutional and organizational development has taken place. With respectto training, good results were obtained for both the HA (GCRB) staff and the private sectorcontractors. However, there are objectives that were not achieved or whose achievement is stillin doubt. Among the most important non-achieved but articulated objectives are the control ofaxle loads and development of traffic counting and other data services. Weigh bridges have beenbuilt (under the Third Highway project) -but not yet put into use- and additional ones are underconstruction (see para. 6.3). Data services and "planning systems" started in the FourthHighway projects were to be improved in the Fifth, but this has been neglected.

4.4 Cost recovery is an objective whose achievement is still in doubt. Cost recovery and amechanism for stable funding was to be implemented in the Sana'a-Hodeidah Road project.Partial success was achieved: the Government decided to establish a road fund whose first year

10. It should be noted that there is uncertainty in these ERR estimates beyond the "normal" uncertainty in traffic forecasts and useror administration costs. The traffic counting system is not fully adequate to support benefit-cost analyses; also, user costcalculations should be improved. Benefit-cost calculations are also affected to an unknown degree by user costs which are belowthe economic costs.

34

of operation is 1996. The Road Fund Board is to begin its work in the newly approvedTransport Rehabilitation project (see para 4.8.)

4.5 The two projects in the PDRY did not achieve their institutional objectives for furtherdevelopment of the HA set up under prior projects. This was somewhat surprising since in otherareas of infrastructure the PDRY had been able to capitalize on its historical heritage andgenerally outperformed similar projects in the YAR. In the Fourth Highway project, theobjectives of strengthening the maintenance organization by training maintenance staff andimproving cost recovery were not achieved. None of the constructed training centers were putinto use for want of trainers and training plans. Failure to achieve these objectives predestinedthe outcome of the institutional objectives of the Fifth Highway project: completing themaintenance organization and creating a well-trained work force were not achieved becausetechnical assistance and training for maintenance, postponed from the Fourth Highway project,were not undertaken. Again, both projects were affected by unification and civil unrest whichwere probably especially detrimental to institutional development in the PDRY given itscentrally planned economy. It may not be surprising that a linear TA program, with objectivesimplicitly or explicitly challenging an institution which provided its workers a social safety net,was resisted and rendered ineffective in changing a system already under duress.

Sustainability

4.6 Past IDA credits and cofinancing of projects by other donors have contributedsignificantly to training of the GCRB staff and to the development of its technical procedures.The GCRB, and its predecessors, developed during the projects into an able professionalorganization with established management and trained work force to maintain and build roads.Besides being competent in road construction and maintenance, the GCRB has a traffic countingsystem, technical specifications and standards, a functional line organization, a cost accountingsystem, a computerized design department, a contract monitoring system, and ability to dostudies on traffic safety and project feasibility. There are also workshops, regional maintenancecenters with limited decision authority, and a staff training center. Many of these arecharacteristic of a Road Administration from a more developed country.

4.7 Overall, institutional and organizational components, and training made a substantialdevelopment impact in Yemen, although they were disrupted by the unification process. Themerger of the two road administrations has been accomplished without disruption and the unifiedroad administration, the GCRB, has emerged as a competent, professional organization withgood leadership. Because of the leadership and competence existing in GCRB, sustainability ofthe road construction and maintenance works is dependent on future maintenance. Because ofthe recent provision for stable funding of maintenance through the Road Fund and the successfultraining programs in the YAR, financed by IDA and other donors, sustainability of theachievements in the six audited projects is rated as likely. The projects in the North already arebeing sustained and, as indicated, steps have been taken to accomplish the same in the South.

A Look Forward

4.8 All the above institutional strengths, and some more, are in need of updating and furtherdevelopment in Yemen. Since unification in 1990, the other players in the road sector are theMinistry of Planning and Development (MPD) and the Ministry of Finance (MOF). The former

35

is the Borrower of all foreign loans and credits, and also acts as the owner of those donor-financed road projects which are built by the GCRB. A key feature of the institutionalframework in the road sector is its flexibility. In road projects where there is foreign financing,the GCRB can be either the contractor or the supervisor/owner. In both cases FederationInternationale des Ing6nieurs Conseils (FIDIC) practices are followed. If the GCRB is thecontractor, then the supervising consultant, "the engineer", reports to the MPD. If the project isexecuted by a contractor other than the GCRB, then the GCRB acts as the owner on theGovernment's behalf and the supervising consultant reports to it. In projects funded by theGovernment, the GCRB is both the owner and the supervisor. It may build these projects bydirect labor or by contract (and may employ a consultant as the supervisor). In recent yearscontracting and subcontracting have increased markedly and the GCRB employs contractors inslightly over fifty percent of its capital budget (used for road construction, rehabilitation and,partly, for periodic maintenance). Routine maintenance operations and part of the periodicmaintenance is the responsibility of the maintenance department of the GCRB and, up till now,done by direct labor.

