Type of Review: Annual Review Project Title: Road Rehabilitation and Maintenance Programme (RRMP) Date started: 17 July 2011 Jul 2013 Date review undertaken: 2 Jun–21 Introduction and Context What support is the UK providing? DFID committed £19.45 million in grant funding over a three-year period (April 2012 to March 2015) in order to support (i) the rehabilitation of 45 km of regional highway Route 601 in Helmand and repairs to the Bolan bridge in Lashkar Gah, (ii) highway maintenance plans in Helmand and (iii) a national highway maintenance framework for the Ministry of Public Works (MPW). The rehabilitation and repair contracts in Helmand will be completed by March 2014 and oversight during the defects liability period will be provided from DFID Kabul before handing over the completed works to MPW. What are the expected results? The desired long-term impact of the intervention is “enhanced economic growth and freedom of movement”. This is based on the expectation that the planned outputs will lead to an outcome of “strategic roads in Central Helmand rehabilitated and highway maintenance in place across Afghanistan”. The planned outputs attributable to UK support are: 1. Route 601 and Bolan bridge rehabilitated to national standards. 2. Paved Road Maintenance Plans established in Helmand and funded from operating budget. 3. National and provincial paved road maintenance and management framework established for wider Afghanistan. What is the context in which UK support is provided? Afghanistan has a massive infrastructure deficit which constrains economic growth and poverty reduction and hinders stabilisation and development efforts. Asset maintenance is recognised as a high priority, but government capacity to manage and maintain the highway network is weak. Infrastructure development is one of the main priorities of the Afghan Government. Roads are a critical requirement to boost economic development through improved access to markets, schools, healthcare and job prospects. In Helmand, 70% of economic activity is based on agriculture and well maintained road links are essential to the efficient transport of products to markets and the main population centres of the country and to potential export corridors though Kandahar. The UK and other funding agencies have made a significant contribution to improve the road network in Helmand. Over 200 km of national, provincial, rural and urban roads have been completed or upgraded in the Province since 2006 at a total investment cost of around £200m. Route 601 is a 1 primary artery from the provincial capital to National Highway 1 to the east and from there to wider Afghanistan. The construction of Route 601 was partially completed in 2007 but the contractor abandoned the works after receiving threats. The road’s condition has deteriorated significantly and the need for emergency repair works, which are a costly drain on scarce resources, had escalated. As ISAF troops draw down, the capacity of MPW to maintain the highway network is essential if the state is to be able to sustain popular support and legitimacy. Ministries lack the systems and internal controls needed to both determine appropriate Operation and Maintenance (O&M) requirements and spending levels, and to ensure that the amounts budgeted for O&M are spent on appropriate activities. USAID provided support through the Infrastructure Rehabilitation Programme to initiate maintenance capacity building nationally, including in Helmand. This support ended in late 2011 and follow up support from others is not expected to become effective until 2014. Accordingly, to sustain the momentum established by the USAID programme, MPW will require support to compile asset registers, determine asset condition, estimate maintenance costs, prepare operation and maintenance budgets and to manage the full cycle of O&M activities. Enhancing the capacity of Provincial Departments to participate in budget formulation and of key spending ministries to execute their budgets at the sub-national level is an important focus of the transition period. Without this it could be difficult for GIROA to absorb a greater proportion of aid onbudget and deliver results to the Afghan people. Assuming GIROA does its part to increase its absorptive capacity, this will help mitigate the adverse economic impacts of declining international financial flows aid since the local economic impact of on-budget aid is much higher. The project fits within the objectives of DFID’s Country Operational Plan for Afghanistan, the Helmand Plan and Helmand Infrastructure Strategy and builds on the successful completion of an earlier programme that delivered 46 km of improved roads in central Helmand (RICH). Route 601 was identified by MPW as a high priority and the capacity building component complements the Helmand Provincial Reconstruction Team’s (HPRT’s) Sustaining Economic Infrastructure in Helmand (SEIH) 2012/14 programme. Section A: Detailed Output Scoring Output 1: Route 601 and Bolan bridge rehabilitated to national standards. Output 1 score and performance description: A = Output met expectation, although it was delivered ahead of schedule. Progress against expected results: Output indicator 1.1:kms of asphalt surfaced road completed to national standards – planned 10km by 2013 Output indicator 1.2: Bolan bridge repaired – planned 100% by 2013 Route 601 is a key National highway that