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Implementation Completion Report (ICR) Review - Second East-west Highway Improvement

1. Project Data:   
ICR Review Date Posted:
Project Name:
Second East-west Highway Improvement
Project Costs(US $M)
 80.0  97.8
L/C Number:
C4373, C4512
Loan/Credit (US $M)
 35.0  54.0
Sector Board:
Cofinancing (US $M)
Board Approval Date
Closing Date
02/29/2012 06/30/2012
Roads and highways (98%), Central government administration (2%)
Infrastructure services for private sector development (50% - P) Regional integration (25% - S) Other public sector governance (25% - S)
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Victoria Alexeeva
Kristin Hallberg Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
The statement of objectives in the Project Appraisal Document (PAD) and the Financing Agreement is identical: "to (i) contribute to the gradual reduction of road transport costs and improve ease of transit and safety along the central part of Georgia’s East-West corridor, through upgrading a segment of the East-West Highway from Tbilisi to Rikoti; and (b) strengthen the capacity of government agencies, especially the RDMED, to develop and implement a traffic safety program".

In October 2008, Additional Financing in the amount of US$20 million was approved to cover a financing gap that was anticipated during project preparation due to limitations on the amount of IDA funding that Georgia was able to access at the time of the original project approval.

During Additional Financing, the results framework was updated, i.e., the target values for road safety indicators were set upon approval of the National Traffic Safety Strategy by the Government in July 2008.

b. Were the project objectives/key associated outcome targets revised during implementation?

c. Components:
Component 1: Upgrade of the Igoeti to Sveneti section of the E60 Highway from two to four lanes (appraisal cost US$70.5 million; actual cost US$96.1 million). This component comprised: (i) civil works for the construction of a new two lane carriageway along a 24 km section of the E60 highway from Igoeti to Sveneti, the construction of 4 bridges and the rehabilitation of the existing two lanes; (ii) consultant services for the supervision of the works; and (iii) the design of another section of the E60 Highway to be specified by the Government at a later date to help prepare a future project.

Component 2: Road Safety (appraisal cost US$2.13 million; actual cost US$0.80 million). This component comprised works, specialized consultancy services, training, and equipment as needed to strengthen the capacity of RDMED to develop and implement a traffic safety program along the E60 corridor and other roads.

Component 3: Project implementation (appraisal cost US$0.72 million; actual cost US$0.86 million). This component was designed to fund consultant services for the Transport Reform and Rehabilitation Center (TRRC), project audits and incremental operational costs to support implementation of the project.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
Project cost: Total project cost was US$97.81 million at closure, 22% higher than the appraisal estimate of US$80 million as a result of cost overruns in the civil works.

Financing: The World Bank Group contribution consisted of a credit in the amount of US$35 million and Additional Financing of US$20 million, totaling US$55 million. US$0.74 million was cancelled. At closure, US$54.04 million was disbursed.

Borrower contribution: The Borrower actual contribution was US$43.8 million compared to the appraisal estimate of US$45.0 million.

Dates: The project was extended by four months from the original closing date of February 29, 2012 to June 30, 2012. This extension was requested by Georgia’s Ministry of Finance to ensure the completion of the remaining project activities.

3. Relevance of Objectives & Design:

a. Relevance of Objectives:
At the time of appraisal, despite dramatic increase in rehabilitation and maintenance funding and substantial
support of the international community, road infrastructure in Georgia remained inadequate to accommodate significant traffic growth. This resulted in longer transit times and added to transport costs and deterred usage of the
Georgian transit route. The modernization and improvement of its transport infrastructure became one of
the Government of Georgia’s priorities in order to integrate Georgia with world markets and to sustain high economic growth rates experienced in 2005 and 2006. Development of the East-West Highway (E60), a major international transit corridor, was seen as an opportunity to support growth in export-oriented activities. The project development objectives were consistent with the focus on “developed, high quality and safe road infrastructure" in the Strategic “10-Point Plan” of the Government of Georgia for Modernization and Employment, 2011-2015. The objectives were also relevant to the World Bank Group's FY10-13 Country Strategy for Georgia that supported critical infrastructure improvement to spur foreign and domestic investment, including through "investment in the roads sector which is essential for boosting the country’s potential as a transit country as well as to provide better connectivity between rural areas and market opportunities". The objectives were also in line with the main priorities of the Country Strategy FY06-09 at appraisal, which aimed at improving infrastructure to generate growth and create jobs.

