facility administration manual · libor – london interbank offered rate mascs mlgpc mofp mwsd ......

Project Number: 45148 Facility Number: M {XXXX} Loan Number(s): {XXXX; XXXX} September 2012

Democratic Socialist Republic of Sri Lanka:

Multitranche Financing Facility for the Greater

Colombo Water and Wastewater Management

Improvement Investment Program

Facility Administration Manual

CONTENTS

Page

I. DESCRIPTION OF THE FACILITY 1 A. Rationale, Location, and Beneficiaries of the Investment Program 1 B. Impact, Outcome, and Outputs 2

II. IMPLEMENTATION PLANS 5 A. Project Readiness for Project 1 Implementation 5

B. Investment Program Implementation Plan 6 III. PROJECT MANAGEMENT ARRANGEMENTS 8

A. Project Implementation Organizations: Roles and Responsibilities 8 B. Key Persons Involved in Program Implementation 9 C. Investment Program Organizational Structure 10 D. Subproject Selection Criteria and Approval Process 10 E. Sequencing of Tranches 11 F. Subproject Approval Procedure 12

IV. COST ESTIMATES AND FINANCING PLAN 12 A. Allocation of the Loan Proceeds for Project 1 14 B. Contract and Disbursement S-Curve for Project 1 Financing 18 C. Fund Flow Diagrams for Implementing Agencies 20

V. FINANCIAL MANAGEMENT 22 A. The National Water Supply Drainage Board 22 B. The Colombo Municipal Council 24 C. Disbursement 25 D. Accounting 27 E. Auditing 27

VI. PROCUREMENT AND CONSULTING SERVICES 28 A. Advance Contracting and Retroactive Financing 28 B Procurement of Works, Goods, and Consulting Services 29 C. Procurement Plan 29 D. Consultant's Terms of Reference 30

VII. SAFEGUARDS 30 A. Key Safeguard Documents 30 B. Implementation Arrangements 30 C. Environmental Safeguards 30 D. Social Safeguards (Resettlement) 31 E. Safeguards Disclosure 32 VIII. GENDER AND SOCIAL DIMENSIONS 32

IX. PERFORMANCE MONITORING AND EVALUATION, REPORTING, AND COMMUNICATION 35

A. Program Design and Monitoring Framework 35

B. Monitoring 35 C. Evaluation 36 D. Reporting 36 E. Consultation and Participation Strategy 36

X. ANTICORRUPTION POLICY 39

XI. ACCOUNTABILITY MECHANISM 39

XII. RECORD OF CHANGES IN THE FACILITY ADMINISTRATION MANUAL 40

APPENDIXES: 1. Procurement Plan for Project 1 41 2. Indicative Outline Terms of Reference for Management Advisory and Supervision

Consultants 47 3. Indicative Outline Terms of Reference for Awareness Generation and Media

Consultants 61 4. Indicative Outline Terms of Reference for Community Mobilization and

Behavioral Change Nongovernment Organization 64 5. Design and Monitoring Framework for the Investment Program 68 6. Design and Monitoring Framework for Project 1 71 7. Consultation and Participation Plan for Project 1 74

Facility Administration Manual Purpose and Process

1. This Facility Administration Manual (FAM) describes the essential administrative and management requirements for implementing the Investment Program on time, within budget, and in accordance with Government of Sri Lanka and Asian Development Bank (ADB) policies and procedures. The FAM should include references to all available templates and instructions, both those directly incorporated in the FAM and those not found here (through links to relevant URLs).

2. The executing agencies, the Ministry of Water Supply and Drainage (MWSD) and the Ministry of Local Government and Provincial Councils (MLGPC), and the implementing agencies, the National Water Supply and Drainage Board (NWSDB) and the Colombo Municipal Council (CMC), are wholly responsible for the implementation of ADB-financed projects, as agreed jointly between the Government and ADB, and in accordance with the Government’s and ADB’s policies and procedures. ADB staff are responsible for supporting implementation including ensuring compliance by the MWSD, MLGPC, NWSDB, and CMC with their obligations and responsibilities for Investment Program implementation in accordance with ADB’s policies and procedures.

3. At loan negotiations the borrower and ADB shall agree to the FAM and ensure consistency with the Framework Financing Agreement (FFA) and the loan agreements. Such agreement shall be reflected in the minutes of the loan negotiations. In the event of any discrepancy or contradiction between the FAM and the FFA and loan agreements, the provisions of the FFA and loan agreements shall prevail.

4. After ADB Board approval of the Investment Program’s report and recommendation of the

President (RRP) to the Board, changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including project administration instructions) and upon such approval they will be subsequently incorporated in the FAM.

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund AFS CBO CEA

– – –

audited financial statement community-based organization Central Environmental Authority

CMC CPP CQS

– – –

Colombo Municipal Council consultation and participation plan consultant qualification selection

DMF – design and monitoring framework DSICs EARF

– –

design, supervision, and institutional consultants environmental assessment and review framework

EIA – environmental impact assessment EMP – environmental management plan ESMS – environmental and social management system FAM FFA FIDIC GAP GACAP

– –

– – –

Facility Administration Manual Facility Financing Agreement Fédération Internationale Des Ingénieurs-Conseils gender action plan governance and anticorruption action plan

GDP – gross domestic product ICB – international competitive bidding IEE – initial environmental examination LAR – land acquisition and resettlement LIBOR – London interbank offered rate MASCs MLGPC MOFP MWSD NCB

– – –

– –

management advisory and supervision consultants Ministry of Local Government and Provincial Councils Ministry of Finance and Planning Ministry of Water Supply and Drainage national competitive bidding

NRW – non-revenue water NPCNGNGO NWSDB O&M

– – – –

National Planning Commission nongovernment organization National Water Supply and Drainage Board operation and management

PAI – project administration instruction PMU PSC PPMS QBS

– – – –

program management unit Program Steering Committee program performance management system quality-based selection

QCBS – quality- and cost-based selection RFP – request for proposals RRP RSC-WC

– –

report and recommendation of the President Western Central Regional Support Center

SBD – standard bidding document SOE – statement of expenditure SPS – safeguard policy statement SPRSS – summary poverty reduction and social strategy TOR – terms of reference WASH – Water, sanitation, and hygiene

I. DESCRIPTION OF THE FACILITY

A. Rationale, Location, and Beneficiaries of the Investment Program 1. Colombo, 1 the capital city and economic and administrative hub of the country, is covered by a piped water supply system. However, the system suffers from low and fluctuating system pressure and intermittent supply; hence, some areas of the city receive water only in off-peak hours, and others receive water for only 6–10 hours a day on average.2 Many parts of the distribution network in Colombo were built over 100 years ago.3 Though there have been various projects to address the increasing water demand in the city, significant rehabilitation of the network has not been carried out, causing non-revenue water (NRW) still remain around 49%., which was around 55 five years back.4 The National Water Supply and Drainage Board (NWSDB), under the Ministry of Water Supply and Drainage (MWSD), supplies piped water to 127,000 metered service connections in Colombo.5 Additionally, around 3,200 stand posts are to be metered in the areas of under-served settlements. The water tariff is currently below the full cost recovery level. To enhance water conservation through the stand posts in under-served settlement, NWSDB has launched various pilot programs across the country and specifically in Colombo. These programs need to be implemented on a larger scale.6 2. According to the United Nations Development Programme (UNDP), as of 2008, 66% of the Greater Colombo population was served by on-site sanitation facilities, 25% by sewerage systems, and 9% had no facilities and disposed of its wastewater on the seashore, in canals and waterways, and on available open ground. It is currently estimated that various sewerage systems operating within Greater Colombo serve, a total of 140,000 households.7 The existing sewer network, built between 1906 and 2007, comprises about 320 kilometer of sewers, 18 pumping stations in two catchments (north and south), and two sea outfalls. The sewer lines have frequent collapses and blockages, and one-third of the pumping facilities are not working, causing frequent overflow into watercourses. Free septage removal 8 is provided by the municipalities. The Colombo Municipal Council (CMC) owns and operates the wastewater infrastructure services in Colombo city, and is the only municipal body handling such services in the country. Wastewater facilities outside the CMC area are managed by NWSDB. NWSDB has introduced a sewerage tariff within its operational jurisdiction9 and has a dedicated account for sewerage services. However, the sewerage operation in CMC is not separate from other operations and CMC has no independent accounting for its sewerage operation. Aside from property taxes, CMC does not have a separate wastewater charge. Expenditures for sewerage

1 The area covered by the Colombo Municipal Council has a population of about 700,000 over 37 km

2.

2 Only about 60% of the Greater Colombo population receives piped water supply, and only 50% of it has a

continuous water supply. 3 About 700 km out of the 927 km water supply distribution network in Colombo city is more than 50 years old.

4 The 49% NRW for Colombo city, which is twice the average NRW for the rest of the country, comprises 33%

physical losses, 5% commercial losses, and 11% free water supplied to under-served settlements. 5 As of December 2011.

6 NWSDB has already managed to form about 500 consumer societies, out of some 4,000 stand posts in Colombo,

on a community participation basis and charges them the minimum tariffs (SLRs3 per cubic meter [m3]).

7 While 64,000 households n the CMC areas are currently registered as connected, it is extremely common to find

two or more households per connection. These households, 80% are domestic and 20% are non-domestic. 8 These services generally include septic tank emptying using vacuum tankers with discharge into the sewerage

system (one of the pumping stations). The municipalities treat the costs of such services as part of the property tax. 9 The introduction of a sewerage charge was approved by the Cabinet in September 2002. Subsequently the

NWSDB approved a sewerage tariff policy and a specific tariff structure, which the Minister of Water Supply and Drainage also approved. The notification of a new sewerage tariff was gazetted in October 2007 and charging of sewerage tariff started in March 2008. As part of the system computerization at NWSDB, the form of the water bill was modified and the sewerage charge has been incorporated into the water bill.

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operation are met out of allocations from its general budget.

3. The core issues for Colombo’s water supply and sanitation are inadequate infrastructure and the services efficiency is low. Both water supply and wastewater facilities have exceeded their technical life, and are therefore inefficient and unreliable. NWSDB continues to face the difficult challenges of continuously increasing water demand and very high NRW in Colombo. The Government acknowledges that the subsector has been neglected: of the total investment in the water and sanitation sector during last 2 decades, less than 5% was spent on sanitation. The inadequate infrastructure and service delivery in Colombo sewerage system also stems from an inadequate institutional framework and the weak capacity of service providers. Although the issue has since been resolved, for a long time there was lack of clarity concerning the role of the two key institutions involved in wastewater management, NWSDB and CMC, and ambiguity about their ownership of assets. 10 Assets are in the process of being inventoried and an accurate database on their condition is being established. Customer databases are not regularly updated. There is inadequate institutionalized mechanism for monitoring operating performance or environmental compliance. The CMC lacks adequate capacity to efficiently manage the wastewater services. Similarly, NWSDB’s Western Central Regional Support Center (RSC-WC), in charge of Greater Colombo, needs more autonomy and capacity development to improve its operational, capital planning, commercial, and financial functions.

B. Impact, Outcome, and Outputs

4. The impact of the Investment Program will be an improved urban environment and quality of life for the residents of Greater Colombo. The expected outcome will be improved water and wastewater services and management in Greater Colombo. 5. The Investment Program is expected to have the following output:

(i) Output 1: Rehabilitated and expanded water supply system and reduced NRW in Colombo city. To achieve this output, the Investment Program will support (a) the rehabilitation and replacement of the water supply distribution network, pumps, and transmission pipes in the city; (b) the enhancement of domestic service connections, including installation of higher-quality customer meters; (c) the validation of geographic information system (GIS) network maps; (d) city-wide active leakage control using fully equipped NRW teams; (e) reinforcement of the Operations & Maintenance unit to undertake major repairs; (f) the establishment of an NRW monitoring and control system based on a zone distribution system, i.e., district metered areas (DMAs), and (g) the provision of materials, equipment, vehicles, and NRW buildings.

(ii) Output 2: Improved wastewater services in Greater Colombo. To achieve this output, the Investment Program will support (a) the rehabilitation and expansion of existing sewers; (b) the provision of sewer connections; and (c) the construction of two wastewater treatment plants with a total capacity of about 175,000 cubic meter per day.

(iii) Output 3: Strengthened institutional structure and capacity of service providers. To achieve this output, the investment program will support (a) the establishment of an operations performance audit cell in NWSDB; (b) the

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Assets are believed to be owned by NWSDB, in accordance with the voluntary transfer order in 1996 under Section 64(1) of the NWSDB Law. However, the transfer turned out to be invalid in the absence of Parliamentary approval. The Attorney General issued a legal opinion in September 2007, making CMC the legal owner of the sewerage assets within the CMC area, a determination that was acknowledged by CMC and NWSDB. NWSDB remains the asset owner and service provider outside CMC.

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decentralization of all Colombo City water supply operations to RSC-WC, which will be set up as an autonomous business center under NWSDB; (c) the delegation of asset, management, and investment planning to RSC-WC; (d) the establishment of a GIS-based asset management system for water and wastewater in Colombo; (e) the separation of sewerage and drainage into two functional departments and the establishment of a separate accounting system for wastewater services; (f) the preparation of bid documents for build–operate–transfer contracts for the wastewater treatment plants; (g) the introduction of a wastewater volumetric tariff in CMC to recover O&M costs, and methodology and guiding studies supporting the cost-recovery tariff; (h) the provision of management advisory and supervision consultants (MASCs) to support investments in water sector and manage NRW reduction and design, supervision and institutional consultants (DSICs) to support the implementation of investments in the wastewater sector; (i) the provision of a public awareness campaign with the participation of nongovernment organizations (NGOs) in the activities under the Investment Program; and (j) training and capacity building to improve the operating performance of staff.

(iv) Output 4: Investment Program managed and implemented. To achieve this output, implementation support will be provided to the executing and implementing agencies in managing the investment program successfully, and in preparing the remaining tranches by enhancing the facilities and providing on-the-job training with the day-to-day collaboration of consultants.

6. The Investment Program will be implemented over a period of 8 years, from 2013 to 2020. It will be phased as follows: (i) $84 million for Project 1 in 2012 and (ii) $80 million for Project 2 in 2013, both focusing on reducing NRW and improving water service efficiency in Colombo; (iii) $100 million for Project 3 in 2015; and (iv) $36 million for Project 4 in 2016, both of which will include improvements in wastewater services and expansion of the water supply and wastewater services to other areas of Greater Colombo. A similarly phased approach will be taken within the tranches and in NRW reduction efforts. NRW reduction will be tackled first in areas with greater physical and commercial losses, and therefore requiring more critical investment in infrastructure replacement. These include Mattakkuliya, Modera, Kotahena, Grandpass, and Bloemendal in Colombo North Area; Fort, Slave island, Kollupitiya (part), and Union Place in Colombo Northwest Area, and Welikada, Boralla, Dematagoda, Maligawatta (part), and Maradana in Colombo Northeast Area. These areas will be covered by the first tranche. During this period essential studies and modeling under the Japan International Cooperation Agency (JICA) master plan will also be conducted to inform subsequent tranches. 7. Details of the subsequent tranches will be prepared during the implementation of Project 1, from 2012 to 2017. Project 1 will have the following output:

(i) Rehabilitation and replacement of about 318 km of seriously degraded distribution network pipes, including the replacement of about 278 km of cast-iron pipes;

(ii) Installation of new electromagnetic flow meters, valves, and special fittings for formation of district metered areas (DMAs) and for the NRW monitoring and remote control system;

(iii) Replacement and transfer of around 51,000 service connections with polyethylene pipes and fittings;

(iv) Replacement of about 17,000 defective water meters; (v) Introduction of 5,000 water meters with automatic meter reader the facility in a

pilot area;

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(vi) Metering of 3,200 additional free water outlets, and formation and operationalization of their consumer associations;

(vii) Validation and updating of the GIS network for the rehabilitated system; (viii) Establishment of fully equipped city-wide active-leakage-control units and

reinforcement of the O&M units to undertake NRW activities and major repairs; (ix) Construction of a dedicated NRW office for Colombo city with buildings,

materials, equipment, and vehicles; (x) Establishment of an operations performance audit cell in NWSDB; (xi) Decentralization of Colombo city water supply operations to RSC-WC of NWSDB

and setting up of an autonomous business center under the NWSDB with appropriate financial and commercial systems and separate books of accounts, and transfer of all records to the business center;

(xii) Delegation of the management of assets to RSC-WC and establishment of a GIS- based asset management system;

(xiii) Provision of MASCs to manage all NRW reduction activities in Colombo; and (xiv) Implementation of an effective public awareness campaign, with the active

participation of women and NGOs. (xv) MASC support in managing and implementing the project and preparing the

remaining tranches; and (xvi) Trainings and capacity building to improve the operating performance of NWSDB

staff.

8. Indicative details of projects, under the Investment Program, to be funded under subsequent tranches, are as follows:

Project 2 ($80 million loan) (2013–2017): Water Supply Subprojects (i) System rehabilitation and replacement in the rest of the city area (around 300 km

of pipe replacement and rehabilitation), including a supply pump and 12 km of transmission lines, expansion of water supply system in Greater Colombo;

(ii) Revision of water tariff to improve sustainability, including an increase in the tariff in under-served settlement in par with the citywide residential tariff;

(iii) Capacity building for NRW reduction; and (iv) Implementation support.

Project 3 ($100 million loan) (2015–2019): Wastewater Subprojects (i) Rehabilitation of around 30 km of collection sewers, and around 445 km of sewer

extensions to serve unsewered and under-served areas; (ii) Establishment of a GIS-based wastewater asset management system; (iii) Establishment of a sewerage division under CMC with separate accounting

system, and introduction of a volumetric wastewater tariff; and (iv) Implementation support.

Project 4 ($36 million loan) (2016–2020): Wastewater Subprojects (i) Construction of two wastewater treatment plants of around 125,000m3/d and

50,000 m3/d capacity to the secondary treatment standard; (ii) Capacity-building technical assistance for O&M; (iii) Public Private partnership management of wastewater treatment facilities; and (iv) Implementation support.

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II. IMPLEMENTATION PLANS

A. Project Readiness for Project 1 Implementation

Table 1: Project Readiness for Project 1 Implementation

Milestones

Responsible

Agency Jul

Aug

Sept Oct Nov Dec Jan 13

Feb13

ADB loan appraisal mission

ADB

RFP for MASC completed and bidding process started

NWSDB

Tendering of priority works started

NWSDB

Loan Negotiations ADB and

Gov’t

ADB Management approval

ADB

Loan signing ADB and MWSD

Government legal opinion provided

MWSD

Government budget inclusion

MWSD

Loan effectiveness

ADB= Asian Development Bank, MASC= management advisory and supervision consultant, MWSD= Ministry of Water Supply and Drainage, NWSDB= National Water Supply and Drainage Board, RFP= request for proposals.

