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Implementation Completion Report (ICR) Review - Third Highway Improvement Project

1. Project Data:   
ES Date Posted:
Project Name:
Third Highway Improvement Project
Project Costs(US $M)
 68.9  63.8
Loan/Credit (US $M)
 48  45.4
Sector, Major Sect.:
Central government administration, Roads & highways,
Law and justice and public administration; Transportation
Cofinancing (US $M)
 5.8  5.8
L/C Number:
Board Approval (FY)
Partners involved
Nordic Development Fund and Swedish International Development Cooperation. 
Closing Date
06/30/2003 06/30/2003
Prepared by: Reviewed by: Group Manager: Group:  
Kavita Mathur
Peter Nigel Freeman Alain A. Barbu OEDST

2. Project Objectives and Components:

a. Objectives
The overall objective of the project was to support Lao People’s Democratic Republic (PDR) economic growth and transition to market economy. The project’s immediate objectives were to:

    (a) reduce road transport costs through the upgrading of a southern leg of Road No. 13 and the construction of Road No. A-1;
    (b) improve institutional capacity and effectiveness to manage construction and maintenance activities at the central and provincial levels;
    (c) introduce routine and periodic maintenance of roads by contract using competitive bidding procedures.

b. Components
Road Improvements (Appraisal US$ 36.05 million, Actual US$ 37.24 million). The upgrading of 200 km of Road No. 13 South between Banlak 35 and Pakse to a bituminous surface; the construction to a bituminous surface of 7 km of Road A-1; and provision of consultant services for the supervision of works. Road Maintenance (Appraisal US$ 20.6 million, Actual US$ 23.86 million). Funding for a four year program of periodic maintenance and routine maintenance and technical assistance for the organization and management of the road maintenance program.

Consultants Service and Training (Appraisal US$ 2.31 million, Actual US$ 2.68 million). Technical Assistance to the Planning and technical Division; Planning and Monitoring Division; consultancy services for feasibility, design, engineering, and local transport sector studies and external audits; training of engineers and management staff; technical equipment; and logistical support.

Revised components:

In response to the torrential rains of August 2002, an emergency upgrading program for the national roads was prepared and IDA reallocated SDR2.6 million of the project funds for rehabilitation, repair and maintenance. The scope of the project was revised accordingly.

c. Comments on Project Cost, Financing and Dates
During project implementation, the local currency Lao Kip suffered an eight-fold devaluation to the dollar. This generated savings that were used for emergency upgrading and additional activities. The project was completed within the planned time and budget.

3. Achievement of Relevant Objectives:

The objective to reduce road transport costs through the upgrading of a southern leg of Road No. 13 and the construction of Road No. A-1 was achieved above expectations with many indicators higher than appraisal.
  • The upgrading of 200 km of Road No. 13 South between Banlak 35 and Pakse from gravel to bituminous surface reduced the roughness level from 12 to 3.1 m/km IRI (International Roughness Index), which is slightly better than the appraisal target of 3.5. This allowed the travel speed to increase from 35 km/h to 80 km/hr despite higher than anticipated traffic volumes and reduced travel time from five hours to less than three hours. The savings in vehicle operating costs are estimated at US$ 39 million.
  • Construction of 7 km stretch of Road No. A-1 was done under the Second Highway improvement project (scope of the Third Highway Improvement was reduced).
  • 44 bridges along Road 13S were reconstructed.
  • All emergency works were completed on time, with satisfactory quality and within budget.

The objective to improve the institutional capacity to manage construction and maintenance at the central level was very successfully achieved, but at the provincial level the capacity needs further attention.
  • Technical assistance, on the job raining, studies abroad and training courses were provided to strengthen the capacity of the staff at central and provincial level. However, effective knowledge transfer and strengthening at the provincial level was low.
  • The capacity of the Ministry of Communication, Transport, Post and Construction (MCTPC) to schedule routine and periodic maintenance, introduce competitive procurement processes, and increase participation of the local private sector in road construction and transport services and to incorporate the Provincial Department in project management was strengthened.
  • A strategy for the roads sector was prepared by MCTPC.
  • MCTPC created the Project Monitoring Division (PMD) under the Department of Roads (DOR) in 2000 to take over the functions of various Project Coordination Units (PCU) to coordinate and monitor all donor funded activities.
  • MCTPC prepared medium and long-tern investment and maintenance programs.
  • The Environmental Action Plan was implemented satisfactorily.
  • A study to assess the impact of upgrading Savannakhet – Pakse road section was carried out and the government has decided to proceed according to the recommendations for investment.

The objective to introduce a competitive bidding system for routine and periodic maintenance was achieved. Appraisal targets were exceeded, an estimated 70% of the routine maintenance (appraisal target 60%) and 100% of periodic maintenance (appraisal target 100%) was subjected to competitive bidding.

4. Significant Outcomes/Impacts:

The upgraded section of Road No. 13 now provides all weather access to important agricultural areas in southern Lao PDR.
  • The project provided the basis for the creation of a sustainable framework for road maintenance. The government established the Road Maintenance Fund to provide adequate funding for road maintenance. The targets for routine and periodic maintenance were surpassed – 21,761 km were subjected to routine maintenance (appraisal target 13,700 km) and 933 km to periodic maintenance (appraisal target 600 km).
  • Training material such as road maintenance handbook and maintenance activities codes were developed to strengthen the MCTPC capacity.
  • The project assisted in the development of local private contractors for carrying out maintenance. The number of private contractors increased from 30 in 1997 to 130 in 2003, of which about 70 are financially stable. Standard bidding documents for national competitive bidding were prepared.
  • There have been reduced dust emissions on the rehabilitated sections and those sections that were sealed.

5. Significant Shortcomings (include non-compliance with safeguard features):

The implementation capacity for contract management at the provinces is still fairly weak.
  • The quality of a few of the bridges that were reconstructed using JICA grant funds is poor. Six bridges have unacceptable levels of settlement which have not been corrected by the contractors.
  • In some cases, training was not targeted at the right staff in the organization.
  • 6. Ratings:ICROED ReviewReason for Disagreement/Comments
    Highly SatisfactoryHighly Satisfactory
    Institutional Dev.:
    Highly LikelyLikelySustainability is rated "Likely" instead of "Highly Likely" for the following reasons:
    • lack of qualified permanent staff, especially at provincial level,
    • slow establishment of qualified local consultants and contractors, and
    • there is a gap between revenue and road maintenance needs, and dependence on foreign funding assistance will continue in the foreseeable future.
    Bank Performance:
    Highly SatisfactoryHighly Satisfactory
    Borrower Perf.:
    Highly SatisfactoryHighly Satisfactory
    Quality of ICR:

    7. Lessons of Broad Applicablity:

    In countries with a number of donors, donor coordination is critical. The project experience shows that a single unit (PMD) responsible for coordinating donor activities in the highways sub-sector succeeded in integrating all functions including, project monitoring and reporting and staff professional development.
    • Up-front technical assistance to supplement and enhance borrower capacity, careful review of the civil works final design and budgeting, and a manageable scale of investment, are vital for successful implementation of the project.
    • Technical audits are an effective instrument for enhancing quality as problems can be identified early on. They should be included in all future projects.

    8. Audit Recommended?  Yes

              Why?  To verify the project sustainability and to conduct a sector-wide evaluation to assess the impact of this project and the previous three highways sub-sector projects funded by IDA.

    9. Comments on Quality of ICR:

    The quality of the ICR is exemplary. It is concisely written and the analysis is sound and it provides adequate data to rate the project. The Lessons Learned section is insightful and useful.

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