b. Relevance of Design:
The statement of development objectives was clear. The project results framework had a clear causal chain between the activities financed by the project and the outputs and outcomes related to the attainment of the development objectives. For example, with regard to physical investments in road upgrade (Component 1), the activities were expected to reduce transit time and vehicle operating costs. The investments in road safety (Component 2) were expected to lead to the implementation of national road safety action plan with targets and monitoring indicators. The design, however, did not include any activity related to achieving the indicator for an operating multi-agency coordination body in road safety. The role was assigned to the existing Transport Commission; according to the ICR, no evidence exists that it performed this role.

The risks discussed in the PAD were properly identified and mitigation measures were adequately developed. The task team, however, underestimated the Road Department’s inadequate institutional capacity to implement large highway projects, poor technical designs, and poor awareness of environment and social safeguards compliance risks. The PAD highlighted the Government’s priority for a speedy project implementation at the time of project preparation, and assigned a low-to-medium rating to the risk of failure to implement the project in a timely manner. The risk of a lack of a road safety champion in the implementing agency was well recognized by the task team during project preparation as evidenced from the Minutes of the Bank’s internal review processes; however, this risk was not included in the PAD and no relevant activity was considered in the road safety component, for example building the capacity of a future road safety multi-agency coordination body as a potential champion.

4. Achievement of Objectives (Efficacy) :

(i) Reduced road transport costs and improved ease of transit and safety along the central part of Georgia’s East-West corridor. Substantial.


  • A 2-lane 24km road segment was upgraded to a 4-lane motorway of the East-West Highway from Tbilisi to Rikoti.
  • 24 blackspots (up from the planned 20) were removed along the E60.
  • The following safety measures were implemented: (i) the installation of New Jersey barriers and guardrails; (ii) the relocation of bus stops from busy E60 sections to safer areas; (iii) the construction of highway accesses; and (iv) the provision of traffic marking and signs.

  • Upgrading from a 2-lane road to a 4-lane motorway led to a reduction in transit time from 19 minutes to 11.8 minutes exceeding the target of 12 minutes on the Igoeti-Sveneti section, and a reduction of vehicle operating costs from US$0.20 to US$0.18 per km for cars and from US$0.76 to US$0.71 per km for trucks, meeting the target.
  • Number of fatalities per 10,000 cars fell to 6.8 from 14.5 at appraisal exceeding the target of 12 for 2011. As there are no segregated road accidents data for the Tbilisi-Rikoti segment of the E60, it is statistically difficult to confirm improved safety on this segment. The country-wide statistics show a substantial decline in road accidents, injury rates and fatality rates over the period of project implementation during 2008-2012. The Road Department has mainstreamed the approach of incorporating similar road safety engineering measures on all road construction and rehabilitation projects.

(ii) Strengthened capacity of government agencies, especially the Road Department of the Ministry of Economic Development, to develop and implement a traffic safety program. Modest.

  • Road Safety Audit Guidelines were developed (Guidelines for Safety Audits of Existing Roads, Guidelines for Safety Audits for New Road Designs, Guidelines for Traffic Management at Road Works and Temporary Diversions, and Guidelines for Road Traffic Signs and Markings).
  • Trainings were carried out for developing skills to effectively analyze hazardous locations, design and oversee implementation of safety improvements.
  • RD Road Safety Unit added 2 more staff as planned to meet the target of 5.
  • The first stage of the New Accident Data System for use by key agencies to develop safety interventions in each sector was completed that included development of specifications for improvement of the current system. The second stage is planned to be implemented under the on-going follow-up project (TEWHIP AF).
  • Several roads safety handbooks were translated into the Georgian language, which were considered good practice in Western European countries and found of particular use by the Road Safety Unit of the RD.
  • The role of high level multi-agency coordination body was given to the existing Transport Commission (TC).