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B. Investment Program Implementation Plan

Table 2: Investment Program Implementation Plan

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.0 Loan agreement effectiveness 12.12.2012

2.0 Contracts under tranche One

2.1Supply and installation of system input meters

and priority customer meters

2.1.1 Bidding and procurement process

2.1.2

System input meters and priority customer

meters received and installed

2.2Supply of LD, pressure monitoring and large

dia pipes equipment


2.2.2 Supply of equipment

2.3Construction of NRW office including meter

workshop and AE office


2.3.2 Design and Construction

2.4Supplying and laying of pipes in Colombo

North Area (initially critical area)


2.4.2 Construction

2.5

Supplying and laying of pipes in North East of

City


2.5.2 Construction

2.6

Supplying and laying of pipes in North West of

City


2.6.2 Construction

2.7 Procurement of vehicles - Phase 1

2.7.1 Bidding and procurement

2.7.2 Purchase

2.8

Management Advisory and Supervision

Consultant (MASC)

2.8.1 EOI

2.8.2 RFP and procurement

2.8.3 Mobilization and performance of MASC

3.0 Contracts under Tanche Two

3.1

Supplying and laying of pipes in South East of

City

3.1.1 Design and documentation


3.1.3 Construction

Task Name

GCWWMIP Implementation Plan

ID2018 2019 20202012 2013 2014 2015 2016 2017

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ADB = Asian Development Bank, EOI = expressions of interest, EIA = environmental impact assessment, IEE = Initial Environmental Examination, EMP = environmental management plan, MASCs = Management Advisory and Supervision Consultants, PIU = Project Implementation Unit, PMU = Project Management Unit, RFP = Request for Proposals, RSC-WC = Western Central Regional Support Center, TOR = Terms of reference. Source: Asian Development Bank.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

3.2

Supplying and laying of pipes in South West of

City



3.2.3 Construction

3.3 Supplying and laying of pipes in South of City



3.3.3 Construction

3.4 Procurement of vehicles - Phase 2


3.4.2 Purchase

3.5Supplying and laying of pipes

fromMaligakanda to Fort and Galle Face


3.5.2 Construction

3.6

Construction of Area Engineers' Office for City

South


3.6.2 Construction

3.7 Procurement of O & M Equipment


3.7.2 Purchase

4.0 Tranche 2

4.1

Scraping and relining or supplying and laying

of pipes in that place

4.1.1 Documentation


4.1.3 Construction

4.2 Rehabilitation of Pumping Stations


4.2.2 Implementation

5.0 Procurement under Tranche 3 and 4

5.1

Rehabiltation of Gravity Sewers and Force

Mains

5.1.1

Detailed Design and Preparation of bid

documents

5.1.2 Procurement process

5.1.3 Construction

5.2

Extension of Sewer System to Non-served

Areas

5.2.1


documents


5.2.3 Construction

5.3

Extension of Sewerage Facility to

Underserved Areas

5.3.1


documents


5.3.3 Construction

5.4

Construction of Wastewater Treatment

System

5.4.1


documents


5.4.3 Construction and Commissioning

5.4.4 Operation

5.5

Design Supervision and Institutional

Consultancy

2016 2017 2018 2019 2020ID Task Name

2012 2013 2014 2015

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations

Table 3: Project Implementation Organizations and their Roles and Responsibilities Project Implementation Organizations Management Roles and Responsibilities

Program Steering Committee (PSC) at the Ministry of Finance and Planning (MOFP), comprising:

(i) Chairperson: Secretary to Treasury (ST) as chairperson

(ii) Members: Secretary of the Ministry of Water Supply and Drainage (MWSD); Secretary of Ministry of Local Government and Provincial Councils (MLGPC); Representatives (senior officials) from the Department of External Resources (DER) National Planning Department (NPD), Ministry of Defense and Urban Development (MOD&UD) National Water Supply Drainage Board (NWSDB), and Colombo Municipal Council (CMC), and

others as required.

Two ministry level steering committees, each headed by respective secretary to review the Project implementation progress and approvals.

(i) Provide strategic guidance in and oversee the implementation of the Investment Program.

(ii) Meet quarterly and provide policy directions on: (a) Overall progress and issues; (b) Implementation of institutional and other reforms;

and (c) Compliance with loan covenants under the ADB

loans. (iii) Facilitate the resolution of critical project implementation

issues and the inter-departmental coordination. (iv) Ensure the audit of the loan proceeds. (v) Review and approve the balance sheet, audit report, and

other annual reports of the program, if necessary. (vi) Ensure the timely release of funds to the Investment

Program. (vii) Approve:

(a) Subproject concept, scope, and cost; and (b) Periodic financing request scope and cost.

(viii) Consider and decide on: (a) Annual budget; and (b) Annual action plan.

MWSD, executing agency for water supply investments and wastewater investments outside Colombo city MLGPC, executing agency for wastewater investments

(i) Establish PMUs each headed by a project director, who will be a senior official of NWSDB or CMC, with authority to decide on facility administration, loan disbursement, and reporting to ADB.

(ii) Endorse subproject scope. (iii) Provide a forum for the effective involvement of stakeholders

in program implementation and civic awareness activities. (iv) Ensure adequate staffing and timely release of funds to the

PMUs. (v) Ensure the audit of loan proceeds and maintenance of

accounts. (vi) Finalize the proposal for institutional changes with the

assistance of the PMUs. (vii) Provide guidance and support to the PMUs to ensure

smooth and timely implementation. (viii) Help the PMUs in seeking support of stakeholders. (ix) Assist in site clearance activities, interagency coordination,

and the securing of statutory clearances. (x) Ensure the adequacy of counterpart funds. (xi) Implement the agreed policy and institutional reforms plan

under the Investment Program.

NWSDB and CMC, implementing agencies , through their project management units (PMUs)

(i) Establish imprest accounts; manage and replenish them. (ii) Organize audits by chartered accountants or independent

auditor. (iii) Engage and manage the Investment Program consultants

and contractors. (iv) Coordinate with ADB addressing any implementation issues. (v) Prepare, consolidate, and submit quarterly, semiannual and

annual progress reports on the Investment Program to ADB and Government as agreed.

(vi) Establish an Investment Program PPMS within 3 months of

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Project Implementation Organizations Management Roles and Responsibilities

the signing of the PFR, including a set of clearly measurable performance monitoring indicators relating to implementation, improvements, institutional development, and capacity-building milestones such as those in the DMF, and monitor the implementation of the Facility in line with the PPMS.

(vii) Implement the approval procedure for subprojects. (viii) Obtain and provide to ADB all disbursement-related

documentation. (ix) Carry out the procurement of goods and works under the

Investment Program. (x) Monitoring of the civil works and other works of the

contractors. (xi) Provide support to the PSC and the ADB missions. (xii) Provide adequate staff for project implementation and

supervision. (xiii) Provide timely guidance at each stage of the project to

ensure smooth implementation. (xiv) Oversee the implementation of safeguards in accordance

with the agreed safeguard plans and frameworks. Obtain all relevant government permits and clearances. Submit semi-annual safeguard monitoring reports to ADB.

ADB = Asian Development Bank, DMF = design and monitoring framework, MWSD = Ministry of Water Supply and Drainage, MLPGC= Ministry of Local Government and Provincial Councils, PMU = project management unit, PPMS = program performance management system, PSC = program steering committee.

B. Key Persons Involved in Program Implementation

Table 4: Key Persons Involved in Program Implementation Executing Agency –Water Supply Investments and Wastewater Investments in non-CMC areas Ministry of Water Supply and Drainage (NWSD)

A. Abeygunasekara, Secretary Telephone: +94 11 20808149 Email address: [email protected] Office Address: 35 Lakdiya Medura New Parliament Road, Pelawaththa, Battaramulla, Sri Lanka

Implementing Agency – Water Supply Investments and Wastewater Investments in non-CMC areas National Water Supply and Drainage Board (NWSDB)

K.L. L. Premanath Position: General Manager Telephone: +94 11 2636449 Email address: [email protected] Office Address: Galle Road Ratmalana, Sri Lanka

Executing Agency - Wastewater Investments in CMC area Ministry of Local Government and Provincial Councils (MLGPC)

R A A K Ranawaka, Secretary Telephone: +94 11 2399673

Email address: [email protected],

Office Address: 330, Union Place, Colombo 2, Sri Lanka

Implementing Agency – Wastewater Investments in CMC area Colombo Municipal Council (CMC)

Bhadrani Jayawardhane Position: Municipal Commissioner Telephone: +94 11 2678425Email address: [email protected] Office Address: Colombo Municipal Council, Town Hall, Colombo 7, Sri Lanka

ADB - Urban Development and Water Division (SAUW) of South Asia Regional Department

Y. Fei Director, SAUW Telephone: +63 2 6326858 Email address: [email protected] Mingyuan Fan Responsible Program Officer - Urban Development Specialist Telephone: +63 2 683 1763 Email: [email protected]

mailto:[email protected]


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C. Investment Program Organization Structure

Figure 1: Investment Program Organizational Chart

ADB= Asian Development Bank, CMC= Colombo Municipal Council, CDTA= capacity development technical assistance, DSIC= design, supervision, and institutional consultant, MASC= management advisory and supervision consultant, MLGPC= Ministry of Local Government and Provincial Councils, MWSD= Ministry of Water Supply and Drainage, NRW= non-revenue water, NWSDB= National Water Supply and Drainage Board, PMU= program management unit.

D. Subproject Selection Criteria

1. General Project Selection Criteria

9. The geographical scope of the Greater Colombo Water and Wastewater Management Improvement Investment Program (GCWWMIIP) is limited to Greater Colombo. In accordance with the objectives and targets set under the road map and investment program for the GCWWMIIP Multitranche Financing Facility (Facility), projects eligible for financing under the Facility will (i) water supply and wastewater infrastructure; and (ii) institutional development.

10. The projects will be part of the GCWWMIIP for 2012–2020. If the projects proposed under the GCWWMIIP are being financed from another funding source, alternative projects will be considered for selection only if they are part of the investment plan for water supply and wastewater improvements in Greater Colombo. The selection of each project will be subject to the following general criteria to be adhered to by the project management units (PMUs):

(i) The project has not been sanctioned under any other program. (ii) The project is technically sound. A feasibility study with preliminary design,

infrastructure coverage, and implementation plan will be used to confirm the technical viability of these projects.

(iii) The project has the following features: (a) design alternatives have been identified and a least-cost analysis has been conducted, leading to the proposed selection; (b) the cost and benefit analysis indicates that the economic internal

NWSDB-Implementing Agency

MWSD-Executing Agency

Government of Sri Lanka ADB

CDTA NRW Specialist

and Team

Program Steering Committee

MASC

PMU

MLGPC -Executing Agency

CMC-Implementing Agency

PMU DSIC

11

rate of return equals or exceeds the economic opportunity cost of capital;11 (d) the tariff analysis, including equity considerations in tariff structure, willingness to pay, and affordability, has been updated; and (e) 25-year financial projections have been prepared for the service operations.

(v) All necessary Government approvals and clearances have been obtained. (vi) The project complies with laws and regulations in Sri Lanka for environmental

and social safeguards and ADB safeguard policies.

2. Subsector-Specific Criteria

a. Water Supply

(i) The project will achieve the minimum service level criteria acceptable to MWSD. (ii) The project will address active leakage control and pipe rehabilitation before pipe

replacement, unless the pipes are so degraded that the rehabilitation cost outweighs the cost of pipe replacement.

(iii) The project is consistent with best practice for NRW reduction endorsed by the International Water Association and other good experience on NRW.

(iv) The project ensures that Colombo’s water supply system remains financially sustainable.

b. Wastewater

(i) The system will achieve the minimum service level criteria acceptable to the MLGPC and CEA

(ii) Sewerage projects are limited to the areas where the per capita water supply is sufficient to ensure that self-cleansing velocities can be regularly achieved without frequent system flushing.

(iii) Sewerage projects in new areas will only commence once sample surveys show that consumers are willing to have sewerage connections.

(iv) The project ensures that Colombo’s wastewater system remains financially sustainable.

E. Sequencing of Tranches 11. The sequencing of tranches is based on the following principles: (i) readiness of projects in terms of institutional capacity and safeguard compliance (in particular land acquisition and resettlement, as well as environmental, aspects); (ii) relative investment priorities under the GCWWMIIP and the Government's investment program, based on a ranking of the projects for their potential ability to augment the efficiency of existing utility systems, and capacity building of service providers beyond the requirements of the system expansion; and (iii) size, of growth rates, and logical urban development of Greater Colombo. 12. Tranches will be sequenced as follows:

(i) Works pertaining to the improvement of most critical infrastructure and operational efficiencies will be taken up in the first tranche. These include areas with higher NRW levels, and analytical, modeling and system improvement work required for the entire Colombo city. For sewerage, rehabilitation work will be considered first, followed by treatment and expansion.

11

The economic analysis should be conducted in accordance with ADB’s Guidelines for the Economic Analysis of Projects (1997).

12

(ii) Projects for the expansion of infrastructure and services for the rest of the

districts in Colombo city and Greater Colombo will generally be taken up in the second and fourth tranches.

F. Subproject Approval Procedure

13. The consultants will prepare the final project report, and also assist the PMUs in design reviewing, preparing technical specifications, and reviewing bid documents. The NWSDB or CMC will deploy in-house design office staff or use consultants to prepare detailed designs and the detailed design report (DDR) for each component. 14. The DDR will be based on quantitative data, and will include the rationale and description of the component, an assessment of alternative design options, the selection of the least-cost design for all options, cost estimates, a procurement plan, financial analysis, economic analysis, environmental assessment, involuntary resettlement assessment, plans for the development of indigenous people, a gender action plan, a consultation and participation strategy, and a social and poverty reduction strategy. 15. The PMUs of the NWSDB and CMC will appraise the subproject using the DDR in the light of ADB’s operating and safeguard policies, and ADB’s guidelines and handbooks. If the PMUs conclude that the DDR fully meets ADB’s operating and safeguard policies, they will endorse the DDR and submit it to ADB for thorough review. ADB may request site visits and clarifications from the PMUs or may ask for reconsideration of the subproject design. 16. The PMUs of the NWSDB and CMC will improve the DDR on the basis of ADB’s no- objection and will then submit the DDR to PSC for endorsement. Upon endorsement of the PSC, the PMU will prepare a periodic financing request (PFR) and formally submit it to ADB, through the Government. ADB’s appraisal mission for the specific PFR will be organized on the basis of the quality of feasibility documentation and the timetable set for meeting the readiness criteria. The consolidated PFR to be formally submitted by the executing agencies to ADB through the ERD should include: (i) the required loan amount; (ii) a list of subprojects to be financed under the loan; (iii) cost estimates and financing plan; (iv) implementation arrangements; (v) confirmation of the continuing validity of, and adherence to, the provisions of the Financial Financing Agreement; (vi) confirmation of compliance with the provisions under previous loan agreements and project agreements as appropriate; (vii) due diligence on safeguards; and (viii) other information as may be required under the Facility Administration Manual to be prepared and agreed between ADB and Sri Lanka, to facilitate implementation and processing of the Facility.

IV. COST ESTIMATES AND FINANCING PLAN

17. The total cost of the Investment Program is estimated at $400 million (Table 5) inclusive of taxes duties, interest and other charges on the loan during construction. A multitranche financing facility of $300 million from ADB will finance 75% of the total Program cost. The MFF comprises blend financing from ADF and OCR up to the aggregate MFF amount of $300 million equivalent. Thus, the provision of any ADF resources is balanced by a corresponding reduction of the available OCR financing, so that the total financing provided under the MFF will not exceed the aggregate MFF amount of $300 million equivalent. Any ADF allocation will be subject to (i) the general availability of ADF resources from time to time, (ii) Sri Lanka’s access

13

to such resources pursuant to ADB’s graduation policy,12 as amended from time to time, and the requirements of the ADF donors, and (iii) the availability of such resources to Sri Lanka pursuant to ADB’s policy on performance-based allocation of ADF resources,13 as amended from time to time. Project 1 of the program will be funded with (i) a $70 million LIBOR-based loan having a 26-year term, including a grace period of 5 years, an interest rate determined in accordance with ADB’s LIBOR-based lending facility, a commitment charge of 0.15% per year, and other terms and conditions set forth in the loan and project agreements; and (ii) a loan in various currencies equivalent to $14 million from ADB’s Special Funds resources, to finance a part of the project costs. The loan from ADB’s Special Funds resources will have a 32-year term, including a grace period of 8 years, an interest charge of 1.0% per year during the grace period and 1.5% per year thereafter, and other terms and conditions set forth in the loan and project agreements. Project 1 is estimated to cost $112 million (Table 6) and the periodic financing request is $84 million for Tranche 1 of the MFF. The detailed cost estimates are in Tables 9, 10 and 11.

Table 5: Investment Program Cost Estimate ($ million) Item Amount

a, b

A. Base Cost Output 1 Rehabilitation and expansion water supply 167.0 Output 2 Improvement of wastewater services 138.0 Output 3 Institutional reform and capacity building 20.0 Output 4 Implementation Support 14.0 Subtotal (A) 339.0 B. Contingencies

c 44.0

C. Financing Charges During Implementation d 17.0

Total (A+B+C) 400.0

a In mid 2012 prices. Exchange rate of $1 = SLRs132 is used.

b Includes taxes and duties of $38 million to be financed by the government.

c Physical contingencies computed at 12.5% for civil works and 10% for equipment; price contingency computed at 7% for domestic goods and 2% for imported goods

d Includes interest and commitment charges. Interests during construction for Asian

Development Bank loan(s) is computed at 1.5% per annum for ADB loan(s) from ordinary capital resources and 1.0% per annum for ADB loan(s) from Special Funds resources. Commitment charges for the ADB loan from ordinary capital resources are computed at 0.15% per annum.

Source: ADBestimates.

Table 6: Project 1 Cost Estimate (US$ million) Item Amount

a, b

A. Base Cost

Output 1. Water supply rehabilitation and NRW reduction 67.55

2. Institutional reform and capacity building 7.29 3. Implementation support 3.41 Subtotal (A) 78.25 B. Taxes and Duties

c 15.73

C. Contingencies d 13.29

D. Financing Charges During Implementation e 4.73

Total (A+B+C+D) 112.00

a Exchange rate of $1 = LKRs132 is used.

b In mid-2012 prices.

12

ADB. 2008. Review of the 1998 Graduation Policy of the Asian Development Bank. Manila. 13

ADB. 2004. Review of the Asian Development Bank’s Policy on the Performance-Based Allocation of Asian Development Fund Resources. Manila; ADB. 2008. Refining the Performance-Based Allocation of Asian Development Fund Resources. Manila.

14

c Taxes and duties computed at 32% for imported goods and at 12% for domestic goods

and services. Taxes and duties are the responsibility of the government. d Physical contingencies computed at 12.5% for civil works and 10% for equipment; price

contingency computed at 7% for domestic goods and 2% for imported goods. e Includes interest and commitment charges. Interests during construction for Asian

Development Bank loan(s) are computed at 1.5% per year for ADB loan(s) from ordinary capital resources and 1.0% per year for ADB loan(s) from Special Funds resources. Commitment charges for ADB loan(s) from ordinary capital resources are computed at 0.15% per year.

Source: ADB estimates.

A. Allocation of Loan Proceeds under Project 1 18. The proceeds of the loan shall be used to finance eligible program expenditures. All work, goods, and services to be financed out of the loan proceeds shall be procured in accordance with the loan and project agreements and shall be used exclusively in the program. ADB may refuse to finance a contract where works, goods, and services have not been procured according to the procedures those agreed on with the Government or where the terms and conditions of the contract are not satisfactory to ADB. The allocation of loan proceeds for Project 1 of the Investment Program is given in Table 7 and Table 8.

Table 7: Indicative Allocation and Withdrawal of OCR Loan Proceeds

Category ADB Financing

Number Item Amount Allocated ($) Percentage Financed and Basis for Withdrawal Category

1 Civil Works 55,240,000 72 Percentage of total expenditure claimed

2 Interest and commitment charges

4,204,000 100 Percentage of amounts due

3 Unallocated 10,556,000

Total 70,000,000

Table 8: Indicative Allocation and Withdrawal of ADF Loan Proceeds

Category ADB Financing

Number Item

Amount Allocated (SDR) Percentage Financed and Basis for Withdrawal Category

1 Material and equipment

1,863,000 54 Percentage of total expenditures claimed

2 Consulting services. NGO contracts

4,132,000 100 Percentage of total expenditures, excluding taxes and duties

3 Training and workshops

649,000 100 percentage of total expenditure, excluding taxes and duties

4 Incremental recurrent costs

1,609,000 72 Percentage of total expenditure claimed

5 Interest charge 343,000 100 Percentage of amounts due

6 Unallocated 588,000

Total 9,184,000

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Table 9: Project 1 Detailed Cost Estimates by Financier ($ million)

ADB OCR ADB ADF Government Total

Item Amount % Amount % Tax Nontax Total % Cost

A. Investment Costs

1. Civil Works 55.24 71.6% 0.00 0.0% 13.62 8.31 21.93 28.4% 77.17

2. Mechanical and Equipment 0.00 0.0% 2.84 53.8% 1.33 1.11 2.44 46.2% 5.28

3. Resettlement 0.00 0.0% 0.00 0.0% 0.00 0.05 0.05 100.0% 0.05

4. Capacity Development 0.00 0.0% 7.29 90.3% 0.78 0.00 0.78 9.7% 8.07

a. Project Management and Design Supervision 0.00 0.0% 6.30 89.0% 0.78 0.00 0.78 11.0% 7.08

b. Training and Workshops 0.00 0.0% 0.99 100.0% 0.00 0.00 0.00 0.0% 0.99

Subtotal (A) 55.24 61.0% 10.13 11.2% 15.73 9.47 25.20 27.8% 90.57

B. Recurrent Costs

Incremental Administrative Costs 0.00 0.0% 2.45 71.8% 0.00 0.96 0.96 28.2% 3.41

Subtotal (B) 0.00 0.0% 2.45 71.8% 0.00 0.96 0.96 28.2% 3.41

Total Base Cost 55.24 58.8% 12.58 13.4% 15.73 10.43 26.16 27.8% 93.98

C. Contingencies

1. Physical Contingencies 6.90 82.8% 0.28 3.4% 0.00 1.15 1.15 13.8% 8.33

2. Price Contingencies 3.66 73.8% 0.61 12.3% 0.00 0.69 0.69 13.9% 4.96

Subtotal (C) 10.56 79.4% 0.90 6.7% 0.00 1.84 1.84 13.8% 13.29

D. Financing Charges During Implementation

Interest and Commitment Charges 4.20 88.9% 0.52 11.1% 0.00 0.00 0.00 0.0% 4.73

Subtotal (D) 4.20 88.9% 0.52 11.1% 0.00 0.00 0.00 0.0% 4.73

Total Project Cost (A+B+C+D) 70.00 62.5% 14.00 12.5% 15.73 12.27 28.00 25.0% 112.00 % Total Project Cost 62.5% 12.5% 25.0% 100%

ADB= Asian Development Bank, ADF= Asian Development Fund, OCR= ordinary capital resources. Note: Figures may not add up to the totals given because of rounding. Source: ADB estimates.

