Document of The World Bank Report No: ICR2466 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2850) ON AN IDA GRANT IN THE AMOUNT OF SDR6.7 MILLION (US$l0 MILLION EQUIVALENT) TO THE KINGDOM OF BHUTAN FOR A SECOND RURAL ACCESS PROJECT April 8, 2013 Sustainable Development Unit Bhutan Country Management Unit South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective October 2012) Currency Unit = Nu Nul = US$0.02 US$l = Nu52.74 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank BHU Basic Health Unit CAS Country Assistance Strategy DOR Department of Roads EA Environmental Assessment EFRC Environmental Friendly Road Construction EMP Environmental Management Plan EIRR Economic Internal Rate of Return GDP Gross Domestic Product GNH Gross National Happiness GOI Government of India ICCR Implementation Completion and Results Report IDA International Development Association IUFR Interim Unaudited Financial Report IDD Investigation and Development Division ISR Implementation Status Report KKTYR Khotakpa-Khar-Tsebar-Yurung Road M&E Monitoring and Evaluation MOF Ministry of Finance MOWHS Ministry of Works and Human Settlements MTR Midterm Review NECS National Environmental Commission Secretariat NPV Net Present Value NWF National Work Force OP Operational Policy PAD Project Appraisal Document PCU Project Coordinating Unit PDO Project Development Objective PMU Project Management Unit PPD Policy and Planning Division QA Quality Assurance QAG Quality Assurance Group QALP Quality Assessment of Lending Portfolio 2 QAP Quality Assurance Plan RAP I Rural Access Project RAP II Second Rural Access Project RGOB Royal Government of Bhutan SAF Social Assessment Framework SNV Netherlands Development Organization SQCA Standard & Quality Control Authority Vice President: Isabel Guerrero Country Director: Robert Saum Sector Manager: Karla Gonzalez Carvajal Project Team Leader: A.K. Farhad Ahmed ICR Team Leader: Mesfin W. Jijo 3 BHUTAN Second Rural Access Project CONTENTS DATA SHEET ................................................................................................................5 A. Basic Information ...............................................................................................5 B. Key Dates ............................................................................................................5 C. Ratings Summary ................................................................................................5 D. Sector and Theme Codes ....................................................................................6 E. Bank Staff ............................................................................................................6 F. Results Framework Analysis ...............................................................................6 G. Ratings of Project Performance in ISRs .............................................................9 H. Restructuring (if any) ..........................................................................................9 I. Disbursement Profile .........................................................................................10 1. Project Context, Development Objectives and Design .............................................11 2. Key Factors Affecting Implementation and Outcomes .............................................13 3. Assessment of Outcomes...........................................................................................18 4. Assessment of Risk to Development Outcome .........................................................23 5. Assessment of Bank and Borrower Performance ......................................................23 6. Lessons Learned ........................................................................................................26 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...........27 Annex 1. Project Costs and Financing ...................................................................28 Annex 3. Economic and Financial Analysis ..........................................................30 Annex 4. Bank Lending and Implementation Support/Supervision Processes .....38 Annex 5. Beneficiary Survey Results ....................................................................39 Annex 6. Stakeholder Workshop Report and Results ...........................................51 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..............52 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................65 Annex 9. List of Supporting Documents ...............................................................66 MAP ......................................................................................................................................................... 67 4 DATA SHEET A. Basic Information Bhutan Second Rural Country: Bhutan Project Name: Access Project Project ID: P100332 L/C/TF Number(s): IDA-H2850 ICR Date: 07/09/2012 ICR Type: Core ICR KINGDOM OF Lending Instrument: SIL Borrower: BHUTAN Original Total XDR 6.70M Disbursed Amount: XDR 6.70M Commitment: Revised Amount: XDR 6.70M Environmental Category: B Implementing Agencies: Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 06/15/2006 Effectiveness: 05/16/2007 05/16/2007 Appraisal: 11/20/2006 Restructuring(s): 11/01/2011 Approval: 04/10/2007 Mid-term Review: 03/31/2010 03/02/2010 Closing: 10/10/2012 10/10/2012 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Negligible to Low Bank Performance: Moderately Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Satisfactory Moderately Satisfactory Implementing Satisfactory Quality of Supervision: Agency/Agencies: Overall Bank Moderately Satisfactory Overall Borrower Satisfactory Performance: Performance: 5 C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry Satisfactory No at any time (Yes/No): (QEA): Problem Project at any Quality of Satisfactory No time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 8 8 Roads and highways 92 92 Theme Code (as % of total Bank financing) Administrative and civil service reform 33 33 Rural services and infrastructure 67 67 E. Bank Staff Positions At ICR At Approval Vice President: Isabel Guerrero Praful C. Patel Country Director: Robert Saum Alastair J. McKechnie Sector Manager: Karla Gonzalez Carvajal Guang Zhe Chen Project Team Leader: A.K. Farhad Ahmed Binyam Reja/Isabel Chatterton ICR Team Leader: Mesfin W. Jijo ICR Primary Author: Sati Achath F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objective was for residents of beneficiary Dzongkhags to utilize improved rural transport infrastructure and services. Revised Project Development Objectives (as approved by original approving authority) The objective was not revised. 6 (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Reduction in travel time of beneficiaries to key economic and social centers in Indicator 1 : the nearest town by EOP. Value 1-15.5 hrs or 4-62 km to quantitative or 65% 62% all-season road Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 The final socio-economic impact monitoring study reported 78% reduction Comments achieved. However, the value computed by the ICR team is 62%. (incl. % achievement) Reduction in transportation costs of goods and supplies from/to beneficiary Indicator 2 : villages to/from the nearest town by the end of the project. Unit costs of The project Value human/animal transport: restructuring quantitative or 50% Nu. 0.28-0.42 Per km per dropped this Qualitative) kg indicator Date achieved Nov-2006 30-May-2010 NA This indicator was dropped at restructuring on account of its sensitivity to factors other than access. However, at the end of the project it was estimated that the Comments transport costs have increased considerably since the baseline survey but are (incl. % significantly less than the baseline cost of using pack animals. achievement) Lower basic commodity prices in project villages than in unconnected villages as Indicator 3 : a result of newly constructed roads by the end of the project. Baseline basic The project Value commodity prices are restructuring quantitative or 10% being collected on project dropped this Qualitative) roads. indicator Date achieved Nov-2006 30-May-2010 NA This indicator and its baseline data collection was dropped at restructuring, when it was argued that it was sensitive to externalities. Nevertheless, during the ICR, Comments shop owners confirmed that villages on the RAP - II roads had experienced a (incl. % reduction in prices charged for common consumables so that they cost only 11% achievement) more than prices for comparable goods in nearby towns, which was reported to have been manifold before the project. This is consistent with the findings of the RAP-I evaluation study. Overall beneficiaries' satisfaction with the improved delivery of road Indicator 4: infrastructure. Value quantitative or N/A N/A 93% Qualitative) Date achieved 30-July-2012 7 By the MTR the satisfaction level was 91% increased to 93% by end of the Comments project. The assessment would have given a complete picture of the (incl. % beneficiaries’ perception before and after the intervention, had there been a achievement) baseline beneficiary survey. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Share of rural population with access to an all season road [% beneficiaries from Indicator 1 : Project Area (36 direct beneficiary villages (TBC) to be placed within 2 km or 30 min of walking distance to all-season Value (quantitative 0% 60% 78% or Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 Comments As per results of the final socio-economic impact monitoring study report (May (incl. % 2012) achievement) Indicator 2 : % of target feeder roads constructed. Value (quantitative 0% 100% 100% or Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 Comments (incl. % All the planned three feeder roads constructed. achievement) Indicator 3 : % of target feeder roads improved to all-season standards. Value quantitative or 0% 100% 100% Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 Comments (incl. % All 3 feeder roads improved to all season standard achievement) Indicator 4 : % of target bridges constructed Value quantitative or 0% 100% 100% Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 Comments Out of 8 target bridges 7 constructed. In one case vented causeway has been (incl. % constructed instead of a bridge. achievement) Indicator 5 : % of target feeder roads maintained to all-season standards. Value Restructuring 0% 100% quantitative or process dropped 8 Qualitative) this indicator. However, all handed over roads are now being maintained. Date achieved Nov-2006 30-May-2011 Comments (incl. % achievement) Indicator 6 : All planned training programs are delivered Value To be undertaken in YR1 Complete all Achieved quantitative or training programs Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 Comments The scope of training could have been defined in a better manner stating the (incl. % number of trainees and pre-defined specific training programs. achievement) Indicator 7 : DOR applies EFRC in all road projects regardless their sources of funding. Value 0% EFRC applied in Applied in 5 quantitative or all road projects projects Qualitative) Date achieved Nov-2006 30-May-2011 30-July-2012 Comments EFRC was applied before the project and the baseline value of projects executed (incl. % using ERFC could have been established in a better manner. achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/04/2007 Satisfactory Moderately Satisfactory 0.00 2 10/23/2007 Satisfactory Satisfactory 2.48 3 06/03/2008 Satisfactory Moderately Satisfactory 3.25 4 12/13/2008 Satisfactory Satisfactory 3.25 5 05/16/2009 Satisfactory Satisfactory 4.77 6 08/26/2009 Satisfactory Satisfactory 4.77 7 04/15/2010 Satisfactory Satisfactory 5.69 8 11/10/2010 Satisfactory Satisfactory 8.47 9 06/13/2011 Satisfactory Satisfactory 10.27 10 12/21/2011 Satisfactory Satisfactory 10.27 11 06/26/2012 Satisfactory Satisfactory 10.27 H. Restructuring (if any) Level 2 restructuring was done in November 2011 9 I. Disbursement Profile 10 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Country and Sector Background: After opening up to the outside world in the 1960s, Bhutan had made significant economic progress. As a result of prudent macroeconomic management, and rational exploitation of its hydropower resources, Bhutan had experienced Gross Domestic Product (GDP) growth of 6 percent per annum over the 2002-2006 period. This sustained growth had led to increased GDP per capita from US$470 in 1999 to US$760 in 2004. However, despite the country’s substantial progress and measurable improvement in the population’s well-being, poverty remained acute and was particularly high in remote rural areas where 69 percent of the people lived. Sector Background: Road transport was the dominant transportation mode in Bhutan, having grown substantially since the 1960s. At project preparation, road network consisted of 4,153 km (around 62 percent paved) of roads, more than 4,300km of mule tracks, 242 motorable bridges, and 336 pedestrian suspension bridges. Bhutan’s road density, which was 0.1 km/km and 6 km/1000 inhabitants, was substantially higher than in other developing countries of similar size and population. Rural Accessibility: Rural communities suffered from inadequate accessibility, and were poorly connected to basic social and economic services, which were mostly concentrated in urban centers. About 21 percent of the Bhutanese rural households lived within one to four hours of walking distance from the nearest all-season road, and another 21 percent lived more than four hours away. Thus, many communities remained isolated and dependent on animal and head-load transport. As a result, they had to pay 50-70 times more for transporting their produce to the market in the nearest town than those living in connected areas and using motorized transport. Despite the government’s effort over the last few decades, the improvement in accessibility in Bhutan had remained to be constrained by rough and fragile terrain, and scarce financial resources. Rationale for Bank assistance: The Second Rural Access Project (RAP II) was aligned with the World Bank’s Country Assistance Strategy (CAS) for Bhutan (2006-2009), which was underpinned by three pillars: (i) expanding access to better infrastructure and social services, and connecting communities to markets; (ii) promoting private sector development and employment; and (iii) strengthening management of public resources, and Monitoring & Evaluation (M&E) of development outcomes. In doing so, the project would directly contribute to: (i) infrastructure expansion and access improvement through building new roads and improving the condition of existing roads to connect remote rural communities to economic and social services; (ii) promotion of private sector through outsourcing construction and maintenance contracts; and (iii) environmental conservation through Environmental Friendly Road Construction (EFRC) methods. It would also be an important intervention to consolidate and sustain the institutional development initiatives started under RAP-I and further enhance the newly-created capacity in DOR and its field divisions. 11 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The PDO was for residents of beneficiary Dzongkhags to utilize improved rural transport infrastructure and services. Key Indicators were:  Travel time by targeted beneficiaries to economic and social centers will be reduced by 50 percent  Transportation costs of commodities and supplies will be reduced by 50 percent in project areas  Basic commodity prices in project villages will be 10 percent lower than in unconnected villages as a result of newly constructed roads.  Overall beneficiaries’ satisfaction with the improved delivery of road infrastructure 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The objective was not revised. However, at the time of project restructuring in November 2011, two project outcome indicators were dropped as they were likely to be influenced by external factors such as fuel prices, government regulated mule rates, increase in global food prices, which were beyond the control of the project. The indicators dropped were: (i) reduction in transportation costs of goods and supplies from/to beneficiary villages to/from the nearest town; and (ii) lower basic commodity prices in project villages than in unconnected villages. 1.4 Main Beneficiaries The target beneficiaries were about 12,000 rural residents in several geogs (blocks of villages) of Wangdue, Dagana, and Pemagtsel Dzongkhags, which had the highest demand for access in Bhutan. The project also enhanced the capacity of the local construction industry and the Department of Roads in the Ministry of Works and Human Settlement. 1.5 Original Components (as approved) The project consisted of two components as follows: Component 1: The Road Access (US$8.7 million) included the following: (a) Constructing new feeder roads of approximately 65 km length in total (b) Upgrading about 24 km of existing roads to all-season, feeder road standards (c) Piloting low-cost sealing of feeder roads and performance based maintenance mechanisms using the National Work Force (NWF) and/or community involvement or petty contracting (d) Upgrading eight bridges with a total approximate length of 116 meters. 