connects highway 1 to the provincial capital of Lashkar Gah. Previous upgrading work had been temporary and the road was in poor condition. DFID funded rehabilitation incorporated the existing road sub-base and consisted on an asphalt overlay, upgrading of drainage (including culvert protection measures) and shoulder improvements. The road was completed to national standards on 7th February 2013, almost 14 months ahead of schedule. Upon completion the contract included a six month retention period which ends on 7th August 2013. The STRE and DoPW will conduct a joint inspection of the road at the end of July, any defects found are to be rectified by the contractor at his own expense prior to the final retention payment being made. 2 Despite being completed ahead of schedule there have been some issues with the road building project: The original budget for the capital works (road and bridge) was £15.4m. However the actual cost of the capital works is £5m. The underspend was due to the original cost estimate being made before a full condition assessment of the existing road had been completed, and being based on a full rebuild, which was subsequently found not to be required. In addition, the original estimate was made during a time of overinflated local market construction costs (which were subsequently driven down by the implementation of the No Acceptable Price No Contract (NAPNOC) initiative). The cost estimate for the Bolan Bridge was based on a complete replacement of the western abutment. Subsequent surveys of the bridge abutment and an underwater survey of the piers confirmed that a less costly repair procedure could be adopted without compromising the structural integrity of the bridge. The road has not yet been officially handed over to the Provincial Governors Technical Team (PGTT). This is due to disagreements over the delivery against the design of the project, which are being addressed and will be finalised during the forthcoming joint inspection at the end of July. The Bolan bridge serves as the single river crossing point on the route 601 to the west of Lashkar Gah. Extremely high storm water levels in 2009 damaged the bridge sub structure abutment on the west bank. A number of condition surveys were carried out by British Military Engineers to determine the extent of damage and appropriate measures to repair the bridge were considered. The bridge is heavily trafficked and due to there being no other crossing point the option of a complete closure was not permissible. A cost effective repair solution to the abutment that involved the use of a cement based acrylic resin (Acrylicon(R)) without affecting traffic flow was selected. The repair was effectively carried out by a competitively selected Afghan local contractor and it was the first time this material had been used in Afghanistan. The bridge repairs were completed ahead of schedule in in February 2013. Recommendations: See conclusion section Impact Weighting (%): 65% Revised since last Annual Review? No, this is the first Annual Review. Risk: Medium Revised since last Annual Review? No, this is the first Annual Review. Output 2: Paved Road Maintenance Plans established in Helmand and funded from operating budget. Output 2 score and performance description: C = Output substantially did not meet expectation. Progress against expected results: Output indicator 2.1: Ministry of Public Works (MPW) Approved Helmand Road Maintenance Plans – percentage of annual road maintenance plan (a condition based and prioritised programme of road maintenance works planned for fiscal year implementation) for Helmand delivered - planned 25% by 2013. Output indicator 2.2: Helmand Road condition – percentage of sample provincial road network in good condition – planned 15% by 2013. This project has not delivered against the results included within the logframe. Progress has been slow 3 and there are no road maintenance plans in place for Helmand as yet. UNOPS have now been contracted to complete this work but we have only just received the inception report for this. There are a number of reasons for these delays. It took longer than expected to secure the services of UNOPS due to extensive consultation with MPW, the need to secure approval for a single source tender and the new requirement to complete due diligence assessments on implementation partners. UNOPS have also taken longer to find suitable personnel to staff the project team. Future progress in this area will be dependent on the DoPW in Helmand employing engineers and UNOPS recruiting suitable TA to support these engineers. Both are reliant on each other for this output to be achieved. UNOPS have now identified their project leader for Helmand. At the time of writing this review, the MPW Deputy Minister, Dr Ahmad Shah, has agreed that 2 engineers will be in place in Helmand within 2 weeks. However this has been promised for over 2 months. Recommendations: See conclusion section Impact Weighting (%): 25% Revised since last Annual Review? No, this is the first Annual Review. Risk: Medium Revised since last Annual Review? No, this is the first Annual Review. Output 3: National and Provincial paved road maintenance and management framework established for wider Afghanistan. Output 3 score and performance description: C = Output substantially did not meet expectation. Progress against expected results: Output indicator 3.1: MPW approved