nepal - bridges improvement and maintenance program...

Document of The World Bank

Report No: 121710-NP

IMPLEMENTATION COMPLETION AND RESULTS REPORT(IDA-Cr. No. 5138-NP)

ON A

CREDIT

IN THE AMOUNT OF SDR 38.7 MILLION (US$60.0 MILLION EQUIVALENT)

TO THE

GOVERNMENT OF NEPAL

FOR A

BRIDGES IMPROVEMENT AND MAINTENANCE PROGRAM

January 11, 2018

Transport and ICT Global PracticeSouth Asia Region

CURRENCY EQUIVALENTS(Exchange Rate Effective June 30, 2017)

Currency Unit = Nepalese Rupee (NPR)US$1 = NPR 103.40

SDR 1 = US$1.39

FISCAL YEARJuly 15 – July 14

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankBIMP Bridges Improvement Maintenance ProgramBMS Bridge Management SystemBSM Bridge Site MonitoringCIAA Commission for the Investigation of Abuse of AuthorityCMS Contract Management SystemCPS Country Partnership StrategyDLI Disbursement-linked IndicatorDoLIDAR Department of Local Infrastructure Development and Agricultural RoadsDoR Department of RoadsEIRR Economic Internal Rate of ReturnESMF Environmental and Social Management FrameworkF&C Fraud and CorruptionGDP Gross Domestic ProductGESU Geo-Environmental and Social UnitGoN Government of NepalGRM Grievance Redressal MechanismICR Implementation Completion and Results ReportISN Interim Strategy NoteLRN Local Road NetworkM&E Monitoring and EvaluationMDG Millennium Development GoalMoF Ministry of FinanceMoPPWTM Ministry of Physical Planning, Works, and Transport ManagementNPC National Planning CommissionNPV Net Present ValueNVC National Vigilance CenterOAG Office of the Auditor GeneralOHS Occupational Health and SafetyPAP Program Action PlanPDO Program Development ObjectivePforR Program-for-ResultsPIP Priority Investment PlanPPA Public Procurement ActQAP Quality Assurance PlanRBN Roads Board Nepal

RSDP Road Sector Development ProjectSDC Swiss Agency for Development and CooperationSRN Strategic Road Network

Regional Vice President: Annette Dixon Country Director: Takuya Kamata

Senior Global Practice Director: Practice Manager

Jose Luis IrigoyenKarla Gonzalez Carvajal

Project Team Leader: A.K. Farhad Ahmed; Dominic Pasquale Patella

ICR Team Leader: Sami AliICR AuthorSami Ali

NEPALBRIDGES IMPROVEMENT AND MAINTENANCE PROGRAM

Table of Contents

DATA SHEET..............................................................................................................i1. Program Context, Development Objectives, and Design...................................................12. Key Factors Affecting Implementation and Outcomes....................................................113. Assessment of Outcomes..................................................................................................184. Assessment of Risk to Development Outcome................................................................245. Assessment of Bank Performance....................................................................................256. Lessons Learned...............................................................................................................27Annex 1. Results Framework and Key Outputs.......................................................................30Annex 2. Disbursement-Linked Indicators (DLIs)..................................................................32Annex 3. Program Action Plan (PAP).....................................................................................33Annex 4. BIMP Expenditures..................................................................................................37Annex 5. Bank Lending and Implementation Support/Supervision........................................38Annex 6. Borrower’s Comments..............................................................................................39Annex 7. Economic Analysis...................................................................................................40Annex 8. Supporting Documents.............................................................................................45

DATA SHEET

BASIC INFORMATIONProduct InformationProject ID Project Name

P125495 BRIDGES IMPROVEMENT AND MAINTENANCE PROGRAM

Country Financing Instrument

Nepal Program For Results

Original EA Category Revised EA Category

Partial Assessment (B) Partial Assessment (B)

Organizations

Borrower Implementing Agency

Ministry of Finance Department of Roads

Project Development Objective (PDO)Original PDOThe Program Development Objective is to provide safe, reliable and cost-effective bridges on Nepal’s Strategic Roads Network.

Revised PDOn.a.

FINANCING

Original Amount (SDR) Revised Amount (SDR)Actual

Disbursed (SDR)

World Bank FinancingIDA-51380 38,700,000 38,700,000 38,700,000Total 38,700,000 38700000 38700000

KEY DATESApproval Effectiveness MTR Review Original Closing Actual Closing28-Jun-2012 20-Dec-2012 21-Jan-2013 15-Jul-2017 15-Jul-2017

RESTRUCTURING AND/OR ADDITIONAL FINANCING

Date(s) Amount Disbursed (US$)Key Revisions

13-Jan-2017 41,632,976Reallocation of Financing Proceeds.KEY RATINGS

Outcome Bank Performance M&E Quality

Satisfactory Satisfactory Satisfactory

RATINGS OF PROJECT PERFORMANCE IN ISRs

No. Date ISR Archived DO Rating IP Rating

Actual Disbursements

(SDR)

01 19-Dec-2012 Moderately Satisfactory Unsatisfactory 9.68

02 25-Nov-2013 Moderatly Unsatisfeactory

Moderately Unsatisfactory 9.68

03 04-Jun-2014 Unsatisfactory Unsatisfactory 9.68

04 20-Dec-2014 Moderately Satisfactory

Moderately Satisfactory 13.30

05 24-Jun-2015 Moderately Satisfactory


06 11-Feb-2016 Moderately Satisfactory

Moderately Unsatisfactory 20.14

07 03-Aug-2016 Moderately Satisfactory


08 16-Mar-2017 Satisfactory Moderately Satisfactory 28.87

09 28-Jun-2017 Satisfactory Satisfactory 38.70SECTORS AND THEMES

SectorsMajor Sector/Sector (%)Rural/Inter-Urban Roads 100

Rural and Inter-Urban Roads 100ThemesMajor Theme/ Theme (Level 2)/ Theme (Level 3) (%)Infrastructure Services for private sector development 90Governance & Institution Building

ADM STAFF

Role At Approval At ICR

Regional Vice President: Isabel M. Guerrero Annette Dixon

Country Director: Ellen Goldstein Qimiao Fan

ii

Senior Global Practice Director: John Henry Stein Jose Luis Irigoyen

Practice Manager: Binyam Reja (Acting) Karla Gonzalez Carvajal

Task Team Leader(s): A.K. Farhad Ahmed A.K. Farhad Ahmed; Dominic Pasquale Patella

ICR Author: Sami Ali

iii

1. Program Context, Development Objectives, and Design

1.1 Context at Appraisal

Country Background

1. At the time of appraisal in 2012, Nepal was still emerging from a 10-year armed conflict, that ended in 2006, and was passing through a momentous and prolonged political transition. Nepal’s economic growth had been adversely affected by the political uncertainty. Growth over the past decade had been below potential, relying largely on remittances and tourism. Nonetheless, Nepal had made good progress both in poverty reduction and improvement of social indicators. The proportion of poor people had fallen substantially from 45 percent in 1995–96 to 25 percent in 2010–11. This reduction in poverty level came with improvements in income equality. Nepal’s overall Gini coefficient had simultaneously declined from 0.41 to 0.35, a measure that shows poor segments of the population had been able to increase household incomes (often with the help of remittances). Nepal had also made impressive progress toward achieving the Millennium Development Goals (MDGs) in the areas of primary education, gender parity, and under-5 child mortality. Several MDG targets had already been met and Nepal had received the United Nation’s MDG award for reducing maternal mortality.

2. Many of the improvements in social outcomes had benefitted from improved access to all-weather roads. Between 1995–96 and 2010–11 the proportion of people with access to paved roads had increased from 24 percent to 51 percent. However, while the quantity of access had increased, the armed conflict and the political instability had a detrimental impact on the overall quality of the road network and bridges on those roads. The proportion of the Strategic Road Network (SRN) in poor condition had increased from 18 percent in 2008 to 22 percent in 2010 and much of the existing bridge stock was over 35–40 years old and in desperate need of rehabilitation and maintenance. Further, there were still many gaps in the SRN caused by lack of bridges contributing to a substantial lack of physical access to economic centers and social services, particularly in remote areas. Nepal’s topography and geology also complicated efforts to provide adequate transport infrastructure. The lack of physical access was seen as one of the root causes of the conflict and instability in the country. Roughly one-fourth (18 out of 75) of district headquarters did not have an all-weather road connection. This lack of connectivity had adversely impacted the ability of people, particularly in the severely affected rural areas, to participate in economic activities and access quality health care and education services. As a result, Nepal’s economic growth had not reached its potential. One of the key priorities of the Government of Nepal (GoN) was investing in physical and social infrastructure to attain broad-based growth and poverty reduction.

Macroeconomic and Fiscal Background

3. Nominal gross domestic product (GDP) per capita in Nepal doubled from US$350 in 2006 to US$735 in 2011. Nepal’s economy was projected to grow by 4.6 percent in FY2012 compared to 3.9 percent in FY2011. Inflation was running at 7 percent, which was the lowest level attained in three years. The overall fiscal discipline had been maintained and Nepal’s general government debt level, at 34 percent of GDP, was among the lowest in the South Asia Region. While Government revenues had risen and supported increased spending, the quality of expenditures remained a concern. On the external sector front, with high remittance growth, Nepal’s account was in surplus and reserves had risen to a level sufficient to cover

1

nine months of goods and services imports (as of mid-March 2012). Remittances played a large role in the Nepalese economy and were estimated to be 20 percent of GDP in 2010.

4. Fiscal priorities of the GoN had shown a shift toward greater levels of investment in physical infrastructure in an effort to drive economic growth and achieve policy goals relating to socioeconomic integration. The Ministry of Physical Planning, Works, and Transport Management (MoPPWTM) was the lead line ministry for developing transport infrastructure and managed 86 percent of all budgeted expenditures in the sector. A key aim of increased transport sector investment was to connect all 75 district headquarters with all-weather road access. Increasing resource allocations to the transport sector demonstrated the GoN’s commitment for achieving road transport-related policy objectives that would support economic growth and social integration.

Sector Background

5. The road network in Nepal totaled about 42,800 km. The SRN and Local Road Network (LRN) were roughly 10,800 km and 32,000 km, respectively. National highways, feeder roads, and other roads of national importance constituted the SRN. Rural roads and urban roads constituted the LRN. The SRN was managed by the Department of Roads (DoR) under the MoPPWTM and the LRN came under the Department of Local Infrastructure Development and Agricultural Roads (DoLIDAR) and municipalities under the Ministry of Local Development. Due to the challenging terrain of Nepal, bridges played a significant role. They were managed and budgeted for as a subset of the main DoR program. Most new bridge construction on both the SRN and LRN had been managed by the DoR. This was because the department was considered to be the most technically capable organization to undertake this work. The DoLIDAR had focused on trail bridges, which provided non-vehicular access to remote communities. Going forward, the GoN wanted to clarify institutional responsibilities. Under the new arrangement, the DoR would only be responsible for SRN-specific bridges and the DoLIDAR would take over all LRN bridge-related responsibilities.

6. In 2007, the GoN developed a 10-year (2007–2016) Priority Investment Plan (PIP) for the road sector, which prioritized investments to reach target accessibility levels by 2016 (87 percent of hills and 100 percent of Terai population within four-hour and two-hour of walking time, respectively, to the nearest all-weather road). The projected upgrading and maintenance costs of the SRN during the plan period were estimated at NPR 100 billion (US$1.25 billion). Since June 2007, the development partners had committed approximately US$400 million for the SRN projects. This still left a substantial deficit (approximately US$0.85 billion) to implement the PIP. This plan had largely ignored bridges and hence, there was a need to provide support to these critical assets.

7. The nature of funding and its allocation process had also been a considerable challenge for the DoR’s bridge sector investments. The overwhelming majority of the budget for bridge maintenance and new construction had been allocated directly, through separate budget lines, to the DoR. These funds had been used for both the LRN and SRN bridges and had been subject to an ad hoc prioritization that was often driven by political expediency. Maintenance activities were taking second place to new construction. However, some bridge failures had made the Government rethink its priority. Then maintenance activities received a higher priority and funding. The lack of clear institutional mandates and opaque planning and funding mechanisms for bridge development had resulted in a proliferation of bridges on

2

non-priority routes, over procurement, and under completion. Some bridges remained incomplete for up to 10 years.