  • 100% of vehicle occupants started wearing seatbelts on E60 exceeding the target of 85%.
  • The strengthened capacity of the Road Safety Unit of the RD is demonstrated in carrying out jointly with Traffic Police annual blackspot inspections (identification and analysis) of all roads under the RD’s jurisdiction and mainstreaming road safety audits in all road construction and rehabilitation projects.
  • The capacity strengthening of other government agencies — including the Transport Commission that was assigned the role of a road safety multi-agency coordination body — was not supported through the project. There is no evidence showing TC performed this role. No Secretariat was created to help TC undertake daily monitoring and assessment of the National Traffic Safety Strategy.

5. Efficiency:

The economic internal rate of return (EIRR) for road works at closure (which constituted 99% of final project cost) is estimated to be 13% as compared with 14.5% at appraisal. The analysis was carried out for the main project activities of upgrade from two to four lanes of the highway between Igoeti to Sveneti and construction of the Igoeti bypass, including the rehabilitation of the local two-lane road through the Igoeti village. Benefit calculations were done using the Highway Development and Management Model (HDM-4) that follows the standard methodology of comparing, over time, the operating performances between the scenario without the investment and that with the investment. The main types of benefits considered were vehicle operating costs savings, time savings for both passenger and freights transiting on the road section, and maintenance costs savings.

The civil works component cost was 34% higher than estimated. Poor quality of the technical designs and significant differences of the actual construction quantities from the design estimates were the main reasons for the cost overruns. The designs had a number of errors — in particular, with regard to the vertical alignment, i.e., the underpasses were incorrectly designed (often too high), the design failed to account for the need to relocate an irrigation channel and high voltage power lines near Igoeti village, detailed drawings of parallel and access roads were missing, the design failed to correctly present the use of fill material. Throughout 2008, the RD requested clarifications and corrections from the design consultant, but no satisfactory revisions were provided. The formal review of the designs was not submitted by the supervision consultant until September 2009.The underpasses had to be re-done, additional designs had to be prepared for parallel and access roads during the construction phase, and variation orders needed to be issued to address the identified deviations for the use of fill material.

The project was extended by four months from February 29, 2012 to June 30, 2012. The conflict with Russia in August 2008 interrupted construction and cut off some sources of materials. The contractor was not able to access the site for more than one week. Earlier and harsh winter condition prevented the second road contractor from executing all remedial works and completing the remaining works — including those required by the Environmental Management Plan (EMP) — by the December 2011 deadline. By project closure, the contractor only partially completed the remedial works, construction of access and local roads, and implementation of additional road safety measures, because the contractor was instructed to mobilize and complete another major road construction project on another road financed by GOG. In August 2012, the contractor returned to that project road segment to complete the remaining works financed from GOG’s budget. In December 2012, the Bank was advised that the contractor went bankrupt and some of the remedial works (repair of cracks and construction of drainages at two interchanges), which were financed from GOG budget, had not been completed. The RD intended to re-bid the remaining repair and road safety works and have those works completed in April 2013. As per project's team information subsequently provided in June 2013, the procurement of the outstanding repair and road safety works had been completed, and the works were about to start; the supervision of these works was included under the follow-up 3rd EWHIP.

Efficiency is assessed as modest.

a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:

Rate Available?
Point Value
ICR estimate:

* Refers to percent of total project cost for which ERR/FRR was calculated

6. Outcome:

The project’s development objective was highly relevant to the challenges faced by the road sector in Georgia. Relevance of design is rated substantial. The project substantially contributed to reduced road transport costs and improved ease of transit and safety along the central part of Georgia’s East-West corridor. There was, however, only modest achievement of the project’s institutional objectives. Efficiency is rated modest due to cost overruns. Outcome is assessed as moderately satisfactory.

a. Outcome Rating: Moderately Satisfactory

7. Rationale for Risk to Development Outcome Rating:

The sustainability of road investments, and the effectiveness of sector institutions and road safety improvement activities are most likely to continue receiving attention and support from the new government and from the World Bank under the new project (EWHIP-4). Provision of routine maintenance of the newly constructed and rehabilitated road segment under this project was recognized and arranged by the GOG.