provincial road maintenance plans – no. of provinces submitting road maintenance plans to MPW – planned to be 6 by 2013. This project has not delivered against the results include within the logframe. Progress has been slow and there is no maintenance plan in place for this yet. As highlighted above UNOPS have now been contracted to complete this work. However in the early weeks of activity of the TA team’s Chief of Party (CoP) (as well as on occasion when joined by the DFID Infrastructure Advisor) it is apparent that the complexity of multiple, disconnected past and ongoing donor arrangements for projects, technical assistance and capacity building has led to a situation in MPW that is almost overwhelming. This means that the CoP’s effort in getting to grips with this complexity is enormously valuable and a highly important first stage. Recommendations: See conclusion section Impact Weighting (%): 10% Revised since last Annual Review? No, this is the first Annual Review. Risk: Medium Revised since last Annual Review? No, this is the first Annual Review. Section B: Results and Value for Money. 4 1. Progress and results 1.1 Has the logframe been updated since last review? No, this is the first Annual Review. The logframe is no longer fit for purpose and should be reviewed. It is out of date as output one has been achieved ahead of schedule and the timeframes for outputs 2 and 3 have slipped. Outputs two and three also need to be updated in light of UNOPS’ inception plan. An additional output for the second provincial pilot project (covering, most likely, the Salang corridor in Parwan province) should be added. Indicators, milestones and targets at Impact, Outcome and Output levels should be reviewed. Impact weightings should also be revised – the real prize of this project will be to establish the basics of a national road maintenance system and to set the MPW on a better path for more substantial resources to be mobilised through their own revenue generation, capacity (including using the private sector) and partner donors. UNOPS have provided a suggested logframe as part of their inception report. The team should use this as a basis to update the logframe. 1.2 Overall Output Score and Description: B = Outputs moderately did not meet expectation 1.3 Direct feedback from beneficiaries MPW reportedly find the programme support useful – the Minister has welcomed DFID’s project. Partner donors see the project playing an import role in helping MPW to coordinate (i) donors capacity building support to MPW and the sector, (ii) MPW’s efforts on O&M and (iii) activity around Salang. 1.4 Summary of overall progress Progress on the capital works in Helmand delivered by the’s Specialist Team Royal Engineers (STRE) has been excellent. Outputs 2 and 3 have not progressed as originally planned and the original project duration has been extended. Getting the Technical Assistance (TA) resources in place to support delivery of outputs 2 and 3 however has been drawn out for the following reasons which should be recorded. The Terms of Reference (ToR) for the TA were not finalised until 4 months after the formal (DFID) start of the project, at which point (July 2012) the Salang corridor was added as a second pilot project. Time (2 months) was taken to decide that competitive bidding for TA resources would be unlikely to lead to a successful result, leading DFID to negotiate with the UN Office of Project Services (UNOPS), who have good experience of working on the road sector in Afghanistan, to request a proposal against the ToR. Following submission of the UNOPS proposal “Keep Afghans Connected” (KAC), DFID-A was careful to take time to consult extensively with MPW to determine that the proposal met their needs. There was also an additional requirement to complete a due diligence assessment of UNOPS following new central guidance. Three MoUs (MPW / DFID / UNOPS) were signed on 17 January 2013. Only after that point could UNOPS legally advertise and seek candidates for the TA team. Care was taken again, this time by UNOPS, to consult with DFID-A and MPW over the shortlisting and eventual selection of CVs. The UNOPS Chief of Party (CoP) was appointed in May 2013. At the time of this Annual Review, UNOPS are 3-4 weeks away from appointing the various technical Project Leads for Kabul, Helmand and the second pilot province. 1.5 Key challenges There are 4 key challenges. As noted above under Output 2; a key challenge is the lack of capacity in Helmand DoPW, which is of course why this project has been launched. For Output 3, MPW lack an overall picture of the assets under their mandate – much road 5 infrastructure has been rehabilitated and built in Afghanistan off-budget by donors, PRTs and ISAF with inadequate involvement of MPW and its DoPWs. They simply do not know what exists. For Output 3 and the Outcome, MPW’s overall Road Operation and Maintenance Strategy is rudimentary and barely in a form that can be translated into a plan of implementation. For Output 3 and the Outcome, MPW’s capacity to coordinate multiple avenues of assistance into the road sector (financial and TA) is weak. 1.6 Annual Outcome Assessment It is too early to make an assessment of the likelihood of the outcome being achieved. 