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Table 10: Project 1 Detailed Cost Estimates by Output ($ million)

Output 1 Output 2 Output 3 Total Cost

Items Amount % of Total Amount % of Total Amount % of Total

A. Investment Costs

1. Civil Works 77.17 100% 0.00 0% 0.00 0% 77.17

2. Mechanical and Equipment 5.28 100% 0.00 0% 0.00 0% 5.28

3. Resettlement 0.05 100% 0.00 0% 0.00 0% 0.05

4. Capacity Development 0.00 0% 8.07 100% 0.00 0% 8.07

a. Project Management and Design Supervision 0.00 0% 7.08 100% 0.00 0% 7.08

b. Training and Workshops 0.00 0% 0.99 100% 0.00 0% 0.99

Subtotal (A) 82.50 91% 8.07 9% 0.00 0% 90.57

B. Recurrent Costs

Incremental Administrative Costs 0.00 0% 0.00 0% 3.41 100% 3.41

Subtotal (B) 0.00 0% 0.00 0% 3.41 100% 3.41

Total Base Cost 82.50 88% 8.07 9% 3.41 4% 93.98

C. Contingencies

1. Physical Contingencies 7.94 95% 0.40 5% 0.00 0% 8.33

2. Price Contingencies 4.21 85% 0.35 7% 0.39 8% 4.96

Subtotal (C) 12.15 91% 0.75 6% 0.39 3% 13.29

D. Financing Charges During Implementation

Interest and Commitment Charges 4.20 89% 0.37 8% 0.16 3% 4.73

Subtotal (D) 4.20 89% 0.37 8% 0.16 3% 4.73

Total Project Cost (A+B+C+D) 98.85 88% 9.18 8% 3.96 4% 112.00 % Total Project Cost 88% 8% 4% 100% Note: Figures may not add up to the totals given because of rounding. Source: ADB estimates.

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Table 11: Project 1 Detailed Cost Estimates by Year ($ million)

Item Total Cost 2013 2014 2015 2016 2017

A. Investment Costs

1 Civil Works 63.55 6.15 31.39 26.01 0.00 0.00

2 Mechanical and Equipment 3.95 1.40 2.55 0.00 0.00 0.00

3 Resettlement 0.05 0.00 0.05 0.00 0.00 0.00

4 Capacity Development 7.29 1.37 3.16 2.27 0.49 0.00

a. Project Management and Design Supervision 6.30 0.92 3.12 1.77 0.49 0.00

b. Training and Workshops 0.99 0.45 0.05 0.50 0.00 0.00

5 Taxes 15.73 1.86 7.92 5.90 0.06 0.00

Subtotal (A) 90.57 10.77 45.07 34.17 0.55 0.00

B. Recurrent Costs

Incremental Administrative Costs 3.41 0.68 0.68 0.68 0.68 0.68

Subtotal (B) 3.41 0.68 0.68 0.68 0.68 0.68

Total Base Cost 93.98 11.46 45.76 34.85 1.23 0.68

C. Contingencies

1 Physical Contingencies 8.33 0.91 4.17 3.25 0.00 0.00

2 Price Contingencies 4.96 0.24 1.98 2.47 0.13 0.14

Subtotal (C) 13.29 1.15 6.15 5.72 0.13 0.14

D. Financing Charges

1 Interest During Implementation 4.39 0.13 0.71 1.17 1.18 1.19

2 Commitment Charges 0.33 0.10 0.07 0.05 0.05 0.05

Subtotal (D) 4.73 0.23 0.79 1.22 1.24 1.24

Total Project Cost (A+B+C+D) 112.00 12.84 52.70 41.80 2.60 2.06 % Total Project Cost 100% 11% 47% 37% 2% 2%

Note: Figures may not add up to the totals given because of rounding. Source: ADB estimates.

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B. Contract and Disbursement S-Curve for Project 1 Financing 19. Figures 2, 3 and 4 show contract awards and disbursements for the OCR loan and the ADF loan, as well as the combined contract awards and disbursements, in terms of percentages for Project 1, based on the likely cumulative contract awards and disbursements.

Figure 2: S-Curve for OCR Loan of $70 Million ($ millions)

Figure 3: S-curve for ADF Loan of $14 Million ($ millions)

0

10

20

30

40

50

60

70

80

2,012 2,013 2,014 2,015 2,016 2,017

Cumulative Contract Awards

Cumulative Contract Disbursements

0

2

4

6

8

10

12

14

16

2,012 2,013 2,014 2,015 2,016 2,017



19

Figure 4: S-curve for Co-financing of Project 1 ($84 Million)

0%

20%

40%

60%

80%

100%

2,012 2,013 2,014 2,015 2,016 2,017



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C. Fund Flow Diagrams for Implementing Agencies

Figure 5: Fund Flow from ADB to NWSDB

ADB= Asian Development Bank, ADF= Asian Development Fund, CB= Commercial Bank, CBSL= Central Bank of Sri Lanka, ERD= External Resources Department, MoF= Ministry of Finance, MWSD= Ministry of Water Supply and Drainage, OCR= ordinary capital resources, TOD= Treasury Operations Department.

ADB: Asian Development Bank

ADF: Asian Development Fund

OCR: Ordinary Capital Resources CBSL: Central Bank of Sri Lanka

CB: Commercial Bank

MOFP: Ministry of Finance and Planning

ERD: External Resources Department TOD: Treasury Operations Department MWSD: Ministry of Water Supply and Drainage

NWSDB: National Water Supply and Drainage Board

PMU: Project Management Unit

Direct Payments Imprest Account/Reimbursement getary Support Budgetary Support Request for payment

ADB / ADF Loan

(funding in USD)

MOFP / Treasury / ERD / TOD

CB for NWSDB

Sub-account

CBSL for MWSD

(Imprest)

Contractors / Suppliers

ADB / OCR Loan

(funding in USD)

CBSL for MWSD

(Imprest)

CB for NWSDB

Sub-account

NWSDB/ PMU

MWSD

21

Figure 6: Fund Flow from ADB to CMC

ADB= Asian Development Bank, ADF= Asian Development Fund, CB= Commercial Bank, CBSL= Central Bank of Sri Lanka, CMC= Colombo Municipal Council, ERD= External Resources Department, MLGPC= Ministry of Local Government and Provincial Councils, MoF= Ministry of Finance, MWSD= Ministry of Water Supply and Drainage, OCR= ordinary capital resources, PMU= program management unit, TOD= Treasury Operations Department.

ADB: Asian Development Bank

ADF: Asian Development Fund

OCR: Ordinary Capital Resources CBSL: Central Bank of Sri Lanka

CB: Commercial Bank

MOFP: Ministry of Finance and Planning

ERD: External Resources Department TOD: Treasury Operations Department MLGPC: Ministry of Local Government and Provincial

Councils CMC: Colombo Municipal Council PMU: Project Management Unit

Direct Payments Imprest Account/Reimbursement getary Support Budgetary Support Request for payment

ADB / ADF Loan

(funding in USD)

MOFP / Treasury / ERD / TOD

CB for

CMC/PMU Sub-account

CBSL for MLGPC

(Imprest )

Contractors / Suppliers

ADB / OCR Loan

(funding in USD)

CBSL for MLGPC

(Imprest )

CB for CMC/PMU

Sub-account

CMC/PMU

MLGPC

CMC

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V. FINANCIAL MANAGEMENT

20. The financial management assessment of the NWSDB (the implementing agency for the water supply rehabilitation project) and its PMU, as well as of the CMC (the implementing agency for the wastewater improvement project) and its PMU was conducted. A. The National Water Supply and Drainage Board

Table 12: Financial Management Assessment of the NWSDB Area of Assessment Findings

Executing and implementing agencies

The executing agency is the Ministry of Water Supply and Drainage (MWSD) and the implementing agency is the National Water Supply and Drainage Board (NWSDB).

Major experiences of executing and implementing agencies in managing ADB financed projects

NWSDB has gained extensive experience in implementing externally funded projects including several ADB-funded projects. Currently, NWSDB is implementing about 20 ongoing externally funded projects.

NWSDB is currently implementing three ADB-funded projects, including the fourth ADB project, which is focused on Polonnaruwa, Anuradhapura, Trincomalee, Hambantota, and Batticaloa regions and is due to finish by 2013; the 5

th ADB project which focuses on Chillaw, Puttlam, Vavuniya and Mannar

regions; and the sixth ADB project which focuses on Jaffna and Kilinochchi.

Fund flow arrangements The disbursement of loan proceeds under Projects 1 and 2 will follow the existing fund flow arrangements for the water supply component for Loans 2710 and 2711.

ADB disburses to the government the OCR loan proceeds and the ADF loan proceeds through the first-generation imprest accounts maintained at the Central Bank of Sri Lanka.

The government provides 50% of the loan proceeds to NWSDB as a grant and 50% of the loan proceeds on the basis of onlending terms that comply with relevant policies and regulations. The government provides counterpart funds through budgetary support.

NWSDB will maintain two separate second-generation imprest accounts in LKR. Fund requests to ADB will be channeled via the Treasury, Ministry of Finance, Colombo.

NWSDB manages loan proceeds through imprest accounts, direct payment procedures, and reimbursement procedures. Expenditures are consolidated monthly by NWSDB and reimbursement claims are then referred to ADB through the Treasury, Ministry of Finance, Colombo.

A separate LKR account with a commercial bank, acceptable to the government, will be maintained by NWSDB for budgetary support.

Organization and staffing of implementing agency

The board of directors (BOD) NWSDB is its governing body of. Under the BOD is the general manager who is responsible for the management and operation of the NWSDB. The general manager has seven additional general managers who directly manage the regional support centers (RSCs), and a separate management advisory committee, which renders technical, financial and institutional advice to the general manager. Under the additional general manager are deputy general managers (DGMs) who directly supervise and control the operation of the RSCs. The DGMs are supported by the assistant general managers (AGMs) and support staff.

NWSDB has about 10,000 employees.

The finance department is headed by a DGM who reports directly to the general manager. The finance department oversees NWSDB’s island wide finance and accounting functions. There are four qualified chartered accountants in the finance department.

Accounting policies and procedure and information systems

NWSDB prepares accounts in accordance with Sri Lanka Accounting Standards. NWSDB is developing and testing a new integrated computerized system which is being developed with the assistance of an international information technology firm.

The new integrated computerized system will have several modules for functions

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Area of Assessment Findings

such as: (i) customer information system, (ii) billing, (iii) inventory management, (iv) purchasing, (v) human resources and payroll, (vi) maintenance and repairs, (vii) asset management, (viii) financial accounting system, (ix) grievances, (x) NRW, (xi) water quality and (xii) production.

The new computerized system has been adopted by the human resource division. The rest of the modules are currently in the testing stage.

Segregation of duties in the implementing agency

Functional responsibilities are segregated for authorization, review and approval, payment, recording, and custody of assets and records. NWSDB maintains proper segregation of duties.

Budgeting system in the implementing agency

Annual budget preparation uses the performance-based budgeting method, where costs and inputs are planned to match performance and output. The annual budget preparation process takes about 5 months. Cost-centre managers start preparing the annual budget request starting in July of each calendar year. Budget requests are consolidated at the finance division and reviewed by the management committee composed of the chairman, the general manager, and senior managers. The operations budget, except salaries, becomes effective after approval by the management committee

Payments in IA Adequate controls are in place for monitoring and recording payments.

In a typical process, the accounts department receives requests for payments with supporting documentation. These are then validated and checked before is a payment voucher is released. At the time of the preparation of a payment voucher, a journal entry is created. The payment voucher is then checked again by an accountant, who certifies and then draws a check in favor of the payee. Upon release of the check, an entry is made against the cash book and invoices are stamped “paid”.

Cash and bank accounts of the implementing agency

NWSDB being a state-owned entity, it maintains primary banking activities with state-owned banks (Bank of Ceylon and People’s Bank). NWSDB also has other bank accounts with large private sector commercial banks such as the Commercial Bank of Ceylon.

Book balances are reconciled monthly with bank statements.

Safeguarding over assets by the implementing agency

NWSDB has adequate safeguards over assets such as vehicles, cash in transit, and a few other assets. Vehicles and cash in transit are covered by insurance policies.

Other offices of the implementing agency

The NWSDB currently operates 11 RSCs aside from its head office in Ratmalana, Colombo. Before 2008, there were only six RSCs. The increased number of RSCs was to improve the quality of service and customer support.

Internal audit of the implementing agency

The internal audit function of the NWSDB is headed by the DGM for the internal audit department (IAD). He reports directly to the chairman of the board. He has no line responsibilities and thus maintains functional independence within the organization.

The IAD provides checks and controls over the operations of the waterboard and conducts financial audits of transactions performed by employees to determine whether they comply with established policies, guidelines, and regulatory requirements.

External audit of the implementing agency

In accordance with the provisions of the Finance Act (No. 38) of 1971, the auditor general carries out external audits and inspects the accounts, finances, and the management of the board annually.

In practice, the department submits two types of audit reports. One is a biannual report and the other is a monthly report. The monthly report is based on the internal audit work, and sent to the chairman of the board. The biannual report is a summary of the monthly reports and sent to the auditor general.

Reporting and monitoring by the implementing agency

The NWSDB prepares annual statements of accounts in accordance with the provisions of the Finance Act (No. 38) of 1971.

Income and expenditure statements are generated monthly to monitor actual results (current month and year-to-date) and analyze variances with budget.

Although detailed financial statements are available for NWSDB’s entire island-wide operations, similar statements are not available at the RSC level. Fixed asset registry, capital budget, and loan books and tax books are maintained and recorded only at the head office. Accordingly, the performance of each RSC cannot be determined effectively because of the absence of individual balance

24

Area of Assessment Findings

sheets, income statements and cash flow statements.

In RSCs, however, individual income and expenditures accounts (income statements) are prepared monthly up to operating profit, excluding depreciation.

ADB= Asian Development Bank, ADF= Asian Development Fund, BOD= board of directors, CMC= Colombo Municipal Council, DGM= deputy general manager, IAD= internal audit department, LRK= Sri Lanka rupees, MWSD= Ministry of Water Supply and Drainage, NWSDB= National Water Supply and Drainage Board, OCR= ordinary capital resources, RSC= regional support center.

B. The Colombo Municipal Council

Table 13: Financial Management Assessment of the CMC Area of Assessment Findings

Executing and implementing agency

The executing agency is the Ministry of Local Government and Provincial Councils and the implementing agency is the Colombo Municipal Council (CMC).

Major experiences of EA/IA in managing ADB financed projects

MLGPC is the executing agency and CMC is the implementing agency for the ongoing ADB-funded Greater Colombo Wastewater Management Project (GCWMP).

Fund flow arrangements The loan proceeds under project will follow the existing fund flow arrangements for Loans 2558 and 2557 under GCWMP.

ADB disburses the OCR loan proceeds to the Government and the ADF loan proceeds to the first-generation imprest accounts maintained at the Central Bank of Sri Lanka.

The government provides 82.5% of the loan proceeds to CMC as a grant and 17.5% of the loan proceeds on the basis of onlending terms that comply with relevant policies and regulations. The government provides counterpart funds through budgetary support.

CMC will set up a designated project management unit under CMC, which will maintain two separate second-generation imprest accounts for the OCR loan and the ADF loan in LKR. Fund requests to ADB will be channeled via the Treasury, Ministry of Finance, Colombo.

The CMC/PMU manages loan proceeds through imprest accounts, direct payment procedures, and reimbursement procedures. Expenditures are consolidated monthly by CMC and reimbursement claims are then referred to ADB through the Treasury, Ministry of Finance, Colombo.

A separate LKR account with a commercial bank, acceptable to the Government, will be maintained by the CMC/PMU for budgetary support.

Organization and staffing of IA

The mayor is the chief executive officer of CMC and the municipal commissioner is the chief administrative officer reporting to the mayor. For civic services to the public, CMC delegates these functions to the relevant departments. The department heads report to the mayor through the municipal commissioner.

The municipal treasurer is in charge of all finance and accounting–related functions of the CMC. The municipal treasurer reports to the mayor through the municipal commissioner.

Accounting policy and procedure and Information system

CMC prepares accounts in accordance with the Municipal Councils Ordinance of 1987 and the Sri Lanka Accounting and Auditing Standards Act (No 15) of1995.

CMC has an integrated computerized accounting system, which was most recently upgraded in 2011.

Segregation of duties in IA CMC maintains proper segregation of duties.

Budgeting system in IA The annual budget is prepared on the basis of historical performance.

The annual budget preparation and approval process takes about 6–7 months to finalize. Each department provides a departmental budget. The municipal treasurer, who is a qualified public accountant, supervises the consolidation of the departmental budgets at the municipal council level, makes adjustments, and submits the final agreed budget for all departments to the finance committee of CMC for approval. Upon approval, the annual budget is made available for public view and comments. The finance committee then submits the annual budget to the Central Government for final approval.

Payments in IA Adequate controls are in place for monitoring and recording payments.

25

Cash and bank of IA CMC maintains primary banking activities with state-owned banks (Bank of Ceylon and People’s Bank). CMC also has other bank accounts with large private sector commercial banks such as Commercial Bank of Ceylon.

Book balances are reconciled monthly with bank statement.

Safeguard over assets by IAs

CMC has adequate safeguards over assets such as vehicles, cash in transit, and a few other assets. Vehicles, computers, and cash in transit are covered by insurance policies.

Internal audit of IA The internal auditor reports directly to the municipal commissioner.

External audit in IA The Auditor General’s Office conducts the annual statutory audit and reports on CMC accounts to the Parliament.

The 2011 annual audit by the Auditor General was delayed.

Reporting and monitoring in IA

Monthly and annual financial statements are generated by the computerized accounting system.

ADB= Asian Development Bank, ADF= Asian Development Fund, BOD= board of directors, CMC= Colombo Municipal Council, DGM= deputy general manager, GCWMP= Greater Colombo Wastewater Management Project, IAD= internal audit department, LRK= Sri Lanka rupees, MWSD= Ministry of Water Supply and Drainage, NWSDB= National Water Supply and Drainage Board, OCR= ordinary capital resources, RSC= regional support center.

21. Conclusion and Recommendations. While no major financial management issue has been identified during the implementation of ongoing projects, the following areas of NWSDB’s financial management need strengthening: (i) identification of assets under RSC-WC, establishing fixed asset register, and preparation of RSC-level income statement, balance sheet, and cash flow statement for RSC-WC; (ii) completion of testing of the integrated computerized system in functions other than human resources and transition from a manual accounting system to a computerized accounting system for the RSCs; (iii) appointment of a qualified chartered accountant to assist in and oversee RSC level financial reporting for RSC-WC; and (iv) engagement of an independent auditor for the annual audit of NWSDB as well as for the project. For the CMC: (i) the annual budget should be based on physical as well as financial targets; (ii) an independent auditor should be engaged for the timely annual audit of CMC as well as the project; and (iii) adequate budgetary support should be obtained to avoid delay in receiving counterpart funds due to the lengthy budget approval process.

C. Disbursement

22. The loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2012, as amended from time to time)14 and detailed arrangements agreed upon between the government and ADB. Pursuant to ADB's Safeguard Policy Statement15 (2009) (SPS), ADB funds may not be used for activities on the ADB Prohibited Investment Activities List (Appendix 5 of the SPS). All financial institutions will ensure that their investments comply with applicable national laws and regulations and that the Prohibited Investment Activities List is applied in the implementation of the project financed by ADB. 23. Types of disbursement procedures. There are four major types of disbursement procedures:

(i) Direct payment procedure, where ADB, at the borrower's request, pays a designated beneficiary directly;

(ii) Commitment procedure, where ADB, at the borrower's request, provides an irrevocable undertaking to reimburse a commercial bank for payments made or to be made to a supplier against a letter of credit financed from the loan account;

(iii) Reimbursement procedure, where ADB pays from the loan account to the borrower's account, for eligible expenditures that have been incurred and paid for

14

Available at: http://www.adb.org/documents/loan-disbursement-handbook. 15

Available at: http://www.adb.org/documents/safeguard-policy-statement.