12 Component 2: The Capacity Development and Implementation Support (US$0.7 million) comprised of the following: (a) Human resource development and training (b) Technical Assistance to pilot performance-based maintenance mechanisms (c) Project implementation support for the Project Coordinating Unit (PCU) in Thimphu and the three Project Management Units (PMUs) at project sites (d) Socio-economic impact monitoring study (e) HIV/AIDS awareness of construction workers through the Nation-wide program run by the Ministry of Health. 1.6 Revised Components The components were not revised. However, scope of Components 1 and 2 were slightly modified as mentioned in Section 1.7. 1.7 Other significant changes Project Restructuring: A level 2 restructuring was done in November 2011 leading to the dropping of two indicators and slightly modify the scope of components while keeping the PDO and the number of components the same. The changes were:  Dropping two outcome indicators: For details see Section 1.3  Change in length of roads for new construction under Component 1: the length of roads estimated at appraisal was eventually increased following detailed design, and 8.2 km of road section was included to the project to pilot low-cost surfacing technique.  Change in road for Otta-Seal pilot: The corridor selected to pilot low cost surfacing (Otta seal) was changed for technical reasons.  Performance Based Maintenance Scheme: a similar scheme had already been launched through the Asian Development Bank (ADB) financing; hence the activity was dropped at mid-term review as redundant. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry Background Analysis: The PAD provided a good analysis of the country and sector background at appraisal; highlighted the challenges of access to essential services in terms of sector, social and related indicators; identified constraints in addressing them including the unique geographic and demographic environment coupled with the financing and execution capacity constraints. The design and implementation of the predecessor project (RAP I) has been reviewed through the ICR where relevant lessons were drawn to inform the design of the repeater project. The analysis guided the design to be simple and realistic, and also provided the knowledge base to align the project with the overall objectives of the RGOB’s Ninth Five-Year Development Plan (2002-2007), which included: (i) improving the quality of life and income, especially of the poor; (ii) ensuring good governance, (iii) promoting private sector growth and employment generation. These objectives were based on the home-grown concept of Gross National 13 Happiness1 (GNH), which stresses maximization of human happiness as its overarching goal. Design and Quality at Entry: As noted above, the design benefitted from the analysis of country and sector context at the time. The design also took into account the realities on the ground and the opportunities available to deliver the project on time and at cost, which the projects successfully achieved. The following design aspects positively contributed to the achievements of project outcomes:  The design was simple and straightforward aimed at addressing accessibility of the otherwise isolated communities in rural areas with relatively low population density and rough and fragile terrain. The project roads were packaged taking into account the rugged terrain, capacity of local contractors, environmental and geological characteristics of the area. This contributed to the timely completion of project activities, which in turn led to the timely time closure of the loan.  RAP-II was the first project in the South Asia region to pilot the use of Country Systems that met the World Bank safeguard requirements, thus it was prepared in accordance with the requirements of the World Bank operational policy (OP/BP 4.00) “Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects� issued in March 2005. This enabled the Bank team to leverage some enhancement to the RGOB’s system to ensure equivalence with the Bank’s safeguard instruments.  The environmental management system used in RAP II was built on the experiences of the predecessor project RAP I, (i) in which basic elements of EFRC was piloted, and (ii) which showed satisfactory performance in implementing the environmental safeguard requirements. As part of the project preparatory activities, an Environmental Assessment (EA) was undertaken with technical and financial assistance from SNV-Bhutan.  Social Assessment Framework (SAF), developed on the basis of consultations with key stakeholders and beneficiary communities, was prepared by the DOR to define the policies, principles and processes for assessing social impacts on people affected by the project.  The piloting of low cost surface sealing technique was an important value addition to minimize gravel usage in Bhutan where sourcing gravel poses a big environmental risk.  The cost effectiveness criteria adopted to prioritize project roads, ensured transparency, equity and value for money. The approach is specifically appropriate to Bhutan where low density, scattered population pattern wouldn’t fit to the conventional cost/benefit and economic analysis models. 1 ‘Gross National Happiness’ (GNH) is the philosophy which forms the cornerstone of Bhutan’s development and which Bhutan is succeeding in implementing. Introduced by the Fourth King of Bhutan in the 1970s, GNH presents an alternative model for development which places equal weight on the social, spiritual, intellectual, cultural and emotional needs of a society as it does on material and economic gain. 14 Adequacy of Government Commitment: at the outset, the government demonstrated a high level of commitment to the objectives of the project. (i) Noting the success in RAP I and the significant unmet needs, the RGOB requested the Bank to finance a follow-on project to the beneficiary dzongkhags of immediate priorities; (ii) maintained even reinforced the PCU and other implementing units from RAP I operation; (iii) decided to roll out EFRC method to other projects regardless of source of financing; (iv) established an independent monitoring body with a focus on the environmental management of the project, comprising of different agencies and; (v) accepted Bank’s advice implemented the enhancement of the Government’s environmental management system to be at par with the Bank. This prompted the Bank to adopt the country’s safeguard management system. Adequacy of Risks and Risk Mitigation Measures: Key risks were identified based on the lesson from RAP I and sector analysis. These were: (i) environmental damage; (ii) geological risk; (iii) weak financial management capacity; and (iv) procurement staff turnover by transfer. Appropriate mitigation measures and monitoring mechanisms were put in place. The residual risks were assumed to be low to medium which were re- assessed and reconfirmed at MTR, while a few more risk areas and mitigation measures were identified and monitored. Adequacy of participatory processes: Rural beneficiaries were consulted not only as part of project planning, but also during implementation. The consultation process helped in creating a sense of ownership among the beneficiaries for the assets created. Further, the government also provided adequate staffing and resources for the implementation. Quality at Entry: A Quality Assessment of Lending Portfolio (QALP-I) was carried out in May 2010 by a Quality Assurance Group (QAG) panel of reviewers for the project. The panel rated the quality of design, strategic relevance and approach, fiduciary safeguards, and the likelihood of achieving DOs as Satisfactory. QAG noted that: (i) Quality of the Results Framework at the design stage was adequate; (ii) Adequate attention was given to technical and economic analyses to justify the project’s interventions. The ICR team however noted that the design could have benefitted from a more thought- out and realistic result framework, which ensures a strong linkages of indicators with the stated PDO and ease data collection and result monitoring . 2.2 Implementation Government’s continued commitment and proactivity: The Government was able to continue with the momentum on RAP I, reinforced the teams and dedicated for RAP II implementation. Necessary training programs were planned on various areas of project implementation and delivered in the first year of implementation. PWD improved key processes which made a difference in project implementation, these were: 15 (a) Quality of Procurement Documents: The DOR prepared procurement documents on a quality-first-time principle which led to a minimal time in securing its own internal approval as well as for Bank’s response. (b) Introduction of the Interim Payment Certificates (IPC) which had to be paid compulsorily every two months. Internal systems had arrangements for clearing contract bills within 30 days. This had greatly improved the cash flow of the contractors resulting in good progress and timely completion of most projects. RGOB was quick to cover the marginal cost increase encountered during implementation, demonstrating a strong commitment to the project. Midterm Review (MTR) and regular implementation support: A joint Midterm Review of the project was conducted in March 2010, which recommended minor (level-2) restructuring. The Bank had provided regular implementation support, through visits from field offices to project sites and implementing entity’s offices. While the restructuring enabled the Borrower and the Bank to focus on improving progress and realism, the Bank support was crucial to direct the client’s attention to issues as they cropped up and shared global experiences. There have been implementation challenges threatening the project outcomes: (i) Capacity constraints of contractors: As the construction industry was fairly new in Bhutan, the project had difficulty in getting local contractors who could meet the financial capacity and turnover requirements set by the project. This situation had led to delays in getting contractors for some civil works. (ii) Delay in securing clearances: In the first year of implementation delays were noticed in issuing forest clearance for crusher site. In addition, contractors were also facing problems in procuring machine made gabion wire mesh from Nepal. (iv) Adverse weather: Incidences of heavy rainfall than anticipated, monsoon damages, landslides, and extreme cold weather had caused delays in project implementation. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E design: The project M&E design could have been refined and be a more useful tool to monitor the project. Four outcomes and seven intermediate outcome indicators were defined. A socioeconomic survey instrument was designed to collect data and compile report before, after and at midterm of the project implementation. The PDO as stated emphasizes the utilization of improved transport infrastructure and services; but the result framework did not include indicators that directly measure the PDO. These indicators could be in the form of increased number of vehicles, increased frequency of trips, etc. The defined indicators however are still proxy to the PDO outcomes. For example the ‘reduction of travel time’ attracts more potential beneficiaries to use the improved services, so does the ‘decrease in transport cost’. The intended PDO outcomes related to utilization were somehow captured either in the socioeconomic report or noted during the ICR mission visit to the project sites. 16 M&E implementation: the M&E framework was implemented to a reasonable extent. The PCU was regularly collecting data according to the indicators developed during project preparation and implementation. These data especially of the outcome indicators were regularly monitored and compared with the target values. The PCU, as part of its regular monitoring, was providing monthly and quarterly progress reports to the Bank. M&E utilization: the framework with its few shortcomings had still been important for project monitoring and decision making. Appropriate data collected by the PCU from monthly and quarterly reports of indicators was evaluated and appropriate actions were taken as implementation progressed. For example, implementation issues at work sites which could not be resolved by PMUs were reported to the PCU, which in turn would take decisions for resolving them, either unilaterally or in consultation with the DOR. In addition, these reports were useful to the Bank for monitoring implementation progress and also for guiding the PCU to take remedial measures on implementation issues. The joint MTR however re-assessed the appropriateness of the outcome indicators and dropped two of them. It was an opportune time to include indicators measuring the use of the built infrastructures and services. 2.4 Safeguard and Fiduciary Compliance Safeguard Compliance: Both social and environmental safeguards have been assessed as satisfactory. Social Safeguards: All actions on social safeguards agreed with the Bank were complied with. It was reported that replacement land of some 80 affected households was handed over as per the RAP in an orderly fashion along with the provision of the R&R assistance grant-which amounts to the value of the 50% of land acquired. The necessary disclosure of RAPs has been done both in-country and the Bank’s infoshop. Environmental Safeguards: EA categorization for this project was B since this project’s civil works were small and would be implemented following EFRC methods, which emphasized phased construction and bioengineering for slope stabilization. EA had been disclosed as per Bank policy. All agreed actions were complied with by the DOR. Fiduciary Compliance: The project complied with fiduciary covenants during implementation. IUFR’s have been submitted timely almost all the time. Internal control arrangements were in place, and adequate financial management, procurement, and disbursement systems were maintained. 2.5 Post-completion Operation/Next Phase (a) Transition arrangements for O&M: (i) the roads constructed under RAP II have already been handed over to the closest DOR regional offices, which are well established and responsible for the Operation and Maintenance (O&M); (ii) Ministry of Finance (MOF) has kept a discipline of appropriate budget allocation to O&M based on a pre-agreed norms and the road categories (see table below). 17 Road type Maintenance type O&M budget (Nu) Dzongkhag/Feeder roads Routine 60,000/km-year Secondary National Highways Routine 80,000/km-year Primary National Highways. Routine 87,000/km-year For all roads Emergency 2 million per division office For all roads Periodic On a need base Source: DOR The budget earmarked for the Fiscal Year 2013-14 (July 2013 to June 2014) by the DOR’s respective road divisions is as indicated below: (i) Jangchucholing- Trashidingkha road Nu 1,062,845; (ii) Drujeygang-Balung Road: Nu 1,526,850; and (iii) Khotokpa-Khar-Tsebar- Yorung Road: Nu 2,165, 850 respectively. The ICR site visit mission noted routine maintenance was already taking place on the project roads. (b) Follow-on project: Since recently the RGOB decided to switch the Bank’s support entirely to Development Policy Lending , no specific investment lending for rural roads is envisioned. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Relevance of Objective: The background analysis identified that the potential beneficiary dzongkhags and geogs were up to 15 hours away from all-season roads, deprived of access to basic economic and social services. Provision of the much needed access was therefore the top priority of the then Five Year Government’s Plan as was for the Bank’s CPS2. This was also the central focus around which the PDO was defined which made it highly relevant at its preparation. The current 10th Five Year Plan and the 11th Five Year Plan under preparation are both providing emphasis on poverty alleviation, which also concurs the PDO still remains relevant. Further, the PDO was also linked directly to GNH targets. Relevance of design and implementation: The core design of the project and implementation arrangements remain highly relevant. For example, the institutional arrangements; social and environment safeguards arrangements; funds flow and; disbursement methods have been appropriate for the operation and did not need restructuring. Likewise, implementation process of RAP II had also turned out to be effective and efficient for achieving the project objective. M&E and reporting could have been improved by defining the indicators more appropriately and establishing baseline values earlier. Rating: Considering these factors, the relevance of objectives, design, and implementation is rated as Significant. 