4.9 This flexibility of the GCRB to act either as the owner or the supervisor or both, can alsobe an important drawback: the division of responsibility and assignment of accountability is notclear. Particularly troublesome is the dual role of the GCRB as the client and as the implementorfor some of the road works. Rectifying this conflict potential has a high priority. Much claritywould be obtained if the client functions (planning, data services, traffic safety, financing,administration, contracting, supervision) and the producer functions (construction, and perhapsalso maintenance and operations) were clearly separated. In part, the creation of the YRFB seeksto address this problem, but details of a working institutional structure are still unclear.

4.10 Unification has also ushered Yemen into a new era in the road sector. The currently ongoing projects -the Multi-Mode Transport and the Transport Rehabilitation projects- reflectIDA's new Country Assistance Strategy. Accordingly, the road sector strategy is undergoing amajor change: the IDA objectives now seek to improve the sustainability of sector investmentsby creating an institutional framework for comprehensive sectoral decision-making and forfunding maintenance; promote macroeconomic stabilization by reducing the burden on theGovernment's budget of financing road maintenance which now will be recovered directly fromthe users; and, use these mechanisms to ascertain sustainability of transport sector investmentsand restore key economic and social infrastructure important to the future development of thecountry. This new tilt in objectives recognizes the substantial technical skills that exist in theroad sector organizations, especially in the GCRB, but that further progress requires redraftingthe policy framework, recasting the roles of the private and public sectors, and developing a newfunding mechanism for roads.

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5. Bank and Borrower Performance

5.1 The performance of IDA project staff in the YAR cluster was satisfactory. IDA has had asubstantial positive impact on the Yemen highway sector from its initial organization to thedevelopment of its institutional and professional capacity. IDA's perceptions of, and responsesto, problems encountered have been good. The strategy of gradual progress with relativelysmall, well defined projects has worked. The lapses - if they were lapses - in managingprocurement (paras. 3.5-3.8) do not alter this favorable rating. They do, however, provide forlesson learning and point toward the need for continued institutional development in the sector.

5.2 IDA's performance in the former PDRY cluster is mixed. In the early projects (notcovered by this Audit) IDA assisted in creating the basic administrative structure for the PDRYroad sector. In the design of the Fourth and Fifth Highway projects IDA envisioned that furtherdevelopment would include improvement in maintenance management, training of work force,better relationship between economic costs, cost recovery and road sector expenditures, andestablishing a competitive regime for contracting. However, the Borrower, consistent with itseconomic system, had allowed the growth of a large, non-competitive parastatal roadconstruction organization, not trained in road maintenance, that became unsustainable in ashrinking economic climate. Agreement about project objectives was tenuous. Priorities werereversed because the Borrower was interested in finding ways to support the parastatalorganization. This objective gained further importance with the spreading civil unrest. Giventhe socio-political turbulence, the Borrower had less interest in doing things to serve the roadsector objectives which in IDA's experience would have been appropriate; thus it is alsounderstandable why the Borrower was able to implement physical facilities, but not to undertakeorganizational changes or training for maintenance.

5.3 IDA, for its part bent backwards, to accommodate the Borrower and misread any actionas a sign advancing the maintenance and training components high on IDA's priority list. Towit: the implementation of technical assistance lagged seriously behind in the Fourth project. Inthe Decision Meeting of the Fifth project in July 1986, a plan was discussed to have themaintenance training consultant in the field by January 1987 1in order to start disbursing theFifth project in late 1987; otherwise "the project would be premature" notes the meetingmemorandum. In August 1986, the Loan Committee approved the project with the followingqualifications: (a) actions to set up road maintenance and training programs and conducting aroad user charge study (in the Fourth project) should be completed prior to negotiations; (b) theproject financing should be in place before credit effectiveness; and (c) the Green Cover SARshould be submitted to the Loan Committee prior to negotiations. In December 1986, an officememorandum notes that the "Government is fully aware .. and has taken positive action ...[consultant] proposals are due on January 15, 1987 .. and services start in May 1987." In March1987, when preparing the credit package for the Fifth project, IDA again reviewed progress inroutine maintenance and training programs in the Fourth project. It concluded that furtheractions to solve delays were necessary in order for the Fifth project, which "laid a newfoundation for PDRY projects", to proceed. IDA pressed PDRY for consultant contracts formaintenance training which were still undecided. In early April 1987, IDA interpreted the Loan

I1. Originally, as covenanted in the Fourth project, the deadline for the Phase 11 (as the Fifth project was called) training programwas July 1986.

38

Committee conditions to mean that the selection of consultants acceptable to IDA representedsatisfactory progress toward their employment and proceeded with negotiations.12 During loannegotiations in April 1987, IDA made it clear that it would suspend disbursement if training andmaintenance budget targets were not met. IDA also set three conditions for credit effectiveness:(a) signing of consultants' contract to undertake training and maintenance programs; (b) selectionof consultants for the road master plan study; and (c) signing of consultant contract to undertake

13the road user study. The consultant contract for training in road maintenance was finallysigned in December 1987. The consultant mobilized about six months late, submitted requireddocuments in September 1989 for review, and was terminated for non-performance shortlyafterward. A new consultant was appointed in May 1990, but this consultant also performedpoorly and his contract was terminated in 1991. The consultant contract for the Master Planstudy was never signed, and the road user charges study was delayed and eventually becameirrelevant in the new situation after unification.

