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Implementation Completion Report (ICR) Review - Kerala State Transport Project

1. Project Data:   
ICR Review Date Posted:
Project Name:
Kerala State Transport Project
Project Costs(US $M)
 336  313
L/C Number:
Loan/Credit (US $M)
 255  232
Sector Board:
Cofinancing (US $M)
Board Approval Date
Closing Date
12/31/2007 12/31/2010
Sub-national government administration (35%), Roads and highways (35%), Ports waterways and shipping (30%)
Other urban development (50% - P) Municipal governance and institution building (50% - P)
Prepared by: Reviewed by: ICR Review Coordinator: Group:
Ramachandra Jammi
Robert Mark Lacey Soniya Carvalho IEGPS1

2. Project Objectives and Components:

a. Objectives:
The project development objective (PDO) is stated identically in the project appraisal document (PAD) and the Loan Agreement: "To (i) improve traffic flow and road safety on Kerala State's primary road network; and

(iii) strengthen the institutional and financial capacity of Kerala's key transport sector agencies."

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

c. Components:
1. Transport Corridor Upgrading: This component comprised civil works, supervision and quality control services, environmental management, and preconstruction activities such as land acquisition, resettlement and rehabilitation, utility relocation, and government’s project management costs as described below. (Planned: US$262M; Actual: US$163M)
a. Civil works for strengthening and widening two lanes and strengthening of about 600 km of State roads.
b. Civil works for upgrading and rehabilitating State inland waterways, as a pilot component, in one contract package. The works included de-silting, de-weeding, side bank protection, and other minor canal rehabilitation work.
c. Supervision consultant and project coordinating services for civil works mentioned above.
d. Land acquisition (LA), utility relocation, resettlement and rehabilitation (R&R), and environmental mitigation and management.

2. Road Maintenance: Conventional maintenance works contracts for about 1,000 km of State roads in a three-year program, and two pilot performance-based maintenance contracts for a fixed period. Supervision, technical audit, and design advisory services were also included, to strengthen the PWD's (Public Works Department) maintenance supervision and quality assurance practices. (Planned: US$54M; Actual: US$129M)

3. Road Safety: (a) consultant services to undertake identification of accident black spots, programming and designing minor improvements works for State roads including new signs, markings, and accidents recording analysis; (b) improving road safety conditions, conducting road safety audits, minor mitigation measures, strengthening traffic law enforcement recommendations, interagency road safety coordination and training; and (c) equipment and accessories for improving the road safety systems in the State. (Planned: US$4M; Actual: US$4M)

4. Institutional Strengthening: (a) services to implement the institutional strengthening action plan; and (b) equipment and software for setting up a sustainable information management system, data collection for inventory management, and accounting in a sustainable manner. (Planned: US$8M; Actual: US$13M)

In September 2009, the first two components were restructured to reflect the reduced scope of physical work arising from implementation delays and cost overruns associated with slow progress in land acquisition and pre-construction activities for road widening works. The restructuring resulted in (a) reducing the target for Component 1a (transport corridor widening) by 327 km, a reduction of 54%; and (b) reallocation of the resulting loan savings (of about US$30 million) to Component 2 for periodic road maintenance of an additional 200 km of Kerala’s State’s primary road network.

d. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The initial loan amount was US$255 million out of a planned total project cost of US$336 million. At the request of the Borrower, US$8 million of the loan amount was cancelled in November 2010 (due to reduction in the expected civil works contract claims) and US$14 million (loan surplus after final disbursement) was cancelled in March 2011. Finally, the surplus balance amount of about US$1 million was cancelled on May 13, 2011, leaving a total disbursed amount of US$232 million. The Borrower's contribution remained at US$81 million as planned.

The project closing date was extended four times to accommodate delays in civil works due to slow performance of some contractors, design changes, delays in the procurement process, slow progress in land acquisition (LA) and the force majeure event of an extended monsoon (rainy) season during the years 2004 and 2005. The project closed on December 31, 2010, three years behind schedule.

3. Relevance of Objectives & Design:

a. Relevance of Objectives:
Kerala's road transport system is highly inefficient by international standards, due to a high degree of congestion and prevalence of road accidents. Of the 3,330 km of State highways (SHs) around 70 percent were single-lane at the time of appraisal. The total economic loss due to road accidents in Kerala for 2009 was estimated at about US$92 million, approximately equal to the annual PWD budget. The economic loss due to poor or bad road conditions was also significant as a result of the large backlog of road maintenance work which had been estimated at more than US$100 million. On another front, Kerala is one of the few Indian States with a considerable inland waterways network that could be developed as a significant complementary transport mode.