8. The priority for the sector was to clarify institutional responsibilities and develop mechanisms for funding and planning that prioritize activities according to the most beneficial social and economic returns possible. The Roads Board Nepal (RBN) was set up to manage maintenance activities on the country’s road network. Revenues to the RBN came from the fuel levy and vehicle registration fees, of which it received roughly 78 percent (about US$35 million) from the Ministry of Finance (MoF) in FY2011/12. The limited revenues to the RBN diminished its role and effectiveness in the sustainable maintenance of road and bridge infrastructure. Its levels of funding were only sufficient for fully supporting routine maintenance of roads and bridges.

9. The recently closed World Bank-financed Road Sector Development Project (RSDP) had been helping the DoR in improving its management of bridge assets. Consultancy services procured under the RSDP had been used for updating bridge inventory and condition data, developing a Bridge Management System (BMS), and preparing prioritized maintenance and investment plans based on sound technical, economic, and social criteria. The BMS included updated asset inventory data. The DoR worked to fully integrate the BMS into its operating processes.

1.2 Rationale for Bank Engagement

10. Support to the SRN Bridge Program was consistent with the Interim Strategy Note (ISN) for Nepal (FY2012/13), particularly the first pillar that related to enhancing connectivity and productivity for growth. Poor road and bridge quality was seen as one of the main constraints to the provision of universal physical access. The ISN explicitly mentioned supporting bridge-related interventions in Nepal to extend year-round accessibility and improve the quality of existing bridges.

1.3 Rationale for Choice of Financing Instrument

11. The decision to adopt the Program-for-Results (PforR) instrument—and the Bridges Improvement Maintenance Program (BIMP) was the second World Bank PforR to go to the World Bank Board—reflected the outcome of the World Bank’s and other development partners’ dialogue with the GoN on taking a more programmatic and results-oriented approach on interventions in the roads sector.

12. This operation was seen as an appropriate candidate for use of the PforR instrument for the following reasons:

(a) The GoN requested the World Bank to design an output/results-based bridge program. This was because the previous interventions in the roads and bridges subsector were not sustainable and the GoN was interested in producing a sustainable model based on achieved results and promoting efficiency in the subsector.

(b) There was strong Government support for the bridge sector and for improving outcomes from the DoR’s existing SRN Bridge Program. The DoR recognized that achieving better outcomes would require improvements to institutional capacity and core business processes. The PforR instrument provided better

3

alignment with the Government’s objectives for strengthening capacity while simultaneously supporting the development and management of much-needed physical assets.

(c) Developing a well-planned, prioritized and rigorously monitored investment approach was the main challenge facing the SRN Bridge Program. A revised approach should have balanced maintenance and rehabilitation needs with the need for new bridges. The PforR instrument incentivized improvements in the way that the DoR planned and prioritized investments to achieve this goal. Key to this was the full integration of the newly developed BMS that provided the basis for planning and monitoring and evaluation (M&E) in the sector. Technical assistance support helped the DoR staff integrate the BMS outputs with planning and budgeting activities.

(d) The World Bank, and other development partners had been engaged with the DoR for many years and had supported the development of fiduciary, social, and environmental systems in line with good practice. The Government had shown strong commitment to the development of these systems and continuous development had been demonstrated. However, improvements were still needed to apply these systems uniformly and effectively. The PforR approach allowed the World Bank’s support to better align with and strengthen the application of existing processes and procedures.

(e) Earlier bridge initiatives using traditional project approaches had not fully succeeded at achieving sustainable results. Anecdotal evidence suggested that these isolated project-style approaches succeeded at building assets but failed at building the institutional mechanisms required for managing longer-term maintenance. The PforR instrument mitigated this risk by facilitating the use of processes that the DoR would use for managing the SRN bridge maintenance in the future.

(f) The DoR’s SRN Bridge Program involved a decentralized implementation model that depended heavily on the DoR’s 25 divisional offices. In general, SRN bridges were numerous, short in span, and relatively inexpensive. Achieving the Program Development Objective (PDO) for this type of diffuse capital program required changes to broadly applied processes and organizational behaviors. The Specific Investment Lending instrument was suitable for a concentrated capital program involving fewer, higher-value assets. However, the PforR approach aligned better with impacts needed to achieve the PDO given the structure of the SRN Bridge Program.

13. The GoN demonstrated a strong willingness to use the PforR instrument, which contributed to policy changes in

(a) Enhancing the quality assurance mechanisms within the Government’s bridge program, by introducing independent verification systems and processes undertaken by public entities such as the National Vigilance Center (NVC) and the Commission for the Investigation of Abuse of Authority (CIAA);

4

(b) Helping the GoN activate their internal transparency and anticorruption mechanisms to enhance the DoR management systems that had previously delayed the project; and

(c) Improving efficiency of government procurement processes by strengthening capacity and systems development, which contributed to accelerating implementation during the last year of the program and ensuring the sustainability of investments.

1.4 Description of the Program Scope and Activities

14. At the time of appraisal in 2012, the World Bank supported the SRN bridge-related activities (hereinafter referred to as the ‘SRN Bridge Program’ or ‘Program’), which was a subset of the overall program of capital investment by the DoR in Nepal’s road and bridge infrastructure.

15. Program overview. The scope of the SRN Bridge Program encompassed three primary activities: (a) planning, technical design, and quality control of bridges; (b) major and minor maintenance of existing bridge assets; and (c) new bridge construction. There were also a number of complementary activities that fell outside the scope of the Program and related to the overall DoR Road and Bridge Program. These activities included the DoR’s Annual Road Maintenance Plan which was funded and monitored by the RBN and did include some routine maintenance activities of bridges on the SRN.

16. The DoR had identified the following medium-term goals to make progress against the intended SRN bridge-related outcomes: (a) completing all urgent major maintenance requirements, (b) completing the current backlog of unfinished bridges already under construction, (c) reducing the accumulated backlog of major maintenance requirements, (d) undertaking minor and routine maintenance to prolong existing asset lives, and (e) continuing to develop economically and socially important new bridge crossings. The World Bank’s operation supported the DoR in developing more explicit quantitative targets for Program results.

17. Sound investment planning and improved implementation procedures were critical for the Program’s success. While bridges did require specialized expertise and some posed significant engineering challenges, most bridges under the Program were relatively small and involved straightforward engineering design. The existing stock of bridges on the SRN had an average span of 43 m, 47 percent were single span (average length 22 m), and only about 10 percent had 6 or more spans (average length of 214 m). The cost estimates for the Program suggested that for 71 percent of the SRN bridges requiring urgent major maintenance, the costs would be less than US$250,000 per bridge. Similar estimates suggested that 85 percent of the new bridges were likely to cost less than US$1 million per bridge. The single most expensive bridge that was being considered was estimated to cost US$8 million. Costs of engineering designs, feasibility studies, and quality management were estimated to be approximately 5–6 percent of civil work spending.

18. Government commitment to the Program. The Government’s budget activity reflected increased priority for the bridge sector. The overall DoR expenditures across its bridge sector programs had increased substantially in subsequent years. Most notably, there had been a 450 percent increase in the budget for major maintenance works—albeit from a low base. In FY2011/12, the total budget for the SRN bridges was approximately US$10

5

million and the GoN had indicated that this figure would increase to US$18.5 million in the next fiscal year. While this was encouraging, the estimated cost of meeting all the SRN bridge needs was in the range of US$328 million. With government funding alone it may have taken nearly two decades to meet all the SRN bridge-related needs. Adding inevitable future needs would have extended this estimate further.

19. The SRN Bridge Program supported the Government’s efforts to clear the backlog of urgent and major maintenance, which over time would reduce the overall maintenance burden for bridges. That said, there were still huge needs in the sector and limited resources and capacity. It was expected that the Government would continue to rely on donor financing and technical assistance in the foreseeable future. The other key to sustainability was ensuring high-quality construction and good bridge asset management. Through the institutional strengthening supported by the Program, the management capacity of the DoR and other implementing agencies would be enhanced, so that these agencies could better carry out the responsibilities for management and delivery of services.

20. Fiscal context. It was expected that over the five-year program, Nepal’s SRN Bridge Program would spend approximately US$29.5 million per year. This amount was equivalent to 0.2 percent of the International Monetary Fund’s estimates for Nepal’s 2012 GDP or 3.3 percent of what the GoN budgeted for capital investment in FY2011/12. The GoN’s contribution to the SRN Bridge Program over the five years (US$87.9 million) fit within the MoF indicated US$185 million funding envelope for the GoN’s contribution toward all the DoR bridge sector investment programs and left sufficient room for other programs.

21. The additional funding from the World Bank’s operation would support the SRN Bridge Program to deliver an increased volume of civil works, which would have otherwise not been possible with government funding alone. Regardless of the World Bank’s involvement, the DoR would have continued taking up new SRN bridge construction on account of the social and political importance of new bridges. However, the World Bank’s support prevented the SRN Bridge Program from making a tradeoff between completing its backlog of bridges under construction and undertaking critical major maintenance needed to sustain the existing stock of SRN bridges. The amount of World Bank funds committed for this operation (US$60 million) was roughly equivalent to the expected amount of SRN Bridge Program spending on major maintenance over the five years (US$58.5 million).

22. Planning, technical design, and quality management. A minimum of 5 percent of its civil works budgets (US$7.4 million over the Program support period) was budgeted for activities to plan, prepare, supervise, and monitor the civil works, including social and environmental aspects. This included funding for consulting services to prepare detailed engineering designs, supervision of bridge construction works, quality assurance and monitoring, data collection linked to bridge conditions and maintenance of the BMS, auditing and verification, training, and miscellaneous activities.

23. SRN bridge maintenance. The SRN Bridge Program was expected to focus on approximately 98 bridges (about 6,225 m) that urgently needed major maintenance to prevent impending failures. Many of these bridges were considered structurally unsound and therefore unsafe. The Program would also complete major maintenance (233 bridges; totaling 10,900 m in length) and minor maintenance (95 bridges; totaling 3,500 m in length) on bridges that were in a relatively stable condition.

6

24. SRN bridge construction. The SRN Bridge Program would construct approximately 121 new bridges (6,000 m). This total included approximately 95 bridges (5,000 m) in the existing DoR backlog of bridge construction. In addition, a total of 26 new bridges (1,000 m) on existing gaps would be constructed.

25. Role of development partners. Several development partners were already supporting the SRN bridge construction through stand-alone projects. Specifically, the Asian Development Bank (ADB), Japan International Cooperation Agency, the Government of the Peoples’ Republic of China, and the Government of India were all funding portions of the SRN bridge construction. These entities were financing bridges associated with individual road projects and had applied their own procedures to govern project implementation along with ‘ring-fenced’ project budgets. As such, these bridges fell outside the remit of the SRN Bridge Program until these completed assets were transferred for long-term maintenance. On the LRN, the Swiss Agency for Development and Cooperation (SDC) was providing a technical assistance program to support motorable bridges. Also, ADB, the U.K. Department for International Development, SDC, and the World Bank were providing support for a trail bridge sectorwide program. The World Bank support was being provided under its Rural Access Improvement and Decentralization Project.

26. Program expenditures. The estimated funding envelope for the SRN Bridge Program over the five years was approximately US$147.6 million. This included an indicative commitment of US$87.6 million from the GoN and the proposed World Bank support of US$60 million.

27. Program exclusions. The SRN Bridge Program excluded bridges that, in the opinion of the World Bank, were likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people or involved procurement of (a) works, estimated to cost US$50 million equivalent or more per contract; (b) goods, estimated to cost US$30 million equivalent or more per contract; (c) non-consulting services, estimated to cost US$20 million equivalent or more per contract; and (d) consultants’ services, estimated to cost US$15 million equivalent or more per contract. The exclusion of non-consulting and consultants’ services exceeding the abovementioned amounts were related to the country’s limited procurement capacity in these areas. The estimates suggested that a total of approximately 24 (out of 760 potential Program interventions) existing or planned bridges would be excluded under the SRN Bridge Program. This was just over 3 percent of the total interventions planned under the SRN Bridge Program. Most bridges in Nepal’s environmentally sensitive areas were lower priority or were likely to be financed by other sources and their exclusion would not have undermined the integrity of the Program.