The benefits associated with the first sub-objective, however, may be jeopardized faster than they would have been if the road works had been done well right from the beginning. Moreover, the repair works (e.g., fixing of cracks) and road safety measures (e.g., installation of New Jersey Barriers on the westbound median) were not fully implemented under the second road contract by the end of the contract date, because the contractor went bankrupt. Due to winter and need for rebidding, the implementation of these repair works and road safety measures had to be postponed until spring 2013. There was a risk that the remaining repair and road safety works might be postponed due to new priorities in the sector by the Borrower. As per project's team information subsequently provided in June 2013, the procurement of the outstanding repair and road safety works had been completed, and the works were about to start; the supervision of these works was included under the follow-up 3rd EWHIP.

Overall, the life of the project road segment may be shorter because multiple repairs necessitated by the poor quality of works by the first road contractor had to be done and yet to be done to this segment. The road roughness indices (IRIs) on the project sections are already a quite high for the newly-rehabilitated and constructed roads. In addition, Georgia’s shrinking fiscal space and another possible economic and financial crisis in Europe anticipated by the IMF at the time of ICR preparation may also affect the GOG’s priorities in the road sector.

a. Risk to Development Outcome Rating: Significant

8. Assessment of Bank Performance:

a. Quality at entry:
The project was prepared and delivered to the Board in less than a year. It was the continuation of a Bank commitment to support the GOG in the E60 Highway Improvement Program. The project preparation and design were built on the lessons drawn from the on-going similar Bank-funded road projects in the Europe and Central Asia (ECA) region and from the then on-going road projects in Georgia. The lessons included (i) ensuring the client’s ownership of the institutional components to achieve the objectives of the institutional components; and (ii) avoiding design changes and variations in complex construction projects by using a phased approach supported by an interactive process. A phased approach was indeed undertaken — however, the preparation phase of the design of the civil works that took place after the Board approval of the project lacked an interactive process between the major design firm, its local sub-contractor, the RD, the Ministry of Economic Development (MOED) and the World Bank (WB).

Due to its high visibility, the project was under political watch and pressure right from the start of its preparation. The PAD explicitly highlighted “the Government’s priority for a speedy project implementation” rating the risk of failure to implement it in a timely manner as low-to-medium. Due to political pressure, the designs underwent a quick review, procurement of the construction works was too speedy, and some project road sections were twice opened prematurely to all traffic, which altogether affected the quality and timeliness of the work contracts and the quality of the outputs. As pointed out by the ICR (page 22) , the Bank was in a position to inform the Government of the future risks associated with speedy project preparation and implementation. It should have better advised the GOG on a reasonable timetable for the overall project, as well as sufficient budgets for
the designs, supervision consultant and civil works component.

The Bank Team should have also included support to a multi- agency road safety coordination body, because the operation of this body was one of the indicators.

Quality-at-Entry Rating: Moderately Satisfactory

b. Quality of supervision:
According to the ICR, monitoring of pre-construction activities and the early stages of construction was not effectively done by the Bank.The most critical step was in January 2008 when a flawed design was tendered out without sufficient time given for a thorough review. The Bank was in a position to insist that the RD ensure proper reviews during the detailed design and prior to the invitation for bids, and to delay procurement until the design was properly checked. Neither of the WB Aide Memoires or Implementation Status Reports in the first half of 2008 indicated any risks associated with too quick tendering of designs without proper reviews.

Two recommendations related to the road safety component of the mid-term review were not taken on board by the Bank Team: (i) creation of a road safety secretariat to support the Transportation Commission in drafting a coordinated action plan and monitoring progress; and (ii) designation of senior individuals in key ministries to be responsible for their department’s contributions to the Road Safety Action Plan, and be held accountable for achievement of targets. Possible reasons included that there were no funds allocated for these activities from the start and that the Bank did not identify a Road Safety Champion — as had been advised previously in the Decision Meeting— to promote either of these activities.

The Bank Team became very proactive when problems with the road construction works started. The Bank responded to the RD’s request to carry out a mid-term review in May 2009 – seven months earlier than planned – which allowed the RD and the supervision consultant to take constructive actions to improve project and quality management. After the mid-term review, the Bank strengthened technical supervision of the project through more frequent and intensive missions (sometimes one every other month), and through monitoring the project via monthly—rather than quarterly — progress reports. The Bank Team filed a case with the Bank’s Integrity Vice Presidency (INT) that called for the investigation of alleged collusion. INT eventually dismissed the case because no information related to a sanctionable practice could be found.

