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

1. Project Data:   
ES Date Posted:
Project Name:
Third National Highway Project
Project Costs(US $M)
 679.0  607.2
Loan/Credit (US $M)
 250.0  223.2
Sector, Major Sect.:
Sub-national government administration, Roads & highways,
Law and justice and public administration; Transportation
Cofinancing (US $M)
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
12/31/2004 12/31/2004
Prepared by: Reviewed by: Group Manager: Group:  
Peter Nigel Freeman
Catherine Gwin Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
The Third National Highway Project (NH3) was the third in a series of national highway projects of the Beijing-Zhuhai Expressway (Jingzhu) connecting Guangdong, Hunan, Hubei, Henan and Hebei provinces. The concept was to support an integrated approach to expressway corridor development. Specific objectives of NH3 were to:

  1. Relieve road transport congestion and improve the integration of interregional trade and commerce by assisting in the further development of the National Trunk Highway System (NTHS) in the principal North-South and East-West transport corridors and allowing early completion of a functional expressway network in Hubei province, thus enabling through traffic to bypass Wuhan City;
  2. Strengthen institutional capacity at Hubei Provincial Communications Department (HPCD) and related institutions (in the area of planning, design, construction, operation and maintenance of Huebei's highway network), through provision of training, technical assistance and equipment;
  3. Develop a policy dialogue in the areas of the commercialization and corporatization of provincial expressway companies and highway maintenance management; and
  4. Improve the safety of road transport.

b. Components
Construction of two sections of the Beijing-Zhuhai (Jingzhu) expressway (143 km) and two sections of the Shanghai-Chengdu (Hurong) expressway (54 km). Both corridors were to be connected by the Junshan Yangste Bridge proposed to be built using a Build Operate and Transfer (BOT) scheme. The works included the construction of administration, service and maintenance facilities, as well as the supply and installation of electrical and mechanical equipment for tolling, telecommunications, traffic monitoring, and lighting of interchanges, toll plazas and service areas;

  • An interconnecting road program (33 km) to link the expressway sections to the existing road infrastructure in the North-South (Jingzhu) and East-West (Hurong) corridors;
  • Construction supervision services for all expressway sections and their interconnecting roads;
  • Studies and technical assistance in (i) highway maintenance management, (ii) expressway commercialization and corporatization; and (iii) road traffic safety;
  • Staff training programs, covering all aspects of highway planning, design, construction, operation, finance and maintenance; and
  • Equipment for: (i) control of construction quality and monitoring of the environment; (ii) operation and maintenance of expressways after their completion; (iii) maintenance of the provincial road network; (iv) bridge management system (BMS), pavement management system (PMS) and maintenance management system (MMS). The breakdown of the costs at appraisal was civil works US$ 615.8 million (90.7% project cost), land acquisition and resettlement US$ 36.1 million (5.3%), supervision US$ 17.4 million (2.6%),training and studies US$ 2.3 million (0.3%) and equipment US$ 7.38 million (1.1%). Equivalent figures at project closing were civil works US$ 544.5 million, land acquisition US$ 42.1 million, supervision US$ 8.9 million, training and studies US$ 3.3 million and equipment US$ 8.45 million.

  • c. Comments on Project Cost, Financing and Dates
    Total project cost came in 10.6% lower than anticipated. The successful bidders won the contracts for the civil works with much lower prices than estimated and supervision costs were also overestimated. Although other components had higher costs their impact on the total project cost was insignificant. The project was completed on schedule.

    3. Achievement of Relevant Objectives:

    The original project objectives were not revised. However, the concept of developing a pilot BOT scheme that could later be replicated as part of the evolving policy and regulatory framework for private toll highway finance was dropped as at the time of presentation to the Board because the BOT legal framework was still incomplete.
    Relieve road congestion and improve interregional trade by improving sections of the Jingzhu and Hurong expressways and interconnecting roads. (Fully achieved).
    The civil works and installation of electrical and mechanical works was completed on schedule and within budget. Construction quality was good. Average speed increased to 80 km/hr from an average of 50 km/hr on roads parallel to the expressway, while average daily traffic on the Jingzhu expressway section grew by 41.5% after the road was open to traffic. Toll revenues increased by 35% and traffic congestion was relieved on NH107, the original main road. The traffic growth also reflects the economic growth in the area and indicates that the goal of improving interregional trade and commerce was achieved.
    Strengthen institutional capacity of HPCD. (Achieved)
    The target indicator for man months of training anticipated from the project (276) was exceeded (425.5). HPCD successfully internalized and recognized the benefits of the international competitive bidding process for provincial projects and extended its use to other projects. Specialized units on environment, quality control and road safety were established and have enhanced their operations since they were first created. The Bank's resettlement procedures were followed and project affected areas generally benefited from accelerated development. For example the number of people living in brick and concrete structures increased from 18% to 80% after the project intervention. Similarly, the area of the structures increased by 51%.
    Develop a policy dialogue on commercialization and corporatization of provincial expressway companies and highway maintenance management. (Partially achieved)
    The impact of the studies on road maintenance and expressway commercialization and corporatization was limited. There was a lack of client ownership, delays in the completion of the studies and only some of the recommendations were adopted. In the client's view the experience of overseas consultants was limited by not taking into account Chinese conditions.
    Improve the safety of road transport. (Achieved).
    The study on road safety was found to be useful by the client and a series of workshops were implemented. In addition four road safety activities were successfully concluded. These were a road safety pilot plan, safety procedures at worksites, identification and remedy of accident black spots and road safety audits. The new expressways also reduced the number of traffic accidents by one third.

    4. Significant Outcomes/Impacts:

    The expressways enable traffic to bypass Wuhan City, which was previously very congested.
    • The resettlement process followed by the project produced a positive impact on the local economy.
    • Although in the early years the surplus from the revenues of the tolled expressways will be low, sufficient reserves have been provided to ensure there will be no liquidity problems. Both financial and economic returns are positive.

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

    The Bank appeared to have little influence on technical matters. The change in surface type from concrete to bituminous pavement was not well justified technically and generated a substantial increase in cost due to the need to import bitumen, instead of cement which is produced locally. Limited progress was made with maintenance and commercialization issues.
  • The development plans of the city of Wuhan were not taken into account in the initial project design. Late in the project preparation it was found that city officials had plans to build a bridge which would have a negative impact on the project.
  • 6. Ratings:ICROED ReviewReason for Disagreement/Comments
    Institutional Dev.:
    Highly LikelyHighly Likely
    Bank Performance:
    Borrower Perf.:
    Quality of ICR:

    7. Lessons of Broad Applicablity:

    City development plans should be incorporated early in the project design of national and provincial transportation links.
    • Clear commitment and strong client ownership are a prerequisite to include policy-related studies as part of a project.

    8. Audit Recommended?  Yes

              Why?  This project should be assessed as part of a cluster of transportation projects in China to ascertain overall sector performance in this large client portfolio.

    9. Comments on Quality of ICR:

    A well-presented and generally clear ICR. One shortcoming, however, is that it did not address some of the issues raised by the HPCD in the partner comment section. While there may have been a direct response by the region to these matters, no mention is made as to how this was to be followed up. These issues concerned technical assistance quality, resettlement and disbursement procedures.

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