1.5 Program Development Objective (PDO), Key Results, and Disbursement Linked Indicators

28. The DoR had a Bridge Policy and Strategy (2004), which was setting out the overall vision for the bridge program in Nepal. In that document, the program objective, which was used as the PDO for this operation, was stated as follows: to provide safe, reliable, and cost-effective bridges on Nepal’s Strategic Roads Network.

29. The emphasis in the SRN Bridge Program objective was to provide safe, reliable, and cost-effective bridges. In the Bridge Policy and Strategy (2004), safety referred to design that adequately addresses standard loading requirements, user safety and climate and seismic resilience; reliability referred to uninterrupted access through adequate maintenance and

7

emergency measures, and cost-effectiveness referred to the use of sound bridge management and commercial practice within the sector. Achievement of these objectives was measured through the following PDO indicators:

PDO Indicator 1: Improved condition of bridges on SRN

PDO Indicator 2: Increased share of bridges on SRN meeting minimum loading requirements

PDO Indicator 3: Strengthened performance management in the bridge sector

30. Disbursements under the SRN Bridge Program were triggered by the achievement of specific results contributing to the PDO indicators called disbursement-linked indicators (DLIs). The DLIs were designed to be simple and to address the primary objective of this engagement: moving from the current ad hoc approach to planning and prioritization to one which is driven by technical, economic, and strategic priorities. The DLIs were heavily weighted toward maintenance activities, with DLI-1 on major maintenance activities and DLI-2 on minor maintenance activities accounting for 55 percent of the credit amount. DLI-3, which relates to new construction or upgrading activities (where the priority was on the backlog of unfinished bridges), accounted for 30 percent of funds allocated. This reflected the importance of extending year-round access on the SRN as a second priority to consolidating the condition of existing bridge assets. These three DLIs supported the achievement of PDO Indicators 1 and 2 and disbursed against physical targets being met in terms of the cumulative meters of completed bridges for maintenance and new construction works. However, to reflect the importance of the developed BMS in improving the management of the sector, the completed bridges would only contribute toward one of the DLI targets if they were included in a list prioritized by the BMS, budgeted for in the budget cycle, and included in the annual Procurement Plan.

31. Three DLIs were related to the achievement of PDO. Indicator 3 on strengthening overall performance management in the sector. DLI-4 was also a PDO-level indicator. It related to the timely implementation of contracts. DLI-4 was a proxy for cost-effectiveness because timely implementation could only take place with improved planning and implementation based on reliable data from the BMS combined with improvements in procurement and contract management. While DLI-5 related to the continued updating and operationalization of the BMS, DLI-6 related to the improved management of complaints as they related to improved transparency and social accountability. These elements had a combined weight of 15 percent.

32. The first three DLIs (1, 2, and 3) were output indicators from the SRN Bridge Program and considered as the highest-level indicators that could be accurately measured given the basic M&E systems that were in place. The other three (4, 5, and 6) were process-level indicators that set out a number of actions designed to ensure that the outputs were delivered in a way that is cost-effective, transparent, and of the highest quality. Table 1 summarizes the DLIs.

33. The Results Framework Matrix for the SRN Bridge Program is provided in annex 1, and annex 2 provides the details of the DLIs and their verification protocols.

8

Table 1. DLIs

Period 1 Period 2 Period 3 Period 4 Period 5

Total Disbursement

Amount(US$,

millions)

Percentage of Total Credit

DLIs related to the achievement of PDO Indicator 1 and 2 DLI-1: Completion of major maintenance of bridges on SRN (cumulative meters)

425 2,575 6,225 11,025 17,125 30 50

DLI-2: Completion of minor maintenance of bridges on SRN (cumulative meters)

700 1,400 2,100 2,800 3,500 3 5

DLI-3: New bridges built or improved on SRN (cumulative meters)

1,700 2,800 3,800 5,100 6,000 18 30

DLIs related to PDO Indicator 3DLI-4: Strengthened performance management in bridge sector (percentage of bridge works completed on planned schedule)

20 25 30 40 50 3 5

DLI-5: Improved Bridge Asset Management

The BMS fully operational in 15 divisional/regional offices

The BMS fully operational in all 30 divisional/regional offices

Condition survey undertaken on at least 20% of the SRN



3 5

DLI-6: Increased effectiveness of the institutions responsible for bridge sector management

Grievance redressal mechanism (GRM) implemented in the DoR and report disclosed detailing status of complaints and actions on fraud

Report disclosed detailing status of complaints and actions on F&C and those related to social and environmental issues




3 5

9

Period 1 Period 2 Period 3 Period 4 Period 5

Total Disbursement

Amount(US$,

millions)

Percentage of Total Credit

and corruption (F&C) and those related to social and environmental issues

Total amount disbursed (US$, millions)† 8.8 9.2 11.5 14.7 15.8 60 100

10

1.6 Main Beneficiaries

34. The main beneficiaries of the SRN Bridge Program were road users who benefited from year-round access through structurally safe bridges to social and economic facilities and services. Given the networkwide nature of the Program, the beneficiaries included all road users in the country, including transport operators (both freight and passenger) and women, children, poor, and physically challenged persons, who used their services. The new bridge construction in the remote areas of the country benefited an estimated 3 million people, either directly or indirectly. Evidence suggested that improved physical access to health facilities and educational institutions would particularly benefit women, especially during the rainy seasons. Investment in the Program would generate approximately 12 million person-days of employment, including long-term maintenance work. Women were expected to get a fair share of these opportunities. A separate impact evaluation study was planned under the Program to estimate the actual benefits to various social and gender groups.

2. Key Factors Affecting Implementation and Outcomes

2.1 Key Factors during Preparation

Fit of Design with the GoN and World Bank Priorities

35. At the time of appraisal in 2012, support to the SRN Bridge Program was consistent with the ISN for Nepal (FY2012/13), particularly the first pillar that related to enhancing connectivity and productivity for growth. Poor road and bridge quality was seen as one of the main constraints to the provision of universal physical access. The ISN explicitly mentioned supporting bridge-related interventions in Nepal to extend year-round accessibility and improve the quality of existing bridges. The support to the SRN Bridge Program was also consistent with GoN priorities, as the Program was a subset of the GoN’s overall program of capital investment in Nepal’s road and bridge infrastructure, which was prepared according to the PIP (2007–2016) for the road sector that prioritized investments to reach targeted accessibility levels by 2016.

Selectivity in Design

36. The design of the SRN Bridge Program focused on critical major and minor maintenance needed to sustain the existing stock of SRN bridges, thus preventing the Program from making a tradeoff between completing its backlog of bridges under construction and undertaking the needed critical maintenance. The design also excluded bridges that were likely to have significant adverse impacts on the environment and/or affected people or involved high-risk large procurement. A total of approximately 24 (out of 760 potential Program interventions) existing or planned bridges were excluded under the SRN Bridge Program. This was just over 3 percent of the total interventions planned under the SRN Bridge Program. Most bridges in Nepal’s environmentally sensitive areas were a lower priority or were likely to be financed by other sources and their exclusion did not undermine the integrity of the Program.

Sustaining the Planning and Quality Management Capacity within the DoR

37. The design of the SRN Bridge Program included crucial interventions related to strengthening planning, technical design, and quality management capacity within the DoR. These interventions included activities to plan, prepare, supervise, and monitor the civil

11

works, including social and environmental aspects. The funding was made available for consulting services to prepare detailed engineering designs, supervision of bridge construction works, quality assurance and monitoring, data collection linked to bridge conditions and maintenance of the BMS, auditing and verification, training, and so on. These activities were intended to sustain the planning and quality management capacity of the DoR which had been supported under the closed World Bank-financed RSDP. Under the RSDP, support had been provided for updating bridge inventory and condition data, developing the BMS, and preparing prioritized maintenance and investment plans based on sound technical, economic, and social criteria. The BMS included updated asset inventory data. The DoR had worked to fully integrate the BMS into its operating processes.

2.2 Key Factors that Affected Implementation

38. The implementation of the SRN Bridge Program benefited from its comprehensive design to achieve its objectives. The adoption of the PforR instrument was welcomed, as it focused the Government’s attention on outcomes rather than on inputs. Initially, the Program faced declining performance from mid-2013 to end of 2014 due to a change in the DoR management. The indifferent leadership during this time slowed down the Program implementation. Further delays in 2015 were due to a number of reasons, including the devastating earthquake of April 2015. The earthquake caused the priorities of the GoN to change to provide immediate relief and reconstruction work to main roads and bridges. During this period, the Program had fallen considerably behind in all key areas, such as not using the BMS in the selection of FY2013/14 bridges for new construction, not making progress on the BMS data verification and update, lacking progress on DLIs, delaying the submission of dossiers for verification, and ignoring bridge quality management. Therefore, until early 2015, the Program’s ability to achieve future DLI targets was questionable.

39. Despite losing approximately one and a half years of implementation, the Program achieved its targets due to the GoN’s initiatives that were responsible for the Program’s remarkable turnaround. The Program progressed very well during its last year. The DoR had also increased the amount of resources spent on the maintenance of the SRN bridges significantly in the later years. The amount spent on bridge maintenance in FY2015/16 (over NPR 1,000 million) was over five times the amount spent at the inception year of the Program in FY2012/13 (just over NPR 200 million). Also, the allocation for new construction of the SRN bridges stabilized and hovered between NPR 2,000 million (FY2014/15) and NPR 1,800 million (FY2016/17) in the last three years. This showed the Government’s commitment to the preservation of existing bridge assets instead of the creation of new assets.

40. The implementation of the Program has also contributed to introducing innovative design and construction techniques in the bridge sector, such as the introduction of prestressed concrete bridges and precast concrete, the use of carbon fiber and micropiling in bridge maintenance, and so on. The Program introduced new methods for bridge inspection and testing, such as the use of bridge inspection vehicles and nondestructive testing equipment. The Program also introduced the adoption of the Design and Build approach in works contracts.

41. This Program was the first of the two PforR Programs approved by the World Bank Board. Therefore, the efficacy of the PforR instrument, to some extent, depended on its success. The Program closed successfully on July 15, 2017. It achieved all its objectives and targets before its closure. Following a request from the Government, the Program was restructured on January 13, 2017. The restructuring has revised two Program DLI targets

12

(DLI-1: major maintenance and DLI-2: minor maintenance) and reallocated the credit proceeds between them. The DLI-1 and DLI-2 targets were revised to 14,125 m (original 17,125 m) and 10,000 m (original 3,500 m) respectively.

42. On the other hand, the planned Program’s impact evaluation study was not conducted due to the lack of funds under the Program. The baseline data collection was completed at the beginning of the Program with funds from a Trust Fund, but the end-of-program data were not collected nor analyzed. This study would have been very useful in the evaluation of the impact of the Program on the road users and on the accessibility of the Program beneficiaries to social and economic services. A provision is required in the follow-up project for the collection of ex post data and an analysis of the Program’s impact making use of the ex post ante and ex post data. It is important to note that the lack of Program impact evaluation did not affect the monitoring of Program results because the BMS was the primary source for monitoring results under the SRN Bridge Program.

43. The following are some of the challenges faced during the Program implementation:

(a) Delays in major maintenance of bridges. This delay required continuous monitoring of ongoing major maintenance contracts. The reason for this delay was the large number of bridges that required major maintenance works, especially after the damage incurred by the earthquake in Nepal, and the limited capacity of local contractors executing the works.

(b) Poor bridge construction quality. Poor construction quality was a constant issue throughout implementation. The National Planning Commission (NPC) had not recommended disbursement of four new bridges during the verification process due to their poor quality. These cases were referred to the CIAA. The World Bank team worked closely with the DoR in improving the construction quality. The main reason for the poor construction was the lack of resources in the number of the DoR supervision staff and the limited experience of the DoR staff to supervise the construction of new bridges. This issue could have been mitigated by hiring qualified consulting firms to undertake the construction supervision and provide capacity building in quality control and assurance to the DoR staff. The PforR instrument contributed to enhancing the quality assurance mechanisms within the Government’s bridge program, by introducing independent verification systems and processes undertaken by public entities such as the NVC and the CIAA.