Shortcomings of the transport system are addressed in the Country Partnership Strategy (CPS) for India for 2009-2012, which focuses on improving infrastructure to help sustain rapid economic growth to achieve poverty reduction objectives. The strategy is also closely aligned with the Government of India’s own development priorities expressed in the Eleventh Five Year Plan. Against this background of the State's needs in the roads sector and country-wide priorities, overall relevance of the project development objectives (PDOs) is rated high.

b. Relevance of Design:
The project was designed with an appropriate balance between physical works (for transport corridor upgrading, road maintenance, and improving road safety) and measures for improving institutional capacity and processes for managing the road network in the long term (planning, financial accounting, inventory management, performance-based contracting, inter-agency coordination, training for upgrading technical and other skills, etc.).

The results framework appropriately links the physical components of the project with intermediate results and the related objective. The link between the institutional component and intermediate results is adequately made, but the ultimate impact on institutional and financial capacity and the manner in which it would be measured is less clear.

The project design considered two major risks: (a) whether the counterpart funding would be fully forthcoming in a fiscally weak State, and (b) the constraints that project preparatory activities, particularly Land Acquisition (LA) and Resettlement and Rehabilitation (R&R) could impose on smooth project implementation. The first risk was mitigated by designing a ring-fenced fund flow system away from the central fund pool through establishing a dedicated project account.

The second risk (relating to R&R and LA) - which was crucial to the smooth implementation of project's major physical component of road transport corridor upgrading - was insufficiently addressed in terms of ensuring adequate knowledge of and institutional capacity for social safeguards. This resulted in serious time and cost overruns, eventually leading to a reduction in the physical scope of the project and downward adjustment of outcome/output targets. Additionally, the risk associated with the design and implementation of the Inland waterway transport (IWT) component was underestimated. Based on these shortcomings, the relevance of project design is rated modest.

4. Achievement of Objectives (Efficacy) :

Objective 1: Improve traffic flow and road safety on the State primary road network. Substantial.

The scope of physical works for road upgrading (which accounted for 60% of the planned project cost) was reduced by 54% in terms of road length. At the same time, the length of road covered by the sub-component for periodic maintenance was increased by 20%.

The region adds (through its email dated June 26, 2012) that the changes in the types of intervention from upgrading to rehabilitation did not make any marked difference and provided the same level of benefits, especially since the project maintained the same design standard and the width did not have any bearing on the economic benefits. For the scaled-down physical targets, targets of improved traffic flow (travel time, cost savings) were largely achieved. Thus, travel time was reduced by 40% against a target of 20%; and the vehicle operating cost savings were estimated at 35% against a target of 20%. In terms of road safety, road accidents were reduced from 7 to 5.5 accidents/black spot/year, exceeding the revised target, but 25% below the original target. The share of roads in poor condition in the core State road network (State highways plus upgraded/rehabilitated roads under the project) was reduced to 54 percent as per the revised target (the original target was 50 percent).

Under the inland waterways component, little or no progress was made towards the target of rehabilitating about 100 km of inland waterways and installation of navigational aids. Dredging and shore protection works were begun but never completed.

Despite the substantial achievement of intermediate outcome indicators relating to road works, achievement of this objective is rated modest due to the large reduction in the scope of roadwork and lack of progress for inland waterways.

Objective 2: Strengthen the institutional and financial capacity of key transport sector agencies. Substantial.

Several tasks were completed that were intended to improve the institutional and financial capacity of the state's transport sector institutions. A dedicated independent Road Safety Authority and Road Safety Fund was set up in the State. The PWD code and Manual was revised to make it compatible with the functioning of a modern road agency. A Geographical Information System (GIS) was developed in conjunction with a Road Maintenance Management System (RMMS). A web-based PWD IT backbone system ‘WINGS’ was established. The terms of reference for some of the cells, such as the Quality Management cell and the Environmental Monitoring cell, could have been more tightly defined to make these cells more effective. The region adds that the project helped to roll out financial management systems to 70 percent of the PWD offices, significantly enhancing the transparency of the whole financial management process.