26

by the project out of its budget allocation or its own resources; and (iv) Imprest fund procedure where ADB makes an advance disbursement from the

loan account for deposit to an imprest account to be used exclusively for ADB’s share of eligible expenditures.

24. The four procedures are normally used for the following kinds of payment.

Table 14: Payment Procedures Disbursement Procedure Suggested Types of Payment

Direct payment Mainly large civil works, progress payments, consultants’ fees, procurement of goods

Commitment Importation costs

Reimbursement Local currency costs, petty purchases, and small civil works

Imprest fund Contractors’ bills and suppliers’ invoices in local currency, numerous items of operating expenses, other relatively small eligible expenditures

Source: ADB Loan Disbursement Handbook (2012).

25. NWSDB and CMC will be responsible for: (i) preparing annual contract award and disbursement projections; (ii) requesting budgetary allocations for counterpart funds; (iii) collecting supporting documents; and (iv) preparing and sending withdrawal applications to ADB through Treasury, Ministry of Finance and Planning (MOFP). 26. Imprest fund procedure. Immediately upon loan effectiveness of each loan, the government will open one imprest account for the executing agency at the Central Bank of Sri Lanka and one (1) sub-account to be maintained by the respective implementing agency, depending on the funding sources. The maximum ceiling of the imprest account will not at any time exceed 10% of the loan amount. The imprest account(s) will be denominated in US dollars (loan currency). The initial advance or replenishment by ADB into the imprest account(s) will be converted into equivalent rupees by the MoFP following its policy. The respective implementing agency may open the sub-account(s) in a commercial bank acceptable to ADB. At the request of the implementing agency, the executing agency will transfer the proceeds from the imprest account(s) in rupees to the sub-account(s) in accordance with relevant procedures of the government. The government will assure ADB that the funds from the imprest account shall be transferred to the sub-account(s) within 30 calendar days of the receipt of the advance or replenishment. The imprest account(s) and sub-account(s) are to be used exclusively for ADB’s share of eligible expenditures. The executing agency or the implementing agency that establishes the imprest account or sub-account in its name is accountable and responsible for proper use of advances to the account or sub-account. 27. The sub-account(s) should be maintained in a bank account without restrictions on fund withdraw at any time. Any interest earned on the credit balance in the sub-account(s) can be utilized to meet project expenditure. Any temporary surplus balances in the sub-account(s) should be retained in the savings account only, and may not be further redeployed as fixed deposits. The request for initial advance to the imprest account should be accompanied by an estimate-of-expenditures sheet16 setting out the estimated expenditures for the next 6 months of project implementation, and submission of evidence satisfactory to ADB that the sub-account(s) has been duly opened. For additional advances, supporting documents should be submitted to ADB together with the withdrawal applications. 17 ADB’s Loan Disbursement Handbook describes the supporting documents that should be submitted to ADB and which should be

16

Follow the format provided in Appendix 10B of the Loan Disbursement Handbook. 17

Follow the requirements set out in Section 10.35, Chapter 10 of the Loan Disbursement Handbook.

27

retained by the government for liquidation and replenishment of the imprest account and sub-account. 28. The executing agency (or implementing agency) will be responsible for the use, management, replenishment, and liquidation of the imprest account(s) or sub-account(s), on the basis of the submission of suitable supporting documentation to ADB. 29. Statement of expenditures. Statement of Expenditure procedures 18 will be used for the reimbursement, liquidation, and replenishment of the imprest accounts, for eligible expenditures not exceeding $100,000 per individual payment. Original supporting documentation for expenditures claimed under the SOE procedure should be retained by the executing and implementing agencies and made available for review by ADB's disbursement and review mission or at ADB's request for the submission of supporting documents on a sampling basis, and for independent audit. ADB has designed specific SOE and summary sheet formats to facilitate the accurate preparation of withdrawal applications. 19 These formats will be provided to the executing agency for implementation. 30. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on its behalf, together with the authenticated specimen signatures of each authorized person. 31. The minimum value per withdrawal application is $100,000, unless otherwise approved by ADB. The executing agency will consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things, that the goods or services were produced in or from ADB members, and are eligible for ADB financing. Withdrawal applications and other loan disbursement information are available at the website of ADB’s Controller's Department (http://lfis.adb.org). 32. Disbursement Practice. To expedite disbursement, ADB’s Loan Disbursement Handbook has dedicated sections in Chapter 4 and Chapter 5 on: (i) actions to be taken by the borrower, (ii) basic requirements for disbursement, and (iii) the withdrawal application. D. Accounting

33. NWSDB and CMC will maintain separate project financial statements and records by funding source for all expenditures incurred under each of the loans under the Investment Program. Each project’s financial statements will adhere to generally accepted accounting principles followed in Sri Lanka and the accounting standards followed by the government, NWSDB, and CMC. E. Auditing 34. NWSDB and CMC will cause each of the project’s annual financial statements, under the Investment Program, to be audited in accordance with the standards prescribed by the Auditor General’s Department of Sri Lanka, and those applicable to the Investment Program, by Auditor General, whose qualifications, experience and terms of reference are acceptable to ADB. The audited financial statements, together with the auditors' report and management letter, will be

18

Follow the format provided in Appendix 9B and 9C of the Loan Disbursement Handbook. 19

Follow the format provided in Appendix 7A, 7B, 9B, 9C and 10A of the Loan Disbursement Handbook.

http://lfis.adb.org/

28

submitted in the English language to ADB within 6 months following the end of the fiscal year by NWSDB and CMC for their applicable tranches. 35. The annual audit report will include a separate audit opinion on the use of the imprest accounts, sub-accounts, and SOE procedures, where applicable. The audit reports should include an assessment of the adequacy of the accounting and internal control systems, the ability to maintain proper and adequate records and documents in support of transactions, and the eligibility of the incurred expenditure for ADB financing. ADB retains the right to: (i) review and examine any account; and (ii) verify the validity of the certification issued by the executing agency for each withdrawal application. 36. The government, the NWSDB, and CMC have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the projects’ financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. Further, any critical audit observations on the projects under the Investment Program should be reported to ADB, and action taken also monitored. For revenue-generating subprojects only, ADB requires audited financial statements for each executing or implementing agency associated with the subproject.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing 37. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time)20 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).21 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB’s approval. The government, and the executing and implementing agencies have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. 38. Advance contracting. Under each loan of the Facility, advance contracting of: (i) civil works, (ii) equipment and materials, and (iii) recruitment of consultants may be requested subject to these being eligible according to the agreed procedures and guidelines. Advance contracting would include: (i) tendering, and bid evaluation for civil works packages; (ii) preparation of tender documents for the procurement of materials and equipment; (iii) evaluation of bids; and (iv) recruitment of consultants. The government has requested advance action for the consulting services, goods and works under Project 1 listed in Table 15.

Table 15: Advance Actions for Consulting Services, goods and Works under Project 1 Description of Consulting Services, Goods, Works Advance Action To Be Taken

Management advisory and supervision consultants Prepare and obtain approval for EOI and RFP document Request for Expressions of Interest Evaluation of EOI Approvals for short list of consulting firms Issue Request for Proposal

System rehabilitation in critical area and essential work in other two areas

Preparation and approval of bidding documents Publication of Invitation to bid

20

Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf. 21

Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf.

http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf

http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

29

Equipment Preparation and approval of bidding documents Publication of Invitation to bid

EOI= expression of interest, RFP= request for proposals.

39. Retroactive financing. Except as otherwise agreed with ADB, expenditures incurred for civil works, equipment and materials and consulting services eligible for advance contracting will be eligible for retroactive financing of up to 20% of the proposed amount of the loans under the Facility for eligible expenditures in each category incurred before the effectiveness of each loan, but not earlier than 12 months before the signing of the loan agreement. B. Procurement of Works, Goods and Consulting Services 40. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). The executing and implementing agencies22 will prepare the biding documents for the Investment Program. The agreed standard bidding documents for national competitive bidding will be used throughout the Investment Program implementation period. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). 41. Under Project 1, two consulting firms and a non-government organization (NGO) will be engaged as: (i) management advisory and supervision consultants (MASCs), (ii) awareness generation and media consultants (AGMCs), and (iii) community mobilization and behavioral change NGO (the NGO, acceptable to the Government) for an estimated 1,341 person-months (143 international and 1,198 national) of consulting services in total to (i) facilitate project management and implementation, (ii) implement NRW reduction measures in Colombo, and (iii) strengthen the institutional and operational capacity of the water service provider, NWSDB. The MASCs will be engaged using the quality- and cost-based selection (QCBS) method of selection with a standard quality–cost ratio of 90:10, the AGMCs will be engaged using the QCBS method with a standard quality–cost ratio of 80:20, and the NGO will be engaged using the consultants’ qualification selection (CQS) method. For Project 2, continuity in the technical approach, experience acquired, and continued professional liability of the same consultant may make continuation with the initial consultant preferable to new competition, subject to satisfactory performance in the initial assignment. C. Procurement Plan 42. The procurement plan provides: (i) a list of goods, works, and consulting services contract packages that will be processed over the next 18 months, with milestone dates for activities; (ii) the proposed methods of procurement of such contracts that are permitted under the respective loan agreements; and (iii) the related ADB review procedures. The contract packages in the procurement plan will be updated by the PMUs for approval by ADB. The procurement plan should be updated annually or more frequently if necessary, and should cover the next 18 months of procurement activity. A delay in loan effectiveness, other start-up delays, and delays during implementation will require an unscheduled procurement plan update. ADB will review each updated procurement plan before its publication. When appropriate, this activity may be undertaken in the field by ADB missions working with the executing and implementing agencies. The procurement plan for Project 1 is in Appendix 1.

22

With the help of the Master Plan consultant and Project Preparatory Technical Assistance consultants.

30

D. Consultant’s Terms of Reference 43. Indicative outline terms of reference for all consulting services are in Appendixes 2, 3, and 4.

VII. SAFEGUARDS

A. Key Safeguard Documents 44. The following safeguard documents were prepared for the Investment Program in accordance with ADB’s Safeguards Policy Statement (SPS, 2009) and government rules:

(i) Initial environmental examinations (IEEs) for Project 1; (ii) Environment assessment and review framework (EARF); (iii) Resettlement plan for Project 1; and (iv) Resettlement framework.

45. The EARF and the resettlement framework serve to guide safeguard assessments and the preparation of relevant safeguard documents in all tranches of the MFF. B. Implementation Arrangements 46. NWSDB project management unit. For water supply investments and wastewater investments in non-CMC areas, the NWSDB will be responsible for ensuring the implementation of environmental and social safeguards. The PMU will consist of a social development & safeguards officer. This person will be supported by one environmental specialist and one resettlement specialist in the MASCs package, to ensure compliance with all safeguard requirements. Detailed tasks are given below. 47. CMC project management unit. For wastewater improvements in the CMC area, the PMU in CMC will be responsible for ensuring the implementation of environmental and social safeguards. The PMU will consist of a sociologist and an environmental officer. These persons will be supported by environmental and resettlement specialists from the design, supervision and institution consultant to be recruited for the wastewater components and will ensure compliance with all safeguard requirements. Detailed tasks are given below. 48. The executing agency will provide all the necessary logistic support (vehicle, computers, support staff, etc.) to the PMUs in the activities related to environmental and social safeguard implementation and monitoring. The implementing agency will ensure that bidding and contract documents include specific provisions requiring contractors to comply with all (i) applicable labor laws and core labor standards on (a) prohibition of child labor as defined in national legislation for construction and maintenance activities, on (b) equal pay for equal work of equal value regardless of gender, ethnicity, or caste, and on (c) elimination of forced labor; and (ii) the requirement to disseminate information on sexually transmitted diseases including HIV/AIDS to employees and local communities surrounding the project sites. C. Environmental Safeguards 49. The PMUs will oversee the preparation of IEEs in accordance with the EARF, and submit them to ADB for review and clearance before bidding out the relevant civil works packages. Environmental management plans (EMPs) are prepared as part of the IEEs. The EMPs are to be included in the bidding and contract documents for civil works packages. The

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EMPs are to be implemented and monitored during construction, and the PMUs are to submit semiannual progress reports to ADB for review and disclosure on ADB’s website. Below are detailed responsibilities of the PMUs related to the implementation of environmental safeguards. 50. Key responsibilities of the PMUs related to environmental safeguards. These include the following: (i) confirming that the EMP is included in the bidding and contract documents for the design and construction package; (ii) confirming that the IEE and the EMP are updated by the consult team during detailed design ; (iii) providing oversight on environmental management aspects of subprojects and ensuring that the EMP is supervised by consultants and implemented by contractors; (iv) facilitating and confirming overall compliance with all government rules and regulations regarding site and environmental clearances as well as any other environmental requirements, as relevant;23 (v) supervising and providing guidance to the design and supervision consultants and contractor in proper EMP implementation; (vi) reviewing, monitoring and evaluating all indicators in the EMP, assessing the effectiveness with which the EMP is implemented, and recommending necessary corrective actions; (vii) reviewing and consolidating the monthly environmental monitoring reports from the consultants and submitting semiannual monitoring reports to ADB in the agreed format;24 (viii) ensuring the timely disclosure of the final IEE and EMP and contact information in locations and in a form accessible to the public; and (ix) establish a grievance redress mechanism as outlined in the IEE and addressing grievances in a timely manner. D. Social Safeguards (Resettlement) 51. The PMUs will oversee the preparation of resettlement plans in accordance with the resettlement framework, and submit the plans to ADB for review and clearance before bidding out the relevant civil works packages. Adequate budget is to be set aside by the government for the implementation of the resettlement plans including measures dealing with both permanent and temporary impact. The PMU will ensure that any physically or economically affected persons are assisted and compensated (according to the resettlement plan entitlement matrix) before displacement in sections ready for construction. The resettlement plans are to be implemented and monitored, and the PMUs are to submit semiannual progress reports to ADB for review and disclosure on ADB’s website. Below are detailed responsibilities of the PMUs related to the implementation of social safeguards. 52. Key responsibilities of the PMUs related to social safeguards. These responsibilities include the following: (i) ensuring that the resettlement plan is updated by the consultants according to the detailed designs, if required; (ii) engaging in ongoing and meaningful consultations with stakeholders and affected persons particularly through the implementation of the consultation and participation plan; (iii) implementing the resettlement plan with the support of consultants; (iv) providing timely payments to affected persons before displacement occurs in sections ready for construction; (v) ensuring all grievances are addressed and, when necessary, activating the grievance redress committee; (vi) taking corrective action where necessary; (vii) monitoring the resettlement process to ensure smooth implementation; and (viii) consolidating the monthly reports related to the consultants and submitting semiannual monitoring reports to ADB. The monitoring reports should record the progress of resettlement activities and any compliance issues, grievances, and corrective actions taken.

23

All relevant permits and statutory requirements of the government are listed in the IEE. 24

The IEE contains a sample monitoring report template to be adapted for the project. ADB can review the semiannual safeguard monitoring report format before the first submission.

32

E. Safeguards Disclosure 53. The safeguard frameworks, the draft and final resettlement plans (and updated versions thereafter), and final IEEs (and updated versions thereafter) will be disclosed on ADB’s website according to ADB’s Public Communications Policy (2011). Semiannual safeguard monitoring reports will also be disclosed on ADB’s website. The PMUs are to provide relevant environmental and resettlement-related information, including information from the safeguard documents, to the affected people in a timely manner, in an accessible place, and in a form and language understandable to them. This information can be made available in brochures, leaflets, or booklets.

VIII. GENDER AND SOCIAL DIMENSIONS

54. Project 1 is classified as effective gender mainstreaming (EGM). A gender action plan (GAP); (see Table 16) was prepared for Tranche 1 to ensure that gender equality measures are put in place during project implementation. The gender and social dimensions of the Investment Program will be overseen by the relevant social officers in the PMUs and implemented with the support of NGOs. For Project 1, the NGOs will provide implementation support as outlined in their Terms of Reference, primarily in the following: (i) implementing the GAP; (ii) leading community outreach efforts; (iii) forming water user groups within under-served settlement communities, (iv) implementing the WASH campaign, (v) implementing parts of the consultation and participation plans for projects, and (vi) providing overall capacity support to NWSDB’s community water supply unit. The PMU’s budget also includes an operational budget for implementing the consultation and participation plan, including consultation and outreach meetings, grievance redress, and awareness building, through workshops, training, etc., related to gender sensitization and the social dimensions of the project. The PMU will work closely with and coordinate the activities of the MASCs and NGOs to ensure the effective implementation of the social and gender dimensions of the project. The consultations and participation plan (see Appendix 7) for Project 1 will be implemented by the PMU, NGOs, and consultants.

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Table 16: GENDER ACTION PLAN (PROJECT 1)a

Activity Targets and Indicators Responsibility Duration

Output 1: Rehabilitated water supply network and reduced NRW in Colombo City

All free water outlets in under-served settlement and form consumer associations (target: 3,200).

Women make up of at least 50% of executive committee members.

There is an increased percentage of customers, including BPL households and FHHs, with access to piped water supply (baseline: 95% in 2012; target: 100% by 2018) in Colombo City.

NWSDB PMU NGO

Within 1–2 years

Mobilize NGOs to form water user groups in low -income communities, with emphasis on women’s role in managing water and sanitation. Mobilize communities in low- income areas to form water user groups. Create awareness of women’s leadership in water user groups. Motivate water user groups to undertake the O&M of public stand posts and latrines.

NGOs with specified qualifications are recruited.

Water user groups are formed in all under-served settlement, with women making up 50% of their executive committee members.

Women have leadership roles in 100% of the water user groups formed under the project.

Women compose 50% of participants in training programs in water and sanitation O&M.

NWSDB PMU NGO

Within 6 months

Collect sex-disaggregated socioeconomic and health data, including data on existing water supply, sanitation, and hygiene practices in communities in under-served settlement and low -income areas).

Sex disaggregated baseline data are included in the socioeconomic survey.

NWSDB PMU NGO

Years 1–2

Give preference to affected households and people in under-served settlement and low-income areas in recruiting for construction work. Orient the NWSDB PMU, contractors, and workers in core labor standards and norms. Ensure equal opportunity for women and men in civil works and other employment.

Women make up at least 40% of skilled and non-skilled labor.

All men and women receive equal pay for equal work.

Male and female laborers and employees are provided with standard safety and security measures at work.

NWSDB PMU MASCs Contractor

Throughout the project

Make water user groups responsible for O&M. Select men and women for O&M training (women should make up at least 40% of trainees) Link water user groups to NWSDB for institutional sustainability and technical support.

Water user group members are trained in O&M.

Water user groups are registered with the relevant unit in NWSDB for technical support.

NWSDB PMU MASCs Contractor


Implement water sanitation and hygiene (WASH) program in low-income communities. Through an NGO, implement a WASH campaign for low-income communities.

Women make up at least 50% of participants in WASH-related awareness activities.

NWSDB PMU NGO


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Activity Targets and Indicators Responsibility Duration

Establish an NRW team under the project with female professional and technical staff among the members.

Women make up 15% of RSC-WC professional and technical staff

NWSDB PMU MASCs


Output 2: Strengthened institutional structure and capacity of NWSDB

Train NWSDB staff in NRW reduction. Women make up 20% of participants in the training.

Recruit women engineers and engineering assistants for the PMU for project implementation.

Women make up at least 15% of the PMU professional staff.

NWSDB MWSD


Introduce institutional reforms in the RSC-WC and include targets for women in staff recruitment.

Women make up at least 15% of professional and technical staff.

NWSDB PMU MASCs


Design and implement a city-wide awareness campaign, using multiple communication channels. This will include gender analysis of different levels of awareness and acceptance between women and men.

Awareness campaigns emphasize shared responsibility of men and women in water management and conservation and in sanitation and health.