2. Costs and timescale 2.1 Is the project on-track against financial forecasts: No The original budget was £19.45million. This was split into £15.4m CDEL and £4.05m RDEL which had the following elements. Component Route 601 rehabilitation Bolan bridge repair Maintenance capacity building Evaluation of capacity building Totals F/Y 2012-13 F/Y 2013-14 F/Y 2014/15 4,000,000 9,000,000 1,500,000 200,000 700,000 0 2,300,000 1,700,000 0 0 0 50,000 6,500,000 11,400,000 1,550,000 Total £ 14,500,000 900,000 4,000,000 50,000 19,450,000 To date the project has spent: £4.3m on completing the capital works for the bridge repair and road rehabilitation. There is an outstanding retention payment of £0.7m which will take total costs to £5m. There is therefore a £10.4 m underspend on this element of the project. £588k on the capacity building work and this budget has now been increased to £4.45m. We have signed an MOU with UNOPS for $6.9m (£4.6m at current exchange rates) and the project has been extended to January 2016. Following the inception phase and report of the project UNOPS have identified that they require an additional $6m (£4m at current exchange rates) to enable them to fully complete the project. The project team have identified they do want to provide this additional funding to ensure that the project is successful and delivers its outcomes. The additional proposal (which would make the project budget around £13m) is within the existing budget however this additional funding would come from the RDEL budget and not CDEL (where the previous underspend is). Given the challenges highlighted in section 1.5 the team should justify why the additional funding is needed, why it represents value for money and how it is to be used. Should the team conclude that it does represent value money the appropriate approval should be sought. The team should also adjust the project budget to reflect the new value of the project following this decision. 2.2 Key cost drivers The key cost drivers for the capital element of the project have been security, labour and materials. The key cost drivers for the capacity development element of the project are the costs of technical assistance within the Ministry of Public Works and within the two pilot provinces. 2.3 Is the project on-track against original timescale: No As highlighted above the capital element of the project has been completed ahead of schedule and the capacity development element is behind schedule and the end date of the project has been extended 6 by 10 months. 3. Evidence and Evaluation 3.1 Assess any changes in evidence and implications for the project None. 3.2 Where an evaluation is planned what progress has been made? No evaluation is planned. But the Helmand Monitoring and Evaluation Programme (HMEP) will be used for providing information about peoples’ perceptions of progress in Helmand Note: the detailed understanding of costs of new construction, rehabilitation, upgrading and maintenance will be very informative for DFID’s likely evaluation planned for the forthcoming AITF programme. 4. Risk 4.1 Output Risk Rating: Medium The risk should be left unchanged for now and reviewed following review of the logframe and review of proposals to increase the value of the TA project. 4.2 Assessment of the risk level Within the original business case the risks highlighted focused mainly on the capital element of the project. This element was successfully delivered therefore the team mitigated these risks appropriately. The two risks identified in relation to capacity development are highlighted in the table below. Risk Likelihood Impact Mitigation MPW fails to Medium High - Link start of full mobilisation of TA support to appointment of provide adequate MPW departmental staff staff complement - Phased delivery of TA support linked to delivery of MPW obligations TA consultant Low High - Clear statement of requirement provided in Terms of performance Reference below par - TA international staff screened by DFID and MPW prior to appointment UNOPS have provided a project implementation risk register as part of their inception report. They have identified 12 risks and their intended mitigation measures. These risks cover areas such as poor donor coordination, ownership by MPW, capability of staff, sustainability of capacity building, security and budget procedures. The risk register and mitigating actions appear comprehensive and support the medium rating above. 4.3 Risk of funds not being used as intended An additional measure implemented by the STRE was that of payments to the contractor being made in Afghanis rather than in US dollars. This approach reduced the possibility for missapropriation of funds and reduced the potential for money laundering. The project team completed a due diligence assessment of UNOPS before signing the MOU. The team gave UNOPS a medium risk assessment. The team highlighted a number of recommendations to improve systems processes and procedures. Areas of risk highlighted by the team included limited experience of procuring training and development project and downstream assessment of partners. 7 UNOPS accepted these recommendations and have been reporting regularly back to the team on progress. The team should condtunie to monitor progress against actions. DFID is making payments to UNOPS twice a year, in February and August. The payments in February 2014 and February 2015 will be made on the basis of achieving milestones. 