5.4 The above project timeline shows that IDA was well aware of both the lack of progressin the Fourth Highway project and its impact on the Fifth. The timeline shows that there werenumerous opportunities to postpone the Fifth project and concentrate on the Fourth. Instead,equipment acquisition was substituted for critical - and covenanted - technical assistance in theFourth project to facilitate disbursement, and qualifications were interpreted so as to permit theapproval of the new project in FY88.

5.5 As explained (para 2.3), the design of the Fourth Highway project was not characterizedby unanimity. The sequence of objectives and components was compromised. It is unclear if theproject design of that project would have worked if IDA had enforced the covenants that it hadimposed to ensure achievement of the objectives. Supervision of the Fourth Highway projectwas deficient and lax and major objectives relating to maintenance were not achieved. Thisaffected the preparation of the Fifth Highway project so that it was premature, as suspected in aBank memorandum during preparation (para 5.3), and its quality at entry was flawed. Theabove project history is the basis for rating Bank performance in the Fourth and Fifth Highwayprojects as unsatisfactory: the minimum supervision, but quite likely also the design, of theFourth Highway project was unsatisfactory; and, the quality at entry and initial supervision ofthe Fifth Highway project were also unsatisfactory. All this could not be rectified by thesignificant efforts made by the Bank in later phases of the projects (para 5.6).

5.6 The project preparation and supervision team was changed four times after the Bank'sreorganization in mid-1987. The team that finally inherited the Fourth and Fifth Highwayprojects in 1992 acted swiftly. It proceeded to supervise the completion of the physical aspectsof the Fourth Highway project and took other parallel steps together with the now unified roadorganization in the Republic of Yemen to ensure sustainability of the accomplishments,including the agreement to create the Road Fund. It made serious attempts to resurrect the FifthHighway project and began to coordinate the technical assistance activities with the GCRBmanagement which had taken over project implementation. But, after disbursing for the repairof flood damaged roads, two IDA supervision missions found grave implementation problems inthe three-year time slice of the routine and periodic maintenance program -awarded to theparastatal contractor PCRC in 1991- and deep seated reasons for poor performance in other

12. Memorandum from Mr. Prancih to Mr. Wapenhans, dated April 3, 1987.

13. Ofice memorandum from Mr. Kwaku to Mr. Wapenhans, dated April 30, 1987.

39

components became apparent to the new project team (paras. 5.3 and 5.4), IDA then resolved,quite appropriately, to terminate the project and decided to pursue those objectives which stillremained valid after unification in forthcoming projects.

5.7 Borrower performance was satisfactory in all the YAR projects. The Borrower workedwith IDA in an affirmative way, complied with covenants, implemented the projects well, andachieved significant accomplishments in developing institutional capacity. Borrowerperformance in the two projects in the former PDRY is difficult to assess because the originalBorrower no longer exists. No reasons were found to alter the PCR/ICR evaluation: satisfactoryin the Fourth, unsatisfactory in the Fifth.

14. Memorandum by Mr. Wolden of December 21, 1993 and letter by Mr. McKechnie of March 24, 1994. Project files show aclear -and positive -change in IDA's management of the projects following project team changes in the Bank.

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6. Conclusions and Lessons Learned

Ratings

6.1 The Audit's ratings for the six projects are shown in Table 6.1. In the Audit's opinion, itis better not to rate the projects separately, especially for their impact on institutionaldevelopment and sustainability which depend mostly on factors common to all the projects. Themost appropriate way is to rate several of them as one program that forms a continuum not easilyseparable by each project's logical framework for its implementation.

6.2 For the YAR cluster, the outcome is rated as satisfactory; the objectives were achievedand often exceeded. Sustainability is rated as likely and institutional development as substantial.Bank and Borrower performance are both rated as satisfactory. Individual ratings for outcome,sustainability, and institutional development in the Sana'a-Hodeidah Road project are upgradedto satisfactory (vs. unsatisfactory in the ICR), sustainability as likely (vs. uncertain), andinstitutional development as moderate (vs. negligible). This is because the objectives wereachieved: a main road was rehabilitated with a satisfactory ERR, it is being maintained in goodcondition, domestic construction industry personnel was trained with apparent success, the RoadFund was agreed upon, and, most importantly, during the transition period the consolidation ofthe road administrations of the North and South was begun. Also, while the institutionalobjectives in the Marib-Safir Road project were initially limited, the component added later forsafeguarding the historical ruins of Saba and the Marib dam had a positive impact on sensitizingthe Highway Authority on archeology and the environment.

6.3 For the former PDRY cluster the outcome is rated as unsatisfactory. Its overridingobjectives were not achieved with regard to institutional development. Because of the successfulunification process and the capability of the road administration in the Republic of Yemen, theGCRB, sustainability is rated as likely on the basis of the good overall achievements.Institutional development, excepting the construction of buildings for training, did not take placein the former PDRY, and is rated as negligible. The PCR evaluation rates institutionaldevelopment in the Fourth Highway project as substantial in spite of the fact that there was none.Bank performance for the Fourth Highway project is rated as unsatisfactory because the projectwas pushed through regardless of strong opposition within the Bank that it was not ready forimplementation and it was not stopped even when the covenanted institutional development,which was to be the basis for the Fifth Highway project, did not take place. Bank performance inthe Fifth Highway Project is also unsatisfactory because that project was premature and itsquality at entry was unsatisfactory (paras. 5.3-5.5).