NWSDB PMU MASCs


BPL= below poverty line, FHH= female headed household, MASCs = management advisory and supervision consultants, MWSD = Ministry of Water Supply and Drainage, NGO = nongovernment organization, NRW = non-revenue water, NWSDB = National Water Supply and Drainage Board, O&M = operation and maintenance, PMU = project management unit, RSC-WC = Western Central Regional Support Center, WASH = water, sanitation, and hygiene. Source: Asian Development Bank. a The gender targets in the GAP have been set in consultation with NWSDB and CMC. From experience, women’s participation in decision-making processes,

structures, training and their access to skilled and unskilled employment opportunities and programs in urban settings exceeds targets initially set below 50% in urban areas. The team has therefore agreed to set a 50% target.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND

COMMUNICATION

A. Program Design and Monitoring Framework 55. The design and monitoring frameworks (DMFs) for the Investment Program and Project 1 are in Appendixes 5 and 6. B. Monitoring 56. The program steering committee will be the highest authority responsible for monitoring and providing policy directions on: (i) critical implementation issues and interdepartmental coordination; (ii) implementation of the institutional reform agenda; (iii) compliance with the FFA and the loan covenants; and (iv) compliance with social and environmental safeguards. The PMUs will establish a program performance monitoring system (PPMS) for water supply and wastewater investments, which will cover:

(i) Program performance monitoring; (ii) Compliance monitoring; (iii) Safeguards, gender and social dimension monitoring.

57. Program performance monitoring. Disaggregated baseline data for impact, outcome, and output indicators, in accordance with the DMF for the Investment Program and each of the loans, will be established by the executing or implementing agency within 6 months from the date the first loan under the MFF takes effect, for water supply and wastewater services, and will be updated by the executing and implementing agencies. Roles and responsibilities for monitoring project performance will also be defined when the PPMS is established and agreed on with ADB. Similarly, the executing and implementing agencies will define the structure and responsibilities of the compliance monitoring team and submit these for ADB’s no objection at the time of setting the PPMS, in accordance with the covenants in the FFA and the loan and project agreements. 58. Safeguards, gender, and social dimension monitoring. The structure and responsibilities of the safeguards, gender and social dimension monitoring team are summarized in Table 17. Safeguards monitoring requirements and the report formats are included in the safeguard plans and frameworks. The PMUs and NGO will be involved in the monitoring of the GAP and the consultation and participation strategy (CPS).

Table 17: Safeguards, Gender and Social Dimension Monitoring Task Team Responsibility

Project directors, PMUs (NWSDB and CMC) Oversee project implementation and ensure smooth implementation of activities related to social development and safeguards.

Social development and safeguards officer, PMU (NWSDB)

Manage overall day-to-day social development and safeguard -related activities in NWSDB components.

Environment officer, PMU (CMC) Manage overall day-to-day environmental safeguard activities in CMC components.

Resettlement officer, PMU (CMC) Manage overall day-to-day social development and social safeguard activities in CMC components.

Public relations officer, PMU (NWSDB and CMC) Manage awareness generation and consultation and participation activities.

Community mobilization and behavioral change NGO Implement key activities in TOR related to social development, community participation, and outreach.

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CMC= Colombo Municipal Council, PMU = program management unit, NGO= nongovernment organization, NWSDB = National Water Supply and Drainage Board, TOR= terms of reference. C. Evaluation 59. Regular review. The PPMS will be aimed at detecting any deficiency or discrepancy between the plan and the execution of the Investment Program and the projects under it in order to ensure that timely corrections can be made in the Investment Program and the projects. Each of the monitoring teams will evaluate the causes of deficiency or discrepancy between the plan and the execution, align by the PPMS, propose corrective measures, and seek policy guidance from the PSC if the matter is still unresolved. Evaluation will take place at four different levels at different intervals:

(i) Implementing agencies through the PMUs (monthly); (ii) Executing agencies through the PMUs (quarterly); (iii) Program Steering Committee (semiannually); and (iv) ADB (annually).

60. Midterm reviews. In addition, a midterm review of each loan under the Facility will be undertaken during the implementation period of each loan. The midterm reviews will evaluate in detail the scope of the Facility and the loans, implementation arrangements, and any outstanding issues (environment and resettlement, as well as safeguards issues), achievement of scheduled targets, contract management progress, and other issues as appropriate, and generate agreement on any changes that may be needed. D. Reporting 61. The executing agencies will provide ADB with the following reports, all subject to disclosure in compliance with ADB’s Public Communications Policy (2012):

(i) Quarterly progress reports in a format consistent with ADB’s project performance reporting system, within 15 days of the end of each quarter;

(ii) Facility annual reports including (a) progress achieved by output as measured through the DMF indicator’s performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months;

(iii) Each project account under the Investment Program, and the asset owning agency’s annual financial statement together with the associated auditor’s report;

(iv) A project completion report25 within 6 months of the physical completion of each project under the Investment Program; and

(v) A Facility completion report within 3 months of the completion of the final tranche of the Investment Program.

E. Consultation and Participation Strategy 62. A separate consultation and participation plan (CPP) was prepared (Appendix 7) for Project 1 and provides the methodology and processes for continued consultations with various stakeholders, including the poor, the vulnerable and female-headed households during project implementation. The affected public, namely, communities and other local stakeholders, will be involved in consultations for project planning, implementation and any safeguard-related issues.

25

The project completion report format is available at http://www.adb.org/Consulting/consultants-toolkits/PCR-Public- Sector-Lanscape.rar.

37

The NGO will be responsible for supporting the implementing units in implementing the community consultation programs in under-served settlement areas, and the PMU and MASCs will support the NGO and media consultants. Orientation in HIV/AIDs and other safety measures will be provided to the contractors and laborers as part of the training package. 63. In supporting the PMU in community awareness and social development programs, the NGO will be responsible for: (i) ensuring meaningful community participation through local planning, mobilization, and awareness creation, and establishing constructive public relations for the project; and (ii) ensuring the development and implementation of behavior change communications strategies in relation to health-seeking behaviors, hygiene, and sanitation, in a sustained campaign of information, education and communication in the service areas of the project targeting the poor and women. 64. A robust community awareness program and behavior change communications strategy also requires the proactive participation of various stakeholders. The NGO will therefore seek the support of the following civil society representatives: (i) community influencers, religious leaders, and civil society representatives; (ii) CBOs and women’s groups; (iii) vendor associations and labor union federations; (iv) ward councilors, ward members and citizen forums; and (v) the public at large.

38

Table 18: Stakeholder Communication Strategy Information on

Investment Program

Messages

Means of Communication

Responsibility

Audience

Frequency

Resources

Basic project information

Improvements, budget, implementation schedule and arrangements, etc.

Web MWSD & MLGPC (EAs) and NWSDB & CMC (IAs) through the PRO (PMUs) and CS (MASC & DSIC)

General public Processing and implementation stages

PMU budget

Environmental and social safeguards: IEEs and RPs

Environmental management measures, entitlements for affected persons, grievance redress, etc.

Web Field level consultations/ meetings with stakeholders; separate field consultations with affected persons, poor and vulnerable groups; Media campaigns (print, radio, TV), displays/hoardings

EAs and IAs, with the help of EMS (MASCs and DSICs), RS (MASCs & DSICs), CS (MASC and DSICs), PRO (PMUs) and media agency

Affected persons, end users and other stakeholders

Regularly, as needed

PMUs’ budget CPP Media agency budget

Poverty and social development: IPSA, GAP, SPRSS (project benefits; benefits for poor and vulnerable)

Pro-poor and gender features of project

Field level consultations/ meetings with all stakeholders including contractors; separate field consultations with poor and vulnerable; Media campaigns (print, radio, TV), displays/hoardings.

EAs and IAs, with the help of media agency, RS (MASCs and DSICs) and GADS (project NGO)

Affected persons, end users, poor and vulnerable groups, and other stakeholders

Regularly, as needed

CPP Media agency budget

Development outcomes and impact

Identify impact and outcomes and progress towards achieving them

Web Press meets/releases, newsletters/ issue-based supplements, talk shows on radio and TV, workshops and seminars

EAs: Responsible Secretary with the help of PRO (PMUs) and media consultant

Government of Sri Lanka, Colombo district and divisional administration, CMC, citizens, under-served settlement dwellers, media, NGOs, school/college teachers and students, other stakeholders

Annual PMUs’ budget; Media agency budget

CMC= Colombo Municipal Council, CPP= consultation and participation plan, CS=communication specialist, DSICs= Design, Supervision and Institutional Consultants, EA = executing agency, EMS= environmental management specialist, GAP = Gender Action Plan, GADS= gender and development specialist, IA = implementing agency, IEE= initial environmental examination, IPSA -= Initial Poverty and Social Assessment, MASCs=management advisory and supervision consultants, MSWD=ministry of water supply and drainage, NGO = nongovernment organization, NWSDB=national water supply and drainage board, PMU=project management unit, PRO=public relations officer, RP= resettlement plan, RS= resettlement specialist.

39

65. The communication strategy outlines the information on the Investment Program that will be communicated, the means of communication, the sources of the information, the target audience(s), and the frequency of communication. The objective of the communication strategy is to: (i) promote awareness of the Investment Program and water supply and wastewater projects during implementation; (ii) secure the participation of the community in all stages of project planning and implementation; (iii) establish two-way flow of information and dialogue with directly involved stakeholders, to integrate their concerns and increase support and involvement in the projects; and (iv) secure the participation of high-quality professionals, including contractors, in project implementation. The communication strategy includes a media-based awareness campaign, web disclosure, and direct communication through meetings and consultations. The CPP for Project 1 (Appendix 7) also identifies consultation and disclosure activities to be undertaken and the institutions responsible. A budget for implementing the communication strategy and CPP are incorporated into the Investment Program budget.

X. ANTICORRUPTION POLICY

66. ADB reserves the right to investigate, directly or through agents, any violations of the Anticorruption Policy (1998, as amended to date) relating to the Investment Program. All contracts financed by ADB shall include a provision specifying the right of ADB to audit and examine the accounts of the executing agencies and project contractor, consultants, and other service providers. Individuals on ADB's anticorruption debarment list are ineligible to participate in ADB-financed activity, and may not be awarded contracts under the ADB-financed projects. To support these efforts, relevant provisions are included in the loan agreement, regulations, and bidding documents for the projects under the Investment Program. 67. The projects under the Investment Program will include other measures, in addition to the standard ADB requirements, to deter corruption and increase transparency. The projects will (i) build the implementing agencies’ capacity to comply with ADB and government procedures; and (ii) disclose on the websites of the NWSDB and CMC information and project implementation, including procurement-related information (e.g., the list of participating bidders, name of the winning bidder, basic information on the bidding procedures adopted, amount of contract awarded, and the list of the goods and/or services procured), as well as updated procurement plans. 68. Any individual obtaining information on fraudulent, corrupt, or collusive practices should immediately contact ADB’s Office of the Auditor General and report the same by e-mail at [email protected] or [email protected], by phone at +63 2 632 5004, by fax at +63-2-632-2152, or by mail at the following address (please mark correspondence “Strictly Confidential”): Office of Anticorruption and Integrity (OAI) Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines http://www.adb.org/OAI/default/asp

XI. ACCOUNTABILITY MECHANISM

69. People who are, or may in the future be, adversely affected by the Investment Program may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-



40

assisted projects can voice, and seek resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, the affected people should make a good-faith effort to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.26

Secretary, Compliance Review Panel Asian Development Bank

6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines

Tel: +63-2-632-4149 Fax: +63-2-636-2088 Email: [email protected] Web: www.compliance.adb.org

XII. RECORD OF CHANGES IN THE FACILITY ADMINISTRATION MANUAL 70. All revisions or updates made in the manual during implementation should be retained in this section to provide a chronological history of changes in implemented arrangements recorded in the FAM.

26

For further information see: http://www.adb.org/Accountability-Mechanism/default.asp.

http://www.adb.org/Accountability-Mechanism/default.asp

Appendix 1 41

PROCUREMENT PLAN FOR PROJECT 1

Basic Data

Project Name: Greater Colombo Water and

Wastewater Management Improvement Investment Program – Project 1

Project Number: 45148

Country: Sri Lanka Executing Agency: Ministry of Water Supply and Drainage

Loan Amount: $84 million Loan Number: TBD

Date of First Procurement Plan: TBD Date of this Procurement Plan: 12 September 2012

A. Process Thresholds, Review, and 18-Month Procurement Plan

A. Project Procurement Thresholds

1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works

Method Threshold

ICB for works $5,000,000 and above

ICB for goods $500,000 and above

NCB for works Below $5,000,000

NCB for goods Below $500,000

Shopping for goods

Shopping for works

Below $100,000

Below $ 10,000

B. ADB Prior or Post Review

2. Except as ADB may otherwise agree, the following prior- or post-review requirements apply to the various procurement and consultant recruitment methods used in the project.

Procurement Method Prior or Post Comments

Procurement of Goods and Works

ICB for works Prior

ICB for goods Prior

NCB for works Post First set of bidding documents in English, shall be prior reviewed irrespective of US dollar value, rest shall be post reviewed

NCB for works Post Same as above

Shopping for goods

Shopping for works

Post

Post

Same as above

Same as above

Recruitment of Consulting Firms

Quality- and cost-based selection Prior

Consultant Qualification Selection Prior

ICB = International competitive bidding, NCB = national competitive bidding.

42 Appendix 1

C. Goods and Works Contracts Estimated to Cost More Than $1 Million

3. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description

Contract Value

($ mil)

Procurement Method / Selection

Prequalification of Bidders

(y/n)

Advertisement Date

(quarter/year) Comments

System rehabilitation in Colombo North area (initially called critical area)

27.27 ICB N 4 / 2012 Advance action*

System rehabilitation in Colombo Northeast area


System rehabilitation in Colombo Northwest area


Construction of NRW building with water meter testing, and other buildings

2.74 NCB N 2 / 2013

Supply and installation of flow meters, pressure transducers, and software, and supply and delivery of flow meters


1. Supply of vehicles for NRW teams 1.15 ICB N 1 / 2013

ICB = international competitive bidding, NRW = non-revenue water. *Note: Bids will be called on these package on one stage two envelop bidding process (para. 2.6[a] of the ADB Procurement Guidelines (2010, as amended from time to time).

D. Consulting Services Contracts Estimated to Cost More Than $100,000

4. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description

Contract Value

($ mil)

Recruitment Method

Advertisement Date

(qtr/year)

International or National Assignment Comments

Management advisory and supervision consultants (MASCs)

5.000 Quality- and cost-based selection

3/2012 International Advance action

Public awareness and media campaign 0.405 Quality- and cost-based selection

3/2013 National

Capacity building of communities (NGO) 0.200 Consultant-Qualification

selection

3/2013 National

Appendix 1 43

E. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000

5. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description

Value of Contracts (cumulative)

($ mil)

Number of Contracts

Procurement/ Recruitment

Method Comments

Supply of leakage detection and all other related equipment, and installation where relevant, including training

0.950 1 ICB / 1S – 2E 2013

Minor tools and equipment for ALC and leak repair teams

0.405 6 Shopping 2013

1. Office equipment for PMU and consultants’ office

0.419 6 Shopping

2013

B. Indicative List of Packages Required under the Project

6. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project.

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Domestic Preference Applicable Comments

Goods

Supply of leakage detection and all other related equipment, and installation where relevant, including training

0.95 1 ICB No 1S – 2E

Supply and installation of flow meters, pressure transducers, and software, and supply and delivery of flow meters

3.11 1 ICB No 1S – 2E

Supply of Vehicles for NRW teams

1.15 1 ICB No 1S – 2E

Office equipment for PMU and consultants’ office

0.419 6 Shopping No With a minimum of 3 quotations

Minor tools and equipment for ALC and leak repair teams

0.405 6 Shopping No With a minimum of 3 quotations

Works

Water distribution system rehabilitation

73.85 3 ICB

Civil Works

No 1S – 2E

44 Appendix 1

Construction of NRW and other buildings

2.74 1 NCB

No 1S – 2E

General Description Estimated

Value (cumulative)

Estimated Number of Contracts

Recruitment

Method

Type of Proposal

Comments

Consulting Services

Management advisory and supervision consultants (MASCs)

5.0 1 QCBS Full

Technical International

Public awareness and media campaign

0.405 1 QCBS STP National

Capacity building of communities (NGO)

0.20 1 CQS STP National

1S – 1E = single stage, one envelope, 2S = two-stage bidding, ICB = International competitive bidding, NCB = national competitive bidding, QCBS = quality- and cost-based selection, QBS = quality-based selection, ALC = active leak control, PMU = project management unit.

C. National Competitive Bidding

1. General

7. National competitive bidding (NCB) shall conform to the provisions for "National Competitive Bidding" in the Procurement Guidelines 2006 for Goods and Works issued in January 2006 by the National Procurement Agency, and the specific procedures prescribed inthe Procurement Manual issued on March 2006, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the ADB Procurement Guidelines (2010, as amended from time to time).

2. Registration (i) Bidding shall not be restricted to preregistered firms under the national

registration system of the Institute for Construction, Training and Development (ICTAD), and such registration shall not be a condition for the submission of bids in the bidding process.

(ii) Where registration is required before the award of contract, bidders: (i) shall be allowed a reasonable time to complete the ICTAD registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification.

(iii) National sanction lists or blacklists may be applied only with the prior approval of ADB.

3. Prequalification

8. Post-qualification shall be used unless prequalification is explicitly provided for in the loan agreement or procurement plan. When used for large or complex works contracts (i.e. turnkey, design and build, or management contracts: or custom-designed equipment, industrial plants, and specialized services), prequalification evaluation shall not include the evaluation of equipment and personnel. This assessment shall be undertaken at the bid evaluation stage. Irrespective of the procedure applied (whether prequalification or post-qualification), no

Appendix 1 45

domestic or foreign contractor shall be precluded from participation.

4. Advertising

9. Bidding out of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the procurement plan.

5. Bidding Documents

10. Procuring entities shall use standard bidding documents acceptable to ADB for the procurement of goods, works and consulting Services, based ideally on the standard bidding documents issued by ADB.

6. Packaging

11. Slicing or splitting of contracts within a package shall not be used to change the contract sizes and their corresponding methods of procurement as approved in the procurement plan.

7. Bid Security

12. Where required, bid security shall be in the form of a bank guarantee from a reputable bank.

8. Preferences

(i) No preference of any kind shall be given to domestic bidders or domestically manufactured goods.

(ii) Foreign suppliers and contractors from ADB member countries shall be allowed to bid without registration, licensing, and other government authorizations, leaving compliance with these requirements for the period after the award and before the signing of the contract.

9. Procurement of Works

(i) Specifications for works may be based on specifications recommended by ICTAD to the extent possible, but ICTAD approval shall not be required for adoption of specifications in a particular procurement activity.

(ii) The determination of the financial capacity of a bidder for award of the contract in post-qualification evaluation shall take into account current contract commitments and shall not be confined, for domestic bidders, to the ICTAD registration.

46 Appendix 1

10. Bid Rejection for Unrealistic Rates 13. Bids shall not be subjected to a test for unrealistic rates. No lowest evaluated and substantially responsive bid shall be rejected on the basis of comparison to rates, including but not limited to market, historical, or agency established rates, without the prior approval of ADB.

11. Rejection of All Bids and Rebidding 14. Bids shall not be rejected and new bids solicited without ADB’s prior concurrence.

12. Price Negotiations 15. Price negotiation shall be allowed only where the price offered by the lowest evaluated and substantially responsive bidder substantially exceeds cost estimates. The approval of ADB is required before any negotiation of prices.

13. Participation by Government-Owned Enterprises 16. Government-owned enterprises in the Democratic Socialist Republic of Sri Lanka shall be eligible to participate only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not dependent agencies of the procuring entity, the project executing agency or the implementing agency.

14. Member Country Restrictions 17. Bidders must be nationals of member countries of ADB, and offered goods, works, and services must be produced in and supplied from member countries of ADB.

Appendix 2 47

INDICATIVE OUTLINE TERMS OF REFERENCE FOR

MANAGEMENT ADVISORY AND SUPERVISION CONSULTANTS

A. Introduction

1. Management advisory and supervision consultants (MASCs) will be engaged by the program management unit (PMU) under the National Water Supply Drainage Board (NWSDB) to provide advisory services on all non-revenue water (NRW)–related investments and activities, and design, construction supervision and project management for water supply investments under the Investment Program, with the ultimate objective of achieving NRW reduction citywide to a level of at least 20% by 2020.

2. MASCs with the same expertise and qualifications will be required for both Projects 1 and 2, and will need to be engaged for about 54 months with a total estimated input of 1593 person-months (183 international and 1,410 national). However, MASCs will be originally engaged for Project 1 only for about 42 months with an estimated input of 839 person-months (143 person-months international and 696 person-months national). For Project 2, continuity in the technical approach, experience acquired, and continued professional liability of the same consultant may make continuation with the initial consultant preferable to new competition, subject to satisfactory performance in the initial assignment. The MASCs are expected to be mobilized by the second quarter of 2013, and recruited by the NWSDB PMU using the quality- and-cost based selection (QCBS) method in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). The contract will first for the Project 1. For Project 2, continuity in the technical approach, experience acquired, and continued professional liability of the same consultant may make continuation with the initial consultant preferable to new competition, subject to satisfactory performance in the initial assignment.