4.4 Climate and Environment Risk The business case climate and environment risk assessment focused mainly on the capital element of the project and highlighted a number of environmental challenges. The business cases stated that an environmental management plan would be prepared as part of the design process for the rehabilitation and highway works. However there is no evidence that this took place. With regards to the technical assistance element the business case stated that: ‘the terms of reference for the MPW technical assistance team would include specific requirements for climate change and environmental matter to be fully addressed when preparing the designs, specifications and conditions of contract for maintenance works’ However there is no mention of this in the inception report from UNOPS. The team need to ensure that this is now included within the project. 5. Value for Money 5.1 Performance on VfM measures There was no specific VfM measure included within the business case. With regards to the capital element the business case stated that journey times will be reduced and security will be improved. However it doesn’t appear that a baseline or any monitoring done after completion to be able to verify if this has been achieved. However given that the road was in such a poor condition previously that vehicles had to negotiate pot holes then it is fair to assume that journey times have improved. On security the new asphalt surface is harder to seed with improvised explosive devices and measures have been taken to restrict access to culverts along the road. 5.2 Commercial Improvement and Value for Money Value for money of the capital projects was ensured through competitive tender. The STRE introduced a No Acceptable Price No Contract (NAPNOC) process that involved a fixed price being presented to contractors to which the contractor’s bids must be below. This innovative process drove overall costs down on capital projects in Helmand. STRE have delegated authroity for DFID infrastructure management and supervison at no cost to the project, representing a considerable saving and ensuring there were no delays for supervision procurement. The final contract cost was £5m which equates to £111,110 per km. This cost is extremely good VfM when compared to other provincial road projects in Helmand, for example (although these projects were of full pavement construction and not just for an asphalt overlay): i) The US Military funded a narrower 23km road at an average cost of £522,788 per km. ii) The UK Conflict Pool funded a 36.4km road in northern Helmand at an average cost of approximately £500,000 per km built to a similar design standard (the higher cost reflects the security premium in northern Helmand compared to central Helmand). iii) DFID funded the Lashkar Gah to Gereshk Road (Phase 1 -11.4km) at an average cost of £414,315 per km (the higher cost reflects a higher design standard). 8 The team decided to complete a single source process with UNOPS for the capacity development of the project. The basis of this was: a) UNOPS are able to utilise UN security and operational infrastructure nationwide, reducing platform costs, increasing freedom of movement and enabling them to provide their own duty of care. b) UNOPS had a proven track record working with MPW (with staff embedded in the Ministry) and on Afghan infrastructure projects. Their proposal was jointly evaluated through a joint DFID MPW panel and was strengthened following this process. The team drove down costs from the initial proposal of $16.9m to $6.8m by driving down staff, communications/IT and support costs. As mentioned above UNOPS have stated they need another $6m to fully deliver the outcomes of the project. The project team should ensure that they fully review these proposals to ensure they deliver value for money before making a recommendation to senior management. 5.3 Role of project partners The main project partners are: STRE - The STRE holds the relevant levels of technical competency, financial delegation and the ability to visit construction sites in hostile locations on behalf of the PRT. The STRE was instrumental in the design, contracting, tendering, delivery and quality assurance of the entire project. The STRE produced the quality assurance plan, carried out site inspections on a regular basis, implemented stage payments in accordance with progress and quality being met. The STRE took material samples of aggregate, asphalt and concrete from the site on a regular basis and had the samples tested in a military laboratory in Camp Bastion. If any sub-standard test results were received then the contractor was required to make good the work before any payment was processed. Eagle International Construction Company – The contractor performed well, the quality was of the expected standard, work was completed ahead of schedule and within budget. MPW – Has overall responsibility for the road infrastructure upon its completion. MPW has been involved with the complete programme, which has also included including the recruitment of individuals. DoPW in Helmand - DoPW were involved in the selection of contractors and quality assurance of work by the means of joint site inspections. DoPW was also used as a point of contact between the local population and the Provincial Governor’s office for any queries that were raised. UNOPS – as highlighted under above the project is behind the original project plan and there has already been slippage in the project proposal from UNOPS (e.g. the inception report has been provided 2 months behind schedule). Now that the inception report has been delivered and UNOPS have provided a work plan the project team must ensure that this is delivered to plan. 5.4 Does the project still represent Value for Money : Yes. The existing elements of the project still offer value for money however the team will have to complete an assessment of the proposed amendment and increased budget. 