6.4 The composite outcome of the entire program of road projects in Yemen is rated assatisfactory, sustainability is rated as likely, and institutional development as substantial. Bankand Borrower performance is rated as satisfactory. Given the qualifications made earlier (paras.4.5, 4.6, and 5.6) these are broadly c,nsistent with the ICR/PCR ratings; although, as explainedabove, some individual ratings ha -,et upgraded the outcome for the PDRY cluster is rated asunsatisfactory.

Table 6.1: Ratings for Outcome, Sustainability, Institutional Development and Bank and BorrowerPerformance for the Six Audited Yemen Road Projects

Project YAR-Hwy 4** YAR-Hwy 5** YAR-Hwy 6** YAR-Hwy 7* PDRY-Hwy 4** PDRY-Hwy 5*Taiz-Mafraq Udayn-Ibb Marib-Safir Sana'a-Hodeidah Wasit-Beihan MaintenanceRoad Road Road Road Road

Entity

OutcomePCR Satisfactory Satisfactory Satisfactory Unsatisfactory Satisfactory UnsatisfactoryPAR Satisfactory Satisfactory Satisfactory Satisfactory Unsatisfactory Unsatisfactory.

SustainabilityPCR Likely Likely Likely Uncertain Likely UnlikelyPAR Likely Likely Likely Likely Likely Likely

Inst'I Dev'tPCR Moderate Substantial Substantial Negligible Substantial NegligiblePAR Moderate Substantial Substantial Moderate Negligible Negligible

Bank PerformancePCR Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory UnsatisfactoryPAR Satisfactory Satisfactory Satisfactory Satisfactory Unsatisfactory Unsatisfactory

Borrower PerformancePCR Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory UnsatisfactoryPAR Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Unsatisfactory

** PCR rating *ICR rating

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Lessons Learned

6.5 The preparation, appraisal and implementation of the projects had the following pattern:establishment of the road organization (done in a project not audited) and agreement onimmediate problems; engaging the road organization in engineering activities it most likely cando or has some experience in doing, possibly with expatriate advisers, and training themanagement and the work force in priority activity (maintenance); pursue other activities andtraining with the Borrower by first conducting studies followed by gradual implementation oftheir results. The "other activities" included formulation of objectives, feasibility studies,priorities of future projects (paras. 2.1- 2.3, footnote 3), contractor training, subcontracting(paras. 3.9-3.10) and so forth. This pattern worked successfully in the YAR. It did not in thePDRY, but, as detailed earlier, at an important juncture the pattern was abandoned.

6.6 The key lesson of the Audit is the following hypothesis: the sequence for successfulinstitutional and capacity development has the following four steps:

* establish a (new) policy framework and agree on a contract for near-term objectives;* formulate a project in which the Borrower can utilize existing skills, and begin trainini the

management and work force in priority activities consistent with near term objectives;* conduct studies (the Borrower together with the Bank and other donors) on the

organization's core processes and prioritization of projects, and begin to implement them;* undertake more complex activities when ready, and recycle to step one.

These steps set into motion a process wherein significant portions of project decision making andtheir execution are carried out with the Bank and the Borrower working in common, notseparately. Such a process involves extensive communication, collaboration, participation andflexibility. It is multifaceted multistaged and involves continuous feedback loops. For the sakeof shorthand, this is referred to as the work in common in a process framework. In Yemen, thisprocess has been cycled once and is now beginning its second (or third) cycle. 16

6.7 The counterfactual case for this model was presented in the audited projects in thePDRY. There, a policy framework was successfully established in the early projects and skillswere developed (or they existed) to build roads by the parastatal construction company PCRC.However, unlike in the YAR, studies were not conducted on future priorities by the client -toprepare the client mentally for priority maintenance- and there was a lack of de facto contractabout the new near-term objectives for maintenance in the Fourth and Fifth Highway projects.Concurrently, while existing skills were employed to build agricultural access roads, training ofwork force for the important maintenance objectives was neglected (paras. 5.2-5.5).

6.8 This model, when used in a participatory way allows for identification of problems andtheir resolution through (Bank sponsored) project work (work in common). The operation of the

15. Expatriate advisers were used in the early projects. Judging from the outcome the expatriates worked well;judging from theevidence in the files and from discussions on the projects, there was much resistance to expatriate advisers and their effectivenesswas limited. There is yet a third alternative: the expatriate advisers were poor trainers. In any case, the Yemeni trainers provedsuperior in the Taiz Vocational Training center established under the Third Highway project and continued in subsequent projects.

16. The role of leadership and management - either in the client country or in the Bank - is absent from this model. There can be nodoubt that leadership in the client country played a decisive role for success. For this reason, for the Bank and the client alike, thedevelopment of leadership and managerial ability is an important issue. The Yemen experience also shows that the model is robustand permits errors as long as the main thrust of the program is correct.