B. Objectives and Overall Scope of the Assignment

3. The overall objective of the assignment is to assist NWSDB in successfully implementing Project 1 of the Investment Program and achieving NRW reduction targets in the areas covered by Project 1 through various measures, such as the establishment of the district metering area (DMA) system, active leakage control, optimized pipe replacement and rehabilitation, enhancement of NWSDB’s capacity for NRW management, and creation of fully trained NRW units in RSC-WC to maintain and improve on the NRW reductions achieved under the Investment Program. Key responsibilities of the MASCs are as follows:

1. Assuming Responsibility for NRW Reduction

(i) Managing and reviewing the design for water supply investments under Project 1, and supervising the same during implementation.

(ii) Developing and implementing a detailed NRW strategy that factors in (a) the existing situation, (b) improvements from ongoing projects, and (c) phased and specific measures to be taken to reduce NRW to the targets outlined under the Investment Program.

(iii) Preparing training, identifying stakeholders to train in best practices on NRW reduction, and organizing and conducting training for both in-house and field staff.

48 Appendix 2

(iv) Managing all NRW teams in active leakage control, ensuring that they are equipped.

(v) Ensuring that the overall NRW in Colombo city covered under Project 1 is reduced to at least 20%, and losses are reduced by around 30 million m3/year. 1

(vi) Analyzing the customer metering and billing system with reference to potential NRW issues and improvements.

(vii) Advising, supporting, and training the NRW teams within NWSDB in implementing the NRW reduction program in an efficient, timely, and cost- effective manner and sustaining the NRW targets.

(viii) Providing overall capacity building, training, and providing expert advice on all NRW reduction and service improvement issues to NWSDB.

2. Improving Water Supply Services and Utility Management

(i) Establishing and verifying the geographical information system (GIS) network maps, examining and analyzing secondary data related to all aspects of the system in the city, reviewing and verifying the hydraulic model, and improving the quality of GIS information.

(ii) Introducing relevant indicators to measure the productivity of system and staff. (iii) Carrying out necessary print and electronic media announcements and local

publicity through public address systems. (iv) Coordinating with other stakeholders and other agencies to meet the NRW

objectives. (v) Providing advice on recovered water sales, billing and collection reforms, and

tariff reforms. (vi) Establishing and commissioning DMAs and DMA management for the Colombo

city water supply. (vii) Establishing a GIS-based asset management system for water supply for Greater

Colombo.

3. Advising on Design, Construction Supervision, and Engineering Services

(i) Supporting NWSDB in the prioritization of the infrastructure rehabilitation under the Investment Program and other internal and externally funded programs.

(ii) Providing design review and construction supervision services for infrastructure implementation under Project 1 of the Investment Program, including monitoring resettlement implementation.

(iii) Assisting the NWSDB PMU (the PMU) in carrying out design review, procurement and contract management of all activities and packages under Project 1.

(iv) Assisting the PMU in carrying out compliance monitoring under the resettlement plans for Project 1 and environmental monitoring of Project 1 in accordance with the relevant guidelines and policies of both ADB and the government.

4. Supporting Institutional, and Policy Reforms Implementation and Capacity Building

1 This estimated quantity is the total target for both Projects 1 and 2. The consultant is liable only for achieving the

reduction targets apportioned to the Project 1 areas. The actual total quantity may change after the confirmation of baseline by the capacity development technical assistance. Similarly, the quantity to be reduced through Project 1 interventions will also be established by the CDTA.

Appendix 2 49

(i) Supporting NWSDB in the transition of Colombo city’s water services, RSC-WC, into an autonomous business center that is efficiently running, ring-fenced financially and administratively and financially viable to meet current and future costs of the system, by the end of 2017.

(ii) Providing technical assistance and support to NWSDB managers and staff in reorganizing RSC-WC and implementing the policy and institutional reform plan agreed under the Investment Program.

(iii) Developing, supporting, and strengthening the capacity of the newly transitioned RSC-WC in its (a) organization and management, (b) financial management and commercial operations, (c) operation and maintenance, and (d) internal regulation.

C. Detailed Tasks

4. The MASCs’ detailed tasks will constitute, but not be limited to, the following:

1. Component A: Non-revenue Water Reduction Management and Design Review

(i) Assume overall responsibility for design review of the projects related to Project 1 of the Investment Program and NRW reduction improvement for NWSDB related to Project 1 areas and overall management system and practices.

(ii) Analyze the present scenario of NRW in Colombo city, identify deficiencies, and prioritize critical and important activities for improvement. Carry out water balance audits.

(iii) Upon the installation of system input meters, measure and periodically update the NRW levels.2

(iv) Advise PMU on the approaches, study methodologies, options considered, and key findings and recommendations for successful completion.

(v) Validate and calibrate the GIS network model prepared under the JICA–financed master plan.

(vi) Ensure that all rehabilitation packages are designed on a district metering area (DMA)3 basis, with each DMA hydraulically isolated from the other DMAs. The DMAs should be of operationally manageable size with an appropriate number of connections.

(vii) Ensure that detailed design and a bill of quantities (BOQ) are prepared for each DMA, i.e., the entire BOQ of the rehabilitation package can be divided among the component BOQs for each DMA. This is essential to ensure the measurement and payment of the contractor work is on a DMA basis.

2 CDTA consultants, led by the NRW specialist, will assist NWSDB in establishing the baseline for NRW in Colombo

city. 3

A district metering area refers to a zone of a water supply network that can be isolated and provided with a bulk meter to measure input water quantity and consumer meters to measure consumption. The difference is used in assessing NRW in the district metering area.

50 Appendix 2

(viii) Ensure that the BOQ specifically contains an item and adequate allocation for the detailed design of the works by the contractor. Review and ensure the adequacy of design (by the contractor) and recommend approval by the PMU.

(ix) Review and ensure that a comprehensive survey of all consumers’ connections in each street in each DMA has been carried out by the contractor, and ensure that a list and network map of all those consumers’ connections have been prepared and validated, as these will be needed for disconnection once the rehabilitation work is completed in the respective DMA and old connections of such consumers have been transferred to the new network. Assist NWSDB in preparing clear instructions and procedures for the disconnection of the old connections by the contractor.

(ix) Explore and include payment options for items in the BOQ for the contractor to carry out verification surveys and actual disconnection of the old pipes. Unless this exercise of transferring all the connections on the new pipe is carried out and monitored, both the new and old pipes may remain charged and add to the physical losses rather than reduce them as intended. Ensure that the contractor follows the agreed methodology during commissioning so that only the new pipes remain charged once the work is completed and commissioned.

(x) Ensure that the minimum NRW reduction target is kept for all rehabilitation packages. Explore and include the payment mode of the works contracts to incentivize the contractor to achieve the targets.

(xi) Ensure that contractor carries out the disconnection during the execution of the contracts. Contracts may be designed such that a certain percentage of the total contract value, apportioned for the particular DMA, may be withheld until the contractor disconnects all old pipes in the DMA. This is critical as the work of laying the new pipe and disconnecting the old pipe must be done at different points in time. The old pipe can be disconnected only once all the new pipes have been integrated into the system and the entire new network is fully charged and commissioned. Once the new network is commissioned, the contractor can take up the work of verifying and disconnecting the old connections.

(xii) Ensure that the bidding documents include requirements for the contractor to give prior notice, of 1 month, to NWSDB for the disconnection of existing pipes in the DMA and for the commissioning of the new pipe network, upon which NWSDB will assign responsible staff to assist in or facilitate the disconnection and prepare for the supply of water to the DMA entry point. The contractor should be required to provide a certificate or letter to NWSDB advising the completion of disconnection of old pipes, which will be verified by representatives of NWSDB. The payment withheld for disconnections may be released by NWSDB upon receipt of the verification of the disconnections based on the terms of payments described in the bidding document.

(xiii) Assist NWSDB in preparing a template for a stepwise commissioning plan to be submitted by the contractor (bidders) for each of the letter of the DMAs of the rehabilitation works, to be included in the bidding documents. The bidders should, as part of the bid proposal, submit a stepwise commissioning plan, following the template, for each of the DMAs under the contract. The template should contain the following as a minimum: (a) procedures for pressure-testing the segments of pipe network; (b) sequencing plan and procedures for disconnecting the old connections and pipes; (c) procedures for NRW

Appendix 2 51

assessment in each DMA; (d) identification of all equipment and tools, such as isolating valves, meters, pressure gauges, needed to achieve a successful commissioning and measurement of the performance targets detailed; and (e) confirmation of their inclusion in the price estimates.

(xiv) Assist NWSDB in reviewing the validated or revised commissioning plan submitted by the contractor for approval at the following intervals: (a) prior to the works in the DMA; and (b) before actual commissioning of the network in the DMA. The contractor will take full responsibility for validating all required information including the map of old distribution pipes and connection points provided by NWSDB as part of the detailed design, and submit the updated information or map of the same as part of the commissioning plan at both these intervals.

(xv) Organize orientation workshops for NWSDB staff, contractors, and all their staff, and laborers before the start of rehabilitation works so that the concerned personnel fully understand and imbibe the objectives of such rehabilitation works with DMA and NRW reduction approach. Develop simple, short, user-friendly, easy-to-understand guidelines and procedures, also in the local language, for the orientation of personnel and implementation of these works for use by the lowest level of workers of the contractors.

(xvi) Ensure that all costs required for the implementation of the commissioning plan, such as disconnection of the old network, training of personnel and workers, preparation of training materials, measurement of performance indicators, etc., required for the successful commissioning and achievement of performance guarantees in the new network are included in the cost estimates of the contractor’s BOQ items.

(xvii) Guide and assist NWSDB in monitoring the step tests or equivalent carried out by the contractor in the newly laid or rehabilitated pipe network following the disconnection of old pipes in each of the DMAs. This step test or equivalent will determine the real physical losses and pressure in the newly constructed distribution network in the DMA according to the IWA guidelines.3 Assist NWSDB in preparing the procedures for step tests4 or equivalent for the DMAs and issue to the contractor to measure the physical losses and pressure in the network.

(xviii) Review, amend and recommend contractor’s submissions of quality assurance

and quality control (QA & QC) manuals delineating consistent, comprehensive, and uniform system of quality assurance and quality control of activities, including system checks of designs and description of type, frequency, and procedures of on-site as well as laboratory tests and inspections followed for design and construction to enforce the highest standards of quality.

(xix) Review, amend, and recommend for approval contractors’ submissions of a health & safety manual for each construction site to ensure the health and safety of construction staff and citizens, and monitor their implementation.

3 The international Nonrevenue Water Assessment Matrix gives a basic assessment of NRW in terms of more

scientific unit of liters per capita per day when the system is subjected to a certain pressure. The commonly used indicator, percentage of NRW, is not appropriate and can be misleading, especially in intermittent water supply systems.

4 Refer to the procedure for step tests given later.

52 Appendix 2

(xx) Review, amend, and recommend for approval the contractor’s submissions of standard construction management systems to be followed by contractors at construction sites, comprising important components such as planning of activities (work plan); procurement of construction material and equipment; construction methodology; deployment of construction machinery; deployment of workers; deployment of funds.

(xxi) Review, amend, and recommend the contractor’s submissions of manuals and guidelines. Organize training and orientation workshops at appropriate times to ensure their proper and effective use to improve the quality of implementation and O&M.

(xxii) Review and recommend the contractor’s construction schedules and prioritize critical surveys in such a way that the detailed engineering design is carried out efficiently and expeditiously according to the implementation schedule of the project.

(xxiii) Review and ensure that GIS information updates reflect newly laid pipes, specials and fittings and other components in the water network and attribute database (e.g., characteristics of pipelines including diameter, pipe material, depth, year of construction, current condition), under Project 1, and complete the mapping digitization for Project 1 areas.

(xxiv) Prepare an asset registry with consumer details for comprehensive (future) maintenance; establish a GIS based asset management system and populate it.

(xxv) Review and recommend for approval engineering designs, construction methodology, technical specifications, and other information provided by the contractor to ensure they meet the objectives of the project and NRW targets under Project 1. All the designs should be in conformity with the best international and national engineering standards. All necessary calculations should be prepared to determine and justify the engineering solution proposed for each component, and incorporated into the design reports.

(xxvi) On the basis of the detailed engineering design, prepare an implementation schedule for Project 1, and update and monitor it frequently.

(xxvii) Review and recommend the construction drawings with sufficient detail done by the contractor and guide the contractor in carrying out construction work effectively and unambiguously and to the highest standards of quality.

2. Component B: Construction Supervision

(i) Formulate guidelines for contract administration delineating procedures and assigning responsibilities at various levels for day-to-day requirements, including measurement of works; certification and payment of contractors’ bills; release of retention money; approval of variation, time extension and contractors’ claim; issue of completion certificate; financial closure of contract; management during the defects liability period; management during the O&M period; and any other responsibility delegated according to the FIDIC standards.

(ii) Supervise and monitor the construction of all project components under Project 1, prepare measurements for works completed and in progress, and verify bills for payment.

Appendix 2 53

(iii) Check the layout of construction to ensure conformity with the contract; propose any change in the plans, if required.

(iv) Assess and enforce, according to standard construction management system, the adequacy of contractors’ input in terms of materials, equipment, construction machinery, workers, and construction approach and methodologies.

(v) Monitor and enforce, as detailed in the safety manual, the measures taken to ensure the safety of the workers, other project personnel, the public and the works.

(vi) Furnish detailed drawings, with revisions as necessary, to the contractor check the contractor design and drawings for civil work contracts.

(vii) Work as the engineer's representative within the context of conditions of the contracts under Project 1.

(viii) Regularly monitor physical and financial progress against the milestones, under Project 1, according to the contracts to ensure the completion of the contracts on time.

(ix) Monitor and enforce, as detailed in the QA & QC manual, the quality of input, processes, and output during all construction activities to ensure the highest quality of works, conforming to the specifications and drawings.

(x) Examine contractors’ claims for time extension, variations, and additional compensation, etc., and recommend appropriate decisions.

(xi) Assist PMU in resolving various other contractual issues and overall contract management under Project 1.

(xii) Review and approve GIS updates after the physical completion of the contract under Project 1.

(xiii) Monitor the performance of the contractor during the defects liability period.

(xiv) Review the contractors’ work program with respect to resource allocation, activity sequence, duration, etc., and approve the program.

(xv) Review the contractors’ method statements and recommend approval before the start of the work; review the contractors’ monthly claims, and recommend approval.

(xvi) Review and approve the construction drawings with sufficient detail done by the contractor and permit the contractors to carry out construction work effectively and unambiguously and to the highest standards of quality.

3. Component C: Institutional and Policy Reforms

a. Task 1: Organizational, Policy, and Institutional Reforms

(i) Assist NWSDB in finalizing the details of the 5-year decentralization and institutional building plan. Prepare operational action plan (OAP) that also incorporates the institutional and policy reforms outlined in the institutional and policy reforms plan under the Investment Program. Ensure that the OAP includes stepwise and detailed activities to be undertaken, and define all resource requirements and responsibilities.

54 Appendix 2

(ii) Develop and implement suitable organizational structure and staffing requirements for NWSDB. This includes the setting up of a full staff complement at the regional, area or district, and WC-RSC offices where the entire operations of the utilities are carried out.

(iii) Define and prepare a functional chart describing the primary functions and responsibilities of each department or division in the organization. Based on the established functions and responsibilities. Prepare staffing requirements. The staffing requirements shall be based on the projected growth in service connections and targeted ratio of staff/1,000 connections.5

(iv) Assist NWSDB in preparing for organizational changes and staffing of the organization. This includes filling newly identified positions, matching existing skills with the job requirements and placing staff in appropriate positions that may include lateral transfers or in some cases may involve promotion. Outside hiring shall be resorted to if the required expertise is not available in-house.

(v) Evaluate the capacity of existing staff and match them against position titles and work assignments. Some realignment may be necessary to place people where their skills are most suited. To carry out this activity, an inventory of staff and assessment of their capacity shall be undertaken and will be matched against the required skills and qualifications.

(vi) Review and improve existing practices in recruitment and hiring, compensation and benefits, and staff development. With the new roles for the revenue centers/regional offices, current policies and procedures for personnel management shall be reviewed to align them with planned new roles for the revenue centers. Suggested changes in areas of human resource management that are not covered by the Dept. of Management Services, the Salaries Commission, and other government agencies shall be made. Design a responsive compensation and benefit package that will motivate employees and address the problem of retaining qualified staff.

b. Task 2: Financial Management, Accounting Reforms, Customer

Service, and Commercial Operations Improvement.

(i) Develop a short-term, medium-term and long-term business plan and financial projections for NWSDB as outlined in the policy and institutional reforms plan for the Investment Program. These plans will support the OAP and will be the basis for monitoring performance and attainment of targets. They will indicate when the district office is likely able to achieve self-reliance and viability, and when dependence on govt. subsidy can be stopped. The business plan shall consist of a detailed action plan covering institutional, financial, and technical targets and financial projections for the short, medium, and long term (projected income statement, project balance sheet, and others), including water supply tariff requirements to support the detailed action plan.

(ii) The financial and operational indicators shall be developed and agreed on between the head office and the revenue centers. These indicators will be the basis for monitoring performance and granting incentives to well-performing offices. The attainment of the agreed levels of service, financial, technical, and customer service targets and business plan shall form part of the loan covenants.

5 Targeted ratio to be agreed with NWSDB and the MASCs at the end of the first year of the MASCs mobilization.

Appendix 2 55

(iii) Assess and prepare a customer relations improvement strategy for NWSDB, consisting of a long-term program for improving customer service and relations including appropriate staffing and training. Assist NWSDB in implementing the strategy.

(iv) Assist NWSDB in strengthening the Customer Service Center in each of the project areas. This includes the provision of necessary office space, facilities, and equipment to enable NWSDB to implement a customer service program that will effectively handle customer service requests and complaints.

(v) Assist the PMU and other stakeholders in establishing proper systems for accounting and financial management of NRW units in NWSDB.

(vi) Work with PMU and other stakeholders in “ring-fencing” revenues and expenditures for RSC-WC.

c. Task 3: Building Capacity and Institutionalizing Reforms in NWSDB

(i) Conduct a training needs assessment to determine the required capacity in various aspects of operations in addition to already identified training requirements under each subcomponent.

(ii) Develop and implement a training program that will address the identified training needs under the subcomponents discussed in the foregoing. The training program shall cover technical, financial management, commercial, and administrative aspects of water supply and sewerage operations.

(iii) Provide adequate support for training facilities and equipment, as provided in the budget, for the project sites.

(iv) Develop and install appropriate systems and procedures for financial and commercial systems for the reorganized RSC-WC, and train staff to use them. The systems and procedures will be installed in each district office and the staff will be trained on the job. The systems and procedures to be developed shall be in the following areas: (a) General accounting and financial reporting system; (b) Financial planning and budgeting; (c) Billing and collection; (d) Fixed assets; (e) Purchasing and inventory management; (f) Construction work in progress; and (g) Disbursements.

(v) Review, recommend, and install an appropriate computerized billing and collection system appropriate to the size and operation of the regional or district office and implement their water supply schemes.

(vi) Implement other follow-up training courses. After the installation of the customized systems and procedures above in the district offices, WSS, and RSCs, their staff will be provided further training in the areas of O&M, water supply planning and development, and financial management and general administration. Before the actual conduct of the training, a comprehensive

56 Appendix 2

training needs assessment will be conducted to obtain an updated training needs list.

(vii) Strengthen training implementation in the local offices. With the anticipated amount of training that need to be undertaken under the various tasks above, the conduct of training will be best handled with a separate and dedicated training unit that looks after the training needs of the local offices. It is proposed that the training unit that will be set up during project implementation will handle training specific to the local offices.

4. Component D: Project Management

a. Task 1: Overall Project Management and Project Financial

Management

(i) Supervise contractors and NGOs, under Project 1, for all tasks assigned to them and monitor their effective compliance according to their respective milestones and TORs. Carry out performance evaluation of contractors and NGOs including their specific personnel, and review and comment on various reports submitted by contractors and NGOs. On the basis of such reports, support the PMU to taking timely corrective action for the effective implementation of Project 1 under the Investment Program.

(ii) Review and recommend all designs and drawings prepared by contractors under Project 1. Establish a system of proof checking for all structural designs and drawings at appropriate levels.