2 Report No:56577-BT; dated October 27, 2010 18 3.2 Achievement of Project Development Objectives: Rating: Satisfactory The project has been successful in achieving the targeted outcomes even surpassed them. It also generated some unintended positive outcomes to the beneficiaries. The four indicators identified in the PAD appear more proxy to the intended outcome- “utilization� of the improved services. The achievement of the outcomes has also been demonstrated by a number of other indicators not included in the PAD, which the ICR documented them below. Thus, considering the project’s achievements on the above three aspects, the outcome is rated Satisfactory. (i) PDO indicators: The following is an account of the achievement of the PDO indicators identified in the PAD. Outcome Indicator 1: Changes in Travel Time. Table 5 in Annex 3 suggest that there has been a 623% reduction in travel time to socio economic facilities and some 62% of communities are now within 30 minutes walking distance of an all season road. Outcome Indicator 2: Changes in Transportation Costs. Site visit confirmed that beneficiaries along the Drujeygang- Balung road had seen significant shift from the use of mules and head loading to motorized transport, mainly in the form of single and double cabin pickups capable of carrying up two and one ton loads respectively. The transport costs have increased considerably since the baseline survey but are significantly less than the baseline cost of using pack animals (See Table 6 in Annex 3). Outcome Indicator 3: Changes in Beneficiary Satisfaction. 91% of those interviewed at the mid-term stage were satisfied with the road and this increased to 93% at the completion stage. In both surveys, some 80% of respondents recognized the reductions in travel time brought about by the improved roads, with 45% reporting a substantial reduction in travel time. Similarly, some 85% of road users rated improved safety as the most important 3 The socio-economic survey reports 78%, but the ICR economic analysis recomputed it ot be 62% 19 benefit brought about by the improved road. Outcome Indicator 4: Changes in the Price of Commodities. Site visit confirmed that the RAP - II roads had the effect of narrowing price differentials for common commodities. It is reported by key informants that the price that farmers received in the last season had exceeded all expectations and was approximately 30 Nu per kilogram or 5 Nu per piece, some ten times the price reported in the Appraisal Document. Traders have started to use the improved roads to gain access to farmers who prefer to sell at the “farm gate�. (ii) Other Indicators. The following is an account of the achievement of the intended outcomes as demonstrated through indicators not included in the design. Increased frequency of trips: End of the project (2012) Socio-Economic Impact Monitoring Survey showed that the number of people making 8 to 10 trips and more than 10 trips in a month substantially increased between the midterm survey and the Final survey indicated a higher use rate by the respondents as the roads have opened up the much sought after service centers (health, education, communication, shopping, social occasions etc.) Increased motorized traffic: a moving observer traffic count undertaken during the site visit for economic analysis showed that about 40 to 50 motorized vehicles are using the improved Drujeygang - Balung road on a daily basis. The majority of these vehicles were privately owned, with some 30 to 40 vehicles reportedly purchased by the residents of Tshangkha since the road was completed in 2011. Increased production of cash crops: It has been reported that farmers have started increasing the production of cash crops in response to better marketing opportunities because of the utilization of new rural roads. For example, it was estimated that the acreage under orange trees has increased by about 10% since the completion of the road. Increased income from agriculture produces: Compared with the baseline data, the household ex-post income from agriculture produces has increased by 206% and livestock products by 78%. Reliable supply lines for emergency relief operations: the project roads are acting as the supply lines even during the severe winter months there by ensuring accessibility to government agencies to maintain supply of essential food items. Alternate sources of income from taxis and other commercial vehicles: The emergence of the new roads shifted the dominance of the non-motorized mode of transport to motorized transport. Taxis and other commercial vehicles have started to ply on these roads providing transport based alternate sources of income to the communities and a turnaround in the earnings from transport sector has been observed in the Final Survey results. 20 Increased land prices: The project also resulted in increased land prices in the project area. When compared with the baseline figures, in some cases there has been a fourfold increase in land prices. (iii) Innovative concepts implemented by the project. Use of Bhutan's Country System for environmental management: RAP II embodied Bhutan’s Environmental and Social Safeguard management system, which allows the DOR to further test and consolidate the system for a better roll out across the nation. Technical Audit: The project conducted bi-annual Technical Audits through the Investigation and Development Division (IDD) in-house as well as a third party audit by Standard and Quality Control Authority (SQCA) to ensure quality control and transparency. Quality Assurance: The project has helped the DOR in introducing a system of Quality Control during the road construction in Bhutan. Inspection formats (Request For Inspection, Non Compliance Report etc), field QC test formats, list of basic field test with the test frequencies, procedure for Job mix formula and work methodology for base course works were prepared and distributed to all the PMUs. EFRC: Even though the concept of EFRC was introduced in DOR in the year 2000 through the Rural Access Project I, RAP II has further strengthened the EFRC capacities of DOR/contractors through trainings, on control blasting and bio-engineering and implementation of EMP. Rating: In light of the project’s many successful achievements as described above, the outcome is rated as Satisfactory. 3.3 Efficiency There were no project time and cost over runs. The road construction component was completed in May 2012 some five months ahead of the project completion date of October 2012. The project achieved its physical targets of constructing some 67 km of new roads and upgrading some 23km of existing road and did so within the overall project budget of US$8.7 million dollars. The ex-post economic evaluation has shown a robust return on the investment made. All the road construction and upgrading contracts were completed and the targets were achieved. RAP-II had the following approximate targets: 65km new road construction and 24km road upgrading. The achievements are: 66.93km of new roads constructed and 23.34km of roads upgraded. Also the project constructed 15.2km of Otta-seal roads. These achievements have significantly benefitted the people living in the three Dzongkhags of Wangdi, Dagana and Pemagatshel. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 21 The PDO remains relevant all along, timely and appropriate to the current needs of Bhutan’s infrastructure sector. The targets for outcome and output indicators have been significantly achieved in a timely manner. The design of the project proved to be efficient in (i) completing project activities within almost the planned cost and ahead of the intended time; and (ii) implementing the design alternative which resulted in a robust ex- post economic return EIRR. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Poverty Impacts: In the short-term, the project had provided employment opportunities to the locals, which directly contributed to income generation and livelihood improvement of the local people in the project areas. In the long term, driven by increased demand for their produce which in turn is triggered by improved transport access, farmers are now receiving higher prices on their commodities. Farmers are reported to claim “fair� negotiated price for their crops by using mobile phones to check prices in nearby towns. Further, farmers are increasing the production of the cash crops in response to better marketing opportunities. The periodic monitoring of socioeconomic impacts carried out showed that the project has brought in multiple economic gains for the beneficiaries and thereby significantly contributed to reduce poverty between mid- term and end-project. Gender Aspects: The reduction in travel time significantly reduced the multi-task burden of women, the opportunity cost of their time and dependence on men and thus increased their productivity, mobility choices and access to health and education services. With improved transportation facilities resulting from new roads, women are able to travel to nearby towns in vehicles, sell their produce, and earn higher incomes. Women’s increased income reduced their vulnerability. As new schools and hostels for students have been constructed in the project areas, more girls are now attending schools. Social development: Under the project, awareness generation programs on HIV/AIDS were carried out on RAP roads. Information was disseminated through pamphlets; and posters were displayed in the camps for all contracts under RAP II. Better transportation facilities improved communication among different communities and enabled them to mingle with each other more frequently. Improved social interaction resulted in boosting the confidence level of people living in remote areas. Ambulance services are now accessible to remote areas are easily for emergency medical treatment at the nearest Basic Health Units (BHUs)/hospitals. (b) Institutional Change/Strengthening The project resulted in a substantial institutional development impact as demonstrated by the following: Impact on social safeguards management: The overall social safeguards management improved with the help of the project. The project brought about awareness on social safeguards, like management of social issues at the field, consultative procedures, 22 grievance redressal mechanism, complaints register, capacity building in preparation and implementation of Resettlement Action Plans, social safeguards trainings and workshops. Capacity building in the DOR: Capacity of DOR staff has improved significantly because of various training programs. The field staff were involved in community consultations during the preparation stage and that helped them to conduct consultations without any external help during the implementation stage. Use of Bhutan's Country System for environmental management; Quality Assurance; and Technical Audit (details are in Section 3.2) (c) Other Unintended Outcomes and Impacts (positive or negative)  Because of increased awareness on EFRC applications, capacity level of the public on bioengineering techniques has improved for preventing and mitigating landslides.  RAP II roads helped in partly fulfilling the government manifesto by connecting four Gewog Centers to motorable roads. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops See Annex 5. 4. Assessment of Risk to Development Outcome Ratings: Negligible to Low The risk to the development outcomes to be sustained is low. The outcomes started to realize even at midterm of implementation evidenced by some of the indicators like increased trip frequency. Government demonstrated its commitment to O&M through the well-established maintenance units and a good budget discipline. However complementary investments in transport services, health and market centers and other rural infrastructure will be important to fully rip the benefits of improved access. The project roads will continue to remain as the single mode of transport infrastructure for rural communities for a foreseeable future. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management. Two alternatives were considered for the project design. In addition, risk factors and lessons drawn from RAP-I were considered and incorporated into the project design. 23 The repeater project instrument was used to streamline and accelerate project processing. The project was prepared within nine months (from Project Concept Note review to Board approval). Project design and preparation benefited from a strong task team and peer review comments, especially on the social aspects. Further, there were an adequate number of specialists who provided the technical skill mix necessary to address sector concerns and a good project design. The Bank contributed in introducing appropriate field/material tests to suit the local resources and technical audit by a third party to ensure the quality, modification of base course specification, piloting of low cost pavement technology and performance based maintenance contracts with NWF. The knowledge and experience of the Bank staff in the region has helped technology transfers incurring substantial improvement in the quality of roads in this project. To the above extent, the Bank performance was satisfactory. On the other hand, the design could have a much robust and realistic M&E framework. While the four indicators are relevant to the PDO, better indicators could have been defined to directly measure the emphasized outcome - “to utilize improved infrastructure and services�. In addition:  Baseline values were not available for some indicators, or not properly collected and established for some others.  The two outcome indicators were dropped as they were likely to be influenced by factors other than improved access. This could have been foreseen at appraisal.  Performance Based Maintenance Scheme was dropped from the project not to duplicate with another pilot financed by ADB using NWF. A scheme that would be implemented through private contractors could have been designed on other corridors. Taking these factors into account, the overall Bank performance in ensuring Quality at Entry is rated Moderately Satisfactory. (b) Quality of Supervision Rating: Moderately Satisfactory. QALP-I carried out in May 2010 by the QAG panel supervision inputs and processes as Satisfactory. Candor and realism of ISRs, and focus on development effectiveness were rated moderately satisfactory/likely. According to the ICR team, the Bank's performance during the implementation of the project was moderately satisfactory. Sufficient budget and staff resources were allocated, and the project was adequately supervised, and closely monitored. The task team prepared Aide-Memoires regularly and alerted the government and the DOR to problems with project execution and facilitated remedies in a timely manner, in conformity with Bank procedures. The Implementation Status Reports (ISRs) realistically rated the performance of the project both in terms of achievement of development objectives and project implementation. The task team monitored safeguard and fiduciary compliances, and carried out MTR in March 2010. 24 Bank’s procurement and financial management staff worked with the PCU staff to explain the rules and procedures to be applied during project implementation, with regard to procurement of goods and works, and selection of consultants, accounts and audits, based on the Grant Agreement. The Bank team however missed the opportunity at the MTR and thereafter to make good the shortcomings of the M&E framework. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory. Based on the Bank performance during lending phase and supervision as discussed above, overall Bank Performance is rated Moderately Satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory. As mentioned in Section 2.1, the government had shown its commitment to the PDO at the time of project preparation. Further, the 20-year Road Master Plan of RGOB facilitated selection of priority feeder roads and it contributed to ownership. The government consistently maintained its commitment throughout the implementation. For example, the government ownership in addressing environmental and social aspects (including safeguards) was very receptive to the Bank team’s constructive suggestions and advices. The government officials worked closely with the Bank's project team on a continuous basis, and cooperated fully with the task team. The government officials were very responsive in taking corrective implementation measures, and were effective in dealing with the operational issues. Appropriate levels of review and approval were usually in place; financial accountability and follow-up was observed, and expenditures were duly authorized before they were incurred; and documentation was maintained properly for periodic review. (b) Implementing Agency or Agencies Performance Rating: Satisfactory. DOR Technical & quality assurance: DOR had an established system for quality assurance. Two types of audits were conducted to ensure quality and transparency of road works of RAP II roads: (i) Bi-annual Technical Audits through the IDD; (ii) a third party audit by SQCA. The roads were under the intense supervision of the PMUs that were set up at road sites. The PCU, the main apex body for the project implementation and coordination, was strong and proactive in carrying out all aspects of project management, such as financial management, procurement arrangements, reporting activities, and disbursements: 25 Financial management: The Financial Management performance of the project remained satisfactory throughout the project term. To the extent possible, financial management and disbursement arrangements used the country government systems. As the country systems continued to be strengthened (either through Bank support or otherwise), the FM capacity in the projects also improved. The project activities were budgeted within the overall budget of RGOB. The submission of the quarterly Interim Unaudited Financial Reports (IUFRs) was mostly on time. Good FM staffing at PCU also made a big difference to the FM performance of the project. Procurement: The procurement performance was satisfactory. Apart from the initial delays in preparation of bidding documents and noncompliance with the Bank’s no objection procedures, there were no problems with the procurement process leading to contract awards. Social & Environmental Safeguards: Safeguards issues of the roads were addressed as per agreement with the Bank. Reporting Arrangements: The PCU submitted all required quarterly and annual reports in a timely manner. The status of performance indicators were incorporated in all progress reports and served as valuable input to Bank supervision mission reports. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory. In light of the Government and DOR performance as discussed above, the overall performance of the Borrower is rated satisfactory. 6. Lessons Learned Design of appropriate M&E: it is prudent to ensure a strong linkage between intended outcomes and indicators. Indicators that are likely to be affected by externalities should be avoided, or if feasible, a methodology such as panel survey that filters the effect of externalities should be designed. Once defined at appraisal, indicators should be periodically be assessed for their continued relevance with the PDO; and use opportunities such as restructuring to correct any misalignment. At appraisal ensure appropriate mechanism is in place for baseline data collection. Independent Monitoring: in a global biodiversity ‘hotspot’ like Bhutan, environmental issues are given at most attention. The independent monitoring body comprising of different agencies proved to be exemplary in achieving the required level of environmental compliance during project implementation. This practice should be streamlined in all PWD’s operations. Documenting specific experiences: while the EFRC framework is the best response to the environmental concerns in road construction in Bhutan, some of the specifics guidelines need to be tailored to local situations. Efforts should be taken to document 26 the lessons learned in different geographic, geologic and climatic locations while applying the EFRC framework. For example, trench barriers are found effective in controlling spoil spill over in certain situations compared to other methods, cutting in steep slopes, water management, etc. Experiences such as these need to be used for future works, discussed and used for revising EFRC guidelines and specifications. Economic Evaluation: in a situation where low density populations live in mountainous terrain, the construction costs are high and economic benefits are low. This undermines the application of conventional cost benefit analysis, which focuses on the savings accruing to the vehicles using the roads, or the effects of transport cost reductions on agricultural producers living along the road. Cost effectiveness criteria as a road planning tool is therefore a pragmatic and acceptable approach for ranking or prioritizing roads. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Borrower reviewed and has No comment on the draft ICR (b) Cofinanciers N/A (c) Other partners and stakeholders N/A 27 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Road Access Component 8.68 10.84 92.00% Institutional Development & Implementation Support 0.69 0.92 8.00% component Total Baseline Cost 9.37 11.76 100% Physical Contingencies 0.43 0.00 0.00 Unallocated 0.20 0.00 0.00 Total Project Costs 10.00 11.76 Project Preparation Fund 0.00 0.00 0.00 Front-end fee IBRD 0.00 0.00 0.00 Total Financing Required 10.00 11.76 100.00% (b) Financing Appraisal Actual/Late Type of Estimate st Estimate Percentage Source of Funds Cofinancing (USD (USD of Appraisal millions) millions) RGOB 0.00 1.50 13% International Development 10.00 10.26 87% Association (IDA) 28 Annex 2. Outputs by Component Component 1: Road Access Construction & Upgrading of Feeder Roads: RAP-II has following achievements against the approximate targets: Sub-component Approx. Target Achievement Road construction 65km 66.93km4 Road Upgrading 24km 23.34km Piloting of low-cost sealing Not applicable 15.2km Construction of bridges 8 numbers; span116m 7 numbers; span 97m The civil works new road construction of 66.93 km as against target of 65km and road improvement of 23.34km against target of 24.34km has been completed. This has immensely benefitted the rural people of the three Dzongkhags of Wangdi, Dagana and Pemagatshel. Piloting of low cost sealing was done successfully in Drametse 7km and Bajo Shengana 8.2km. Performance Based Maintenance Scheme and maintenance contracting is on- going in DOR. New bailey bridges and RCC bridges, a total of 102.768 m was constructed against a target of 116m. Rating: Satisfactory Component 2: Capacity Development and Institutional Support All the human resource development and training activities have been completed. Procurement of vehicles and equipment has also been completed. Socio-economic impact monitoring study has been completed. The following table summarizes this component’s achievements. Sub-component Achievement Human resource development and 6 planned activities completed successfully training Technical assistance to pilot DOR has completed a study in Sept, 2009, report performance-based maintenance produced and actions taken as per the study mechanism recommendations. Project implementation support 10 planned activities completed successfully socio-economic monitoring study Study completed and the final report submitted Rating: Satisfactory 4 Excluding the Otta-seal work on Bajo-Shengana Road (3.40-11.60km) and Drametse Feeder Road. 29 Annex 3. Economic and Financial Analysis (including assumptions in the analysis) A Introduction The RAP- II project was designed to build on the success of RAP – I, through continued International Development Association (IDA) support to the Department of Roads in the Ministry of Works and Human Settlement. This second RAP had two main components. The first implementation component concerned the construction and improvement of some 90 5 kilometres of high priority feeder road in Dagana, Pemagtsel and Wangdue Dzongkhags. The three Dzongkhags had been identified as some of the least accessible in the country and RAP- II was expected to deliver improved rural transport infrastructure and services to some 12,000 beneficiaries, living in these Dzongkhags as its development objective. Four outcome indicators were identified as suitable for monitoring the achievement of this development objective:- (i) travel time by targeted beneficiaries to economic and social centres will be reduced by 50%; (ii) transportation costs of commodities and supplies will be reduced by 50% in project areas; (iii)overall beneficiaries’ satisfaction with the improved delivery of road infrastructure; and (iv) basic commodity prices in project villages will be 10% lower than in unconnected villages. The second capacity building component focused on the consolidation of the institutional changes achieved by RAP- I by strengthening the ability of the Department of Roads (DOR) to plan, develop and maintain its network of feeder roads. The selection of the three priority roads and the impact of the resultant road improvements, which formed the implementation component of RAP – II, are assessed below: B The Use of Cost Effectiveness to Prioritize the RAP – II Road Construction Program The identification and prioritization of the three Dzongkhag roads for construction involved the use of priority rankings outlined in the Royal Government of Bhutan’s Road Sector Master Plan (RSMP) in Table 1: 5 This total included some 25 kilometres of existing road for improvement in addition to the proposed 65 kilometres of newly constructed roads. 30 Table 1. RGOB Feeder Road Priority Rankings Priority Ranking Range of cphh (Nu.) million A < 0.5 B 0.51 – 0.99 C 1.0 – 1.49 D > 1.5 These rankings were developed from RAP- I data and used feeder road construction costs per household beneficiary (cphh), as a measure of the cost-effectiveness of the investment. The three roads selected for improvement were all considered to be Priority A roads and were subject to further economic analysis which suggested likely economic rates of return of at least 12%. Table 2 summarizes these thresholds for RAP - I, the RAP - II Appraisal and Completion by adjusting RAP- I 1999 prices to 2005 (RAP- II Appraisal) and to 2011 for this Implementation Completion Report (ICR). Table 2. Cost Effectiveness Thresholds EIRR Investment per beneficiary, USD/per person: threshold in US$ Completion of RAP - RAP - I RAP - II Appraisal II 10% 650 797 1,144 12% 560 687 986 15% 450 552 792 NB The Adjustments to the Threshold values for 2011 used the Consumer Price Inflation data derived from World Bank and IMF Economic and Financial Indicator data. Tables 3 and 4 summarize the results of the cost effectiveness analysis at Appraisal and Completion of RAP – II, the latter using actual contract costs and the household data from the Socio-economic monitoring reports. Disappointingly, there is a mismatch between what was predicted at appraisal (Table 3), from that achieved after implementation (Table 4). This largely reflects the small number of beneficiaries and high construction costs of the Jangchucholing - Tashidingka road in Wangdue Dzongkhag. The interaction of these cost benefit parameters reduced its estimated economic rate of return (EIRR) from more than 12% to less than 10%. In contrast, the other two roads are significantly more cost effective with estimated EIRR’s in excess of 12% in the case of the Khar-Tsebar-Yurung road and 15% for the Drujeygang - Balung road. Table 3. Cost Effectiveness Analysis of the Proposed New Roads at Appraisal Dzongkhag Road Total Length Estimated Investment Investment Beneficiaries (km) cost (US$ per km, per (residents million) US$ per beneficiary +10% visitors) km US$ per person WANGDUE Jangchucholing- 3,284 13.7 2.0 144,949 603 31 Tashidingka DAGANA Drujeygang-Balung 4,008 22 2.5 113,182 621 PEMAGTSE Khar-Tsebar- Yurung 4,895 29 3.3 113,793 674 L Total/Average 12,187 65 7.8 120,167 638 Table 4. Cost Effectiveness Analysis of the Newly Constructed Roads Investment Total Investment Estimated per Beneficiaries Length per km, Dzongkhag Road cost beneficiary (residents (km) US$ per (US$million) US$ per +10% visitors) km person Jangchucholing- WANGDUE 1,365 11.83 1,656,682 140,041 1,213 Tashidingka DAGANA Drujeygang-Balung 4,114 26.10 3,186,392 122,084 774 Khar-Tsebar- PEMAGTSEL 4,834 29.01 4,041,495 139,314 836 Yurung Total/Average 10,313 66.94 8,884,569 132,724 861 Further investigation of the Jangchucholing - Tashidingka road indicates that it is classed as a Priority B in the RSMP and as such should not have been selected for improvement by RAP - II. Indeed, the Appraisal indicates that its inclusion in RAP - II should be confirmed by the baseline socio economic study (Table 1 of the Appraisal Report). There is no evidence that this confirmation was undertaken and it is likely that the inclusion of the Jangchucholing - Tashidingka road represents a planning failure and a misallocation of scarce investment resources in economic terms. C The Development Impact of the Completed Roads This section addresses the achievement of the RAP - II Development Objective and Outcome Indicators. Development Objective: Improved Transport Services The Development Objective of RAP - II of improved rural transport infrastructure has been achieved. Moreover, this achievement is being sustained by the active maintenance inputs of the DOR Regional Office, as observed during the site visit. What is less clear is the evidence for improved transport services since neither the project, nor the socio economic monitoring consultants, appear to have collected traffic data that might confirm the anticipated improvement in transport services. The latter normally involves increases in speed, reliability and safety along with reductions in the cost of travel and transport, as human and animal porterage is replaced by motorized transport modes. The low rural population densities that characterize Bhutan means that there is limited demand for regular transport services. It is therefore not surprising that the 2011 Annual Report of the Bhutan Road Safety and Transport Authority indicates that no transport operators have registered with the project Dzongkhag authorities to deliver regular transport services along the new roads. 32 Nevertheless, a moving observer traffic count undertaken during the site visit suggests that some 3 to 4 6 motorized vehicles per hour are using the improved Drujeygang - Balung road. The majority of these vehicles were privately owned, with some 30 to 40 vehicles reportedly purchased by the residents of Tshangkha since the road was completed in 2011. Half of these vehicles were motorcycles but a significant number of households had bought pickups and small mini buses. None of these vehicles were said to provide a regular transport service and most were used on an ad hoc basis as personal transport. In addition, vehicles were being hired out to neighbors and friends for the transport of goods and produce, as well as travel outside the gewong. Outcome Indicator 1: Changes in Travel Time. The MTR recommended the use of two travel time indicators:- a) The first was a 50% reduction in the travel time taken for beneficiaries to walk to key economic and social centers in the nearest town; b) The second was to improve the access of 60% of project beneficiaries so that they were within 30 minutes (i.e. 2 kms) walking distance of an all-season road. The Final Socio Economic Impact Monitoring Study addressed these indicators and Section 5.8 of its Report states that there had been a 78% reduction in travel time spent walking to key economic and social facilities, with some 80% of beneficiaries are now living within 30 minutes walking time of the completed road. These statements are not well supported by survey data, which necessitated the reworking of the raw data. Table 5 summarizes this reworked data in a before and after road improvement format that might have been adopted by the monitoring consultants. Table 5. Hours Spent Walking to Socio Economic Facilities and the Road Head Before and After Road Construction Dzongkhag Road Average Travel Time to Average Travel Time to MTR - Final - Facilities (Hours) Before and Road Head (Hours) Before Before After After Road Improvement and After Road Improvement Before After % Before After % %<30 %<30 Change Change mins mins WANGDU Jangchucholing- 3.90 1.26 68% 2.77 0.58 79% 33% 67% E Tashidingka DAGANA Drujeygang- 3.26 1.18 64% 1.03 0.69 33% 29% 57% Balung PEMAGTS Khar-Tsebar- 1.58 1.02 35% 0.69 0.29 58% 67% 67% EL Yurung Overall Average 3.05 1.17 62% 1.23 0.56 55% 38% 62% 6 This suggests that some 40 to 50 motorised vehicles are using this road on a daily basis. 33 Source: Data from the Project Mid-Term and Final Socio Economic Monitoring Reports is used to represent before and after travel time data. The above averages are based on time values taken for each surveyed settlement or village (rather than households) and there are a number of unexplained anomalies in the data e.g. travel times increase for some villages on the Khar-Tsebar-Yurung road. Nevertheless, the table does suggest that both indicators have been achieved i.e. there has been a 62% reduction in travel time to socio economic facilities and some 62% of communities are now within 30 minutes walking distance of an all season road7. Outcome Indicator 2: Changes in Transportation Costs. The Appraisal Report indicated that road improvements would bring about a reduction in transportation costs, which in turn would have a direct bearing on the price of commodities bought and sold in the beneficiary communities. Unfortunately, the Mid Term Review recommended that this indicator should be dropped from the socio economic monitoring of the project outcomes. Nevertheless, the site visit confirmed that beneficiaries along the Drujeygang-Balung road had seen significant shift from the use of mules and head loading to motorized transport, mainly in the form of single and double cabin pickups capable of carrying up two and one tonne loads respectively. The transport costs have increased considerable since the baseline survey but are significantly less that the baseline cost of using pack animals8 (Table 6). Table 6. Transportation Costs Gewog Transport cost/km/kg, Nu Mule Truck Tsangkah (Baseline Survey) 0.28 0.006 Tsangkah (Completion) Rarely used 0.035 Source: Kyingkhor Consultancy Services, RAP – II Baseline Survey, May 2006. Site visit November 2012 Outcome Indicator 3: Changes in Beneficiary Satisfaction. A road user satisfaction survey was undertaken by the socio economic monitoring consultants at the mid-term and completion stage of the project roads. It is not clear if the two studies adopted a similar methodology to identify and sample road users but both reports signify very high levels of user satisfaction i.e. 91% of those interviewed at the mid-term stage were satisfied with the road and this increased to 93% at the completion stage. In both surveys, some 80% of respondents recognized the reductions in travel time brought about by the improved roads, with 45% reporting a substantial reduction in travel time. Similarly, some 85% of road users rated improved safety as the most important benefit brought about by the improved road. 7 These averages are crude averages and are not weighted by village populations. Similarly, there is no guarantee that the village centre on one survey matches that of the second. 