The Bank team provided support to the RD in determining the terms and conditions for settlement of the expired contract with the original road contractor. When the fatal accident happened on the project section (while performing a pavement test one of the local employees was killed by a speeding car whose driver ignored a road construction warning sign), the Bank Team was persistent in following up with the RD for a year and half to ensure that compensation was paid to the family of a contractor’s local employee.

Both the Bank project team and the management remained persistent in ensuring compliance of the road contracts with social and environmental safeguards. After project closure, the Bank team continued to fulfill its due diligence through monitoring the implementation of the remaining (remedial and road safety) works on the Igoeti-Sveneti section that were not completed by the end of the project (those works were funded from the GOG’s budget). While these works were not part of the design of the project they are nevertheless associated with the project road segment.

Quality of Supervision Rating: Moderately Satisfactory

Overall Bank Performance Rating: Moderately Satisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
High level of GOG’s commitment to this project was demonstrated through a fast pace of project preparation and good cooperation between the RD, MOED and the Bank. The project was prepared and delivered to the Board in less than a year. The GOG cooperated with the Bank in carrying out all necessary public consultations for the preparation of the relevant safeguard documents in compliance with the Bank safeguards policies. High commitment was also demonstrated in the continued availability of the GOG’s funds to support the E60 Highway Improvement Program despite the financial crisis and economic slowdown that hit Georgia in 2008-2009. In addition, the GOG’s commitment was demonstrated by a prompt development and adopting of its first National Traffic Safety Strategy and Action Plan prior to appraisal of the AF for the project, which was made within 8 months of the Board approval. While implementing reforms in the ministries — in particular, establishing the MRDI in 2009 and moving the RD from the MOED to MRDI—the GOG made sure that these ministerial reforms did not affect in any way project implementation and the same core project team remained in place for the duration of the project.

Despite high commitment to the project, there were instances that indicated high degree of political interference, which affected the quality outputs in a few deliverables and the sustainability of some project benefits. There were a number of actions from the Borrower’s side that affected the decision-making process, the performance of the RD as a frontline implementing agency, and the quality of the project outputs. These actions included:

(i) Demanding an overly ambitious schedule for design preparation and civil works procurement activities. Design and procurement of both road and bridge contracts took place at a very fast pace, and without proper and thorough review of designs. The budget of 1.5% of the construction cost estimate was low and insufficient for the amount of surveys, geotechnical investigations, design development and checking required for a road project of this scale. The road designs were included in the bidding document in January 2008 — within a month after submission — without proper review by the RD. Procurement of the bridge works was also carried out quickly; tenders were called in early 2009, and the contract was signed in April 2009.

(ii) Implementing two premature openings of the project road sections for all traffic and disregarding environmental safeguards, prior to the Bank management’s interference. The project road sections were twice prematurely open for traffic in public ceremonies at the request of the GOG — once in January 2009 and a second time in November 2009. The January 2009 opening resulted in premature failure of the pavement, which had not been recovered by November 2009. The November 2009 opening coincided with the opening of several project road sections to all traffic for more than 72 hours, in spite of strong warnings by the Bank not to do so. Several sections were not given adequate drying/curing time for the concrete pavement and the bridge slabs, and this caused some problems with the pavement that needed to be repaired later.

(iii) Delaying the order for closure of the project road sections necessary for the second contractor to complete remaining works and remedial measures. When the project was extended, it took the GOG about 4 months to finally close some sections that needed to be closed in order for the second road contractor to complete the remedial measures and remaining works. But instead of finalizing these works, this contractor was assigned by the GOG to work in priority on other road construction projects that were also critical for the GOG in anticipation of the upcoming election in October 2012.

Government Performance Rating: Moderately Unsatisfactory

b. Implementing Agency Performance:
The Roads Department (RD) was proactive in project implementation. For example, due to concerns over project implementation, the RD requested the Bank to carry out a mid-term review earlier. The mid-term review, which was carried out 7 months earlier than originally planned, allowed the RD and the Bank to identify root problems in a timely manner and immediately find adequate solutions, which prevented further exacerbation of project implementation issues and possible substantial delays in the completion of civil works contracts.