(iii) Regularly communicate and coordinate with other utilities and authorities before, during, and after the works to ensure the smooth implementation of Project 1.

(iv) Anticipate in advance and obtain, in a timely manner, the required clearances, permits, approvals, sanctions, or any other information from relevant competent authorities so that the project activities are not unduly delayed.

(v) Assist NWSDB in obtaining approval or clearance from relevant authorities for Project 1 implementation.

(vi) Coordinate with the NWSDB and the public in the interruption of water supply to facilitate the construction work under Project 1, and with the media consultants for its announcement to the stakeholders.

(vii) Provide regular feedback to PMU for timely corrective action.

(viii) Establish a separate financial accounting and control system for the project under the Investment Program, and assist the PMU in administering the loans in accordance with ADB’s disbursement guidelines.

(ix) Establish all necessary records and the procedures for maintaining/updating such records for each subproject and for Project 1, and assist the PMU in maintaining the same.

(x) Ensure accurate and timely submissions of all required reports to NWSDB, the government, and ADB from the PMU.

Appendix 2 57

(xi) Establish systems for smooth and timely funds flow from ADB or the Government to NWSDB and contractors.

(xii) Develop and implement procedures for timely payments to the contractors and monitor for compliance. b. Task 2: Establishment and Implementation of Program

Performance Monitoring System (PPMS)

(i) Prepare a program performance monitoring system (PPMS) according to the agreed design and monitoring frameworks (DMFs) for Project 1, and in accordance with ADB’s guidelines.

(ii) Implement the PPMS, including a benchmark survey and subsequent monitoring and evaluation surveys.

(iii) Continuously monitor the progress of Project 1 against the PPMS, prepare regular progress reports, and take appropriate corrective action on the basis of the progress reports.

(iv) Develop suitable monitoring mechanisms to ensure the timely completion of contracts to the highest standards of quality and the best construction management practices on site, including compliance with all safety requirements.

(v) Develop a computerized management information system for monitoring the progress of activities on the basis of the work plans for all stages (design and construction); regularly analyze the progress against the work plans including physical and financial progress of activities during construction; recommend ways to accelerate project implementation; assess reasons for delays, if any and identify measures for improvement.

(vi) Undertake regularly site visits to monitor and supervise activities under the contracts, and provide actions or suggestions to improve the quality and pace of execution of works.

c. Task 3: Social and Environmental Safeguards Compliance

Monitoring

(i) Establish a system for monitoring the social and environmental safeguards for Project 1; prepare indicators for monitoring the important parameters of the safeguards.

(ii) Take proactive action to anticipate the potential environmental impacts and resettlement requirements of Project 1, to avoid delays in implementation.

(iii) Update the resettlement plan after the detailed design and detailed measurement and inventory of losses survey, and obtain ADB’s prior approval for public disclosure before the contract award.

(iv) Ensure that the resettlement activities are carried out in accordance with the resettlement plan agreed on between the government and ADB and that any civil works begin only after the affected households have been compensated at full replacement cost.

(v) Update the initial environmental examination (IEE) after the detailed design and obtain ADB’s prior approval for public disclosure before the award of contract.

58 Appendix 2

(vi) Prepare and submit semiannual monitoring reports for social and environmental safeguards through the PMU to NWSDB, the Government, and ADB.

(vii) Provide training for PMU, and other NWSDB staff involved in the project implementation to strengthen their capacity to manage and monitor social and environmental safeguards.

d. Task 4: Gender Equality and Social Inclusion Action Plan

(i) Prepare and integrate indicators related to gender, social inclusion, and poverty in all project activities; ensure the collection of disaggregated data and analysis of the results, especially benefits from the project corresponding to these indicators.

(ii) Implement, in consultation with the PMU and the NGO, a gender action plan for the active involvement of women as equal partners in all decision-making processes in the project and as prime beneficiaries of the project activities, and for the benefit of the poor and weaker sections on priority, with additional assistance, support and efforts.

(iii) Provide input and sensitize important stakeholders to project objectives related to poverty, gender, and social inclusion, ensuring the inclusion of the poor, women, indigenous people, and other marginalized and vulnerable groups in subprojects.

(iv) Work in collaboration with the project NGO to prepare socioeconomic profiles and social maps of the selected areas under Project 1, using appropriate techniques to determine the social, economic, health and sanitation status of the community. Especially focusing on the likely improvement in health status of the citizens; the likely impact on health and hygiene; the community participation and public education program to be implemented during Project 1; willingness to contribute to NRW reduction; the ability to contribute to NRW reduction; and likely changes in consumption patterns.

(v) Work in collaboration with the project NGO to develop specific criteria for identifying the poor and generate suitable mechanisms for targeting the poor for inclusion in the services to be developed under Project 1 under the Investment Program.

(vi) Implement the public awareness program, in collaboration with the Media consultant.

D. Indicative Personnel Requirement

Appendix 2 59

Table A2: Estimated Experts and Person-Month Requirements

Experts

International National International National

TOTAL MM

No

MM

Sub- total MM

No

MM

Sub- total MM

No

MM

Sub- total MM

No

MM

Sub- total MM

Component A: NRW Reduction Management

NRW management expert 1 24 24 1 24 24 1 6 6 1 30 30 84

NRW ALC field expert 2 24 48 48

NRW engineering asst 1 24 24 1 30 30 54

GIS expert 1 6 6 6

GIS engineer 1 24 24 1 24 24 48

GIS engineering asst 1 24 24 1 12 12 36

Modeling expert 1 6 6 6

DMA design expert 2 6 12 1 24 24 1 12 12 48

Billing expert 1 2 2 2

Metering expert 1 2 2 2

Other expert 1 4 4 4

Subtotal 9 100 5 120 2 10 5 108 338

Component B: Construction Supervision

Construction manager 1 24 24 1 30 30 54

Const. senior engineer 1 24 24 1 30 30 54

Const. engineer 1 24 24 1 30 30 54

Const. engineering asst 6 24 144 6 30 180 324

Quantity surveyor 3 24 72 3 30 90 162

Subtotal - 12 288 - 12 360 648

Component C: Institutional and Capacity Building

Water utility management specialist 1 4 4 4

HR development and management specialist 1 4 4 1 4 4 8

Finance management system specialist 1 3 3 1 4 4 7

IT specialist 1 4 4 1 4 4 8

Change management specialist 1 4 4 4

Accountants 0

Training specialist 1 12 12 12

60 Appendix 2

Experts

International National International National

TOTAL MM

No

MM

Sub- total MM

No

MM

Sub- total MM

No

MM

Sub- total MM

No

MM

Sub- total MM

Social andResettlement specialists

1 42 42

42

Senior public relation officer (communication specialist)

1 24 24 1 18 18 42

I. Subtotal 5 19 6 90 0 0 1 18 127

Component D: Project Management

Project manager 1 24 24 1 30 30 54

QA & QC manager 1 24 24 1 30 30 54

QA & QC engineer 1 24 24 1 30 30 54

Environmental management specialist 1 30 30 1 18 18 48

Subtotal 1 24 3 78 1 30 3 78 210

Component E: Office Management

Office manager 1 24 24 1 30 30 54

Secretary 1 24 24 1 30 30 54

Clerks 2 24 48 2 30 60 108

Office asst. 1 24 24 1 30 30 54

Subtotal 5 120 5 150 270

TOTAL 15 143 31 696 3 40 26 714 1593

DMA= district metering area, GIS= geographic information system, NRW= nonrevenue water.

Appendix 3 61

INDICATIVE OUTLINE TERMS OF REFERENCE FOR AWARENESS GENERATION AND MEDIA CONSULTANTS

A. Introduction 1. A local media firm with experience in designing public awareness campaigns and social marketing1 will be engaged for 4 years and a total of 82 person-months (for Projects 1 and 2) in the third quarter of 2013 by the National Water Supply Development Board (NWSDB) project management unit (PMU) as awareness generation and media consultants (AGMCs). The AGMCs will design, develop, package, and implement an effective and contextualized public awareness campaign, and will be selected using the quality-based selection (QBS) method in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). 2. The AGMCs should be experienced in designing public awareness campaigns and social marketing, preferably for government or externally supported projects. They must meet the following eligibility criteria: (a) show a proven track record in designing and implementing awareness campaigns for government or externally supported development projects; and (b) have a good background in social marketing. B. Overall Scope of Work 3. The AGMCs will design and implement the media campaign with a focus on: (i) the relevance of the project, anticipated benefits in terms of improved service for all and lower environmental costs, cost of water production/supply, etc., (ii) benefits to women and poor households, opportunity cost savings for the community (improved water quality and pressure leading to lower burden of disease, lower burden on women related to water collection and caregiving), and the importance of paying for the service to be able to demand continued good service, benefits under the project for the poor and vulnerable and the means of gaining access to the benefits; (iv) water conservation and linkages between water, urban growth, and environmental management; (v) possible disruptions in water supply/sanitation access, as well as traffic-related impact and access impact, disruption minimization measures proposed, and grievance redress process; and (vi) key messages of the water, sanitation, and hygiene (WASH) campaign. 4. The target audiences will be (i) the general public, with special focus on school and college students and teachers, academicians, community-based organizations, residents associations, traders and vendors’ associations, etc.; and (b) under-served settlement communities. The key messages and campaign focus may need to change at different stages of the project. The campaign will be able to accommodate such changes. Awareness materials shall be developed not as a one-time activity, but at different points in time over the project period utilizing different media outlets (audiovisual, TV, print, digital, radio, etc.). 5. The AGMCs will report to the NWSDB PMU. They will develop and implement the campaign in close coordination with the public relations officer of the PMU, the communication specialist (Management Advisory and Supervision Consultant) and the team leader and

1 Social marketing entails listening to the needs, desires, and voices of the target audience themselves and building

a program on that basis. Such a focus on the consumer involves in-depth research and constant reevaluation of every aspect of the program.

62 Appendix 3

participation and outreach expert, the gender and development expert and the WASH expert of the nongovernment organization also engaged under Project 1.

C. Detailed Tasks

6. The AGMCs tasks will constitute, but not be limited to, the following:

(i) Working in close coordination with the public relations officer (PMU), the existing public relations division of NWSDB, the communications specialist (MASCs), the Team Leader and community development, participation and outreach expert, the gender and development expert and the WASH Expert of the project NGO in designing the campaign (decisions on key messages for specific target audiences, timing, locations, print space, etc.). The gender- and vulnerability-sensitive campaign will be developed in the three commonly spoken languages in Colombo City (Sinhala, Tamil, and English).

(ii) Working in close coordination with the project NGO in designing publicity and awareness materials for the WASH campaign. All materials must be gender-and vulnerability-sensitive.

(iii) Producing and developing publicity and awareness materials including a documentary film, television and radio spots, print ads, billboards and hoardings, cinema hall slides, flyers and brochures.

(iv) Carrying out water interruption and public announcements and notices to stakeholders upon advice from the PMU, based on contractors’ notices.

(v) Developing and detailing the implementation strategy (e.g., how many spots in which television or FM radio channel, how many ads in which newspaper or magazine) for the campaign for the project period.

(vi) Revisiting the design and implementation strategy at the start of each year and making appropriate changes as necessary.

(vii) Organizing the publication of op-ed articles developed by the NWSDB local academicians and ADB specialists and coordinated by the communications specialist (MASCs).

(viii) Organizing campaign implementation in close coordination with the (PMU) and the communications specialist (MASCs).

(ix) Participate in meetings as and when required. (x) Prepare and submit quarterly progress reports to the PMU including information

on the status of implementation of its activities and feedback on the awareness campaign from the public.

D. Output/Deliverables2

Deliverables/Output Project 1

Project 2

Documentary film 1 1

TV spots 4 2

Cinema hall slides 6 3

Print ads 6 3

Radio jingles 6 3

2 The outputs and deliverables are to be made available in three languages (Sinhala, Tamil and English). This list is

indicative only. The specific and number of deliverables over 4 years will be agreed on at the inception stage, and year-wise output and deliverables will be agreed on with the PMU, NWSDB, and ADB at the start of each year.

Appendix 3 63

Deliverables/Output Project 1

Project 2

Hoardings, billboards 10 5

Flyers, brochures, Caps, Mugs, badges, refrigerator magnets,key chains etc. (of different types) 20000

10000

64 Appendix 4

INDICATIVE OUTLINE TERMS OF REFERENCE FOR COMMUNITY MOBILIZATION AND BEHAVIORAL CHANGE

NONGOVERNMENT ORGANIZATION

A. Introduction 1. A local nongovernment organization (NGO), with experience in working with low-income communities in Colombo City or Greater Colombo region in community mobilization, awareness building, behavior change, and information, education, and communication (IEC) programs including water, sanitation and hygiene (WASH) promotion, will be engaged as the community mobilization and behavioral change NGO (the NGO). 2. The NGO will be engaged for 4 years and a total of 420 person-months (for Projects 1 and 2) in the second quarter of 2013 by the National Water Supply Development Board (NWSDB) project management unit (PMU), and will be selected using the quality-based selection (QBS) method in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). 3. The NGO will have experience in technical aspects of community-based water supply projects and must meet the following eligibility criteria: (i) show a proven track record in community mobilization, WASH-related activities, and work with communities on water supply-related issues for at least 5 years in externally supported projects; and (ii) have a good background in conducting participatory community-based works including public consultation and issue-based focus group discussions (FGDs).

4. The NGO will report to the project director of the NWSDB PMU and work closely with the social development and safeguards officer of the PMU. The NGO will be required to coordinate constantly with the MASCs and report on progress weekly to the team leader and the NWSDB PMU social development and safeguard officer, as well as to coordinate daily with the engineer in charge of the NWSDB Randiya unit. The NGO will be required to maintain detailed records of the manner in which it is performing its tasks and the results it has achieved.

B. Overall Scope of Work 5. The overall objective of the assignment is to support the Randiya Unit of NWSDB in scaling up its activities by: (i) forming water user groups in under-served settlement areas throughout the city, where individual connections shall be provided if feasible and decommissioning or metering and billing of standpipes currently providing free water is proposed;1 (ii) conducting the WASH program and creating awareness and behavior change-related campaigns in communities and schools; (iii) implementing the gender action plan; and (iv) training NWSDB staff in community mobilization. The water user groups formed by the NGO will take responsibility for the payment of charges for metered standpipes and their maintenance. To this end, the NGO will work in partnership with the NWSDB to provide training. The associations shall have both men and women residents of under-served settlement as

1 “Randiya” is a special program for the urban poor formulated by NWSDB in 2001 to motivate and assist low-income

households in obtaining individual water supply connections. About 22,000 individual connections have been provided under the program. In 2009, the implementation of an additional component focusing on the metering of public water outlets (stand posts, toilets, and washing platforms) was begun. So far, 2,500 public stand posts have been decommissioned and about 250 water points metered under this component. NWSDB perceives the need for NGO support in scaling up these efforts to all under-served settlement in Colombo city.

Appendix 4 65

members and the NGO shall ensure representation of women and other disadvantaged sections in their management committees. The NGO will be recruited to mobilize and form water user groups, targeting women as agents of change in managing and improving water supply and sanitation practices in their communities. The NGO will also implement a WASH awareness campaign in under-served settlement areas throughout the city. A consultation and participation plan (CPP) outlines specific outreach activities to raise awareness and ensure the meaningful participation of communities and stakeholders.

6. The NGO will be responsible for awareness generation among low-income communities on the need to pay for water from metered standpipes to enjoy and demand better water supply service, as well as on tariff structuring and the importance of standpipes metering for the provision of better services to all consumers (good quality water supply at adequate pressure) and opportunities for project-related employment. The organization will also implement a water, sanitation and hygiene (WASH) program in under-served settlement. The NGO will help the NWSDB project management unit (PMU) and management advisory and supervision consultants (MASCs) identify vulnerable households in under-served settlement requiring special protection. It will ensure that the voice of the poor is heard by project authorities and that their grievances, if any, are registered and redressed. The NGO shall be the link between the PMU/MASCs, the Randiya unit of NWSDB, and communities in under-served settlement.

C. Detailed Tasks

7. The NGO’s tasks will constitute, but not be limited to, the following:

(i) Working in close coordination with the PMU and NSWDB in identifying and mobilizing under-served settlement communities, and conducting surveys to establish baseline socioeconomic profiles of under-served settlement communities.

(ii) Forming water user groups in under-served settlement in Colombo city, and ensuring adequate representation of women and disadvantaged and vulnerable persons in decision-making committees.

(iii) Implementing WASH program.

(iv) Generating awareness among communities in under-served settlement of the need for metering of standpipes, tariffs versus costs, project benefits, etc.

(v) Handling all technical matters related to the metering of public stand posts under the Randiya Program, in close coordination with the area officer in charge of the NWSDB.

(vi) Working in close coordination with the NWSDB PMU and media agency engaged for the public awareness campaign to ensure the dissemination of key messages that are gender-sensitive, and in a format easily understood by residents of under-served settlement, and the timely dissemination of information in under-served settlement on implementation schedules, possible disruptions, grievance redress procedures and expected average response time, during project implementation.

(vii) Generating awareness among under-served settlement communities (especially among vulnerable affected persons), about employment opportunities, entitlements, livelihood compensation, transitional allowances, etc., available

66 Appendix 4

under the project; eligibility and procedures for gaining access to these opportunities and entitlements ;and facilitating access to employment.

(viii) Organizing training for community members (men and women) in the operation and maintenance of standpipes and reporting issues that they cannot resolve.

(ix) Designing and demonstrating a phased exit strategy such that the sustainability of water user groups formed period and institutional capacity within NWSDB beyond the project period are ensured.

(x) Training NWSDB staff in community mobilization through on-the-job training and in-house presentations.

(xi) Preparing new or updated training materials in community mobilization for the Randiya unit, including guidance notes and guidelines.

(xii) Putting forth unresolved grievances of affected persons in under-served settlement before the NWSDB PMU, MASCs, grievance redress committee.

(xiii) Assisting the PMU in implementing and monitoring the gender action plan.

(xiv) Participating in meetings as and when required.

(xv) Submitting monthly progress reports to the PMU in NWSDB. 8. In addition to the above tasks, after year 1 of involvement, the NGO shall have the following additional tasks until the end of Project 2 implementation:

(i) Documenting the lessons learned each year, identifying problem areas and follow-up actions and campaigns to address the issues identified, and ensuring the sustainability of water user groups formed.

(ii) Following up on and reinforcing key messages of the WASH program.

(iii) Following up on and reinforcing key messages of the awareness campaign among communities on water conservation, cost of water production, operation and maintenance of water supply systems, need for metering, project benefits, etc.

(iv) Analyzing and reporting the gender impact of project interventions.

(v) Preparing monthly progress reports to the PMU, including information and implementation progress on the CPP and gender action plan and its other activities.

D. Indicative Personnel Requirement

Table A4: Indicative Person-Month Requirements for the NGO

Specialist

Project 1 Person- Months


Total Person- Months

Community Development, Participation and Outreach Expert (Team Leader)

15 9 24

Water Supply and Sanitation Engineer

15 9 24

Appendix 4 67

Specialist



Total Person- Months

Technical Support (6) 72 36 108

Gender and Development Specialist

15

9 24

Community Facilitators (12) 144 72 216

WASH Expert 15 9 24

68 Appendix 5

DESIGN AND MONITORING FRAMEWORK FOR THE INVESTMENT PROGRAM

Design Summary Performance Targets and Indicators

Data Sources and Reporting

Mechanisms Assumptions

and Risks

Impact

Improved urban environment and quality of life for the residents of Greater Colombo

Residents, particularly women, especially the poor, in Colombo have better living conditions and more time for productive activities because of 24-hour continuous water supply (baseline: 50% in 2012; target: 100% in 2024) Quality of discharge of wastewater secondary treatment (BOD5 150 mg/l in 2012 baseline to 100mg/l target in 2024) Waterborne diseases drop below 1 per 1,000 persons in Greater Colombo by 2024 (baseline: 2.2 per 1,000 persons in 2012)

Census data from social department Annual reports from

CMC

Census data from predefined hospitals in CMC

Assumption

Government continues to implement institutional and financial reforms it previously committed itself to implementing.

Outcome

Improved water supply and wastewater service and management in Greater Colombo

Daily water supply increased in low-pressure area

a (baseline: 5 hours in

2012; target: 24 hours by 2020) in Colombo Citywide NRW in Colombo reduced (baseline: 49% citywide and 60% in critical area in 2012; target: 20% in Colombo and 18% in critical area by 2020) Coverage of sewer network increased including all BPL households (FHHs among them) (baseline: 80% in 2012; target: 100% in Colombo in 2020)

NWSDB reports NWSDB water balance audit CMC annual reports

Assumption

NWSDB and CMC follow the recommended strategy and plan of action for NRW reduction and for wastewater service improvement. Risk

Ongoing and planned water supply projects, financed by JICA and NWSDB, are not successfully implemented.