8 It was not possible to get reliable pack animal transport costs during the site visit. 34 Outcome Indicator 4: Changes in the Price of Commodities. The findings of the RAP - I socio-economic impact study suggested that one of benefits of road improvements was a reduction in the prices charged for common consumables in beneficiary villages so that they cost only 10% more than in adjacent towns. Unfortunately, the Mid Term Review recommended that this indicator should be dropped from the socio economic monitoring of the project outcomes. The site visit confirmed that the RAP - II roads had a similar effect of narrowing price differentials for common commodities (Table 7). Table 7. Price of Commodities in Drujigang Commodities Unit Price in Price in Difference % Change Town Village in (Sunkosh) (Tshangkha) Price Rice Kg 22 22 0 0% Cooking oil Litre 95 100 5 5% Sugar Kg 45 50 5 11% Salt Kg 10 12 2 20% Tea leaves Kg 240 250 10 4% Dry chilli Kg 135 150 15 11% Green chilli Kg 50 80 30 60% Soap Kg 10 15 5 50% Torch cell Pairs 17.5 17.5 0 0% Noodles piece 12 15 3 25% Potato Kg 30 25 -5 -17% Overall 666.5 736.5 70 11% Source: Site visit 2012 The site visit also afforded an opportunity to assess the impact of road improvements on the production and marketing of cash crops, notably oranges in Tshankha Gewog in Dagana. It is reported by key informants that the price that farmers received in the last season had exceeded all expectations and was approximately 30 Nu per kilogram or 5 Nu per piece, some ten times the price reported in the Appraisal Document. More importantly, the method of marketing oranges had changed. Traders have started to use the improved roads to gain access to farmers who prefer to sell at the “farm gate�. This preferred method of marketing passes the risk of harvesting, transport and crop disposal onto the trader, who negotiates the purchase of a crop as it stands in the field or orchard. Farmers were also reported to be ensuring that they were able to negotiate a “fair� price for their crop by using mobile phones to ascertain buying and selling prices in nearby border towns. Mobile phone use was also reported for those producing perishables like butter and cheese. These producers would only prepare their butter and cheese in response to a firm order at an agreed price from a nearby trader in an adjacent town. They would then arrange with a transporter to carry the produce to the buyer on an agreed date. It was also reported that farmers were increasing the production of these cash crops in response to these marketing opportunities. It was estimated that the acreage under orange trees had increased by about 10% since the completion of the road and land prices had increased in response to this commercialization process. D Lessons Learned 35 There are a number of lessons learned from this economic and financial analysis of RAP - II. Poor Coordination between Project and National Planning Feeder road construction in Bhutan is challenging because of low population densities and mountainous terrain. This means that construction costs are high and economic benefits are low, . This undermines the application of conventional cost benefit analysis, which focuses on the savings accruing to the vehicles using the roads, or the effects of transport cost reductions on agricultural producers living along the road. The use of cost effectiveness as a road planning tool is therefore a pragmatic and acceptable criteria for ranking or prioritizing roads. The Road Sector Master Plan has applied this prioritization procedure across the country and the Jangchucholing – Chubar chorten road is clearly classed as a Priority B feeder road in this document. This seems to have been overlooked by project management since it has included the Jangchucholing- Tashidingka section of this Priority B road in the implementation program. The Need for Consistent and Project-Focused Socio Economic Monitoring The Socio Economic Monitoring program has involved three surveys at the base line, mid-term and completion stage of the project. Three different sets of consultants have been procured to provide these services. This has not only increased the management burden of the project but undermined the validity and reliability of the surveys and the comparability of their findings. There is some evidence that the survey instruments have been adjusted and changed e.g. the base line survey assessed the time taken to seven socio economic facilities and failed to assess the time taken to access the nearest all season road. The mid-term and final surveys increased the number of socio economic facilities to eleven and added an estimate of the time taken to walk to the nearest all weather road from the centre of the village, presumably in response to the recommendations of the MTR. Similarly, as Table 8 shows the sample sizes collected along each road have varied between the surveys, with each survey drawing on a different subset of households, with varying degrees of overlap. Finally, it is not even clear if the surveys were done at the same time of the year. Table 8. Distribution of Household Samples by roads Name of Road No of Villages No of No of surveyed households Households Baseline Survey Mid-term Final Survey Survey Jangchucholing- 12 178 58 37 38 Tashidingkha (JT) Road Drujeygang- 23 630 43 158 160 Balung (Lajab) (DB) Road Khothakpa-Khar- 7 971 77 118 122 Tsebar-Yurung (KKTY) Road 42 1779 178 313 320 Source: Final Report on Socio�economic Impact Monitoring Survey, RAP � II, Bhutan, April 2010  36 This variability and the propensity of the consultants to collect a considerable volume of data without assessing its relevance and value to the monitoring of the development objective and outcomes does little to support the confidence of DOR planners and engineers in the value and purpose of such an exercise. 37 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Supervision/ICR Sita Ramakrishna Addepalli Environmental Specialist SASDI Debabrata Chakraborti Senior Procurement Specialist SARPS Samantha L. Forusz Program Manager HRSAN Drona Raj Ghimire Environmental Specialist SASDI Parthapriya Ghosh Social Development Specialist SASDS Surendra Govinda Joshi Sr Transport. Specialist SASDT Manvinder Mamak Sr Financial Management Specia SARFM Ishwor Neupane Consultant SASDE Comfort Onyeje Olatunji Program Assistant SASDO Rajesh Rohatgi Sr Transport. Specialist SASDT Kumaraswamy Procurement Specialist SARPS Sankaravadivelu Natalya Stankevich Transport Specialist ECSS5 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY06 2.08 8.21 FY07 29.80 109.04 FY08 0.00 Total: 117.25 Supervision/ICR FY06 0.00 FY07 8.32 FY08 21.80 81.79 FY 09 25.82 80.71 FY 10 17.04 100.50 FY 11 10.45 41.60 FY 12 8.43 48.55 FY 13 5.07 47.18 Total: 408.65 38 Annex 5. Beneficiary Survey Results A. SOCIO-ECONOMIC IMPACT MONITORING STUDY: MID-TERM-2010 Background and objectives Under the Rural Access Project II supported by the World Bank, the Department of Roads is constructing feeder roads in Wangdue (Jangchubcholing-Tashidingkha), Dagana (Drujeygang-Balung) and Pema Gatshel (Khotakpa-Khar-Tsebar-Yurung).. In 2007 and 2008, socio-economic baseline surveys were conducted to establish the socio-economic situation prevailing then. To assess socio-economic impacts it is imperative to periodically monitor the baseline. The objective of the survey is: To assess the magnitude and distribution of the direct and indirect socio-economic benefits of rural access improvement and determination of extent to which intervention under RAP II have caused changes in the livelihood of targeted beneficiaries. Methodology For the monitoring study the sample survey method using structured questionnaires was used to gather data from sampled households in the study area. The frame from which the sample was derived consisted of total households in the villages benefiting from the roads. For this survey, data was collected from 313 households which is an increase by 57% above the baseline survey and more or less sample size as the first monitoring survey. About 30% of the respondents from the first monitoring survey were re-visited and the balance respondents were randomly selected. The unit of analysis for the survey is the household but details were provided by a knowledgeable adult member of the household. Data collection was done by a team of enumerators under supervision. Enumerators were trained on interview techniques and survey methods prior to the field work. Findings Demography The survey revealed that there were 875 (51%) males and 855 (49%) females living in the sample households. By age, the largest group (55%) were between 18 and 56 years followed by minors (32%) aged between 17 and less. Elderly (57 years and above) comprised 13%. In comparison, the baseline had 32% males and 68% females in the population inhabiting the sample households that were interviewed. Agriculture and livestock People owned land for farming mainly cereal crops like paddy, maize, wheat, buckwheat, millet. Fruits and vegetables were also grown mainly of the local varieties. Most of what was produced was consumed at the households. Cereal production was not sufficient to last the whole year. Important cash crops grown are potato, oranges and vegetables. 39 Livestock is an important component of people’s livelihoods. Cattle, horses, sheep, pigs and poultry were raised for dairy produce and meat. Dairy produce was also sold. Present access to services and facilities The present access to services and facilities is not that different from the Phase I surveys since the 2 surveys are being conducted within a span of 6 months only so not much extension of the road network has occurred which has impacted travel distances. However, as compared to the baseline survey, now 47% of the beneficiaries can access an all-season road within 2 km or 30 min walking distance. Income and expenditure People’s primary source of income is from sale of agriculture and livestock produce mainly cash crops like potato and oranges and chili. People also get cash through remittances. Expenditure is heavy on food, clothing, education of children and on house renovation and performing of religious ceremonies. As compared to the baseline, it is noted that income earned from agriculture produce, livestock products, sale of animals, weaving and remittances has increased between 34% to as high as 266%. However, income from manual transportation, mule hire, casual labour, carpentry and business has declined to 8% and a maximum of 86% as compared to the baseline figure. Prices of commodities Prices of commodities largely seem to have been the same as compared to that revealed in the Phase I surveys. People in fact spend more now transporting from the market to the road head spending for vehicular carriage costs of goods. As compared to the baseline, price of commodities has increased between 9% to as high as 142% for some commodities. This rise can be attributed, among others, to inflation especially of food items in the last few years. Transportation The roads are in use up to the sections that are complete. Taxis, trucks are already plying on the roads but traffic is said to be still low. The time for reaching destinations and for transportation has been cut down and in that context if time savings are valuated then there is substantial gain in that people save money or could earn money using time saved. Local economy In terms of local economy, quality of housing seems to be a relative term because housing is largely determined by cultural practice of living as well as climatic conditions and availability of housing materials. Off-farm employment opportunities in Dagana are more than the other districts. However, the wage rates earned by men and women are unequal. Participation in road work among the people in Dagana was the most as compared to the other districts. As compared to the baseline there is a decline in casual labour opportunities (by 8%) implying less off-farm employment opportunities available. The wage rates for labour between males and females differed in that men were paid more for strenuous activities such transportation (Nu. 170 to Nu. 300 per day whereas 40 women were paid a maximum of Nu. 150/day)) and skilled labour (Nu. 200 to Nu. 400 per day whereas women were paid Nu. 200 per day). In the baseline survey, only 25 households reported working on the road, whereas in the monitoring survey, 47 households worked on the road which is an increase by 88%. During the baseline survey land prices ranged from Nu. 1000 a decimal to a maximum of Nu. 3,000 a decimal. Whereas, during the socio-economic survey, the land prices were noted to have increased manifold. The minimum price per decimal in areas along the JT road was Nu. 1,500 a decimal while land prices had also reached Nu. 8,500 a decimal on the same road. The median price at the point of the baseline survey taking prices on all the roads was Nu. 2,000 and recently the median price increased to Nu. 7500 - an increase by 275%. Vulnerability Thirteen percent of the respondents have up to an acre of land most of who are from the KKTY Road. More than 80% of farmers in all the roads face seasonal food shortages and resort to buying rice while all farmers on the KKTY Road buy rice. In comparison, the baseline survey data shows that all households interviewed from the DB Road and the KKTY Road bought rice while 71% on the JT Road bought rice. The data shows some improvement in the food security on the DB road since 91% bought rice as ascertained in the monitoring survey. However, on the JT Road, it is noted that now 81% bought rice as compared to 71% before. Only three percent of the surveyed household population has some form of disability. The baseline survey did not report on disability of surveyed populations. Conclusions It may be noted, for the indicator on reduction of travel time, the end-of-project target is 50% and by the mid-term point of the project it has reached 19%. There seems time in the second half of the project and opportunity through further extension and completion of the road to achieve the target. The indicator on road user satisfaction is already achieved to a large extent since by the mid period of the project, 91% of the sample respondents were satisfied with the roads. The project outputs namely the roads are having effects which are manifested already. some of these are an increase in incomes from most sources and decrease in those for which the road has substituted for travel and carriage such as from porters and horses. a moderate improvement in the local economy is evidenced by increase in land prices and rise in capital investments. impacts on diversification in occupations, increase in literacy, reduction in diseases is yet to be seen. challenges of benefits of the road trickling down to the poorest sections remain. ensuing development programmes like electrification and drinking water supply reaching the villages is observed but whether these are a consequence of roads access cannot be categorically said but it would be fair to say that roads have contributed in some way. 41 B. SOCIO-ECONOMIC IMPACT MONITORING STUDY: END OF THE PROJECT- 2012 The DOR appointed consultants to carry out the Final Socio-economic impact monitoring and road user satisfaction study for the Bhutan Second Rural Access Project in 2011. The overall objective of the study is to assess the magnitude and distribution of the direct and indirect socio-economic benefits of rural access improvement and determination of the user satisfaction with the roads constructed. Methodology The methodology adopted is similar to the baseline and midterm surveys already conducted for the project. It comprised a set of structured and non-structured interviews. The methodology included Participatory Rural Appraisal (PRA) exercises, interviews with roadside communities and group discussions with different economic and social groups. A semi-structured questionnaire was used to carry out the individual and group household interviews. Discussions were also held with officials of the project contractor (in KKTY road where the work was ongoing), project management staff, officials of the Dzongkhag Administration and Gewog officials. For the socio-economic impact monitoring study, the samples covered in the final survey are 320 compared to 178 in the baseline, 312 in the phase I and 313 in the Phase II in the midterm survey. In order to keep the results of the earlier surveys comparable to the final survey, the final survey covered the same villages that were covered in the earlier surveys. Stratified random sampling method was adopted to select the individual households. The repeat coverage of the respondents in the final survey as in the midterm survey is to the tune of 34.4%. For the Road User Satisfaction Study (RUSS) the consultants used both quantitative and qualitative methods of enquiry. Focus group