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model is deceptively simple: a project is agreed and implementation begins; when a problem isencountered it is examined in detail and solved together by the Borrower and the donor (and/orthe consultant); hypothetical problems are not addressed or solved. This process of constantproblem solving and learning is continued throughout the project. The significance of the modelis that ability to absorb and solutions are commensurate. For example, the following specificissues were encountered -and the attendant adjustments recognized or made- during the sixprojects audited:17

* Consultant availability and selection. Yemen has no domestic consulting industry in thetransport field because of the small existing market. Consequently, problems wereencountered in supervision and studies. This issue was dealt with in an 'ad hoc' fashionquite well by increasing IDA supervision and careful consultant selection (excluding thePDRY projects, but there was strong institutional resistance which probably could not havebeen overcome by better consultant selection). This issue must be addressed in futureprojects and (possibly) engage the GCRB with the responsibility for creating a market for thelocal consulting industry (which probably should be joint ventures in the beginning).

* (Sub-)contracting procedures. The issue of contracts emerged in projects when currentexchange rates were used and there were no price escalation clauses. This issue has beenaddressed and (sub-)contracting has increased steadily (para. 3.9-3.10). A largerprocurement problem remains. It was discussed in Section 3 that IDA supervised theprocurement process in detail and assisted in resolving specific cases. It would have beenbetter to help the Borrower to analyze its procurement procedures and to adjust them.18

* Project flexibility. In several projects equipment acquisition was substituted for expandingthe civil works to spend the monies saved in civil works contracts. This may have beencounterproductive to the development of the private contracting capacity as equipmentavailability seemed good in all regions visited (and the government equipment was beingcannibalized). The practice of acquiring equipment instead of expanding the civil workscomponent was attributed to inflexibility in the project design. The obvious question is:why was there flexibility in equipment procurement but not in civil works? Because theYemen road network is still underdeveloped there are numerous good road projects thatshould have higher priority - and a better ERR - than equipment.' 9

* Training continues to be important. The training component of the IDA credits wasexecuted well and must not be neglected in the future even if it is not a component in the

17. The projects also confirm the appropriateness of lessons learned formulated as part of the recent PAR on the Jordan transportsector. These lessons were: Complexity of a project must be consistent with the borrower's understanding of the problem; quality ofpreparation requires correct understanding of the problem; procurement should be used to develop market mechanism in thecountry: competition, entry to market, regulation; client orientation; issues must be dealt with here-and-now; and, managementtraining has first priority. They were observed in Yemen in varying degrees of complexity and achievement depending on thespecific situation. The important lesson learned in Yemen was the successful model for institution and capacity building.

18. Such an approach was adopted in the case of the price escalation clauses. Nonetheless, procurement remains an issue. One istempted to speculate that one reason IDA (and the Bank in general) spends so much time with procurement is because it is aconcrete task that can, given the Bank's procurement guidelines, be done from a desk in Washington D.C. It is far more difficult toassociate oneself with institutional capacity building from Washington. As a rule this is left to consultants. However, theexperience in Yemen and elsewhere shows that these consultants may not be well equipped to deal with Government sectorproblems and to cast them as project implementation problems.

19. The equipment issue is being addressed in the context of further development of the institutional structure of the GCRB whichmay include the corporatization/privatization of the construction department (or the entire producer function) of the GCRB.

45

ongoing projects.20 Training of management will gain in importance. That activity isconsistent with the new country strategy and, especially, with the latest transport sectorcredits. It requires a format that is different from that employed in training the "work force".

* Technical assistance. Technical assistance, while successful, suffered in some projects bybeing tied to the project. An alternative would be to formulate a technical assistanceprogram which, without undue restrictions, spans several projects.21 This is becauseprogress in technical assistance is not a predictable, linear undertaking. It would be better tofollow the spirit of a TOR for technical assistance in a flexible timeline rather than producethe prescribed reports on time.

* Local roads. The quality of local roads was addressed in one project (the Fifth Highway inthe YAR). It has since been dormant. Local roads are likely to emerge as a significant issuein the near future because the GCRB recently took over responsibility for them from theLocal Development Associations. This action is good but introduces new issues which mustbe dealt with in future projects.

Issues and Recommendations

6.9 The state of the road sector both physically and institutionally is satisfactory in Yemen.The pattern in project formulation, preparation and implementation used by IDA in Yemen isgood and lends itself to replication elsewhere. This model facilitates continuous learning andgradual improvement of the (road sector) institutions. It is highly appropriate not only in thecontext of IDA's country assistance strategy but also in the emerging new policy framework inthe Yemen transport sector. The Yemen Road Fund Board (YRFB), is the kernel of a new policyframework for the road sector and its impact will be felt throughout it. While this developmentis welcome, it should not be treated in isolation as strictly a financing mechanism for roadmaintenance. For example the following matters should be examined as openly as possiblebefore making decisions regarding them:

* Development of the policy framework. The YRFB has been introduced as a new entity to thepolicy framework. Will the YRFB only function with regard to the road fund monies(covering only maintenance), or will it also have jurisdiction over development investments?If not, how is maintenance defined? Who will have responsibility for road networkdevelopment?