Output

1. Rehabilitated water supply system and reduced NRW in Colombo

Degraded water supply pipes less than 225 mm diameter replaced in Colombo (target: 450 km by 2018) Increased percentage of households, including BPL households and FHHs, with access to piped water supply (baseline: 95% in 2012; target: 100% by 2018) in Colombo. All free water outlets in under-served settlement ment gardens metered and consumer associations formed (target: 3,200 in 2020) (50% women members in executive committees DMA mechanism for NRW reduction established for Colombo (target: by the end of 2016) Pumps and 12 km water supply

NWSDB annual reports Surveys conducted by the loan consultants and NWSDB reports NWSDB annual reports NWSDB annual reports NWSDB project

Assumption

Key officials who receive the necessary capacity-building training remain in their positions. Risk

Prices of steel and pipes increase beyond projections.

Appendix 5 69

2. Improved wastewater services in Greater Colombo 3. Strengthened institutional structure and capacity of service providers 4. Project management system implemented

transmission pipes replaced by 2017 Sewer network expanded (target: 445 km by 2020) in Colombo Access to sanitation for all in Greater Colombo, including all BPL households (FHHs among them) (baseline: 91% in 2012; target: 100% in 2020) Rehabilitation of existing sewers (target: 30 km by 2020) Wastewater treatment capacity increased (baseline: 0 in 2012; target: 175,000 m3/d by 2020) Cost recovery mechanism, through separate wastewater charges, introduced for wastewater services in CMC by 2016 Operations performance audit cell established by 2013 RSC-WC reorganized, and all positions filled (at least 15% women), and operational as an independent autonomous business center under NWSDB by 2017 Fully functioning and equipped NRW unit in RSC-WC by 2017 NWSDB staff trained for NRW by the end of 2020 (target: 1,000, at least 25% women by 2017) GIS-based asset management system established for both water and wastewater assets by 2020 Sewerage and drainage departments segregated within CMC; wastewater department established as a separate unit with separated accounts, expenditure, revenues, debt, etc by 2020. Awareness and acceptance of wastewater tariff among citizens increased by 20% according to surveys conducted before and after the program Project implemented on time and within budget, and rated successful by ADB project rating system Recruit women engineers and engineering assistants in the PMU for project implementation (15% of PMU staff are women)

progress reports NWSDB project progress reports Consultant’s surveys and NWSDB project progress reports NWSDB project progress reports NWSDB project progress reports CMC annual reports and project progress reports NWSDB annual reports NWSDB annual reports and business plans NWSDB annual reports NWSDB project progress reports CMC and NWSDB annual reports CMC annual reports Survey results MOFP Report NWSDB annual reports

70 Appendix 5

Activities with Milestones Input

1. Water distribution network rehabilitation and replacement and Colombo citywide NRW reduction

Critical Area 1.1 Complete procurement of civil works contract by Q2 2013 1.2 Complete civil works in critical area by Q2 2016 Outside Critical Area

1.3 Complete selection and design of pipes to be replaced and rehabilitated by Q4 2012 1.4 Complete procurement of civil works by Q3 2013 1.5 Complete civil works outside critical area by Q4 2016 NRW Reduction

1.6. Appoint core counterpart staff required for water project implementation by Q3 2012 1.7 Provide the NRW teams with vehicles, tools, equipment, and training, and mobilize the

teams for active leakage control by Q2 2015 1.8 Install system input meters and establish water balance by mid-2014 1.9 Establish DMAs by 2016 1.10 Replace pumps and transmission lines by Q2 2017 1.11 Replace all service connections and meters by 2017 1.12 Install flow and pressure monitoring equipment by mid-2016 1.13 Introduce meter-testing equipment and introduce facilities, and train staff by the end of

2016 1.14 Construct a dedicated Colombo NRW office facility (in Maligakanda) and an operational

center in the critical area by the end of 2016 1.15 Establish water user groups in low-income areas (members at least 50% women) by 2016 2. Wastewater network expansion and construction of wastewater treatment plants in Greater Colombo

2.1 Procure civil works contract for expansion of sewer network by Q4 2016 2.2 Complete civil works of sewer network expansion by Q4 2019 2.3 Procure civil works contract for wastewater treatment plants by Q4 2017 2.4 Complete construction of treatment plants by Q3 2020 3. Strengthened institutional structure and capacity of service providers

3.1 Establish operations performance audit cell by Q4 2013 3.2 Issue tender documents for contract of MASCs by Q4 2012 3.3 Procure contract of MASCs; complete and mobilize consultants by Q2 2013 3.4 Develop and begin implementation of NRW management training and certification

program by Q1 2014 3.5 Institutionalize reforms in RSC-WC and appoint all key staff by the end of 2015 3.6 Complete comprehensive staff training program in NWSDB by the end of 2016 3.7 Establish a staff performance incentive scheme by 2014 3.8 Implement campaign to increase public awareness of water conservation and NRW reduction by the end of 2016 3.9 Recruit NGO for community mobilization by Q3 2013 3.10 Recruit media consultants for community consultations and awareness raising in program

implementation, community participation, employment opportunities, and program benefits by Q3 2013

3.11 Train water user groups in meter reading and O&M by 2018 3.12 Complete separation of wastewater department within CMC and complete separate

accounting and other systems by Q4 2018 3.13. Introduce wastewater tariff by Q1 2020 3.14 Procure DSIC contract; complete and mobilize consultants by Q4 2014. 4. Investment Program implemented.

4.1 PMU in NWSDB established by Q4 2012. 4.2 PMU in CMC strengthened by Q4 2014.

ADB: $300 million

Item Amount ($ million)

Project 1 ADF 14.00 OCR 70.00 Total 84.00 Government: $100 million

Item Amount 2. ($ million)

Project 1 28.00

3.

4.

5.

6.

7.

8.

ADB= Asian Development Bank, CDTA= capacity development technical assistance, CEA = Central Environmental Authority, CMC = Colombo Municipal Council, DMA = district metering area, GIS = geographic information system, km = kilometer, MASCs = management advisory and supervision consultants, MOFP = Ministry of Finance and Planning, NWSDB = National Water Supply and Drainage Board, MOFP, NRW = Non-revenue water, O&M = operation and maintenance, PMU = project management unit, Q= quarter, RSC-WC= Western Central Regional Support Center, TA = technical assistance. aLow-pressure area is about 12 km

2 and refers to Kotahena, Slave Island, Pamankada, Havelock Town, Mattakkuliya,

Bovella, and Hulfsdrop. Source: Asian Development Bank

Appendix 6 71

DESIGN AND MONITORING FRAMEWORK FOR PROJECT 1

Design Summary Performance Targets and

Indicators



and Risks

Impact

Improved water supply and wastewater service and management in Greater Colombo

Daily water supply increased in low-pressure area

a (baseline: 5

hours in 2012; target: 24 hours by 2020) in Colombo Citywide NRW in Colombo reduced (baseline: 49% citywide and 60% in critical area in 2012; target: 20% in Colombo and 18% in critical area by 2020) Coverage of sewer network increased including all BPL households (FHHs among them) (baseline: 80% in 2012; target: 100% in Colombo in 2020)

NWSDB reports NWSDB water balance audit CMC annual reports

Assumption

NWSDB and CMC follow the recommended strategy and plan of action for NRW reduction and for wastewater service improvement. Risk

Ongoing and planned water supply projects, financed by JICA and NWSDB, are not successfully implemented.

Outcome

Improved efficiency and financial sustainability of water supply services in Colombo City

NRW reduction conducted in a sustainable and effective manner with a fully functioning performance-driven NRW unit in RSC-WC by 2017 (baseline: no unified NRW unit in 2012) Revenue from water sales increased by 20% by 2017 (baseline: 2011 annual sales LKRs 11,616 million) 100% of households [incl. all BPL households (FHHs among them)] within the critical area receiving continuous water supply by 2017 (baseline: 50% in 2012)

NWSDB water balance audit NWSDB annual reports NWSDB annual reports

Assumption

NWSDB follows the recommended strategy and plan of action for NRW reduction and works collaboratively with the MASC consultants. Risk

The tariff increase to which the government committed in previous ADB projects is delayed.

Output

1. Rehabilitated water supply network and reduced NRW in Colombo City

By 2017 unless otherwise indicated: Around 318 km of water supply pipelines replaced in critical areas and other areas of Colombo City Additional 3,200 free water outlets in under-served settlement ment gardens metered and consumer associations formed (50% women members in executive committees) Around 51,000 service connections replaced with better pipes and fittings Around 17,000 water meters replaced, and around 5,000 water meters introduced with

NWSDB project progress reports NWSDB annual reports NWSDB project progress reports NWSDB project progress reports

Assumptions

Key officials who receive the necessary capacity-building training remain in their positions. Risk

Prices of steel and pipes increase beyond projections.

72 Appendix 6


Indicators



and Risks

2. Strengthened institutional structure and capacity of NWSDB. 3. Project 1 successfully

automatic meter reader facility in a pilot area GIS network maps for Colombo City updated NRW monitoring and control system established for Colombo City on the basis of DMAs NRW building and AE building equipment procured for RSC-WC 6 ALC teams equipped and operational in RSC-WC, and leak repair team equipped and reinforced NRW unit fully equipped, trained, and functioning in RSC-WC to take over and maintain 2017 NRW levels (at least 15% of RSC-WC professional and technical staff are women). Operations performance audit cell established and operational in NWSDB Colombo City water supply operations decentralized to RSC-WC, and RSC-WC operating as autonomous business center under NWSDB with separate books of accounts, and with all records transferred to it First 3-year operating action Plan and Business Plan of NWSDB completed by 2014 Asset management delegated to RSC-WC, and GIS-based asset management system completed by 2016 NWSDB staff trained in NRW reduction (target: 1,000, at least 25% women) Awareness and acceptance of water tariff among citizens increased by 20% according to surveys done before and after Project 1 emphasizing shared responsibility of men and women in water management. Project 1 completed on time and

NWSDB project progress reports NRW specialist’s and MASCs’ reports NWSDB project progress reports NWSDB project progress reports

NWSDB project progress reports NWSDB annual reports NWSDB annual reports and project progress reports NWSDB project progress reports NWSDB annual reports NWSDB project progress reports Surveys conducted by the project consultants PPMS

Appendix 6 73


Indicators



and Risks

managed and implemented

within budget, and rated successful in ADB project success ratings

Activities with Milestones Input 1. Rehabilitated water supply network and reduced NRW in Colombo City

1.1 Necessary environmental, statutory, and utilities clearances obtained by Q2, 2013 1.2 Tender documents for priority rehabilitation works issued by Q2, 2013 1.3 Isolation of critical area completed by the end of 2013 1.4 Design and planning, fieldwork completion with pressure and flow measurements,

and establishment of all DMAs in north part of Colombo, by February 2014 1.5. Installation of meters and establishment of water balance completed by Q2, 2014 1.6 NRW teams provided with vehicles, tools, equipment, and training and mobilized by Q2, 2015 1.7 All DMAs established by Q2, 2016 1.8 All service connections and meters replaced or upgraded by 2017 1.9 Critical valves and bulk meters replaced by 2016 1.10 A dedicated Colombo City NRW office facility and an operational center in critical

area constructed by the end of 2016 1.11 All pipe replacement and lining civil works contracts completed by Q1, 2017

2. Strengthened institutional structure and capacity of NWSDB

2.1 Implementation of NRW management training and certification program developed and started within NWSDB by Q1, 2014

2.2 Agreed reforms in RSC-WC institutionalized and all key staff appointed by the end of 2015

2.3 Comprehensive staff training program completed in NWSDB by the end of 2016 2.4 Staff performance incentive scheme established by Q3, 2014 2.5 Public awareness campaign in water conservation and NRW reduction designed and

implementation started by Q2, 2013 2.6 NGO for community mobilization recruited by Q3, 2013 2.7 Media consultants for community consultations and awareness raising on program

implementation, community participation, employment opportunities, and program benefits recruited by Q3, 2013

2.8 Training of NWSDB staff in NRW reduction completed by Q2, 2016 2.9 Training of water user groups in meter reading and O&M completed by 2018

3. Managed and implemented for Project 1 successfully 3.1 PMU and core counterpart staff required for project implementation appointed by

Q3, 2012 (25% women) 3.2 Core counterpart staff required for project implementation mobilized by Q4, 2012 3.3 CDTA consultants, including the NRW specialist, mobilized by Q2, 2013 3.4 Tender documents for MASCs issued by the end of 2012 3.5 Contract for MASCs signed with consultants by Q4, 2013

ADB: $84 million Government: $28 million

ADB = Asian Development Bank, AE = , ALC = active leak control, CDTA = capacity development technical assistance, CMC = Colombo Municipal Council, DMA = district metered area, GIS = geographic information system, km = kilometer, MASCs = management advisory and supervision consultants, NWSDB = National Water Supply and Drainage Board, NRW = non-revenue water, PMU = project management unit, PPMS = project performance monitoring system, RSC-WC = Western Central Regional Support Center, TA = technical assistance, Q = quarter. aThe critical areas in Central Colombo are Kotahena, Mattakkuliya, Grandpass, and Modera.

Source: Asian Development Bank.

74 Appendix 7

CONSULTATION AND PARTICIPATION PLAN (PROJECT 1)

C&P Activity Target

Stakeholders Type of

Participation Objectives of the C&P

Activity Responsible Unit/Persons

Time Frame

Cost Estimate

Project orientation workshop for government officials, officers, and staff on the GCWWMIIP (1 whole day)

75-100 Government officials and staff consisting of representatives from MWSD, NWSDB, External Resources Department of MOFP, UDA, CEA, CMC, MLD, RDA, PRDA, Police, MASCs, project NGO, and contractor(s)

Information sharing Consultation Shared responsibility Shared decision making

Introduce the project Demonstrate the link between improved water supply infrastructure and good health, women’s empowerment, and environmental conservation Present safeguards and social and environmental management plans and disclosure requirements Discuss roles and accountabilities of various government units Discuss issues related to use of existing ROWs for the project, and environmental and social risks and their mitigation

ADB project team, MWSD

Year 1: 1 project orientation workshop

$1,000 x 1=

$1,000

Strategic and action planning workshop (1 whole day) NWSDB PMU/MASC monitoring meetings (half day)

PSC meetings (half day)

PMU, members of the project steering committee, MASCs, private contractor(s), and project NGO

Information sharing Shared responsibility Shared decision making Control

Develop strategic and action plans in accordance with the project road map Review compliance with social safeguards, environment, and gender frameworks and plans Discuss progress in implementation, including problems encountered and means of mitigating or addressing them Regularly report on the progress of implementation

NWSDB PMU, MASCs, ADB project team

Planning workshop: Annual PMU, MASC monitoring meetings: Quarterly PSC meetings: Quarterly

Planning workshop: $750 x 4 years = $3,000

PMU/MAS

C monitoring meetings: $300 x 4 x 4 years = $4,800

PSC

meetings: $300 x 4 x 4 years = $4,800

Orientation workshop for contractors and laborers

All project-related staff and laborers in contractor(s)’s teams

Information sharing

Manage construction Provide quality assurance Enforce core labor standards, HIV/AIDS Enforce environmental and social safeguards and mitigation measures Provide assistance to APs during construction Conduct gender sensitization

NWSDB PMU, MASCs, contractors

Year 1: 1 workshop

$750 x 1 workshop

= $750

4 project orientation seminars (POS) for community members (end users) from the project area on the GCWWMIIP (half day)

100 community members, with at least 30 women participating per project orientation seminar At least 50 women community

Information sharing Consultation Shared decision making

Introduce the project, highlighting its importance and benefits to the community Demonstrate the link between improved water supply infrastructure and good health, women’s

PMU, MASCs in cooperation with project NGO

Year 1 $ 1,000 x 4 POS for communit

y members = $4,000

$ 500 x 4

Appendix 7 75

C&P Activity Target

Stakeholders Type of

Participation Objectives of the C&P

Activity Responsible Unit/Persons

Time Frame

Cost Estimate

2 project orientation seminars for women only, on the GCWWMIIP (half day)

members per project orientation seminar

empowerment, and environmental conservation Present safeguards and social frameworks and plans, benefits for poor and vulnerable Gather concerns and views related to water supply (present level of service) Gather initial recommendations for project design and safeguards

POS for women only = $2,000

Total: $6,000

12 focus group discussions with affected persons (APs) on resettlement, entitlement, compensation issues, special protection measures for vulnerable (1–2 hours each) 1 consultation workshop (half day) with temporarily affected persons (APs) Additional consultations with APs as needed

Affected persons (APs): titled and non-titled APs, 10–12 per FGD 50 hawkers or vendors, small shopkeepers, parking attendants affected, and representatives of traders’ associations

Information sharing Consultation

Introduce the project Demonstrate the link between improved water supply infrastructure and good health, women’s empowerment, and environmental conservation; show possible livelihood and business opportunities and special protection measures for vulnerable Solicit the views of APs on resettlement and compensation; mitigate potential conflict Agree on resettlement processes and compensation Inform APs about grievance redress mechanism and contacts Discuss potential disruptions and assistance available for shifting to nearby locations Mitigate potential resistance to the project Gather recommendations Agree on mitigation measures

NWSDB PMU, MASCs, contractors, in cooperation with project NGO NWSDB PMU, MASCs, in cooperation with contractors NWSDB PMU, MASCs

Years 1–2: 6 FGDs in critical area; at least 2 in under-served settlement Years 3–4: 6 FGDs in critical area; at least 2 in under-served settlement Year 1: 1 consultation workshop

$ 300 x 12 FGDs = $3,600

$ 750 x 1 = $750

$ 1,200

Total: $5,550

76 Appendix 7

C&P Activity

Target

Stakeholders

Type of

Participation

Objectives of the C&P

Activity

Responsible Unit/Persons

Time

Frame

Cost

Estimate

1 consultation workshop with under-served settlement communities (end users and APs) from the project area (half day)

Representatives of under-served settlement


Introduce the project, highlighting its importance and benefits Discuss importance of participation in water user groups, maintenance of facilities, opportunities for participation in project Mitigate potential conflict

PMU, MASCs, in cooperation with project NGO, and contractors

Year 1 Consultation workshop

= $750

8 public consultation workshops (half day) with communities (end users), including school and college students, teachers, academicians, community groups, NGOs, on the plans, design, location, management, etc., of water supply infrastructure, environmental and social mitigation measures Workshops to be followed by debates, quizzes, and painting competitions for schools and colleges

50 representatives from the community (at least 30% women and vulnerable HHs), academe, students, NGOs, per consultation workshop 8 schools and colleges in Colombo City


Introduce the project Inform community members of the draft plans, design, location, management of water supply infrastructure and services, as well as envisaged benefits of the project including environmental conservation benefits, benefits for poor and vulnerable, and costs involved in improved service provision Solicit views, suggestions on draft plans, design, location, management of WS Gather recommendations on mitigation measures and other aspects

Generate awareness of project and water conservation issues; conduct community outreach campaign through schools and colleges

NWSDB PMU, MASCs, in cooperation with project NGO

Year 1

$ 500 x 8/ consultatio

n workshops = $4,000

Participatory review meetings (half day)

20 representatives (50% women) from the community and civil society (representatives of CBOs, residents’ and traders’ associations, poor and under-served settlement communities, private sector)

Information sharing Shared responsibility

Elicit issues and concerns during project implementation Discuss and recommend measures to mitigate or address the problems Monitor progress of project implementation

NWSDB PMU, MASCs, contractors, and project NGO

Participatory monitoring meetings: Semiannual

$300 x 4 meetings x 3 years = $3,600

Total Cost of Consultation and Participation $34,250 ADB = Asian Development Bank, AP = affected person, CEA=Central Environmental Authority, CMC=Colombo Municipal Council, C&P = consultation and participation, CBO = community-based organization, FGD = focus group discussion, GCWWMIIP = Greater Colombo Water and Wastewater Management Improvement Investment Program, HH = household, MASC= Management Advisory and Supervision Consultant, MLD = Ministry of Land Development, MOFP = Ministry of Finance and Planning, MWSD = Ministry of Water Supply and Drainage, NGO = nongovernment organization, NWSDB = National Water Supply and Drainage Board, PMU = project management unit, POS = project orientation seminar, PRDA = Provincial Road Development Authority, PSC = program steering committee, RDA = Road Development Authority, UDA = Urban Development Authority, WS = water supply.