For improving road safety, a multi-sector road safety action plan was developed through consultation among the transport department, PWD, police department, health and education departments and NGOs. A public information and communication system, including a 24-hour 7-day grievance redressal system were designed and implemented. A dedicated road safety cell was set up in PWD. The region adds that in 2011 the Road Safety Authority had undertaken improvement of 150 black spots and an extensive driver training program, largest in the country, from the allocated funds of about US$ 8 million. It is reported that the fund allocation for the Road Safety Authority has been increased to US$ 20 million in 2012.

The ICR reports that the achievements under the institutional development component helped transform PWD from a traditional road department to a performance-oriented and user-responsive modern road agency, and helped sustainable road asset management, planning, and budgeting. But there are no intermediate outcome indicators that would show that such outcomes were achieved nor that financial capacity has been enhanced. Kerala PWD was the first institution to have a PWD wide complaint handling and public information system. Some preliminary analyses indicated that 80% of complaints were redressed within 48 hours through the tracking system which was a vast improvement of grievance redressal management from the past.

5. Efficiency:

Economic Rates of Return (ERR) were calculated at appraisal as well as at project completion for component 1a (widening and strengthening of roads), which accounted for about half of the final project cost. The ICR reports that, to the extent possible, the same methodology and assumptions were used at both stages. The overall weighted average ERR for component 1a was 28% at project completion, 2 percentage points more than at appraisal, mainly due to a higher than predicted increase in traffic volume (15.4 percent at project completion vs. 8.5 percent at appraisal).

For the road maintenance component, benefit-cost ratios were calculated. Higher than expected traffic growth (51 percent on average) over several sections covered by this component meant that the weighted average benefit-cost ratio for all sections was higher at project completion (7.4) than at appraisal (5.1).

There were, however, major implementation delays. The road widening and strengthening program took nine years instead of the planned five. This led to cancellation of the planned second phase of the program so that 254 kilometers of road received attention instead of the 578 kilometers foreseen at appraisal. The ICR reports (page 10) that the delays were due to poor procurement planning, shortcomings in detailed engineering, and inadequate design and planning of land acquisition and resettlement actions. These, in turn, led to poor contractor performance, cancellation of contracts, rebidding for fragmented parts of the project, and cost escalations. The road maintenance component took nine years instead of the programmed three (ICR, page 21) and suffered cost overruns of 149%. The region adds that the cost overrun was largely due to increased tender premium during bidding stage and also significant expansion of the scope of the work. Also, the project was implemented during a rapid expansion of infrastructure programs around the world, especially China and India, which increased the global prices for construction input prices, including bitumen, steel, and cement.

Efficiency is rated 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:

Both of the project’s development objectives -- improving traffic flow and road safety on the State primary road network, and strengthening the institutional and financial capacity of Kerala’s key transport sector agencies – were highly relevant to Kerala’s transport needs and to the Bank’s CPS for India. Efficacy of both the project objectives is rated substantial. Efficiency is rated modest due to significant time and cost overruns arising largely from design and administrative shortcomings. Overall outcome is rated moderately satisfactory.

a. Outcome Rating: Moderately Satisfactory

7. Rationale for Risk to Development Outcome Rating:

The development outcome of the project hinges on ongoing provision of sufficient financial resources for maintenance, and deriving positive impacts from institutional enhancements. The State has identified a core network of 12,000 km and prepared an investment plan of Rs. 40,000 crores (about US$9.0 billion) over a decade for development/management of this network. However, considering that the current PWD annual budget is currently only about US$150 million, mobilization of funds and implementation/absorption capacity of the PWD for such a large program remains a question mark. While the State has been able to increase the maintenance funding on the core road network (project roads included), overall maintenance expenditure has largely remained in the range of 20 percent of the overall requirement, thus seriously affecting quality of the non-core network. The State has to embark on a medium/long term financing strategy for developing and managing the road network as a whole, including exploring mobilization of funds through public-private partnerships for which the State has yet to develop a suitable framework. The region adds that the PWD development budget has significantly increased (including for maintenance funding) from about 750 crores annually in FY09 to about 1,200 crores in FY11. The state spent about Rs. 2,500 crores for road development in FY11. The state Government had also allocated dedicated resources (Rs. 55 million in FY 11 budget) for continuing the institutional strengthening initiatives in the state.