* Definition of the roles of the sectoral institutions. It is not clear what decisions and actionsthe YRFB has the mandate to take or do, and what are the cooperative roles of the existing

20. The Taiz Vocational Training Center, established under the Third Highway project, is now idle. The mission visited the TaizCenter and found it clean, equipped and ready for service for private and other public sector clients. The availability of the Centerand its domestic trainers was brought to the attention of the Yemeni officials implementing the ongoing vocational training project(General Authority for Vocational and Technical Training - GAVTT). IDA would do well to oversee that available human andphysical training resources are utilized whenever possible and, if appropriate, transferred to a new sponsor.

21. For example, the decision to establish a (combined) Ministry of Transport and Public Works was made right at the end of theFourth Highway project. The consolidation of that decision would have benefited from technical assistance which was planned butcould not be implemented as part of the then ongoing Fifth Highway project.

46

institutions - MOC, MOT, GCRB, MPD - in the new policy framework. Will the YRFBalso have executing functions?22

* Contracting and procurement. What is the role of MOC in contracting and procurement?23

If maintenance (and development if YRFB also has jurisdiction over developmentinvestments) will be done by contract, how are the contracts bid? Who will award thecontracts?

* Development of human resources. Currently, the GCRB is relatively autonomous; it hasdeveloped and retained capable professionals, in part because of its own salary scales. Inparticular, the GCRB has the required technical skills in maintenance and construction.These must be preserved. Training of management and personnel is very important.Management training, in particular, and broaderning of the leadership base and associatedskills in the GCRB and the entire road sector have a high priority right now given thechanges in the policy framework and recent developments in the area of managementsystems.

* Development ofdata services and management systems. Preservation and development ofexpertise and data services as well as modern management systems in the GCRB must beensured. There is a need to improve current data services, which now reside in the GCRB,with regard to traffic counting, axle load information, road condition, and cost and priceinformation. The development of a road data bank and pavement and bridge managementsystems (PMS, BMS) is also a top priority. Otherwise, full benefits of the Road Fund cannotbe realized.2 4

* Improvement ofstandards and technical specifications. There are technical standards (fordesign and materials) and specifications. In-house or domestic consultant work should beinitiated to update these standards and specifications.

* Functional classification. Size of the network. The important issue of local roads andexpansion of the Yemen road network necessitates a review of the (functional andadministrative) classification of the road network. In this context the responsibility for theirconstruction, rehabilitation, and maintenance as well as funding should be considered. Thesize of the network is a particularly important issue. Some Bank documents suggest that theYemen road network length is adequate and more in need of maintenance than expansion.The claim regarding the length of the network is subject to question and should be examined

22. In its comments the GCRB indicates its willingness to participate in further development of sectoral institutions to eliminate thedouble role of the GCRB as the owner or the supervisor of road works (para 4.9), to improve axle load control, and to examine theissues of the network size and the local roads.

23. The procurement in Yemen is centralized and normally involves several entities. For example, it is not clear how the contractsfunded by the Road Fund would be best handled. As an example of the "bureaucracy", the contracts put forward by CAMA (theCivil Aviation and Meteorological Authority) will involve MOC because of its mandate. It would seem that efficiency would bebest served if procurement was delegated to the entity responsible for the object procured. Potential conflicts of interest should alsobe eliminated (para 4.9).

24. Development of a pavement management system is part of the technical assistance component designed for the startingTransport Rehabilitation project. It should be noted that a modem PMS system has two parts: a module for management and amodule for engineering. It could be envisioned, for example, that the management module would be used by the YRFB and theengineering module by the GCRB. But this is not clear. How these modules are designed depends on the policy and decision-making framework chosen. Regardless, both modules must utilize the same data.

47

carefully. Resolution of this issue, and that of funding the local roads, has importantimplications to the road fund and the management of roads in Yemen.

* Axle load control and enforcement. Weigh bridges were built under the Third Highwayproject, but not put into use because the MOC or the GCRB (or HA) had no jurisdiction onenforcement and could not issue fines. This has now been remedied and additional weighstations are under construction; a total of five weigh bridges will be operating soon.However, the manner in which the axle-load enforcement will be carried out in Yemen is notyet clear. Experience shows that weigh bridges are not sufficient or even an effective meansfor axle load control. Axle load control must include the truckers (through the truckingassociation, for example), pricing of carriage, a system of fines and other enforcementmeasures, insurance, regulations governing vehicle weights and dimensions, and themanagement of pavements by the road administration. This requires substantial institutionalcapacity which may not now exist in the GCRB, MOC, or MOT. Axle load control is aproper object for management training.

49

COMMENTS FROM TEE BORROWER Annex

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Xro. -" 05.06.1996

rnabo. 202-522-31

kr14IITImr. Arm nde) (""0o:)

CA i fXv Tm1-i.r.:Lr.. and Energ ILvis.o.

(Operation Evaluntion Depar-lJV[-nt) 'he Xorlt Bank,u. ut? gn hu E ùúsPate k .........................