When the cases of an Igoeti resident and others emerged (see Section 11a), the RD was losing its credibility with the Bank. However, thanks to a high level of professionalism and commitment on the part of the Resettlement Unit, the RD managed to regain credibility and trust with the Bank by addressing and successfully resolving those issues. The Unit worked hard to resolve each case, especially the one involving an Igoeti resident, who used several lawyers for a series of complaints. In the end, the Unit succeeded in all cases, and its estimates of the compensations were found acceptable. The Resettlement Unit was always thorough in bringing to the Bank’s attention the emerging issues, and ensuring that those issues were raised in the Bank’s aide memoires.

There were a number of shortcomings of the RD' performance: (i) it did not undertake effective monitoring of the earlier stages of the road construction, and (ii) it allowed partial compliance with the project’s covenant related to implementation of the EMP and the RAP during half the course of project implementation. Effective monitoring by the RD in the first year of project implementation would have alerted the Bank of the seriousness of the situation — and earlier intervention could have averted many of the problems, or at least minimized their impacts. The RD should not have allowed the first road contractor to start the civil works without full compliance with the RAP; allowed the first contractor to cause damage to an Igoeti resident’s property; or neglected to enforce monitoring of the EMP implementation.

Implementing Agency Performance Rating: Moderately Satisfactory

Overall Borrower Performance Rating: Moderately Satisfactory

10. M&E Design, Implementation, & Utilization:

a. M&E Design:
The project's indicators were appropriately linked with the intermediate objectives. The key indicators included baseline data and measurable targets set at appraisal (PAD Annex 3 and Section F of the Datasheet). The target values for three intermediate outcome indicators related to the road safety component were provided during Additional Financing; they had not been originally set at appraisal for pending the adoption of the National Traffic Safety Strategy by the Government. The key performance indicators for the project development objective included: (i) reduced transit time from Igoeti to Sveneti, (ii) reduced vehicle operating costs, and (iii) national road safety action plan with targets and monitoring indicators devised and implemented. There was an indicator regarding “a high-level multi-agency coordination body operating” to support implementation of the National Traffic Safety Strategy and coordinate road safety work between road safety public entities. However, the project design did not include any activity to support this body.

M&E was initially carried out by the Transport Reform and Rehabilitation Center (TRRC). From the mid-way of project implementation, it was carried out by the M&E Unit of the RD, with the assistance and guidance of the TRRC, and close supervision by the MOED and later the Ministry of Regional Development and Infrastructure (MRDI).

b. M&E Implementation:
Quarterly and annual reports on implementation progress and monitoring indicators were submitted to the Bank. Most of the same indicators are or will be used by the RD in the monitoring of another on-going project (TEWHIP) and one under preparation (EWHIP-4).

a. M&E Utilization:
The M&E system was used to support recommendations or inform management decisions during the course of implementation.

M&E Quality Rating: Substantial

11. Other Issues:

a. Safeguards:
This was a Category “A” project that triggered six safeguards policies – OP4.01 Environmental Assessment, OP4.12 Involuntary Resettlement, OP4.04 Natural Habitats, Pest Management OP4.09, Physical Cultural Resources OP4.11, and Forests OP4.37.

Environmental Safeguards and Management: A Specific EA and EMP were prepared in compliance with Environmental Assessment OP/BP 4.01, Natural Habitats OP/BP 4.04, Pest Management OP 4.09, Physical Cultural Resources OP/BP 4.11, and Forests OP/BP 4.37 to mitigate and manage direct and indirect impacts of the construction. The EA and EMP were disclosed in Georgia on September 14, 2007, and through the InfoShop on September 19, 2007. All environmental safeguards documentation was prepared, consulted upon and disclosed in compliance with environmental regulations, policies and procedures of the GOG and the Bank. No significant environmental receptors were identified. The most sensitive area was determined at Igoeti where the construction of new bypasses and bridges was planned and the presence of archaeological sites, erosion and land stability issues, and natural (terrestrial and aquatic) habitats was envisaged.

The RD’s Division of the Project Analysis, New Technologies, and Environmental protection under the Office of Technical Policy was put in charge of managing the review of the EAs and EMPs for all RD projects, monitoring the compliance of construction works and associated contractors with approved EAs, EMPs, environmental standards and other environmental commitments, and supervision of the practical implementation of EMPs. During most of the project implementation, there was mainly one young person with insufficient experience who was handling all environmental safeguards related to this and other Bank-funded projects.