In respect of institutional improvement and road safety management, the State has displayed its commitment so far through allocating adequate resources to sustain the project funded initiatives. However, besides providing resources for these initiatives, senior level oversight and monitoring in both institutional strengthening and road safety management need to be enhanced to ensure their long-term sustainability. For instance, while the quality of the works, pavements, and passenger comfort improvements under the project was generally satisfactory, substandard quality of work was noted at some sections, especially on the side shoulders and drains. The region adds that the substandard quality of a side shoulder and drain is about a small section of 1.5 km (out of 256 km) which had suffered some deterioration due to heavy rains and has been repaired since then. It should be noted that the entire 255 Km of upgradation roads have been provided with lined drains which is unique among all state highway projects.

a. Risk to Development Outcome Rating: Moderate

8. Assessment of Bank Performance:

a. Quality at entry:
During project preparation, the Bank drew upon lessons from similar projects in other States of India and other countries in the Region. However, the Bank fell short on making a realistic assessment of resettlement requirements and institutional capacity and preparing for the scale of the social impact of road upgrading activities, and the scope of civil works for the IWT sub-component.

With 840 people per square kilometer, Kerala is one of the most densely populated states of India. Therefore, acquiring right of way for roads improvement and widening was a huge challenge. The Bank did not fully foresee the huge magnitude of the R&R and LA actions that would involve more than 30,000 affected families. R&R of project affected persons was a novel concept for the State administration, and the project did not make sufficient provision for preparing the states agencies for this task.

The IWT pilot was a potentially significant intervention ($8.5 Million; about 3% of the project cost at appraisal and completion) to support the State road network in transporting freight and people. The IWT sub-component would more appropriately have been addressed as a separate project and not merely as one supplementing the much larger road improvement component.

Quality-at-Entry Rating: Moderately Unsatisfactory

b. Quality of supervision:
The Bank's supervision missions were frequent (every six months on average) and extensive. However, the supervision process did not recognize the need for restructuring the project components until late in 2009 – long after it had become clear that the project would not be completed within the planned implementation period. The restructuring of the components could have well begun at the mid-term review in 2004. At that time, the total loan disbursement ratio was only 23 percent and the main delays had already occurred in the corridor improvement component which accounted for the majority of the project cost at appraisal.

Quality of Supervision Rating: Moderately Unsatisfactory

Overall Bank Performance Rating: Moderately Unsatisfactory

9. Assessment of Borrower Performance:

a. Government Performance:
The Government demonstrated a high level of commitment and ownership towards the preparation and design of the project. For instance, it committed substantial resources (US$4M) for project preparation prior to project approval and supported the Strategic Options Study to identify roads for improvement.

However, the Government failed to assess the high magnitude of the challenges relating to R&R and LA for the project. The Government’s revenue department was also not geared to respond within the required time to the funding needs of project activities. This caused delays when the contractors that were already mobilized were forced to follow a stop-and-go schedule, requiring additional time and incurring cost overruns which gave rise to further contract claims. For instance, due to late payments - among other reasons - two of the four main contractors terminated their contracts, causing their work to be suspended for a year. During this time, the prices of the major construction commodities increased, thus raising the overall project cost. The funding shortfall eventually forced Phase II of road upgrading works to be dropped as part of the restructuring in September 2009. Following a change of Government in 2006, project implementation faced further delays during 2006/2007.

Government Performance Rating: Moderately Unsatisfactory

b. Implementing Agency Performance:
The implementing agency, PWD, lacked sufficient capacity to plan and undertake the extensive tasks under this project. There was also frequent turnover of qualified staff during most of the implementation period, including at the top management levels. The PWD/PMU (Project Management Unit) was led by seven different Project Directors (PD) over the less-than-eight-year project duration, including a two-year period during which the position was vacant. PWD had no authority to make decisions on some matters, especially those related to revenue and land acquisition (see section 11below). As a result, there was inadequate oversight of project activities; lack of integration of the land acquisition schedule and utility relocation schedule with award of civil works; lack of coordination between PWD/PMT, contractors, consultants and non-governmental organizations (NGOs); delays in utility relocation and availability of encumbrance-free sites; and delayed release of contract payments. Towards the end of the project, a new project director and project team displayed seriousness and professionalism in managing the project, but this came a little too late in the process.