Viw5 IN. TPHM1kE AIll.?AGIS SIB3IEGCEWEO

SuJCT: OrR RMTWY PPJCT(WCREDT 12h°7-XAM);IFXH MIC~IGY PROJCT(CWW.T 1413-YAR)t M MRIB SÅ2ZM ROAD 2ROJMCT(CIT 1726-YRJ:

~AUA RDEMDAH ROAD P.ROJET(CRIT 1846-YARJ; FM1?Fr MTGwaPeR (nT7 i T-TTR) an rrrrr ;TCUwAx LjuiCTj< CRprT 1923 YDS)

usoar Sxr,

Rertc£euf: i m.~fe co lerrer jo. YwIl dated ~ay 13,1.996 which encloscd the draftPerformance AudLit Report n thc abore me£tioned PZcUuf... Ax requred the

COmnCo on thi draft report are franwedtI enr1n-wed berewith tor consdertion.Additionally, we auc exr.r7nmTy nhl1ged in Cbis contaxt becauac.

-TIte dra:c report is Crnmittcd to sce our coeu.>i.Za tbc drmft rcporc the prep.%rnrin, appza.asal and impleatatica of Procet by

the Mb£LI Bwik arre Geueal Corpoxrin o Roada and Dridqes, is dp. ItucwLmtt andi»he>y,rrn ls proposca to be inplcrtcd in tbe.Cber Cu=Lriw< nf n?he TbUrd World.

rne borrowcr'- perfozance is raced (.u f~ .nPisfactozy; its affL.rativcworkingr wiCk Lr: T-Trld Rnk. comp.iance writh eoronanLa, well ivl=mum..anrinT ofP.r.uje,r-. ,eerc ng good Jeadorahip and maing sigulit>tr prograss in dav_Lopinginsc4tutional =spacitv, 10 espcciallfy hjIgjl.gh re. 12 he roport.

Thaaking ytu,

YouC5 rrfirhfully

A . Al krmbumiman Cencral Corporationof Roads & BrIrYges

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Annex

J.une 1996

.VTll.fECT.- Fourth Highway Project (Credit 1267- YAR); Fifth Highway Project(Crodit 147.1-YAlR); MArib-Safir Road Iitoject (Credit 1726- AR)*Sana'a Hodriduh Road Project (Cridit 1848-VAR); FourtkHighway Project(Creditl 617- YDR) ) and Fifth Highway Pruiet (Credit 1823 - YDR).

Reference is made to lerrer nil dated May, 13, 1996 recrivedfrum. the Chief ofInfrastructure and Energy L ion (Operation Evaluation Department) ofthe WorldBank ,which enclosed the of the Performance Audit Report for the above-mevioned creds for cOnunen

COMWfENTS

(A) 77te Report does very clear# emphasire that:

- The institutional and aanizational development, and training are the mostinpressive achievements of LDA's long term involvement in Yemen. The mager ofthe Iwo roud rulminItrarAmic has bon acrnmpirhid widwut ditrupdan. Theunified road administradin, the GCRB has emerged as a competent, profersionalorganization with good leadership.

- This is a good omen fo> the sustainability of both the physicalfacilities and theinsdiutional development t#at has taken place.

- Bcorrawer'sperfurmance Ip watisfutury fur the YARprojects. It workrd with IDAin an affirmative way, complied with covenans, Implemanted the Projeca w4exercised good Icadersip and made significant progress in developinginstitutional capacity.

- The preparation, apprais4I and implementasion of the Projecrv had the followingpattern:

establishmanr of the road yanitation and agrement on immediate problems;ogaging the mad organizatin in engineering activities it most likely can do or havsome experience in doing, ossibly with Orputrilae advisers, and training themanagement and the work ofurce in priority activity(maintenance); pursue otheractivides and training with 0o Borrower by first conducting stadies followed bygradual implementation of thder resuIts. Thelother activides" inrluiedformuatiian ofobjectives, feasibility stlufies,' priorities (of future projects, contractor training,.9ubotra1fr.din, Und so fok This project formulation, preparation andimplementaTon straray used ,by IDA in Yemen isparicularly appropriate and maylend ieself to application cs,*here as it facilitates continuous learning and gradualimprovement of sector institutiqus".

(B) Based on these citations the performances of GCH have been so promising,effective and praiseworthy, thp evindetly it is not appreciable if th insiutiunuresructuring of the UCRB Is being proposed by ihe World Bank Staff Appraisat

51

Annex

Report dated April 13, 1995, the itnutei of th fterfing with the Yemen Republicddegatinm in Washingtn D. C frum 8 May to 12 May 1995 on TransportRehabilitation Project Parr A; and Aide Memoirt dated 15 April 1996 by teSupervision Aision March 14-31. 1996, which propose as undcr.:

- "GCRB to bcfuly commerciali:ed.

- GCRB should not stay as Client or Supervisor of the road network relatedactivides, but would be =rclusively a public sector construction and maintenanwContractor.

- The newly estabished Yemen Road Fund Board will be responsible for award ofContract for the Study for Planning and Prioritiring Road Mainteacnxer Nee&The proposals for ts,d study have been received and evuluated by GCRB. Award ofthis Contract by December 31, 1996 is a condition of the credit agreement, anddelays coul jeupardke all components of the Project Hence urgent action byYRFB is needed to expedire this study.