(c) Poor occupational health and safety (OHS) on construction sites. The poor enforcement of OHS has led to two fatal accidents in the construction sites during the five years of Program implementation. The two fatalities happened in FY2012/13 and FY2015/16. No further fatal accidents were reported since then. Regarding the proper implementation of the OHS management procedures, the inclusion of OHS in the contractor’s contracts in charge of the rehabilitation and construction of the bridges was implemented in the last two years of the project, which improved the strengthening of OHS on construction sites. The Program has been leading the effort to make construction sites safer. It has also made substantial progress in this regard by the end of the Program by enforcing OHS measures on all sites and providing safety equipment to construction workers. It is, however, necessary to sustain this effort. The proposed follow-on operation—

13

BIMP II—should make provisions in order to further advance on this critical issue.

Program Action Plan (PAP) Implementation

44. All 14 actions of the PAP were implemented satisfactorily. This materially contributed to strengthening capacity and systems and, therefore, to achieving the Program objectives. The one action of the PAP that was completed but still needs updating is related to the operationalization of the Bridge Operation Toolkit that summarizes various bridge planning, construction, maintenance, and management procedures. Recent changes in the Nepal Public Procurement Act (PPA) have necessitated some modifications of the toolkit, which are being incorporated. See annex 3 for more details.

Disbursement Arrangements and Verification Protocols

45. The SRN Bridge Program was planned over a five-year period with disbursements up to a maximum of US$60 million (SDR 38.7 million) over this period. However, due to the depreciation of the SDR to the U.S. dollar, the total credit amount decreased to US$54.3 million by the end of the Program, which affected the extent to which the World Bank financing contributed to the Government’s SRN Bridge Program. Moreover, the GoN spent US$43 million on the SRN Bridge Program out of the initial budget allocation of US$87.9 million from the Government at the time of appraisal. The first three indicators (DLI-1, DLI-2, and DLI-3) were fully scalable meaning that they could be adjusted to reflect the performance of the SRN Bridge Program. The DLI targets were specified as the cumulative number of meters completed for either the maintenance or new construction activities. A bridge was only counted toward the target when it was completed. Partial completion of a bridge did not count toward the target. The values over the period of the Program also took into consideration the gradual improvement in implementation momentum in certain parts of the Program. Where targets were not met in any particular year, the related disbursements were rolled over into the next year. If the Program consistently outperformed the targets, the credit/loans could be fully disbursed before the formal end of the operation.

46. The remaining DLIs were process DLIs. Two of which, DLI-4 on contract implementation and DLI-5 on BMS updating, were partially scalable. DLI-6 on the GRM was an ‘all-or-nothing’ target, which was considered both essential and achievable.

47. The BMS was the basis for providing the data needed for verifying most of the Program results. The results from the BMS were validated through a verification process undertaken by the NPC. The results were also uploaded on the DoR website. This provided an opportunity for the general public to lodge any complaints linked to the improvement and maintenance of bridges. To provide financing on time, an advance of US$15 million (or 25 percent of World Bank financing) was made when the operation became effective. Similar advances were also made at the beginning of each financial year on a rolling basis and provided funds were recovered through meeting subsequent DLIs. At the end of each period a reconciliation was made based on the achievement of the DLIs in the preceding period and forecast expenditures for the next. These arrangements ensured that the Program did not suffer from implementation delays because of a shortage of funds, which was a common problem in the Government’s program.

48. During 2013 to 2017, the NVC, a public entity in charge of technical auditing, conducted 46 technical audits of different bridge construction and maintenance works. The

14

NVC selected a 20 percent sample of bridge works from different regions and topographies. Out of this sample, the NPC did not recommend disbursement of four new bridges during the verification process due to their poor quality. These cases were referred to the CIAA.

49. By closure of the Program, all six DLIs achieved their targets and the full credit amount was disbursed (see annex 2).

Table 2. Achievement of DLIs

DLIs Original Target Revised Target (Restructuring) Achieved Remarks

DLI-1: Completion of major maintenance of bridges on SRN(Length of bridge in meters that has completed major maintenance)

17,125 m 14,125 m 16,139 m Target overachieved

DLI-2: Completion of minor maintenance of bridges on SRN(Length of bridges that have completed minor maintenance)


DLI-3: New bridges built or improved on SRN(Length of bridge in meters built/improved)


DLI-4: Strengthened performance management in bridge sector(Percentage of bridge works completed on planned schedule)

50 50 63 Target overachieved

DLI-5: Improved Bridge Asset Management

BMS fully operational in all 30 divisional/regional offices; Condition survey undertaken on at least 60% of the SRN


BMS fully operational in 25 division and 5 regional offices; Condition survey undertaken on 100% of the SRN

Target overachieved

15



GRM implemented in the DoR and report disclosed detailing status of complaints and actions on F&C and those related to social and environmental issues

GRM implemented in the DoR and report disclosed detailing status of complaints and actions on F&C and those related to social and environmental issues

GRM developed and is being made operational; Report disclosed each year detailing status of complaints and actions on F&C and those related to social and environmental issues

Target achieved

2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization

Quality of M&E Rating: Satisfactory

Design

50. The PDO was clearly specified in the Program Appraisal Document and the Results Framework had clear PDO indicators and DLIs to measure the progress in achieving the PDO in providing safe, reliable, and cost-effective bridges. Considerable effort and care went into the design of the Results Framework and the selection of indicators. With the adoption of a results-based approach under the PforR, M&E was of major importance.

Implementation

51. The BMS was the primary basis for monitoring results under the SRN Bridge Program. The BMS, in conjunction with appropriate Geographic Information Systems software and spatial data, had the ability to provide data on (a) physical bridge characteristics and recent works (for example, location, or meters constructed/maintained); (b) network information (for example, potential detour time if a bridge is out of service); and (c) ‘soft’ variables such as the population served by a bridge. To control the quality of the BMS data, the DoR developed a hierarchy of checks and approvals that aligns with the SRN Bridge Program’s implementation structure.

52. An impact evaluation study for the SRN Bridge Program was also planned under a separate technical assistance. This study would have looked at the impacts of new SRN bridge construction. Specific areas for consideration would have included assessing travel time savings for various road users and the broader socioeconomic impacts of new SRN bridges. However, this impact evaluation study was not completed due to the lack of funds under the Program. The baseline data collection was completed at the beginning of the Program with funds from a Trust Fund, but the end-of-program data were not collected nor analyzed. A provision is required in the follow-up project for the collection of ex post data and an analysis of the Program’s impact making use of the ex post ante and ex post data.

2.4 Fiduciary and Safeguard ComplianceRating: Moderately Satisfactory

16

53. At appraisal, an integrated fiduciary assessment had been carried out. It assessed the fiduciary arrangements relevant to the SRN Bridge Program to determine whether they could provide reasonable assurance that the Program funds will be used for their intended purpose. Based on the assessment carried out, it was concluded that the overall fiduciary framework for the SRN Bridge Program was adequate to support the Program implementation and to achieve the desired results.

54. The GoN had a well-developed budget process along with a Medium-Term Expenditure Framework and sectoral business plans. However, there were inadequacies in their implementation. To address the fiduciary risks arising out of these shortcomings, the MoF provided an indicative resource envelope for three years at a time for the SRN Bridge Program against which annual plans were prepared. The ministry also informed the DoR of the annual allocations of budgetary resources well in advance at the start of the fiscal year. This was to ensure that the divisional offices had time to prepare the annual operating plans based on a firm assurance of resource availability. Therefore, the risk linked to the availability of financial resources to meet the Program’s operational requirements was low.

55. The NVC carried out integrated technical audits that examined the adherence of the SRN Bridge Program to the technical, procurement, and social and environmental standards and guidelines. The DoR referred all credible allegations/complaints regarding corrupt practices to the MoPPWTM. If specific instances of F&C were identified, investigations were conducted through the CIAA in accordance with Nepal’s laws and regulations.

56. The Program’s fiduciary performance is rated Moderately Satisfactory. The Program has withdrawn all its allocated amount (SDR 38.7 million). The DoR continued to submit the Financial Management Report on time. However, the Program faced some delays in conducting the internal audit. Moreover, a few audit reports were also submitted with delay.

57. Although good lessons have been learned from the adoption of the Design and Build approach in works contracts under the Program, the approach needs to be put on a stronger legal footing in Nepal. Contract management also remained a challenge, which would need to be improved in the proposed follow-up Program. Some bridge maintenance contracts required price adjustments due to variations because of an increase or decrease of quantity of items and/or the inclusion of new items. The contracts signed with the contractors did not have a provision for price adjustment, which was a weak point in the contracts. The DoR was accordingly required to conduct due diligence before providing price adjustment payments to the contractors.

Environmental and Social Risks

58. At appraisal, an Environment and Social Systems Assessment was carried out. Given the SRN Bridge Program’s scope, coverage, and size of the bridges, the adverse environmental issues and impacts related to program implementation were limited in nature and also in their geographic extent. While the Program was national in scope, it excluded some investments that had an effect on environmentally sensitive areas such as Government-listed national parks and conservation areas. At the same time, the Program delivered a number of environmental benefits. The rehabilitation and maintenance of bridges ensured that the risks of bridge failure were reduced and that erosion and sedimentation were minimized through repair of failing foundations and river training or abutment works. Improved performance of the DoR with respect to environmental planning and management helped ensure that issues were identified earlier and more consistently and that contractors were

17

supervised more regularly with respect to the environmental provisions of contracts being enforced more consistently.

59. Moreover, there were limited adverse impacts from land acquisition and resettlement from the SRN Bridge Program, and the adverse social impacts were temporary. This was because the area of impact was confined, mostly, within bridge worksites. Similar to environmental benefits, the SRN Bridge Program benefited many isolated communities due to improved physical access. The Program also benefited indigenous communities who constitute a third of Nepal’s population.

60. Performance of environmental and social safeguards continued to be moderately satisfactory. The DoR has completed all three PAP environmental and social actions, including updating the DoR Environmental and Social Management Framework (ESMF) to cater to bridge-related environmental and social issues. All agreed actions were completed, including the recruitment of two OHS specialists and the preparation of safeguards implementation summary note. Safeguard teams, at the central and field levels, continued their supervision and compliance monitoring of the ongoing bridge works. There were no social or environmental risk mitigation issues that were unresolved. Any proposed follow-up Program would need to deepen the gains made under this Program. Two main issues that could be included in a follow-up Program are (a) improving the process of the timely integration of safeguards assessments and inputs to engineering designs and bidding documents, particularly in the case of Design and Build contracts and (b) improving OHS more effectively, including the development of DoR-wide OHS guidelines and guidelines for labor management. These guidelines could be based on those prepared by the International Labour Organization.

2.5 Post-completion Operation/Next Phase

61. On May 15, 2016, the World Bank received a Government request to support a second phase of the BIMP. The World Bank started the related project preparation. Although the Program achievements are significant, the last review mission identified a few areas that need further strengthening in the proposed follow-up Program, including the following:

(a) Further deepening the quality of bridgeworks. It is necessary to further strengthen the bridgeworks quality assurance process. All bridgework contracts have Quality Assurance Plans (QAPs) that are being implemented. However, there remain concerns regarding the accurate implementation of the plans, especially the quality control process, including material testing.

(b) OHS at bridge construction sites, including addressing the labor accommodation and labor influx issues. Although the BIMP has been leading the efforts with the DoR in this area, there is scope for further improvements. It is necessary to develop an OHS policy and guidelines to systematically address OHS issues. Another area that needs attention is the labor accommodation and labor influx issues. The World Bank has also undertaken a study to tackle the labor influx issues. The recommendation of the study could be implemented in the proposed follow-up Program

(c) Bridge site monitoring (BSM) software and its expanded use. The BIMP has developed a BSM application that is now being rolled out to field offices. It is necessary for the follow-up Program to ensure that the application

18

becomes a part of the regular bridgework monitoring process. A simplified version of the application can be developed for the general public to report on the quality of the ongoing bridgeworks or any bridge-related events (for instance, collapse of a bridge).