Implementing Agency Performance Rating: Unsatisfactory

Overall Borrower Performance Rating: Unsatisfactory

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

a. M&E Design:
The project used a mix of appropriate output and outcome/intermediate outcome indicators and specified baseline and target values for most indicators. Intermediate indicators included reduction in travel time and vehicle operating costs; reduction in the share of the state highway network in poor condition; and reduction in road accidents at accident black spot sites improved under the project. Output indicators included the length of road benefiting from upgrading/widening; rehabilitation of inland waterways and installation of navigational aids; length of road rehabilitated; and number of improved accidents black spots.

The indicators for the second objective of strengthening institutional and financial capacity were in the nature of output indicators such as specific number of staff trained and specific systems and work modules added. .

b. M&E Implementation:
The indicators were periodically monitored and reported in the Mission Aide-Memoires and the Implementation Status and Results Reports (ISRs). The performance indicators could have been measured more frequently by the implementing agency.
Three rounds of Road User Satisfaction Surveys (RUSS) were carried in 2003, 2006 and 2010 to assess user perception and feedback. RUSS 2010 shows a marginal positive impact on the income, occupation, ownership of assets and housing among respondents including project-affected persons. Forty percent of the respondents reported no change in their socio-economic status; and 31 percent reported losses due to closing of business and loss of customers and the presence of new business competitors. These are early results, and more focused surveys with clear attribution would be required to confirm these results in the future

The Bank participated in a workshop organized by PWD/PMU inviting all implementing agencies, contractors, consultants and NGOs who were involved in the preparation and implementation of the project. The objective of the workshop was to derive lessons from the project experience.

a. M&E Utilization:
Despite the continual feedback from the Bank's ISRs and mid-term review (MTR) and the frequent inspections by the PWD/PMU, the Bank and the government took longer than necessary to restructure the project components. This lack of prompt follow-up to the clear messages from the M&E framework delayed corrective actions that might have improved the pace and quality of project implementation.

M&E Quality Rating: Substantial

11. Other Issues:

a. Safeguards:
This was a Category A project which triggered the Bank's safeguard policies for Environmental Assessment (OP 4.01), Natural Habitats (OP 4.04), Cultural Property (OP 11.03), Indigenous Peoples (OP 4.02 ) and Involuntary Resettlement (OP 4.12).

At the outset of the project, GoK lacked sufficient institutional capacity for implementing safeguards, especially social safeguards. The project took several steps to improve this situation such as appointing sociologists in the PMU and at several implementation sites; and conducted training and sensitization sessions on R&R.

Environmental Safeguards
With respect to environmental safeguards, extensive capacity building and training was carried out for the PMU, construction supervision consultants, technical audit consultants and the contractors, by the Project Coordinating Consultancy (PCC) Services . This helped in making the project’s Environmental Cell operational. In the first few years of project implementation, a system was established to ensure that all environmental clearances with the State Pollution Control Board were periodically obtained.

The ICR reports that a Sectoral Environmental Assessment (SEA), Environmental Assessment (EA), Environmental Management Plan (EMP), and a Resettlement Action Plan (RAP) were prepared as required. An Environmental and Social Management Plan (ESMP) was prepared for the road maintenance and waterways sub-components of the project. The reports were disclosed in public places in the affected districts. The Government of Kerala prepared a R&R policy.

The ICR reports that, throughout the project period, environmental management was integrated with the project activities at the contractor, construction supervision consultant, and PMT levels. More than 10,000 trees were planted as roadside compensatory plantation to compensate for about 4,000 trees that were cut during construction work.

Social Safeguards
According to the ICR, intensive consultations were conducted with the community and project-affected families (PAFs) throughout project implementation. A Resettlement Action Plan (RAP) was prepared, and a Social and Environment Management Cell was established for implementing the RAP and the ESMP.

The number of project-affected families (PAF) affected over Phase I and II of road works was 30,811 (65 percent higher than the RAP estimate); and land to be acquired (LA) was 176 hectares (54 percent higher than the RAP estimate). The increase in PAF and LA was due to an incomplete listing of affected land parcels at the outset, and the additional land required for improving the vertical profile, slope protection works and utility relocations. This resulted in multiple notifications for initiating the LA process for the same stretch of the road. Out of the total affected PAF, 65 percent were titleholders and 24 percent were subject to permanent displacement. Project roads passed through densely populated areas with ribbon development (habitation along the sides of the road) in almost an entire stretch. Hence, in order to carry out road widening, a large number of structures were affected per kilometer of road, and together with the need to restore access to abutting properties; shifting of utilities; and temporary diversions for traffic, resulted in substantial delays in Phase I.