- The stablirlanent of a Phrject Implemenatdon Unit for road component of thePrjct with MOC having a Technical Advisor and other specialists, who shallassist the Ministry in overseeing the implementation of ie Project "

(Q GCRB has reasons to dwagree with all these proposals and in its opinion, the bestre-sults as acybfure could be obtained if the followint comments are implemented.

(i) GCRD as existing now ha manpower, equipment and technical know-howto canyout all the reiugired uctivides in connection with planniaMy developmentconstrurtion and maintenance road network in the cosnty, so this set ulp neerd nut tobe dismanded, especially in respect of that organizadon wha, e.rsumple ofpreparation,appraisal and implementation of the projects is stressed to be adopted in othercountries of the World having the World Bank flnanced Projects.

() GCA is a legally consdruted autonomous organiradan under tke Mnisterof Construction, fousing and Urban Planning, and entrusted acclusively with theipf oaritie i ta (mmean thn rri* r*. * .r innnea 10 Vcm T i e flidbiity of GCRB to act either as flint orimplementor or hsh is considered a drawback due to the division of rmponsibility andassignment of accounfabilitq being not clear, then improvments in its setup could becarried out The functions of Client (Planning, Durs Service, Traffic Safcty.FinancingAdministration, Contracting, Supervision) and the hmplcmenor functions (Construction and Maintenancr Operations) could be ieparated to liminate thisdrawback within the zising setup of General Corporation tf Rods and Bridges.

(iijThe imposing of tha provision that the award cof Cuntract for "Studo ofPlanning and Prioritiing Road Maintenance Vedx" by December 31. 1996 is acondidon of the Contract dgrrement and that delay could put the relevant companialof the Project into jeopandy, it against the verY spirit of conviction as str.ed in the

52

Annex

auditing report thatpaninhing covenants are never good subtitulei for agreed plans ofIaetin. Accorlingly the Wurld Bank has already been requested that:

The rehabilitation studies are not time consuming and a good ralisfiv time

limit for a study of 100tkmv length !f thr road is nut more than 6 months. On this

btr3s h shall be more appropriate if the rehabilitation studies are made immediately

before the availability of the funds. Additionally it is an undeniablejact that in the

Third World Countrics.even the Planning and Prioritizing of future n fi,- re

decided on the political exigenciew and a.s vur this exerise in question can

properly he takon care of by an experienced organization like GCRB rather than

depending upon expatriate Consultants. This has succcded during the last 25

yars.

(7)) lr. the PAR it is highlighted that In case of difference of opinion as compared to

the World Bank, the point of view of GCRB was correct in respect of theffilliwing

Projects:

-Tiz Al Mufraq Road- (Fourth figinvay Project) 1267- YAR)

4ana"a lodeidah Road(Credit 18 - YAR)

-Marib Safir Road- (Credit 1726 - ,1R)

The restructuring of General Corporation of Roads and Dridgev and crealion ofYemen Road Fund Board. negotiated are a part of dh rcvndy approved TransportRehabilitaion Project, is a matter on whirh GCRB and the World Bank do not agree.

There is a very good posibllity that in the same fashion as that of those cases

enunciated above, 1he point of view of GCRB proves to be accurate at a later stage.

These gut feelings of (CRB and its leadership on this issue are dictated by their very

deep and consistent in volvement in the matter and their complete awareness of theworking of the institutions in the Country.

(E) GCRR and Is leadership highly appreciatcs the findings of thte Perfarmance Audit

R-port to the effect that the issue in respect of the adequary of the road nawork in theCounry needs to be cramined cardfuily. 4ctually for such a vast Country the roadnetwork to the etcnt of S800 i much on the lower side aspecially when disparity in th.southern part of the: uantry in this respect is to be climinated No doubt dwe necessityof improvrment, rehabilitation and maintenance of de #xisting roads cannot beoveremphasked, yet for connecting different parts of the County, providing access to

IndusMrial and agricultural areas amul implementing improved cost recovery .ystemg,there is need of new rwily. This assessment is based on the studies nducted by6'CRB as CIMe on rthe future priorities in consultadon with the other Governmentdepartmrnts in the Counvy.

(F) No doubt the WeIghbridge Stations which have airrady been constructed are notput to use sofar, and that Ministry of Cortruction, Housing and Urban Planning and

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Annex

General Corporation of Roadv and Bridges have nojsisdictdon on "AvJe Load Conh-oland Enforcement". Since this axarcise as very newltr the Country, so the manner inwhich this enforcement shall be carrned out is not rfur as yet However, action hr inhand for tl developmens of insiutional aJmcityfot this ma4tCr and someprocedureis eWir-red ra be emolved duping the currsmn year. GC*B is fuly aware dt without theproper enforcement of a;de load rrsr&ertons, the 4amaging effr-t uf overloadingcannot be take care of

IdV

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Documents

World Bank Document · 2017. 11. 2. · 1989 US$1.00 YR12.00 1990 US$1.00 YR12.00 1991 US$1.00 YR12.00 1992 US$1.00 YR12.00 1993 US$1.00 YR12 ... Abbreviations and Acronyms CAS -Country