There were several serious environmental issues — in particular, with the first road contract. The first contractor failed to consistently comply with the requirements of the EMP. The transgressions included: illegal and/or improper dumping of waste materials, delayed rehabilitation of the two large borrow areas adjacent to the road, poor handling of the borrow pits, substantially delayed or improper tree planting, and disposal of concrete waste on the river bank. Because there was no financial penalty for noncompliance with the EMP, the contractor felt no obligation to properly implement it. The authority of the RD’s young environmental specialist was not recognized by the contractors. It was only the interventions of the RD’s Deputy Chairman and the Bank CD for the South Caucasus through the MOF that caused the first road contractor implement some of environmental mitigation measures.

The ICR reports that "full compliance with the EMP was achieved when the contractor was replaced by another one who fixed the above mentioned environmental problems caused by its predecessor" (page 13). The mountain slope at the km 58 borrow site was properly terraced, and risks of severe erosion and landslides were considerably decreased. Topsoil was spread over the upper terraces and trees were planted. The entire compensatory tree planting program was carried out, a verification survey undertaken, and compliance with the planting contract documented by the RD. Due to late completion of terracing, planting was carried out only on the top terraces. Illegal dumping was cleared on the hill at km 59, and the site was compacted and landscaped with natural regeneration underway. Borrow areas at km 78 and 79 were also terraced and landscaped. The project restored irrigation and portable water supply pipes that were damaged by the landslide on the eroded slope near Igoeti village. In addition, the project piloted hydro-seeding on over two hectares of bare steep slopes to the right side of the highway.

Involuntary Resettlement: The Resettlement Policy Framework (RPF) and the Resettlement Action Plan (RAP) were developed in compliance with the Georgian legislation and the Bank's Social Safeguards Policy OP 4.12. The RFP was prepared in 2006 as part of the First East-West Highway Improvement Project (FEWHIP) preparation, and covered the road segments under FEWHIP and this project. Public consultations were also carried out during the preparation of the FEWHIP. The RAP for the project road segment was prepared, in consultation with the public, and disclosed through the InfoShop on April 1, 2008.

It was anticipated that the project would acquire about 9 ha of land, of which 7ha belonged to about 95 private owners. No physical relocation was expected, although some parts of residential plots were expected to be acquired, and a handful of kiosks and other commercial entities to be demolished. The original RAP envisioned 167 land plots (91,968 mē) to be affected by the improvement works on the Igoeti-Sveneti section. However, the actual number of land plots that were affected by the project and located within the right-of-way of the main alignment was 192 (146,914 mē). This difference was mainly due to data inconsistency for the right-of-way assessment and poor coordination between GIS-based cadastral data in the original RAP and the GIS data used in the preliminary technical design. This resulted in significant adjustments that had to be made based on field surveys during demarcation. The RD had to revise the actual scale and scope of the project impact based on the findings of the in-site survey for each and every affected household and business entity. The signed Demarcation Acts and the documentary evidence were verified to confirm that compensation paid to affected entities was in compliance with OP 4.12. The construction of the connecting roads (secondary roads) as part of the major road construction contract to ensure easy and safe connectivity of neighboring villages to the rehabilitated and newly-constructed project highway segments also required the acquisition of about 4 ha of the private land. A new compensation plan was prepared and attached as an Appendix to the existing RAP, which was re-disclosed in the country in 2008.

Following the World Bank’s advice, the RD’s Resettlement Unit hired a local consultant to aid its 4 staff members in identifying all land plots that were not anticipated in the original RAP and that were located within the additional right-of-way. The RD’s Chairman and Deputy Chairman were directly involved in resolving all resettlement cases. This helped the Resettlement Unit to more effectively handle and resolve each case in a satisfactory way.