discussions and individual interviews were held with various government officials including officials of DOR at the head quarter and project sites, Dzongkhag and Gewog administration officials, drivers of taxis, trucks, private vehicles in the Dzongkhag as well as satellite towns viz. Nobding, Drujeygang, Khotakpa and Nangkor. The total number of samples covered in the final survey is 360 compared to 352 respondents during the baseline and 324 during the midterm survey. Project Development Objectives and Achievement The project development objective was for the residents of beneficiary Dzongkhags to utilize improved rural transport infrastructure and services. The two specific outcome indicators as identified in the project document for monitoring and evaluation were i) travel time by targeted beneficiaries to economic and social centers will be reduced by 50 percent and ii) overall beneficiaries’ satisfaction with the improved delivery of road infrastructure. The survey findings showed that the project has fulfilled its objective of reducing travel time by more than 50%. The achievement in reduction of travel time to reach the service centres has been to the tune of 78% overall. In terms of average walking time to reach the project roads, the target of 30 minutes has also been met in case of all the 3 project roads. The emergence of the new roads almost made the animal based transportation system 42 redundant and people dependent on transportation through hiring of animals suffered major setback in their income. However, with passage of time taxis and other commercial vehicles have started to ply on these roads providing transport based alternate sources of income to the communities and a turnaround in the earnings from transport sector has been observed in the Final Survey results. Land prices along the roads have escalated taking advantage of the improved accessibility. As there was practically no road for meeting emergency travel needs before the project, the satisfaction levels of the users are very high going about 90% in case all the 3 roads. Overall 93% respondents opined that they are either highly satisfied or somewhat satisfied with the project roads and their present condition. FINDINGS OF ROAD USER SATISFACTION SURVEY Respondent Profile The profile of the respondents based on the various socioeconomic parameters such as sex, age group, education levels, occupational status, category of employment, source of income and expenditure etc, has been presented in this section. The profile of the respondents was required to link it with the output of the road user survey as well as to act as a benchmark. The analysis has been presented in a manner to make the findings comparable with the midterm survey findings and for comparison with any future survey findings. The first and second phases of the midterm survey covered 352 and 324 HH representatives respectively. The coverage in both the phases of the midterm survey covered a good mixture of males and females from the 3 project roads. In the final survey the distribution of samples among the 3 project roads were kept close to the same level as in the midterm survey viz. 12% in JT road, 52% in DB road and 36% in KKTY road. The sample distribution has been carefully decided depending on the number of villages benefitting from the road as well as the size of the villages. Compared to the midterm survey sample coverage, the final survey covered various types of road users like drivers of all types of vehicles, students, shop keepers, farmers, government officials, employees etc. Care was also placed in selecting a healthy distribution of male and female respondents. Of the total respondents, 59% were males while the rest 41% comprised females. The profile of the respondents by various age categories shows that majority of the respondents were in the productive age group between 18 to 60 years. Education Level The education levels of the respondents reveal that 44% respondents were illiterates, while 19% were educated up to primary school level followed by 10% up to MSS level. Occupational Structure Farmers comprised the most of the respondents accounting to about 81% followed by the students (6%), people with own business (5%) and civil services (4%) in the order. 43 Respondents belonging to other types of occupation formed about 1% in each of the other categories. By category of employment, self employed formed the largest group mainly being employed in their own farms. Many family members belonging to both the sexes are reported as unpaid family workers as they work in their own houses and do not get paid for doing their own family’s work. Income With about 81% respondents being engaged in farming activities, most of the income earned is derived from the agriculture and allied activities. Income from sale of agricultural products and livestock rank the top two contributors to income. Among the 3 project roads the main agricultural crop varies widely. The main agricultural products sold from the benefitted area around JT road are Chilli and Potato while DB road flourishes with Oranges, Cardamom and Vegetables. Income in the KKTY influence area is mostly through remittances, off farm labour, carpentry and weaving. Income earned from horse/pony hire and portering is much less compared to the major sources of income like agricultural and livestock products. Expenditure In terms of expenditure, the maximum is spent on food by the respondents in case of all the 3 roads. As the expenditure is more in procuring food grains, the roads play a crucial role in facilitating movement of people to the nearby market places and transportation of the items procured to their house. Besides the food grains, other important food items purchased from the market are salt, sugar and oil etc. Other notable heads of expenditure are education, clothing, religious ceremonies and social occasions. Children’s education is accorded priority in Bhutan where qualifying for government colleges after the basic education (education up to class X is free in Bhutan) is much cherished. In DB road expenditure on house renovation forms a sizable component among the expenditure heads. This could be seen while travelling on DB road. Newly constructed houses/renovated houses, wood depots, storage of construction materials on the road shoulder is distinctly visible while travelling on this road. Travel Purpose In terms of the purpose of travel, the prime reason was for business, official purposes, marketing of agricultural products and for shopping. The modal value of frequency in travelling was in the range of 1 to 3 times in a month. The number of respondents making 8 to 10 trip and more than 10 trips in a month substantially increased between the midterm survey and the Final survey indicating a higher use rate by the respondents as the roads have opened up the much sought after service centres (health, education, communication, shopping, social occasions etc.) Among the 3 project roads, higher frequency of movement compared to the midterm survey was noticed uniformly for the purpose of marketing of agricultural products, shopping, education and health. Unlike the earlier surveys, there was no respondent who 44 had not used the road for some purpose indicating the increased role of the roads in the respondents work activities. Road Condition and Impact The opinion of the road users were sought to assess whether the road condition has improved. The responses showed that about 56% opined substantial improvement in the road condition. About 41% responded that the road condition improved marginally, thus the combined overall responses towards improvement in road conditions stood at 97% compared to a level of 81% during the midterm survey. The response was highest (98%) in KKTY road where the works were nearing completion and the users were very receptive of the improved road conditions. In JT road the responses towards improved road conditions although stood at 89%, it still remained the lowest among the 3 roads. This could be attributed to the continuing maintenance works in the road after the rains. With regards to reduction in travel time, about 45% responded that the travel time has substantially reduced. This is higher compared to 40% response for the same during the midterm survey. KKTY road showed a turnaround with substantial reduction in travel time (34 % in midterm to 45% in the Final survey) as the road works are nearing completion. Overall the response for reduction in travel time (both substantial as well as marginal reduction taken together) was to tune of 88% compared to 84% during the midterm survey. About 8% respondents opined that there has been substantial decrease in the fuel cost, KKTY reporting the highest percentage of 11% among the 3 roads. Overall the response towards decrease in fuel cost was to the tune of 16% compared to 5% at the time of midterm survey. Overall 5% reported that the fuel cost has remained the same; JT road reporting the highest of 14% under this category. This may be because JT road was the first to be opened for public and the relatively longer period of use of this road gave a feeling of no change to the road users. Majority of the respondents are the household respondents who are generally the passengers. Vehicle ownership is still at a very low percentage as there were only small lengths of maintenance roads, thus limiting the scope for vehicular travel. Thus the response to reduction on maintenance cost of the vehicles had a large segment of not applicable respondents. Overall about 8% responded decrease in maintenance cost of vehicles compared to a level of 2% during the midterm survey under this category. The project roads form one of the basic needs for their influence area and their lifeline for communication. As there was practically no road for meeting emergency travel needs, the satisfaction levels of the users are very high going about 90% in case all the 3 roads. Overall 93% respondents opined that they are either highly satisfied or somewhat satisfied with the project roads and their present condition. Comfort and Convenience 45 The perceptions of the road users on congestion were assessed with their views on road width. presents that about 80% respondents felt that the width of the roads are adequate and they are free from congestion. Road safety is one of the prime concerns especially in the rural areas where many of the road users are not accustomed with the vehicular transport. Road signs are installed for cautioning road users that work is in progress and such notices/signages ensure least disruption to work due to conflict with the road users. About 94% of the respondents observed the signs put up by the contractors during the road construction work. KKTY road where the works are in progress reported maximum observation of these signages by the road users (99%). While 9% respondents opined the road surface quality as poor, majority (86%) reported it to be either good or very good. The midterm survey had responses to the tune of 78% terming the road surfaces to be good. The recently constructed KKTY road where the road works are nearing completion, received a response level of about 93% reporting that the road surface is good. The reduction in travel time to reach destination was assessed with the road surface quality. The data reveals that over two third respondents (72.7%) mentioned reduction in travel time due to good road surface quality. About 25% respondents mentioned that travel time remained the same. Around 15 % responded that the travel time has remained the same although the road surface quality has become good. The analysis carried out to relate the effect of quality of road surface with convenience to access settlements shows that majority respondents in all the 3 roads feel that quality of road surface has a major role to play in creating convenient access to settlements. The response on quality of road surface to be very good / good was 86% during the final survey compared to 78% during the midterm survey. In terms of the levels of satisfaction with regards to the quality of structures built about 87% were satisfied with the structures. Out of these respondents 39% respondents were highly satisfied with the structures. Generally in the remote areas in Bhutan RCC bridges are rare and provision of such permanent RCC structures for cross drainage work and for erosion protection yields a much better satisfaction level of the respondents. Around 86% of the respondents mentioned of not facing any delays while travelling on the project roads. Among those who experienced some delay, the duration of the delay was between 1 to 30 minutes. The delay was primarily due to the road maintenance works and also due to some narrow stretches through which only one vehicle could pass. In such cases, the vehicles had to wait while the traffic from one direction gets cleared so that the traffic from the other direction can use the road for crossing the narrow stretch. Other reasons for delay comprised disturbances from cattle and ‘uncompromising drivers’. 46 The effect on travel time to destination was assessed by the management of the maintenance staff in time taken to clean up the accidents on the road. Among the respondents who were aware of the occurrence of accidents on the roads 47% responded that the maintenance staff has been good in managing the accidents and thereby the travel time to destinations have reduced. Interactions with the respondents revealed that not many accidents have happened on the project roads; the few that happened have been managed well by the maintenance staff. Like the midterm survey, the reasons that caused irritation to the road users were air and noise pollution, bad roads (pot hole, rough road), disturbance by cattle, beaming headlights of other vehicles and bad driving by others. The works on KKTY is still going on and irritation by air/noise pollution is unavoidable. Similarly settlements being located along the roads, disturbances by cattle are frequent. Bad driving by others is an area of irritation that needs attention of the authorities. Other reasons like wrong/illegal parking, close proximity of shops, volume of traffic and congestion are not very pronounced. Road Safety Respondents’ opinion on safety while using these roads was accessed. About 85% of the road users felt safe while using the roads. This was slightly better than the midterm survey where similar opinion was obtained from about 83% users. In total 24 respondents observed road accidents on the project roads. Some of the main causes of the accidents cited are bad geometry, reckless driving, bad weather and mechanical failure. Like the midterm survey, respondents were canvassed to rank the roads on 4 thematic areas like value for money, comfort and convenience, safety on the road and travel amenities. They were requested to rank these parameters on a scale of 4 points with 1 being “most important’, 2 being quite important, 3 being not so important and 4 being not important. The connotations were as under:  Value for money : savings in fuel consumption, vehicle maintenance cost, tyres  Comfort and convenience : conditions of the road, riding quality and free from congestions.  Safety : safety from sliding, instances of signage along the road  Travel amenities : Provision of food, water, toilet, rest rooms and restaurant The ranking of these themes by the road uses reveal that ‘value for money’ was ranked 2 (quite important) by about 34% respondents while 43% rated it as 3 (not so important). ‘Comfort and Convenience� got a rating of 2 (quite important) by about 56% respondents while 23% rated it as 3 (not so important). Safety on road got a rating of 1 (most important) by about 73% respondents while 23% rated it as 2 (quite important). Travel amenities were ranked as 3 (not so important) by 28% respondents while 56% ranked it as 4 (not important). The findings indicate that the road users place very high importance on road safety aspects followed by comfort and convenience. Travel amenities have not received a higher rank by the users as the feeder roads are shorter in length compared to the highways and are covered in a relatively shorter time. The findings are similar to the baseline and the midterm survey. 