(d) Mainstreaming of the contract monitoring system developed under an IDA-assisted project. The World Bank-financed RSDP has developed a Contract Management System (CMS) for the DoR. It was recognized during the implementation of the BIMP that there were further requirements for improving contract management within the bridge subsector in the DoR. The follow-up Program should endeavor to use the CMS in improving the contract management of bridges in the DoR.

3. Assessment of OutcomesRating: Satisfactory

62. This section assesses the overall results of the Program. Measuring results against the targets set, the assessment confirms that the Program has contributed to a cultural change in Nepal’s bridge sector by contributing to major improvements in the bridge sector’s planning, design, and management of assets and by increasing transparency, accountability, and inclusiveness. The accompanying investments supported under the Program had a significant impact on improving the population’s accessibility to social services and economic opportunities. The Program is assessed as relevant and the results efficiently delivered, often more than the target and with good prospects of sustainability. The assessment therefore finds the overall outcome of the Program Satisfactory.

3.1 Relevance of Program ObjectivesRating: High

63. The relevance of the Program objective is rated High at Program closing, based on Nepal’s current development priorities and current World Bank Country Partnership Strategy (CPS). This evaluation is based on () the current World Bank strategy in effect (CPS 2014–2018) and (b) the ongoing engagement of the World Bank to meet the GoN’s request for a second phase of the Program. Specifically, the GoN’s positive assessment of the SRN Bridge Program, as a whole, and the commitment from the highest level to duplicate this successful Program demonstrates the continued relevance of the Program to national priorities. On the World Bank’s side, current priorities in the CPS (2014–2018) build on Nepal’s achievements, including those of the SRN Bridge Program, to emphasize inclusive growth and strengthened governance and institutions for improved service delivery and accessibility to all citizens.

64. More importantly, Nepal’s topography and geology complicate the provision of adequate transport infrastructure. The lack of physical access was seen as one of the root causes of the past conflict and instability in the country. This lack of connectivity had adversely affected the ability of people, particularly in the rural areas, to participate in economic activities and access quality health care and education services. As a result, Nepal’s economic growth is dependent on people’s connectivity to reach its potential. Therefore, one of the current key priorities of the GoN is to invest in physical and social infrastructure to attain broad-based growth and poverty reduction, through maintaining existing bridge infrastructure and building new bridges to ensure safe and reliable connectivity, given the significant role that bridges play in peoples’ connectivity due to Nepal’s challenging terrain.

19

65. Evidence has shown, according to the midterm review of sectorwide road study and PIP (2015), that the expansion of the SRN to its current (operational and under construction) length of 12,809 km has achieved the primary goal of improving the overall levels of accessibility throughout the country. The role of the SRN is to provide connectivity throughout the country and enable improved levels of accessibility to be achieved locally through the development and expansion of the local road and bridge networks.

3.2 Achievement of Project Development ObjectivesRating: High

66. The efficacy of the program is rated High, as measured by the PDOs. The emphasis in the SRN Bridge Program’s objective was to provide safe, reliable, and cost-effective bridges. In the Bridge Policy and Strategy (2004), safety referred to design that adequately addresses standard loading requirements and user safety; reliability referred to uninterrupted access through adequate maintenance and emergency measures; and cost-effectiveness referred to the use of sound bridge management and commercial practice within the sector. The achievement of these objectives was measured through the following PDO indicators.

PDO Indicator 1: Improved condition of bridges on SRNRating: Substantial

67. The efficacy of this element of the PDO ‘reliability of bridges’ is rated Substantial because it exceeded the end-of-program target. Based on the BMS monitoring tool under the Program, 481 bridges (81.2 percent of the bridges under the SRN Bridge Program) have improved condition (good or fair condition) and are under routine maintenance or require only minor maintenance. This result exceeds the end-of-program target of 376 bridges (75 percent of the bridges under the SRN Bridge Program). This excellent result was achieved by conducting major maintenance of the existing bridges and by constructing new bridges under the SRN Bridge Program (see annex 1).

68. However, because of the NPC’s decision not to recommend disbursement of four new bridges during the verification process due to their poor quality, the efficacy of this element of the PDO was rated Substantial.

69. All related programmed actions in the PAP were satisfactorily achieved, social and environmental impacts were successfully managed, and operation and maintenance and longer-term sustainability of the assets were ensured by the DoR. Both DLIs, on completion of major maintenance of bridges and bridges built or improved, achieved full disbursement (see annex 2). Improved reliability of bridges has increased the access of the population to social services and economic opportunities.

PDO Indicator 2: Reduced number of structurally unsafe bridgesRating: High

70. The efficacy of this element of the PDO ‘safety of bridges’ is rated High because it has achieved the end-of-program target. Based on the BMS monitoring tool under the Program, the percentage of bridges on the SRN rated as structurally unsafe was reduced from 6 percent in 2012 to 1 percent in 2017. A total of 85 bridges were made structurally safe through undertaking urgent major maintenance. This result achieved the end-of-program target of 1 percent bridges on the SRN rated as structurally unsafe. See annex 1.

20

71. All related programmed actions in the PAP were satisfactorily achieved. As mentioned earlier, both DLIs on the completion of major and minor maintenance of bridges achieved full disbursement (see annex 2). Improved safety of bridges has increased the safety and connectivity of road users.

PDO Indicator 3: Strengthened performance management in the bridge sectorRating: High

72. The efficacy of this element of the PDO ‘cost-efficiency of bridges’ is rated High because it has achieved the end-of-program target. Based on the BMS, the percentage of bridge works completed on planned schedule was increased from 20 percent in 2012 to 63 percent in 2017. This result achieved the end-of-program target of 50 percent bridge works completed on planned schedule.

73. All related programmed actions in the PAP were satisfactorily achieved. One of the completed actions needs updating. This action is related to the operationalization of the Bridge Operation Toolkit that summarizes various bridge planning, construction, maintenance, and management procedures. Recent changes in the Nepal PPA have necessitated some modifications of the toolkit, which are being incorporated. The DLIs related to strengthened performance management in the bridge sector, improved bridge asset management, and increased effectiveness of the institutions responsible for bridge sector management achieved full disbursement (see annex 2). The abovementioned three DLIs have increased the cost-efficiency of bridge construction in Nepal, as demonstrated by the project’s economic analysis in annex 7.

3.3 Efficiency Rating: Substantial

74. The efficiency of the Program is rated Substantial. For this Implementation Completion and Results Report (ICR), the World Bank undertook an economic analysis (annex 7) of a sample of bridges that were constructed or maintained under the Program. Overall, the study confirmed the findings of implementation review and support missions: that bridge construction and maintenance were mostly executed on time, with acceptable quality of works. This was done through competitive tendering, professional specifications, and costs that are in line with costs recorded for similar public sector projects, and generally sound arrangements for management and financing of operation and maintenance. In a few cases, the quality of works was an issue such as in the case of the abovementioned four bridges that were rejected due to issues related to the quality of construction.

75. In general, the Design and Build type of contract used under the Program has decreased the cost of bridge construction and reduced the construction duration as evidenced by the fact that 63 percent of the bridges were completed on time (DLI-4) and that no claims were issued for delay penalties nor price adjustments were made during implementation. Moreover, the use of new construction technologies and practices, such as carbon fibers and precast concrete, were much more cost-effective than the traditional practices, because these new practices allowed the contractor to work without disruption of traffic. See the economic analysis in annex 7.

76. Summary of the economic analysis. The economic analysis of the SRN Bridge Program was conducted based on a sample of bridges requiring urgent major maintenance, new construction, and capacity expansion. Nine bridges were selected at appraisal that reflect

21

the typical types of interventions. The selected bridges included three bridges of each category: new construction, rehabilitation, and capacity improvement. The intervention was appraised over a period to 2033 and the rate of discount and the opportunity cost of capital were taken at 12 percent. Road user cost savings were calculated using the World Bank’s Roads Economic Decision software. Traffic growth rates were estimated at 6.6 percent over the period of the appraisal and maintenance costs at 1.8 percent per year of the new construction cost.

77. The model assumptions adopted at appraisal were maintained at the ex post economic analysis. Out of the nine bridges, eight were constructed under the current project and were, thus, evaluated. The analysis showed very high rates of return particularly for major maintenance activities and capacity enhancements but lower returns for new construction. Except for one bridge (Goji), the overall ex post economic internal rate of return (EIRR) of these bridges was estimated well above 12 percent, which shows that the project has a robust economic justification. While the project encountered a few delays in implementation, adequate implementation contributed to its satisfactory efficiency.

78. As shown in the table 7.1, the ex post economic evaluation yields high net present values (NPVs) and high EIRRs for all but one bridge at a discount rate of 12 percent.

79. The economic analysis has also assessed the impact of the poor quality of works on bridge life by undertaking a sensitivity analysis for different scenarios related to (a) asset life, and (b) maintenance costs. The results of the sensitivity analysis for the following three scenarios: (a) asset life reduced to 10 years and incremental maintenance cost increased to (b) 5 percent and (c) 10 percent of capital cost are summarized in table 7.2. It demonstrates that poor construction quality may affect economic viability. Scenarios (a) reducing asset life to 10 years and (c) increasing maintenance cost to 10 percent show the highest sensitivity. However, in all but one case the economic justification remains robust among the bridges that were economically justified in the base case. For bridge Bangandi (narrow bridge at appraisal), the base scenario yields an EIRR of 16.5 percent, whereas in the sensitivity analysis scenario (a) yields –3.1 percent and scenario (c) yields 10.9 percent. See table 7.2 for further details.

3.4 Justification of Overall Outcome RatingRating: Satisfactory

80. As mentioned earlier, the Program was relevant to both the country and World Bank priorities at both appraisal and during implementation. The results demonstrate that the Program delivered the intended outcomes and achieved the PDO. Table 3 summarizes how the PDO indicators were met and exceeded. All three results indicators were achieved and two of them even exceeded their targets (see annex 1).

81. The assessment of the Program’s success in the three areas: relevance, efficacy, and efficiency, is summarized as follows:

(a) Relevance - High. The Program, as at the time of its preparation, is still relevant in the current development context of Nepal. The Program supports the objective of the 14th three-year Transport Sector National Periodic Plan. The transport sector objective in the plan is to provide safe and reliable connectivity. The Program constructed and maintained bridges that either enhanced connectivity or

22

maintained connectivity. The Program’s planned maintenance activities helped in making provision for safe and reliable connectivity.

(b) Efficacy - High. The Program has achieved all PDO and intermediate results indicators. The six DLISs have also been achieved.

(c) Efficiency - Substantial.

(i) The Program maintenance interventions prolonged the life of bridges, which is economically more viable than their premature replacement due to non-maintenance;

(ii) Modern maintenance techniques have enabled prolonging life of bridges, which might not have been possible with traditional maintenance techniques. Without the use of these techniques, the repaired bridges would have required replacement. Again, this constitutes economic viability of the approaches under the BIMP;

(iii) The BIMP undertook emergency major maintenance of a number of unsafe or nearly collapsing bridges on a priority basis. This approach again constitutes to economic gains;

(iv) The Program adopted a Design and Build approach, which has captured the private sector’s efficiency; and

(v) The Program has successfully reduced the contract execution time for bridges, which resulted in savings from nonpayments of price adjustments and delay compensation expenditures.

(vi) Although, as demonstrated by the economic analysis, the poor construction quality may affect the economic viability of the Program by reducing the assets life and increasing the maintenance cost in the future. For that reason, the Program Efficiency was rated Substantial.

82. These results are particularly noteworthy given that the Program is the first infrastructure Program financed by the World Bank’s PforR financing instrument. The Program closed as planned on July 15, 2017. It is one of the few programs in the history of the World Bank’s engagement in the Nepal transport sector that closed on time, achieving all its objectives and targets. Also, the Program passed through rough patches, losing over two years of implementation time due to a number of reasons, including the sudden change of Program management, post-earthquake uncertainties from end-April 2015, and unofficial trade blockades along the Nepal-India borders for over six months. The Program also facilitated the introduction of the PforR instrument in Nepal as the Government has confirmed the effectiveness of the instrument. This led to the use of this instrument in at least two other sectors—health and education. Therefore, the Program can be termed successful.