5.5 If not, what action will you take? N/A 6. Conditionality 6.1 Update on specific conditions NA – not financial aid to a partner government 7. Conclusions and actions The project has delivered on the capital element of the project ahead of schedule but the technical 9 assistance element has shown little progress to date. However UNOPS have now completed their inception report and are starting to get the key personnel in place. The team will have to monitoring the project closely to ensure that the UNOPS workplan is delivered. UNOPS have highlighted that they need an additional $6m to fully deliver this project. This additional money should only be agreed and provided if the team can demonstrate that this is needed and will provide value for money. The key actions arising from the review are as follows: Programme management/delivery: success of the project in Helmand is dependent on the DoPW in Helmand employing engineers and UNOPS recruiting suitable TA to support these engineers. The team should monitor that this is progressing as planned. If these positions are not being filled the viability of the project should be reviewed. They should also ensure that the second pilot already has the technical staff in place in the province to prevent similar delays. Programme management/delivery: now that the inception report has been completed and UNOPS have provided a workplan the programme team need to monitor delivery of this to ensure that there are no further delays. Logframe: The logframe should be reviewed for outputs two and three to reflect the inception report and workplan from UNOPS. An additional output should be added to cover the second pilot project, and the output weightings should be revised and the project risks revisited. Project amendment: The project team should review proposals for extending the project as soon as possible and makes recommendations to senior management. If approved, this will require an amended MOU with UNOPS and MPW. Given the challenges highlighted in section 1.5 the team should justify why additional funding is needed and why it represents value for money. Output risk rating: this should be reviewed following update of the logframe and to take into account any project amendment if this is justified and approved. Monitoring: UNOPS have not yet provided any monitoring reports for the project. The format and regularity of reporting should be agreed as soon as possible. According to the MOU the next payment is due in August and that when requesting payment UNOPS should submit a statement detailing actual expenditure to date and a copy of the latest progress report. Climate and environment. The business case included two actions for incorporating climate and environment considerations. There is no evidence that this has been completed. It is too late for the capital element of the project as it is complete. However the team should ensure that the proposals for technical assistance are implemented. The capital element of the project is completed however there are some lessons which can be learned from this: We should ensure that we have the most accurate information when we make estimate of costs or be clear about cost assumptions. The business case should have been clear what the basis of the costs where and the risk to this given that a review of the road had not been undertaken at the time. The cost and business case should have been adjusted at the earliest opportunity once the actual project cost was obtained. We should ensure to keep the Provincial Governors Technical Team (PGTT)is kept up to date on design plans and changes to these so that it is clear we have delivered against this when it comes to handover. We should ensure that the necessary levels of technical support such as structural engineers and engineer divers are available to conduct the necessary technical assessment at the time of the cost estimate taking place. The business case stated that journey times would be reduced and security would be improved. However a baseline for this was never established and therefore this cannot be measures. Teams should ensure that when statements like these are included in business cases that a means for measurement is determined. It should also be highlighted that delays in implementation of outputs 2 and 3 have been partly due to slippage in finding suitable personnel to positions. This is a common problem across all TA projects within DFIDA. Project teams should be encouraged to be more realistic about this in 10 project planning. 8. Review Process Annual Review ToR approved 3 June 2013. Methodology The review was carried out as a desk review by an internal DFID team (see below) making reference to the project Business Case and logframe, UNOPs reports and MPW documentation. Team Mark Harvey, Senior Infrastructure Adviser, DFID-A Keira Shepperson, Team Leader and Finance Manager, DFID-A Naqibullah Noori, Programme Officer, DFID-A John Bowker, Infrastructure Adviser (Helmand), DFID-A 11