47 Department of Roads (DOR) and Rating of DOR Activities Information sign boards during work in progress and radio formed the basis of knowing about the Department of Roads to the road users. Other lesser means to get knowledge about the DOR and its activities were the television, newspaper and magazines. However, during interaction with the road users it was revealed that the main source of knowledge about the DOR activities in their area is through the Gewog officials and hear say from friends and relatives who knew about the DOR and their road construction proposal. These were also the mode of knowing about the DOR and gathering knowledge about its activities during the baseline and the midterm survey. Regarding users views about the services provided by DOR, reveals that about 93% users rated that DOR has been highly/moderately successful in providing good feeder roads. This is a marginal improvement compared to the response level of 92% for the same during the midterm survey. Regarding the speed and efficiency of the DOR in performing the works, about 71% respondents opined that DOR has been successful in doing the works with speed and efficiency. About 30% respondents rated DOR was moderately successful in doing the works with speed and efficiency. In terms of constructing and maintaining the roads about 77% opined that DOR has been successful in its endeavour to construct and maintain the feeder roads. About 43% rated DOR as ‘highly successful’ in this aspect. Only 34 respondents forming around 9% of the total respondents said that they have complained for any road related problems. Of these 34 respondents, 11 (32%) were satisfied with the manner in which the complaints were redressed. However, 19 (55%) were somewhat dissatisfied with the time within which the complaints were redressed. Almost all these somewhat dissatisfied complainants belonged to JT and DB road where maintenance works were going on. Discussions with some of the key informants revealed the need for quicker response time from DOR in completing the maintenance works. Similar to the findings in Table 6.27, reveals that about 33% complainants were satisfied with the manner in which the complaints were redressed. However, 56% were somewhat dissatisfied with the time within which the complaints were redressed. Almost all these somewhat dissatisfied complainants belonged to JT and DB road where maintenance works were going on. Overall about 50% respondents were satisfied with the maintenance works and the response time of DOR in doing the maintenance works. However DOR has to give more attention to this aspect as revealed during the discussions with key informants. Respondents were also asked about their views on specified aspects of the road construction where DOR should pay more attention. Specific areas of focus were in provision of wider roads, widening/improving of curves, providing wayside facilities, tougher road traffic enforcement, provision of more informatory/warning signs, Improvement of road gradient and improved road riding quality. 48 Users desire DOR to focus more in providing wider roads (77%), widening and improving curves (70%), providing more informatory/warning signs (65%), tougher road traffic enforcement (64%), improve road gradient (58%) , better road riding quality (55%) and more wayside amenities (28%) in the order of preference. This does not imply that the other aspects were not important to the road users. The findings of the final survey are comparable to the baseline and the midterm survey where it was suggested that road riding quality, improving on road gradient, widening of curves featured as the main suggestions. Road users were also asked whether local communities could take up the maintenance work in case there are sufficient people to do so. Of the 58 respondents that said communities should take up this work, 69% indicated there are enough people in the villages to do so. The findings suggest that 82% respondents are of the view that local communities cannot take up the work of road maintenance. Discussions were held with officials of Dzongkhag administrations in the project road areas and their opinions were sought specifically on the World Bank funded project roads vis-a-vis RGOB funded roads. Their suggestions were also sought for future road development strategy. Conclusion Based on the findings some of the conclusions are under; In terms of the purpose of travel, the prime reason was for business, official purposes, marketing of agricultural products and for shopping. The modal value of frequency in travelling was in the range of 1 to 3 times in a month. The number of respondents making 8 to 10 trips and more than 10 trips in a month substantially increased between the midterm survey and the Final survey indicating a higher use rate by the respondents as the roads have opened up the much sought after service centres (health, education, communication, shopping, social occasions etc.) With regards to reduction in travel time, respondents opined that that the travel time has substantially reduced. KKTY road showed a turnaround with substantial reduction in travel time as the road works are nearing completion. There has been a substantial reduction in the fuel and maintenance cost for the vehicles, however, the cost of travel is still quite high. The roads have less congestion as they have the required width and better carriageway. There were adequate road signs in place in the completed roads as well as the road where the works are going on. The roads were evaluated as good in terms of their surface quality and overall safety. The users did not face long periods of delay while travelling on these roads. Noise and dust pollution is a major reason of irritation while travelling on the roads as the maintenance and construction works in one of the roads is still in progress. 49 Safety was expressed by the users as the most priority area for building better and safer roads. Although there were not many accidents, bad driving by others, mechanical failure and bad weather conditions were reported to be the reasons for the accidents. Roadside amenities have not been provided on the feeder roads. DOR has not provided such facilities along the feeder roads as they are much shorter in length compared to highways. Users also did not put a very high rank for their provision along the feeder roads. However, a few shops have already come up along the completed roads. Users placed higher ranking to safety and comfort and convenience. With increased flow of traffic and more movement of passengers other aspects like value for money and amenities along the road will gather more priority by the users. Users have expressed overall satisfaction with DOR’s performance in providing the feeder roads in time and with their efficiency in attending to the maintenance works during the accidents. However, satisfactory redressal of complaints is one of the areas where DOR should focus to improve in future. 50 Annex 6. Stakeholder Workshop Report and Results (if any) N/A 51 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 1. Introduction 1.1 Background Bhutan being landlocked with majority of people living on subsistence agriculture, there is need for rural accessibility and roads are the main mode of transport. There is a huge target for the road sector in the current 10th Five Year Plan (July 2008 - June 2013) under the new Parliamentary Democratic Government. Due to needs of rural infrastructure and the good results delivered by the Rural Access Project I (RAP I), the Royal Government of Bhutan had requested for a follow-up project to continue supporting improvement of rural accessibility using the EFRC construction methods. RAP II was aimed at helping consolidate the institutional development initiatives started under RAP-I and enhance capacity in Department of Roads (DOR). In March 2007, the World Bank has approved a full grant of US$ 10 million towards the Rural Access Project II (RAP II), under the DOR, Ministry of Works & Human Settlement (MoWHS). 1.2 Project Objectives RAP II was designed to directly support the Ninth Five-Year Development Plan (2002- 2007, extended till June 2008), which include: (i) improving the quality of life and income, especially of the poor; (ii) ensuring good governance, (iii) promoting private sector growth and employment generation, (iv) preserving and promoting cultural heritage and environmental conservation, and (v) achieving rapid economic growth and transformation. These objectives are based on the concept of Gross National Happiness. The RAP II was also expected to support the Tenth Five-Year Development Plan (July 2008 - June 2013). The project was aligned with the World Bank’s CAS for Bhutan (2006-2009), by (i) infrastructure expansion and access improvement through building new roads and improving the condition of existing roads to connect remote rural communities to economic and social services; (ii) promotion of private sector development through outsourcing construction and maintenance contracts; and (iii) environmental conservation through mainstreaming of EFRC methods. The Project Development Objective is for residents of beneficiary Dzongkhags (Districts) to utilize improved rural transport infrastructure and services. The target beneficiaries are about 12,000 rural residents of Wangdue, Dagana, and Pemagatshel Dzongkhags, which have the highest demand for access in Bhutan. The Dzongkhags and Geogs (Blocks) were selected taking into account: (i) the development objectives set out in the Ninth Five- Year Development Plan; (ii) the demand for access in the area and the road prioritization as per the RGOB’s 20-year Road Master Plan; (iii) the exclusion of the selected Geogs from projects supported by other donors; (iv) the cost-effectiveness of the individual road; and (v) the detailed geotechnical survey of the individual roads. 52 1.3 Project Development Objectives The Project Development Objective will be monitored and evaluated by the following outcome indicators: (i) Travel time by targeted beneficiaries to economic and social centers will be reduced by 50 percent; (ii) Transportation costs of commodities and supplies will be reduced by 50 percent in project areas; (iii)Overall beneficiaries’ satisfaction with the improved delivery of road infrastructure; and (iv) Basic commodity prices in project villages will be 10 percent lower than in unconnected villages as a result of newly constructed roads. Monitoring of the IDA 14 Rural Access Indicator As a result of the project, it is expected that 60 percent of the rural residents in the project targeted geogs will live within 2 km or 30 minutes of walking distance to an all-season road. Project Restructuring The project was restructured that dropped two outcome indicators serial nos. (ii) Reduction of transportation cost and (iv) Reduction of basic commodity price as recommended by the Mid Term Review (MTR), given that they were likely to be influenced by external factors. 1.4 Financing of RAP II Grant Amount: US$ 10.27 million Effectiveness of the grant: April 23, 2007 Expected closing date: October 10, 2012 Project Implementation period: April 10, 2007 – July 10, 2012 Recipient: Bhutan/Department of Roads Source of grant: IDA Funds disbursed as of June 2012: US$ 10.27M or Nu. 461.851 M (100%) RGOB contribution to RAP II: Nu. 67.264M Total Expenditure as of June 2012: Nu. 529.115M 2. Project Scope 2.1 Original Project Scope The project will include the following components: The Road Access Component (around US$ 8.69 million, excluding contingencies) will include the following: 53 (a) Construction of new feeder roads of approximately 65 km length in total; (b) Upgrading of about 24 km of existing roads to all-season, feeder road standards; (c) Piloting low-cost sealing of feeder roads and performance based maintenance mechanisms using the NWF and/or community involvement or petty contracting; and (d) Construction/upgrading of 8 bridges with a total approximate length of 116 meters. The Capacity Development and Implementation Support Component (US$0.67 million) will comprise the following: (a) Human resource development and training; (b) Technical Assistance to pilot performance-based maintenance mechanisms; (c) Project implementation support for the Project Coordinating Unit (PCU) in Thimphu and the three Project Management Units (PMUs) at project sites; (d) Socio-economic impact monitoring study; and (e) HIV/AIDS awareness of construction workers through the Nation-wide program run by the Ministry of Health. 2.2 Revised components of the project During implementation the project components were revised as follows: Road Access Component Construction of new feeder roads of approximately 65 km length in total; Table 1: New Construction SN Name of Road Assumed Actual Remarks length length 1 Jangchucholing-Tashidingkha-Chubar 13.7 11.83 Completed Chorten road, Wangdi 2 Drujeygang-Balung road 22 26.1 Completed 3 Khotakpa-Khar-Tsebar-Yurung road, 25 29.01 Completed Pemagatshel 4 Laber-Khengzore road, Pemagatshel 4 8.5 Dropped Total: 64.7km 75.44km 66.94 km (b) Upgrading of about 24 km of existing roads to all-season, feeder road standards; Table 2: Road Improvement SN Name of Road Assumed Actual Remarks length length 1 Jangchucholing-Tashidingkha road, 6.34 6.34 Completed Wangdi 2 Drujeygang-Balung road 9 9 Completed 54 3 Khotakpa-Khar-Tsebar road, Pemagatshel 9 8 Completed Total: 24.34 km 23.34km (c) Piloting low-cost sealing of feeder roads and performance based maintenance; i. Piloting low-cost sealing The first pilot otta seal works was carried out at Drametse, Mongar. The contract was terminated on account of failure to bring the aggregates of the required specification by the contractor. The pilot program could not be tested adequately, since the contract got terminated and also due to the steep gradient of the Drametse road. Bajo-Shengana Feeder Road (22 km, to be otta sealed 8.2km) was selected as an important road that links the two Dzongkhags of Wangdue and Punakha. This road when improved would become an important alternative route between these two Dzongkhag thereby reducing travel time and distance. Due to the higher amount of rectification and improvement works required, some costs for improvement works was shared by the RGoB to maximize the use of the funds of RAP II for the low cost sealing. The low cost sealing was piloted successfully on this road. ii. Performance based maintenance mechanisms using the NWF and/or community involvement or petty contracting Under the Road Access Component the project will support piloting routine road maintenance activities through performance based maintenance schemes and also provide technical assistance to this pilot program under the Capacity Development and Implementation Support Component. The maintenance of the completed RAP-I roads will be contracted out to National work force (NWF) on a long-term, performance basis where community contracting is not feasible. The performance-based maintenance scheme was to be implemented on RAP I roads of (a) Dakpai-Buli road, 36.57km, (b) Gomkara- Tomzanhangtsen road, 12.45km, and (c) Bartsam-Ramjar road, 7.45km. The PBMS was initiated by the Department of Roads before the project appraisal, as a pilot scheme that would enhance productivity of workforce, lessen the burden of the site Engineers, maintain roads and highways cost effectively and naturally phase out unproductive workforce. DOR had even tried this scheme on some roads upon the approval of the Ministry. However, during the World Bank’s 2nd supervision mission (Sept 29 – Oct 4, 2007), it was agreed that a common document will be used both for DOR and on RAP I roads to be funded through the project. The IDA had advised DOR to confirm that (i) the proposed scheme complies with all relevant labour/employment acts in the country (ii) Consultation with the NWF have been carried out, before the report can be finalized. The legal comments were incorporated; however the result of the consultation was mixed. While some NWF saw opportunities in the scheme, most of the NWF had preferred the earlier wage system. The DOR is still continuing to test the scheme 55 DOR on its own had initiated piloting the PBMS and was also piloting road maintenance contracts. Although IDA provided some initial input to DOR, it was decided to drop this activity during the restructuring as recommended by the MTR mission. d. Construction/upgrading of 8 bridges with a total approx length of 116 meters Table 3: Construction of bridges SN Name of Road/Bridges Assumed Completed Remarks 1 Jangchucholing- 5 nos 5 1.87km – 12m RCC Tashidingkha-Chubar 6.55km – 12m RCC Chorten road, Wangdi 6.72km – 80ft BB* 24.384m 10.7km – 10m RCC 17.7km – 12m RCC Total 70.384m 2 Drujeygang-Balung road 3 nos 1 4.4km – 8m RCC 4.7km and 5.7km – Replaced with vented causeway 3 Khotakpa-Khar-Tsebar- 1 nos 1 3.2km – 80ft BB*24.384m Yurung road, Pemagatshel Total: 9 nos. 7 nos. Total 102.768m *BB – Bailey Bridge (Double Single) 3. Achievements of Objectives and Outputs 3.1 Achievement by Output/Development Objectives Monitoring and evaluation of outcomes/result under the implementation as agreed in the PAD would be undertaken in the project at the midterm and end of project. The project’s outcome indicators: (a) travel time; (b) transportation costs; (c) basic commodity prices in project affected villages; and (d) overall beneficiaries’ satisfaction with the improved delivery of road infrastructure, will be generated by a socio-economic impact study. The study will include an assessment of the magnitude and distribution of the direct and indirect socio-economic benefits of rural accessibility improvement and determine the extent to which improvement interventions under RAP-II caused changes in the livelihood of the targeted beneficiaries. The socio-economic impact study at the midterm was done by Ms Gonefel Options Consult and at the end of project by Ms RC Consultancy. As per the AM, Mid Term Review Mission, “the project has achieved, and in some cases, exceeded its midterm review targets, which confirms a satisfactory progress towards achieving the development objectives� 56 Table 4: Results Monitoring (March 2010 at MTR) Project Outcome Indicators Baseline YR3 Target Actual (a) reduction in travel time of beneficiaries to key 1-15.5 hrs or 4-62 25% 19% economic and social centers in the nearest town by km to all-season EOP. road (b) reduction in transportation costs of goods and Unit costs of Proposed to be supplies from/to beneficiary villages to/from the human/animal dropped nearest town by EOP. transport: Nu. 0.28-0.42 Per km per kg (c) lower basic commodity prices in project villages Baseline Data Proposed to be than in unconnected villages as a result of newly Collected dropped constructed roads (d) overall beneficiaries’ satisfaction with the Baseline data to be 91% improved delivery of road infrastructure collected Intermediate Outcome Indicators Physical Component (a) 60% of beneficiaries from 36 direct beneficiary 0% 40% 47% villages (TBC) to be placed within 2 km or 30 min of walking distance to all-season road by EOP. (b) % of target feeder roads constructed. 