83. Overall, a positive judgement on the Program’s high relevance, achievement of targeted results, positive impacts on beneficiaries’ lives, and institutional development justifies a rating of Satisfactory.

23

Table 3. PDO-level Results Indicators

Indicators Baseline (%)

End-of-program

Target (%)

Current Achievements (%) Remarks

PDO-level Results IndicatorsIndicator 1: Improved condition of bridges (Percentage of SRN bridges in good or fair condition)

5375 (376 bridges improved to the stated condition)

81.2 (481 bridges improved)

Target overachieved

Indicator 2: Reduced number of structurally unsafe bridges (Percentage of SRN bridges rated as structurally safe)

61 (85 bridges made structurally safe)

1 (85 bridges made structurally safe)

Target achieved

Indicator 3: Strengthened performance management (Percentage of bridges works completed on planned schedule)


Intermediate Results IndicatorsAll the intermediate indicators are DLIs (six in number). All of them are achieved.

3.5 Overarching Themes, Other Outcomes, and Impacts

(a) Citizen Engagement and Gender Aspects of the Program

84. Ensuring citizen engagement in such a Program with mainly small-value interventions in widely dispersed and remote areas has been found to be extremely challenging. The Program has adopted innovative approaches to enhance citizen engagement, including the design and operationalization of the GRM, the provision of signing boards on all construction sites with contact details of the responsible official(s) to be contacted in addressing grievances, and informing the general public about the Program plan using local FM radio stations.

(b) Institutional Strengthening

85. The design of the SRN Bridge Program included crucial interventions related to strengthening planning, technical design, and quality management capacity within the DoR. These interventions included activities to plan, prepare, supervise, and monitor the civil works, including social and environmental aspects. The funding was made available for consulting services to prepare detailed engineering designs, supervision of bridge construction works, quality assurance and monitoring, data collection linked to bridge conditions and maintenance of the BMS, auditing and verification, training, and so on. These activities were intended to sustain the planning and quality management capacity of the DoR that had been supported under the closed World Bank-financed RSDP. Under the RSDP, support had been provided for updating bridge inventory and condition data, developing the BMS, and preparing prioritized maintenance and investment plans based on sound technical, economic, and social criteria. The BMS included updated asset inventory data. The DoR worked to fully integrate the BMS into its operating processes.

(c) Other Outcomes and Impacts (positive or negative)

86. Improvement to government processes. The GoN had a bridge program of its own during the design of the BIMP. It was one of the major capital investment programs of the GoN. However, it was not effective due to several issues, including a nontransparent bridges

24

prioritization process and poor construction quality. These factors resulted in the construction of poor quality bridges on non-priority routes. Furthermore, the bridge maintenance planning and implementation was ad hoc, and the proportion of funding for maintenance was not adequate when compared with new bridge construction. This was an opportune moment for the World Bank to support the Government’s program.

4. Assessment of Risk to Development Outcome Rating: Substantial

87. Risks were reviewed throughout the implementation period and were systematically assessed by the implementation support missions as Substantial. This assessment remains valid at completion in respect of risks to the sustainability of outcomes, which are principally the following:

(a) SRN Bridge Program funds sustainability. The sustainability of the SRN Bridge Program funds was identified as an area of risk at appraisal, and measures to manage this risk were incorporated into the Program. Sustainability was increased by creating a separate budget framework for the SRN Bridge Program; establishing an SRN bridge asset inventory, including the needs and priorities for existing bridges/new crossings; and developing the BMS providing a technically rigorous basis for prioritizing investment according to needs.

(b) Bridge construction quality. Poor construction quality was a constant issue throughout implementation. The main reason for the poor construction was the lack of resources in terms of the number of the DoR supervision staff and the limited experience of the DoR staff to supervise the construction of new bridges. This issue could be mitigated by considering the hiring of qualified consulting firms to undertake the construction supervision and provide capacity building in quality control and assurance to the DoR staff.

5. Assessment of Bank Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory

88. The World Bank’s decision on the use of PforR. The World Bank’s assessment was that PforR would be a more efficient and cost-effective business model that would reduce transaction costs. Appraisal judged that the risks were manageable and that the capacities were adequate. The World Bank’s judgements thus coincided with the GoN’s requests and were well-matched to this program. Overall, the decision to go for the BIMP as the World Bank’s first PforR was well judged. The soundness of these judgements was confirmed by the overall successful implementation and results of the Program.

89. World Bank’s decision on selectivity. The design of the SRN Bridge Program focused on critical major and minor maintenance needed to sustain the existing stock of SRN bridges, thus preventing the Program from making a tradeoff between completing its backlog of bridges under construction and undertaking the needed critical maintenance. The design also excluded bridges that were likely to have significant adverse impacts on the environment and/or affected people or involved high risk and large procurement. A total of approximately

25

24 (out of 760 potential Program interventions) existing or planned bridges were excluded under the SRN Bridge Program. This was just over 3 percent of the total interventions planned under the SRN Bridge Program. Most bridges in Nepal’s environmentally sensitive areas were a lower priority or were likely to be financed by other sources, and their exclusion did not undermine the integrity of the Program.

90. Adequacy of the World Bank’s assessments. Three careful assessments (technical, social and environmental, and integrated fiduciary) of the BIMP were completed during the preparation of the Program. They provided the basis for assessing the Program’s scope, formulating interventions types, designing the PAP, and envisaging risk mitigation measures.

91. Sustaining the planning and quality management capacity within the DoR. The design of the SRN Bridge Program included crucial interventions related to strengthening planning, technical design, and quality management capacity within the DoR. These interventions included activities to plan, prepare, supervise, and monitor the civil works, including social and environmental aspects. The funding was made available for consulting services to prepare detailed engineering designs, supervision of bridge construction works, quality assurance and monitoring, data collection linked to bridge conditions and maintenance of the BMS, auditing and verification, training, and so on. These activities were intended to sustain the planning and quality management capacity of the DoR which was supported under the closed World Bank-financed RSDP. Under the RSDP, support had been provided for updating bridge inventory and condition data, developing the BMS, and preparing prioritized maintenance and investment plans based on sound technical, economic, and social criteria. The BMS included updated asset inventory data. The DoR had worked to fully integrate the BMS into its operating processes.

92. Risk assessment and management. The World Bank’s risk assessment proved accurate as all the risks during implementation proved manageable within the risk framework at appraisal.

93. DLIs. The BIMP had only six DLIs. The DLIs were tangible, transparent, verifiable, and under the Program’s influence. They also had an agreed verification protocol. In this event, the Program was fully implemented, the targeted objectives were met (as measured by the indicators), and disbursements reached 100 percent, confirming the appropriateness of the DLIs.

(b) Quality of Supervision Rating: Satisfactory

94. The successful implementation of the BIMP and the World Bank’s full understanding of the BIMP’s structure, institutions, and processes justified the decision that the World Bank would move from ‘supervision’ to ‘implementation support’, as required under PforR. During implementation, the World Bank provided all the needed support in different areas of the Program implementation. The Government provided a positive assessment of these contributions and acknowledged the value of the World Bank’s focus on results.

95. One area where the World Bank provided strong support was on the introduction of citizen engagement under the Program. Ensuring citizen engagement in such types of programs, which involve mainly small-value interventions in widely dispersed and remote areas, has been found to be extremely challenging. The Program has come up with a number of innovative approaches to enhance citizen engagement, including the design and

26

operationalization of the GRM, provision of a sign board in all construction sites with contact details of the responsible official(s) to be contacted in addressing grievances, and information to the general public about the Program plan using local FM radio stations.

96. In addition to its implementation support role, the World Bank systematically reviewed, with the GoN, the monitoring and verification of the results and DLIs and the risk assessment, and tracked compliance with the GoN’s fiduciary, environmental and social systems, and safeguards. The World Bank consistently raised issues and proposed solutions to overcome these issues, such as issues related to the quality of bridge construction and OHS on construction sites. The Program also made good progress, with the World Bank’s support, in preparing and adopting modern bridge technologies, including the increased use of prestressed concrete technology and network arch bridges.

97. World Bank inputs. The World Bank maintained co-task team leaders throughout the Program. The budget was adequate and well used, and the World Bank fielded qualified, multidisciplinary teams with fair continuity. Regular site visits were made to assess progress over the life of the Program.

98. The World Bank thus implemented all aspects of the implementation support satisfactorily and acted as the GoN’s technical support partner throughout the supervision period. The World Bank also had an important role in supporting the GoN in its remarkable turnaround of the Program that happened despite losing approximately one and a half years of implementation.

(c) Justification of Rating for Overall Bank PerformanceRating: Satisfactory

99. Based on a Satisfactory rating of World Bank performance at program design and implementation, an overall rating of Satisfactory is appropriate.

Table 4. Ratings

Description Rating1. Outcomes Satisfactory2. Relevance of Program Objectives High3. Efficacy High4. Efficiency Substantial 5. Risk to Outcome Substantial6. Bank Performance Satisfactory

6. Lessons Learned

100. Factors to be considered before opting for and during the implementation of a PforR are the following:

(a) The PforR can be an effective tool for supporting a Government with a vision and plan. The PforR was an effective instrument in supporting the DoR’s existing SRN Bridge Program, which was already supported by the Government in its vision and plan to improve Nepal’s vital bridge sector.

(b) Political economy of the Program. The Program suffered in its early phase due to political economy and transparency-related issues. The Program design could

27

not adequately assess the risks linked to the LRN bridges program. This affected the Program negatively, although eventually the issues were resolved.

(c) Implementation agency’s experience with the World Bank. The BIMP’s implementing agency, DoR, has extensive experience of working with the World Bank. The department has been found to be capable of managing fiduciary, social and environmental risks, and technical aspects of the Program. However, the PforR was a new instrument whose processes and mechanisms took time to adapt to,

(d) Clear understanding of the client’s Program/appropriate timing of the Program. The GoN had a bridge program of its own during the design of the BIMP. It was one of the major capital investment programs of the Government. However, it was not effective due to a number of issues, including a nontransparent bridge prioritization process and poor construction quality. These factors resulted in the construction of poor quality bridges on non-priority routes. Furthermore, the bridge maintenance planning and implementation was ad hoc and the proportion of funding for maintenance was not adequate when compared with new bridge construction. It was an opportune moment for the World Bank to support the Government’s program.

(e) Tracking of expenditure. One of the fundamental issues of a PforR operation is the ability to track expenditures under the Program. This ensures that the Program resources are used for the intended purposes and are not diverted for non-Program purposes. So, developing a tool for tracking expenditures is essential.

(f) Achieving some basic milestones before Program inception. Before the BIMP, Nepal did not have the full inventory and a system for effectively managing bridge assets on its SRN. A World Bank-financed RSDP helped Nepal in developing a BMS that included a full inventory of SRN bridges. The BMS has been the backbone of the Program planning since the inception of the Program.

(g) Limiting ambition during Program design and careful assessment of the Program. The BIMP’s scope is focused on three types of activities, as mentioned earlier. The BIMP has only six DLIs. The DLIs are tangible, transparent, verifiable, and under the Program’s influence. They also have an agreed verification protocol. Three careful assessments (technical, social and environmental, and integrated fiduciary) of the BIMP were completed during the preparation of the Program. They provided the basis for assessing the Program’s scope, formulating interventions types, designing the PAP, and envisaging risk mitigation measures.

(h) Implementation agency’s capacity in the PforR requirements, procurement management, and monitoring the quality of the physical works. The DoR’s capacity of managing procurement processes efficiently has helped the implementation of the Program. However, the Program faced a number of issues managing works quality effectively, given the poor performance of the field officials and poor control structures. A few bridges have been rejected by the third party during the DLI verification process. The Program initially suffered

28

due to the client’s limited understanding of the PforR requirements, especially in financial management, budgeting, managing social and environmental risks, and planning of the Program’s interventions. Providing detailed training on the PforR requirements to the client at the beginning of the Program would have saved a great deal of time.