The ICR reports that "the land acquisition and resettlement process was completed and all outstanding cases were resolved to satisfaction of the project-affected people by the end of the project" (page 15). All compensations were fully paid to the Project-affected people by the end of the project. The total amount of compensation was GEL 1,343,773 (about US$ 0.81 million equivalent). The case of the Igoeti village resident that had been outstanding since 2009 was settled successfully. The resident signed an agreement with the RD on June 25, 2012, accepting the payment of GEL 11,139 (about US$ 6,700) as compensation for the acquisition of 954mē of land and 62 fruit trees. The payment was effective on July 9, 2012. This latest payment was in addition to the February 2011 payment of GEL 45,000 (about US$ 27,270) for the damage inflicted to the resident’s summer house during the highway
construction. The RD presented all the necessary documentation to the Bank in evidence and the Bank reviewed and verified a successful closure of this long pending case.

b. Fiduciary Compliance:
Procurement: "The procurement of works, goods and consulting services was carried out in accordance with Bank Guidelines" (page 15). The road and bridge works contracts were procured through international competitive bidding. Procurement took place very fast after the submission of the designs in both road and bridge works instances — and this had an implication, especially on the quality of the road contract execution. The first road contract was signed within 10 weeks of bid opening, which — while within the Bank requirements — was too fast. The bridge contract was awarded within 30 days (four weeks), but there were significantly fewer problems with its execution than with the execution of the first road contract. After dealing with the problems related to the latter contract that included poor construction quality, cost changes and overruns, and inadequate project management, the RD allowed the contract to expire naturally and re-tendered the contract to complete the remaining works and remedy all problems.

Financial management. There were no major issues in financial management (FM). The FM was handled by the TRRC of the RD. The interim financial reports submitted to and reviewed by the Bank during implementation were found satisfactory, in a format acceptable to the Bank, and with minor or no issues identified. Annual audit reports were received on time and the auditor’s opinion was unqualified.

c. Unintended Impacts (positive or negative):
A major Bronze Age archaeological site was found near Igoeti. The RD handling of the archaeological finds was as the ICR describes exemplary, and in compliance with the national legislation. As a result of this experience, the RD has developed a well-defined process of handling archaeological sites and has applied it under another on-going project (TEWHIP) where another archaeological site of a larger scale was found.

d. Other:

12. Ratings:

IEG Review
Reason for Disagreement/Comments
Moderately Satisfactory
Moderately Satisfactory
Risk to Development Outcome:
Bank Performance:
Moderately Satisfactory
Moderately Satisfactory
Borrower Performance:
Moderately Unsatisfactory
Moderately Satisfactory
The ICR Review agrees with the ICR on the component ratings. The overall rating depends on the rating for Outcome, which is in the satisfactory range. 
Quality of ICR:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate.

13. Lessons:
The ICR has identified a number of lessons, of which the most important are listed below with some adaptation of language:
  • Despite political pressure in highly visible projects, due diligence should be performed to ensure quality of project preparation and implementation. Political economy plays a critical and direct role in highly visible projects. Special attention should be paid to ensuring that project schedules are realistic and that due diligence is present in all aspects of preparation and implementation in order to minimize the risks of cost and time overruns and poor quality of outputs due to political pressure for speedy project implementation.
  • A corridor and framework approach should be applied in preparation and implementation of the same type of road projects. In this way, a corridor approach will be followed in subsequent projects — and thus, the same framework will be applied throughout the entire road corridor. This approach is especially valuable when resources are limited and projects need to be done on a one-by-one basis. Safeguard-related frameworks developed under one project could also provide a sound basis for an upcoming project, and can be regularly updated and improved.
  • The Project should allocate sufficient time and budget for the pre-construction activities, including preparation and review of designs. An ambitious timeline and a tight budget for the preparation of designs for a complex project could be major reasons for the poor quality of those designs.
  • Traffic safety should be enforced by the employer and supervision consultants on all construction works in Georgia. There is a traffic safety provision in the Bills of Quantity — the employer and supervision consultant should take advantage of that provision. When it has been determined that the contractor has not been compliant with safety requirements, payment should be refused until such time as the contractor has undertaken a remedial action to adequately provide for the safety of construction workers and road users.

14. Assessment Recommended?


15. Comments on Quality of ICR:

The ICR is analytical and outcome-oriented. The quality of evidence is adequate. The ICR addresses with good detail the implementation issues that caused cost overruns. The lessons are evidence-based. There were, however, some discrepancies in project costs.

a. Quality of ICR Rating: Satisfactory

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