0% 23% 25.34% (c) % of target feeder roads improved to all-season 0% 21% 100% standards. (d) % of target bridges constructed 0% 18% 50% (e) % of target feeder roads maintained to all-season 0% 15% 43.44% standards. Institutional Component All planned training programs are delivered To be undertaken in Achieved YR1 DOR applies EFRC in all road projects regardless Applied in 5 5 their sources of funding. projects After the dropping of two PDO at the project restructure the PDO’s to be monitored at the end of the project were as follows: (i) Travel time by targeted beneficiaries to economic and social centers will be reduced by 50 percent; 57 (ii) Overall beneficiaries’ satisfaction with the improved delivery of road infrastructure; and Reduction in travel time to major service centers is 78% as against the target of 50% as per the Socio-economic impact monitoring study (SEIMS) report. Overall beneficiaries’ satisfaction with the improved delivery of road infrastructure is 93% as per the SEIMS report. Over 90% of the beneficiaries’ are satisfied with the road infrastructure and the services such as road condition, comfort, convenience, and safety. Table 5: Results Monitoring (EOP) Project Outcome Indicators Baseline YR5 (EOP) Target Actual (a) reduction in travel time of beneficiaries to key 1-15.5 hrs or 4-62 km 50% 78% economic and social centers in the nearest town by EOP. to all-season road (b) reduction in transportation costs of goods and supplies Unit costs of Dropped from/to beneficiary villages to/from the nearest town by human/animal 58 EOP. transport: Nu. 0.28-0.42 Per km per kg (c) lower basic commodity prices in project villages than Baseline Data Dropped in unconnected villages as a result of newly constructed Collected roads (d) overall beneficiaries’ satisfaction with the improved n/a 93% delivery of road infrastructure Intermediate Outcome Indicators Physical Component (a) 60% of beneficiaries from 36 direct beneficiary 0% 60% 47% villages (TBC) to be placed within 2 km or 30 min of walking distance to all-season road by EOP. (b) % of target feeder roads constructed. 0% 100% 100% (c) % of target feeder roads improved to all-season 0% 100% 100% standards. (d) % of target bridges constructed 0% 100% 100% (e) % of target feeder roads maintained to all-season 0% 100% 100% standards. Institutional Component All planned training programs are delivered To be undertaken in Achieved YR1 DOR applies EFRC in all road projects regardless their Achieved sources of funding. 3.2 Achievement by Components Road Access Component The civil works new road construction of 66.94km as against target of 65km and road improvement of 23.34km against target of 24.34km has been completed. This has immensely benefitted the rural people of the three Dzongkhags of Wangdi, Dagana and Pemagatshel. Piloting of low cost sealing was done successfully in Drametse 7km and Bajo Shengana 8.2km. Performance Based Maintenance Scheme and maintenance contracting is on- going in DOR. New bridges bailey bridges and RCC bridges, a total of 102.768 m was constructed against a target of 116m. Capacity Development and Implementation Support Component 59 All the human resource development and training activities have been completed. Procurement of vehicles and equipments has also been completed. Socio-economic impact monitoring study has been completed. 4. Lessons Learnt 4.1 Environment safeguards Environmental conservation is a key requirement of the project. As per the Financing Agreement, schedule 2 B under project execution, it was agreed that the project shall be implemented in accordance with the provisions of the Environmental Management Plan (EMP), EAs, SDRR and SAF. Also the project responds to one of the World Bank’s CAS for Bhutan (2006-2009), on environmental conservation through mainstreaming of EFRC methods. Use of country systems RAP-II is the first project in the South Asia region to pilot the use of Country Systems (UCS) that meet the World Bank safeguard requirements of the World Bank operational policy (OP/BP 4.00) “Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects� issued in March 2005. Under this policy, all investments to be financed by the project will apply RGOB environmental laws, regulations and Environmental Impacts Assessment guidelines for selected safeguard policies on a pilot basis. The “Safeguard Diagnostic Review Report (SDRR)� indicated that there is substantial equivalence between Bhutan’s system and the requirements of OP 4.00 with respect to EA, NH, PCR. The differences can be addressed within the scope and duration of RAP II. Regarding the IR there were significant differences and WB will continue to apply its safeguard OP 4.12 rather than Bhutan’s system for management of IR impacts. To achieve and sustain the equivalency the project has introduced several good practices on environment safeguards on overall management of the environment, implementation of EMPs, monitoring at various levels, demobilization, environment action plans, improved coordination, EFRC training in DOR and Districts, job-specific contractor trainings etc. The World Bank has also conducted an independent review of the UCS. The project could learn many good practices through the pilot UCS and rates it as successful. 4.2 Environment Friendly Road Construction The concept of environmental friendly road construction (EFRC) was introduced in DOR in the year 2000 through the Rural Access Project I with support from SNV (Netherlands Development Organization). It was introduced with an initial assessment suggesting increase in cost of 30 % and recovery period of 8 years. However the life cycle cost analysis done in 2007 showed that an EFRC cost 15% higher than the traditional method and the cost recovery period of is 3-4 years. EFRC is not only a safe construction technology but also aims to improve the road planning and selection by way of avoiding geologically, environmentally or culturally vulnerable areas right from the planning stage. 60 It aims to arrive at engineering designs with optimal balance between prevention of environmental damages and investment cost. EFRC in DOR The Environment Assessment Act and the Regulations for Environment Clearance of Projects (RECoP 2002) requires all the construction projects to obtain the environment clearance (EC) before the start of any works and to maintain a valid EC throughout the duration of the project. The EC require all road construction projects to follow the Environmental Code of Practice Roads and Highways, which follows the EFRC concepts. Therefore EFRC is not only followed in the DOR but it is a policy requirement for the construction of roads nationwide. The project has further strengthened the EFRC capacities of DOR/contractors through trainings, on control blasting and bio-engineering and implementation of EMP. However there are some challenges for implementation of EFRC:  Balance cut and fill in mountainous terrain  Landslides and monsoon damages 4.3 Quality Control There were various quality control and assurance systems in the RAP II as follows:  Quality Assurance Plan (QAP) – The plan is required to be prepared by the contractor on basic tests required  Technical specifications – RAP II specifications have requirements for conducting quality tests  Request for inspection (RFI) – Submitted before start of any work or work sub activity  Non-conformance report (NCR) – Issued for non-conformance to technical specifications  Quality control and basic field test trainings – Provided by the project The project has seen further improvements in quality control. Trainings were provided on conducting field tests and guidance was provided on other test requirements of the technical specifications of RAP II. Contractors have improved over time, on assuring quality and conducting tests on civil works. Contractors have set up site laboratory with all the required equipments in place. However there are still some gaps that need to be addressed and improved as follows:  Training of engineers and contractors has to an on-going process.  Dedicated quality control engineer or focal person is desirable in DOR.  Set up of field laboratory by contractors has to be made mandatory by contract documents. 61 4.4 Value Engineering A value engineering assessment was carried out as a cost reduction strategy and to standardize the design and preparation of estimates for road works. This exercise was mainly to assess the actual required quantities of work at site against the designed quantities to reach at more realistic and cost effective estimates. Some of the cost reduction strategy for EFRC road in the various stages of design and estimation is as follows:  Wall quantities – For mountain terrains half cut half fill was possible only for about 10% of the road length. In RAP II it was found that 10% of retaining walls (100m for 1km) were found to be generally adequate.  Breast walls – There is no provision of breast in designs, it was only provided as required at site for protection of weak and marshy slopes.  Gabions walls - All walls of 5m and below are designed as gabion walls owing to the low cost, flexibility, good drainage and adequate retaining strength for retaining up to 5m of fill. Only walls above 5m are designed as RRM walls for improved retaining strength.  L-shaped drains – Owing to the small road widths in the feeder roads, the drains are designed as L-shaped to allow vehicle to pass over the drains when required.  Barriers – There should be provision of barriers like log barrier, boulder barriers, trench barriers. Trench barriers were found to very effective in reducing damage and retaining maximum spoil in road constructions. 4.5 Technical Audit A system of technical audit has been introduced in RAP II. Six engineers from MoWHS were trained to conduct TA. TA was conducted on RAP roads regularly. The TA is a best practice that reviews the overall health of a project with respect to compliance to the contract document and the technical specifications. 4.6 Use of dense grade base course RAP I used the open grade base course in 2 layers 20-50mm and 40-63mm layers. RAP II used the dense grade base course 0-40mm. Results have shown that riding quality is better than the open grade base course. The results especially on the life of the base course will further be tested during the maintenance. 4.7 Independent Project Management Units In the RAP I the project management units were under the administrative and financial control of the field divisions of DOR. Owing to problems faced with the earlier system, in the RAP II project management units have been made independent. PMU is headed by a Project Manager who is assisted by one junior engineer and they function independently from the field divisions. PMU’s are responsible for overall supervision of works, contract administration and quality assurance. 62 Project management has largely improved with an independent PMU. Bills can be paid faster since it is paid directly by the PM. Administrative functions are simple, direct and easier to follow. Decisions are taken promptly and quicker than in the earlier system. There is improvement in transparency and accountability. 4.8 Introduction of Interim Payment Certificates System of IPC is introduced for improving the cash flow for contractors. Contractors have to claim at least one running bill in every two months. Bills are paid within a maximum of 28 days from the claim. This system has helped the contractor with his cash flow and helped improve progress on works. 4.9 Low cost sealing Lessons learnt from the pilot otta seal are as follows:  Otta seal works were aimed at providing a protective cover to the gravel road and improve the riding quality.  Since it is a very thin course 16mm, it will work well only on a good base course.  Otta seal has to be done on freshly laid base course. Ideally after 3-4 weeks from base course laying or at least before a monsoon after the laying of the base course.  It is suitable for plain gradient roads.  It costs lower than the normal premix carpet and asphalt concrete but it is suitable for low traffic rural roads. 5. Comments on road from Districts, SEIMS June 2012 5.1 Jangchucholing-Tashidingkha Road, Wangdiphodrang District  Brings connectivity to the villages in Dangchu gewog.  People receive better access to health care facilities and attend to emergencies in a short time. Sick people can be referred faster to Dzongkhag Hospital at Wangdue and Jigme Dorji Wangchuk Referral Hospital at Thimphu.  Can have supply of agricultural inputs in time due to the road connectivity.  The road helps in marketability of agriculture produce.  Increase in production of cash crops e.g. chili and potato not only for self consumption but also for sell to earn some  Diversify production of vegetables for sell to earn cash income. 5.2 Drujeygang-Balung Road, Dagana  Project road has better design, wide and has good drainage as it is strictly monitored during construction.  Brings connectivity to the villages in Drujeygang, Tshangkha and Lajab gewogs 63  People have better access to health care facilities and the sick people can be referred faster to Dzongkhag Hospital at Dagapela and Regional Referral hospital at Gelephu, Jigme Dorji Wangchuk Referral Hospital at Thimphu. People can reach healthcare facilities at the time of emergency.  The road has helped in marketing of agriculture produces like oranges, maize, cardamom etc.  There has been increase in production of cash crops and vegetables leading to better income for the farmers. 5.3 Khotakpa-Khar-Tsebar Road, Pemagatshel  Brings connectivity to the villages in Khar, Chongshing and Yurung gewogs.  People have better access to health care facilities and the sick people can be referred faster to Dzongkhag Hospital at Pema Gatshel. People can reach healthcare facilities at the time of emergency.  Can have supply of agricultural inputs in time due to the road connectivity.  Helps marketability of agriculture produces. 64 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A 65 Annex 9. List of Supporting Documents  Project Implementation Plan  Project Appraisal Document for Kingdom of Bhutan: Second Rural Access Project (RAP-II) dated March 12, 2007 (Report No: 38312-BT)  Aide Memoires, Back-to-Office Reports, and Implementation Status Reports.  Project Progress Reports.  Borrower's Evaluation Report dated August 2012 *including electronic files 66 90°E BHUTAN S E CO ND RURAL ACCESS P ROJECT 0 10 20 30 40 Kilometers PROJECT ROADS PLANNED TO BE CONSTRUCTED AT APPRAISAL 1. Chuba Chorten–Dungdung 18.17 km PRIMARY NATIONAL HIGHWAYS 89°E 0 10 20 30 Miles 2. Balung–Drujeygang 33.91 km SECONDARY NATIONAL HIGHWAYS 3. Khodokpa–Pema Gatshel 13.00 km DZONGKHAG (DISTRICT) ROADS BHUTAN 4. Pema Gatshel–Tsebar 14.00 km 5. Tsebar–Yurung 23.50 km FEEDER ROADS TOTAL 102.58 km OTHER ROADS NATIONAL PROTECTED AREAS PROPOSED ROADS IN 9TH PLAN CITIES AND TOWNS ROADS UNDER CONSTRUCTION DZONGKHAG (DISTRICT) CAPITALS DZONGKHAG (DISTRICT) BOUNDARIES NATIONAL CAPITAL INTERNATIONAL BOUNDARIES This map was produced by the Map Design Unit of The World Bank. DEPARTMENT OF ROADS FIELD DIVISIONS The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 91°E 92°E GASA Jigme Dorji 28°N 28°N National Park Gasa LHUENTSE Kulongchhu Damji WANGDUE Dungkhar Wildlife PHO DRANG Sanctuary Trashithang BUMTHANG PUNAKHA Chuba Chorten TRASHI THIMPHU 4.2 km Lhuentse 'YANGTSE Dodina Shengana 1 Tashidingkha Punakha Kurjey Tang Tangmachu Trashi Talo Tseshinang 13.97 km ’Yangtse PARO Lobeysa Dangshing Jakar Dungdung Chuserbu Drukgyal THIMPHU Chuzomsa Tshenkharla Dzong Tomzhangtshen Wangdue Trongsa Paro Semtokha Phobji Thrumshingla Talung Ramjar Damthang Gumina Khotakha Nat’l. Park Shershong Bartshma Phongme Torsa Sakteng Strict Haa Khasadrapchu TRONGSA Drametse Chazam Bidung Wildlife Nature Chunzom Black Mtns. Trashigang Sanctuary Reserve Kamichu Gangola Nat’l. Park Zhemgang TRASHIGANG Buli Lingmithang Mongar HAA DAGANA Waklaytar Tendu ZH Tingtibi MONGAR Phekpari Chhukha Dagana TSIRANG EM Meta Balung Lobsebotty Khodokpa 3 CHHUKHA 2 Damphu G 13 km Pema Gatshel SAMDRUP Sipsu Dorokha 33.91 km Drujeygang Jigmecholing Gomphu AN Yurung 14 km 4 Tshelingkhor 27°N 27°N Changakha Gomphu G JONGKHAR SAMTSE SARPANG School 23.5 km Tsebar Narphung Manjiwong Lamidara Yoeseltse Gedu Mirchim Emiray Trashiding Gelek Zam 5 Jampani Kharbandi Sarpang Royal Manas Samtse Gelephu Dewathang Norbuling Nat’l. Park Panbang Nganglam Samdrup Khaling IBRD 35218R Kerabari Samdrupcholing Wildlife Sanctuary Piping PEMA Jongkhar APRIL 2013 Kalikhola Phipsoo GATSHEL Wildlife Sanctuary GSDPM Map Design Unit 89°E 90°E 91°E 92°E