(i) The PforR instrument allowed a focus on systemic change and institutional development with positive implications for sustainability beyond the ambit of the Program itself. The PforR assessments and the PAP strengthened the Program’s focus on systemic change and institutional development. In addition to the Program-specific results, the PforR helped the GoN strengthen its audit capacity and systematic audit approaches. The fiduciary guidance developed has also been mainstreamed in the DoR operations. Similarly, the environmental and social guidance, prepared under the Program, has been adopted by the DoR in their operating mechanism.

101. Other factors include the following:

(a) Citizen engagement and gender aspects of the Program. Ensuring citizen engagement in such a Program, which involves mainly small-value interventions in widely dispersed and remote areas, has been found to be extremely challenging. The Program has come up with several innovative approaches to enhance citizen engagement, including the design and operationalization of the GRM, provision of a sign board in all construction sites with contact details of the responsible official(s) to be contacted in addressing grievances, and information to the general public about the Program plan using local FM radio stations.

(b) Technological shift. The Program made good progress in preparing and adopting modern bridge technology, including the increased use of prestressed concrete technology and network arch bridges. However, one of the lessons learned from the Program is that it is necessary to prepare a long-term plan for a significant shift toward modern bridge technologies to take root.

(c) Quality of bridge construction. Poor construction quality was a constant issue throughout implementation. The main reason for the poor construction was the lack of resources in terms of the number of the DoR supervision staff and the limited experience of the DoR staff to supervise the construction of new bridges. This issue could have been mitigated by considering the hiring of qualified consulting firms to undertake the construction supervision and provide capacity building in quality control and assurance to the DoR staff. The PforR instrument has contributed to enhancing the quality assurance mechanisms within the Government’s bridge program, by introducing independent verification systems and processes undertaken by public entities such as the NVC and the CIAA.

(d) OHS on construction sites. The poor enforcement of OHS has led to two fatal accidents in the construction sites during the five years of Program implementation. The Program has been leading the effort to make construction sites safer. It has also made substantial progress in this regard by the end of the Program by enforcing OHS measures on all sites and providing safety equipment to construction workers. However, the main challenge under the Program was to

29

elevate Nepalese standards to internationally accepted, World Bank standards. The World Bank can help the client by advising on provisions for OHS breaches in contracts, particularly related to fines and penalties. These should correspond with the expected level of performance and risk associated with the implementation of projects. Underestimated fines for OHS breaches can result in inadequate performance by the contractors and passing on of responsibilities. Other measures need to be properly enforced from the beginning, such as the submission and approval of the qualifications of OHS staff and organization chart and ensuring that sufficient number of OHS officers are on-site, to ensure a proactive rather than reactive approach to OHS compliance.

30

Annex 1. Results Framework and Key Outputs

Indicators Baseline Value Date Progress to Date Date (of the data collection)

End-of-Project Target Value Date

PDO: To provide safe, reliable, and cost-effective bridges on Nepal’s Strategic Roads NetworksPDO-level Results indicatorsPDO Indicator 1: Improved condition of bridges on SRN(The percentage of bridges on SRN rated as being in good or fair condition)

53% October 2012 Achievement: 81.2%. Total number of bridges in good or fair condition: 1,387 numbers, out of total existing 1,709 bridges.

July 15, 2017 75% July 15, 2017

PDO Indicator 2: Reduced number of structurally unsafe bridges (The percentage of bridges on SRN rated as structurally unsafe)

6% October 2012 Achievement: Reduced to 1%. Total number of bridges in unsafe condition: 17 (total existing 1,709 bridges).

July 15, 2017 1% July 15, 2017

PDO Indicator 3: Strengthened performance management in the bridge sector (Percentage of bridge works completed on planned schedule)

Negligible October 2012 Achievement: Bridge works completed on planned schedule 63%.

July 15, 2017 50 July 15, 2017

Intermediate Result indicatorsIntermediate Results Indicator 1: Completion of major maintenance of bridges on SRN (Cumulative meters)

0 Achievement:Major maintenance of 16,139 m length of bridges completed

July 15, 2017 14,125 July 15, 2017

31

Indicators Baseline Value Date Progress to Date Date (of the data collection)

End-of-Project Target Value Date

Intermediate Results Indicator 2: Completion of minor repairs of bridges on SRN (Cumulative meters)

0 Achievement:Minor Maintenance of more than 10,729 m length of bridges completed

July 15, 2017 10,000 July 15, 2017

Intermediate Results Indicator 3: New bridges built or improved on SRN (Cumulative meters)

0 Achievement:New construction of 6,61 8m length of bridges (76 bridges) completed

July 15, 2017 6,000 July 15, 2017

Intermediate Results Indicator 4: Improved Bridge Asset Management (Number of actions completed)

0 100% achieved.BMS operational in the DoR.Public version of BMS is available on the DoR website: http://www.dor.gov.np.The DoR has made the BMS compatible with Annual Road Maintenance Plan and also with a tablet-based BSM for budgeting and monitoring and reporting purpose.BMS updated completely.

July 15, 2017 60% condition survey and BMS update

July 15, 2017

Intermediate Results Indicator 5: Increased effectiveness of the institutions responsible for bridge sector management (Number of actions completed)

0 GRM policy developed and approved. The DoR formally launched the GRM system on April 16, 2014.GRM Procedural Manual approved.Work in progress to mainstream the GRM system particularly in field-level DoR offices according to an agreed action plan.

July 15, 2017 Adoption and implementation of an appropriate grievance handling mechanism by the DoR.

July 15, 2017

(a)

32

Annex 2. Disbursement-Linked Indicators (DLIs)


DLI-1: Completion of major maintenance of bridges on SRN(Length of bridge in meters that has completed major maintenance)

17,125 14,125 16,139 Target overachieved

DLI-2: Completion of minor maintenance of bridges on SRN(Length of bridges that have completed minor maintenance)


DLI-3: New bridges built or improved on SRN(Length of bridge in meters built/improved)


DLI-4: Strengthened performance management in bridge sector(Percentage of bridge works completed on planned schedule)


DLI-5: Improved Bridge Asset Management BMS fully operational in all 30 divisional/regional offices; Condition survey undertaken on at least 60% of the SRN


BMS fully operational in 25 division and 5 regional offices; Condition survey undertaken on 100% of the SRN

Target overachieved


GRM implemented in the DoR and report disclosed detailing the status of complaints and actions on F&C and those related to social and environmental issues


GRM developed and is being made operational; Report disclosed each year detailing status of complaints and actions on F&C and those related to social and environmental issues

Target achieved

33

Annex 3. Program Action Plan (PAP)

Action Description Deadline Responsible Party Completion Measurement

Achieved (Y/N)

Updated Status

(i) BMS, the basis for planning, prioritization, and M&E, to be continuously maintained and used for prioritization of the program.

Ongoing Bridge Project/Regional Directorate/Divisional Office

Personnel trained in use of BMS, conditions surveys updated and annual prioritized programs available.

Y The BMS priority has been the basis for preparation of Annual Program for new bridges and maintenance bridges in the DoR.

The BSM system has been made available to the projects and divisions since early December 2016.

BB has updated around 100% bridge data in the BMS.

(ii) The DoR implements a QAP. All materials testing to be undertaken according to specifications as described in the QAP and in the contract between the DoR and the contractor.

Ongoing Bridge Project/DoR Continued compliance will be monitored by technical audit consultants.

Y Preparation and implementation of QAP has been made a part of contractual requirements. These are being monitored on a regular basis and materials testing ongoing according to QAPs.

(iii) The DoR will assign a project management team for each contract that has value over US$125,000 equivalent (roughly NPR 10 million). The project management team will comprise technical, social, and environmental personnel. A team can manage multiple contracts depending on the operational requirements.

October 31, 2012, and ongoing

DoR Continued compliance will be monitored by technical audit consultants.

Y Project Management Team is formed in all projects and the DoR divisions according to the Government circular.

(iv) Through the MoF, during the implementation of the Program, allocate at least 5% of its total civil works budget under the Program in each said fiscal year, for feasibility studies, design, supervision, quality control, management of environmental and social impacts, and other required inputs for the maintenance and construction of bridges under the Program.

October 31, 2012, and July 31 in subsequent years

MoPIT/MoF Increased budgetary allocation

Y The MoF is allocating at least 5% of the capital budget.

34


Achieved (Y/N)

Updated Status

(v) The DoR prepares annual training plans for all the SRN bridge-related functions and implements these plans throughout the Program implementation period.

October 31, 2012, and annually thereafter

DoR/Bridge Project Training plan prepared and training implemented. Activities supported by capacity-building consultants

Y Annual training plans developed and its implementation ongoing

(vi) Creation of separate budget heads for the SRN bridges which will provide the budget allocation for expenditures under the SRN Bridge Program

Effectiveness condition

MoF Separate budget lines for the SRN and LRN bridges appear in the annual budget issued by the MoF.

Y The MoF created separate budget heads for the SRN bridges in FY2012/13.

(vii) Annual preparation and public disclosure of prioritized investment and maintenance plans based on the BMS and limited by an identified budget envelope

October 31, 2012, and annually

Bridge Project Annual investment plan prepared and disclosed on the DoR website

Y PIPs are being prepared and disclosed on the DoR website.

(viii) Appoint and maintain a procurement unit chief in each of the procuring entities with clear job descriptions and provide them with at least one week training on procurement (if they are not already trained).

October 31, 2012, and revise the list as appropriate

DoR A memo from the DoR with the list of procurement unit chiefs and a confirmation from the DoR that training has been provided

Y All divisions, projects, and BB have appointed and maintained procurement unit chiefs. Job description is available.

Training (one week) conducted on procurement on a regular basis.

(ix) Through the DoR, (a) establish an audit committee meeting the requirements of the recipient’s Office of the Auditor General (OAG), to address outstanding audit observations from FY2009/10 and those in subsequent years, if any, resulting from the DoR’s own

October 31, 2012

DoR The committee will have met following receipt of the preliminary report and responded within

Y The DoR committee is established according to the OAG requirements.

The DoR addresses audit observations from FY2009/10 and onward. Progress is being reported to the OAG on a monthly basis (NPR 5.61 billion).

35


Achieved (Y/N)

Updated Status

operations and (b) ensure that all said outstanding audit observations from FY2009/10 are addressed according to a time-bound action plan acceptable to the Association and the recipient’s OAG.

35 days.

(x) Through the DoR, review and revise the DoR’s current environmental and social management rules and procedures to incorporate bridge-specific environmental and social impact mitigation measures, in form and substance satisfactory to the Association, and immediately thereafter implement the revised rules and procedures in a manner satisfactory to the Association throughout the Program implementation.

October 31, 2012

DoR/GESU Revised ESMF disseminated via web and hard copy

Y The DoR ESMF was reviewed and revised (March 18, 2013) and disclosed.

(xi) Through the DoR, provide the Geo-Environmental and Social Unit (GESU), within the DoR, with power and adequate resources, acceptable to the Association, to enable it to carry out the social and environmental management measures in accordance with the revised rules and procedures referred to in action (i) above.

October 31, 2012

DoR Memo from the DoR to formally assign GESU to the SRN Bridge Program

Y The DoR DG has delegated authority/power to GESU through an administrative order in October 2013.

GESU has adequate staff and financial resources now.

(xii) Preparation of a plan and subsequent implementation of that plan, to strengthen GESU both in manpower and financial resources

October 31, 2012, and ongoing

DoR GESU is strengthened according to the agreed plan

Y Business plan prepared, approved, and is being implemented since FY2013/14) with adequate manpower and financial resources.

(xiii) GRM developed, made operational, and implemented in the DoR for managing all type of complaints, including technical, fiduciary, and social/environmental issues

September, 30, 2013, and ongoing

DoR GRM developed and made operational

Y GRM developed and made operational

(xiv) Preparation of a Bridge Operations Toolkit (with support from the

December 31, 2012

Bridge Project Toolkit developed and

Y Developed. However, it is currently being updated to incorporate the

36


Achieved (Y/N)

Updated Status

Association) that will summarize various bridge planning, construction, maintenance, and management procedures. The toolkit will be developed based on the existing procedures in different DoR manuals, guidelines, and so on.

published amendments recently made to the PPA.