At project completion, LA for 65 hectares and R&R activities for 11,485 PAFs were completed under Phase I as per the GoK's R&R policy. In respect of Phase II, LA and R&R is about 95 percent complete. While Phase II activities were excluded from the project scope after restructuring, the Bank continued to supervise the process of LA and R&R for Phase II in anticipation of a follow-up project. Social impact screening of an additional 160 km of maintenance roads has also been completed and no social impacts were identified.

The ICR does not provide any information relating to the safeguards for cultural property and indigenous peoples.

b. Fiduciary Compliance:
At project commencement, the Kerala PWD had limited experience with the Bank’s disbursement procedures, and financial reporting, accounting, and auditing requirements. The ICR reports that the PWD improved its capacity in this regard quite quickly and installed the Project Financial Management System (PFMS) across the state's PWD divisions. The PFMS collated real time project financial information from individual PWD field divisions, and consolidated this information centrally at the PWD headquarters in Trivandrum, the state capital. Documentation and verification of R&R payments to beneficiaries was an important aspect of the project. The project reflected good coordination between the supervision consultant and the finance staff at the PMU who were responsible for authorizing the bills for payment after their own mandatory checks. However, there were persistent delays in the receipt of statutory audit reports each year. This was sometimes due to delays in submission of accounts by the project and also due to delays on the part of the Kerala AG (Auditor General) office . The ICR does not indicate whether the audits were unqualified.

According to the ICR, procurement of works, goods, and consulting services were carried out as per Bank guidelines. Major revisions of the bidding documents have been made to bring them up to international standards, and an integrated software was developed by the project that covered the entire procurement cycle. This was an important contribution by the project to the department for road construction. Overall, the procurement process management was reportedly carried out without any significant fraud and corruption issues.

However, the project component for transport corridor upgrading experienced major procurement-related delays and resulted in the cancellation of Phase II for road works. The delays were attributed to poor procurement planning in respect of detailed engineering and land acquisition, as well as inadequate contractor capacity. These shortcomings led to significant time overruns and cost escalation, and poor performance that resulted in termination of contracts and rebidding for fragmented works of the project.

c. Unintended Impacts (positive or negative):
None reported.

d. Other:

12. Ratings:

IEG Review
Reason for Disagreement/Comments
Moderately Satisfactory
Moderately Satisfactory
Risk to Development Outcome:
Bank Performance:
Moderately Satisfactory
Moderately Unsatisfactory
Underestimation of the scale of land acquisition and resettlement action involved and the capacity of the implementing agency in this regard; Delayed supervisory reaction to signals from M&E system indicating a need to restructure the project. 
Borrower Performance:
Moderately Satisfactory
Failure to assess the high magnitude of land acquisition and resettlement needs; insufficient coordination between government departments; delays in contract management and payments; high turnover of project team leadership 
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:
An under-performing project should be restructured sooner rather than later. In this case, supervision appeared to have not reacted early enough to signals indicating the need for restructuring. Had the project been restructured earlier, resources could have been deployed more advantageously towards the better performing components.

For projects that involve a high level of land acquisition and resettlement, prior progress in this regard should be taken into account when assessing the project's readiness for implementation. In this case, non-completion of LA and R&R operations before the start of the civil works was a major issue in the implementation of the project resulting in the time and cost overrun.

Where the Borrower lacks sufficient capacity and experience for crucial aspects of a project such as LA and R&R, the Bank team should take greater care to advise the Borrower more definitively based on the Bank's wider cross-country and cross-provincial experience. This should be particularly demonstrated in situations where - as in this case - Bank expertise is centered in the country office.

14. Assessment Recommended?

Several aspects of this project can be examined in greater depth for drawing lessons for other provinces in India at the least. Together with the Uttar Pradesh State Roads Project (P067606) the areas for learning include balancing institutional capacity with project expectations and design; engaging the Government and implementing agency for institutional development; the role of country-based Bank supervision of projects, and planning for land acquisition and resettlement.

15. Comments on Quality of ICR:

The ICR is informative and analytical, and covers all relevant aspects of the project in a generally objective manner. The annexes on economic analysis and road user surveys and end of project workshop are useful. The ICR provides substantial information on compliance with environmental and social safeguards, but no information on compliance with safeguards policies on cultural property and indigenous peoples, which were triggered for the project. There is no indication of whether or not project audit reports were qualified.

a. Quality of ICR Rating: Satisfactory

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