37

Annex 4. BIMP Expenditures

DLIs Target Revised Target Achieved Unit Disbursed Amount (US$, millions)

DLI-1Completion of major maintenance of bridges on SRN(Length of bridge in meters that has completed major maintenance)

17,125 14,125 16,139 m 24.50

DLI-2Completion of minor maintenance of bridges on SRN(Lengthof bridges that have completed minor maintenance)

3,500 10,000 10,729 m 8.50

DLI-3New bridges built or improved on SRN(Length of bridge in meters built/improved)

6,000 6,618 m 18.00

DLI-4(Strengthened performance management in bridge sectorPercentage of bridge works completed on planned schedule)

50 — 63 % 3.00

DLI-5Improved Bridge Asset Management

BMS fully operational in all 30 divisional/regional offices;Condition survey undertaken on at least 60% of the SRN.

— BMS fully operational in 25 division and 5 regional offices; Condition survey undertaken on 100% of the SRN

3.00

DLI-6Increased effectiveness of the institutions responsible for bridge sector management


— GRM developed and is being made operational; Report disclosed each year detailing the status of complaints and actions on F&C and those related to social and environmental issues

3.00

38

Annex 5. Bank Lending and Implementation Support/Supervision

Bank Staff Team

Name Role Specialization Unit Location

A.K. Farhad Ahmed Team Leader Transport GTI07 Washington, DCDominic Pasquale Patella Team Leader Transport GTI06 Washington, DC

Shambhu Prasad Uprety Procurement Specialist Fiduciary GGO06 Kathmandu, Nepal

Yogesh Bom Malla Financial Management Specialist Fiduciary GGO24 Kathmandu, Nepal

Annu Rajbhandari Social Safeguards Specialist Safeguards GEN06 Kathmandu, Nepal

Bibash Shrestha Team Member Admin GTI06 Kathmandu, NepalDeepak Man Singh Shrestha Team Member Transport GTI06 Kathmandu, Nepal

Drona Raj Ghimire Social Safeguards Specialist Safeguards GEN06 Kathmandu, Nepal

Jun Zeng Social Safeguards Specialist Safeguards GSU06 Washington, DC

Shubu Thapa Team Member Operations GTI06 Kathmandu, Nepal

Staff and Travel Cost

Fiscal Year Staff and Travel Cost (US$)

FY16 99,710.69FY17 204,298.92FY18 16,451.09

Note: There is no information available before FY16.

39

Annex 6. Borrower’s Comments

The following are the borrower’s comments on the ICR of the Nepal Bridge Improvement and maintenance Program (BIMP), received by email on December 31, 2017.

The ICR is well written and represents the BIMP correctly. The good work is appreciated

However, there are minor discrepancies in the achieved figures for DLIs 1, 2, and 3 in paragraph 49 and in annexes 1, 2, and 4; compared to the figures included in the ICR version prepared by the GoN

Most of the maintenance contracts were of 8 months’ contractual period so there is no contractual provision for price adjustment for any contract having a contractual period below 15 months. However, there is a provision of price adjustment for materials only if the price varies more than 10 percent to that of 28 days before the date of bid submission. Such a case did not happen.

40

Annex 7. Economic Analysis

1. The ex post economic analysis follows the same methodology that was used at appraisal. Nine bridges were selected for appraisal that reflect the typical types of interventions likely under the SRN Bridge Program. Eight of these bridges were constructed under the Program and thus taken into consideration for the ex post economic analysis.

2. The road user cost savings were calculated using the World Bank’s Roads Economic Decision software. Traffic growth rates were estimated at 6.6 percent over the 20-year period and maintenance costs at 1.8 percent per year of the new construction cost.

3. New construction. Construction of a new bridge reduces both distance and time costs of road use by shortening access distance and avoiding costs crossing the river by ford or ferry, or both. Ford crossings are generally closed in the rainy season and thus, benefits to bridge construction are distance cost savings (of a detour) during the rainy season and time saved during the dry season (by crossing by bridge as opposed to fording). Where a new bridge is replacing a ferry crossing, the costs avoided are the time costs incurred by vehicles waiting to cross and crossing and the cost of providing the ferry services.

4. Weak bridges. When a weak bridge fails, two sets of costs may be incurred: the cost of providing a temporary crossing while the bridge is being reconstructed (not considered in ex ante and ex post analysis) and the costs of additional kilometers driven to find a detour. The main issue is determining just when a weak bridge may be expected to fail and result in road closure. For the present exercise, the probability of failure is assessed according to the DoR’s 2012 bridge asset inventory with the probability of failure increasing every year over the 20-year period. This assessment classified weak bridges into two categories:

(a) High probability of failure (within a period of four years). In the first year, the probability of failure was assumed to be 25 percent. In subsequent years, this probability increases by 5 percent a year until reaching near certainty and remaining at that level for the remainder of the 20-year period.

(b) Medium probability of failure (with a period of 20 years or more). The analysis assumes that these bridges have a 5 percent probability of failure that increases at 5 percent over a 20-year period.

5. Inadequate capacity bridges. Replacing single-lane bridges with two-lane structures avoids delays caused both by vehicles slowing to negotiate the narrow bridge and waiting for approaching vehicles to cross. The analysis incorporates estimations of delays at single-lane bridges based on Erlang queuing model. A single-lane bridge would have a width of 3.5 m. The three bridges that were assessed are all wider than this but still have less than a full two-lane capacity. Accordingly, the benefits from increased capacity are factored by the difference between appraisal width and a single lane.

6. Table 7.1 shows the results of the ex post economic analysis. Investments for rehabilitation, maintenance, and capacity increases yield very high EIRRs. New construction is more difficult to justify given that new construction is costlier and generally occurred on low-volume roads. However, the high economic returns on the large majority of bridges with an EIRR well above 12 percent justify the project investments.

41

Table 7.1. Results of Economic Analysis

New Construction Goji Dhud Koshi Discount rate (%) 12 12EIRR (%) 1.5 18.1Present Value of Costs (US$, thousands) 2,427 1312.46Present Value of Benefits (US$, thousands) 844 2,059.75NPV (US$, thousands) ‒1,583 747.28Benefit-to-cost ratio 0.3 1.6Switch value for costs (%) ‒65 56.9Switch value for benefits (%) 188 ‒36.28%

Major maintenance Tinau BagmatiDiscount rate (%) 12 12EIRR (%) 207.9 39.7Present value of costs (US$, thousands) 439 125Present value of benefits (US$, thousands) 27,930 700NPV (US$, thousands) 27,491 574Benefit-to-cost ratio 63.6 5.6Switch value for costs (%) 6,256 458Switch value for benefits (%) ‒98 ‒82

Widening Bagmati Bangandi ChandiDiscount rate (%) 12 12 12EIRR (%) 61.7 16.5 59.0Present value of costs (US$, thousands) 282.6 207.7 88.0Present value of benefits (US$, thousands) 15,505.7 334.2 1,950.9NPV (US$, thousands) 15,223.1 126.5 1,862.9Benefit-to-cost ratio 54.9 1.6 22.2Switch value for costs (%) 5,388 61 2,116Switch value for benefits (%) ‒98 ‒38 ‒95

7. The economic analysis has also assessed the impact of the poor quality of works on bridge life by undertaking a sensitivity analysis for different scenarios related to (a) asset life and (b) and maintenance costs. The results of the sensitivity analysis for the following three scenarios: (a) asset life reduced to 10 years and incremental maintenance cost increased to (b) 5 percent and (c) 10 percent of capital cost are summarized in table 7.2. It demonstrates that poor construction quality may affect economic viability. Scenarios (a) reducing asset life to 10 years and (c) increasing maintenance cost to 10 percent show the highest sensitivity. However, in all but one case the economic justification remains robust among the bridges that were economically justified in the base case. For bridge Bangandi (narrow bridge at appraisal), the base scenario yields an EIRR of 16.5 percent, whereas in the sensitivity analysis scenario (a) yields –3.1 percent and scenario (c) yields 10.9 percent. See table 7.2 for further details.

42

Table 7.2. Results of Sensitivity Analysis

Dudh Koshi (new bridge)

Base Case 10-year Asset Life

Maintenance Cost at 5%


Discount rate (%) 12.00 12.00 12.00 12.00EIRR (%) 18.10 13.50 17.1 15.4Present value costs 1312.46 1285.77 1450.77 1681.29Present value benefits 2059.75 1402.40 2059.75 2059.75NPV @ 12% 747.28 116.63 608.97 378.46Benefit-to-cost ratio 1.60 1.10 1.40 1.20Switch value for costs (%) 56.90 9.10 42.00 22.50

Switch value for benefits (%) –36.28 –8.32 –29.57 –18.37

Bagmati (weak bridge) Base Case 10-year Asset

LifeMaintenance Cost

at 5%Maintenance Cost at

10%Discount rate (%) 12.0 12.0 12.0 12.0EIRR (%) 39.7 36.5 37.8 35.1Present value costs 125.0 123.0 153.0 192.0Present value benefits 700.0 398.0 700.0 700.0NPV 574.0 276.0 547.0 507.0Benefit-to-cost ratio 5.6 3.2 4.6 3.6Switch value for costs (%) 458.0 225.0 357.0 263.0


Tinau (weak bridge) Base Case 10-year Asset

LifeMaintenance Cost

at 5%Maintenance Cost at

10%Discount rate (%) 12.0 12.0 12.0 12.0EIRR (%) 207.9 207.9 206.9 205.3Present value costs 439.0 430.0 536.0 674.0Present value benefits 27,930.0 16,060.0 27,930.0 27,930.0NPV 27,491.0 15,630.0 27,394.0 27,256.0Benefit-to-cost ratio 63.6 37.4 52.1 41.4Switch value for costs (%) 6,256.0 3,637.0 5,109.0 4,041.0


Bangandi (narrow bridge)




Discount rate (%) 12.0 12.0 12.0 12.0

43

EIRR (%) 16.5 –3.1 14.2 10.9Present value costs 207.7 288.3 253.4 318.8Present value benefits 334.2 202.0 334.2 334.2NPV 126.5 –86.3 80.8 15.4Benefit-to-cost ratio 1.6 0.7 1.3 1.0Switch value for costs (%) 61.0 –30.0 32.0 5.0

Switch value for benefits (%) –38.0 43.0 –24.0 –5.0

Bagmati (narrow bridge)




Discount rate (%) 12.0 12.0 12.0 12.0EIRR (%) 61.7 55.6 60.5 59.2Present value costs 282.6 291.0 342.2 408.5Present value benefits 15,505.7 1,799.9 15,505.7 15,505.7NPV 15,223.1 1,509.0 15,163.5 15,097.2Benefit-to-cost ratio 54.9 6.2 45.3 38.0Switch value for costs (%) 5,388.0 519.0 4,431.0 3,696.0


Chandi (narrow bridge)




Discount rate (%) 12.0 12.0 12.0 12.0EIRR (%) 59.0 55.4 57.0 55.0Present value costs 88.0 92.3 115.2 144.9Present value benefits 1,950.9 603.9 1,950.9 1,950.9NPV 1,862.9 511.5 1,835.7 1,806.0Benefit-to-cost ratio 22.2 6.5 16.9 13.5Switch value for costs (%) 2,116.0 554.0 1,594.0 1,246.0


Dobhu Goji (new bridge)




Discount rate (%) 12.0 12.0 12.0 12.0EIRR (%) 1.5 –18.4 –1.4 –7.0Present value of costs 2,427.0 2,370.0 2,711.0 3,116.0Present value of benefits 844.0 499.0 844.0 844.0NPV –1,583.0 –1,870 –1,867.0 –2,272.0Benefit-to-cost ratio 0.3 0.2 0.3 0.3Switch value for costs (%) –65.0 –79.0 –69.0 –73.0

Switch value for benefits 188.0 374.0 221.0 269.0

44

(%)

45

Annex 8. Supporting Documents

The World Bank Project Appraisal Document on a Proposed Credit in the Amount of US$60 million to Nepal for the Bridges Improvement and Maintenance Program, Report No: 67866-NP, June 1, 2012

World Bank’s Aide Memoires of supervision missions 2012–2017

World Bank’s Project disclosed Implementation Status and Results Reports (ISRs)

Midterm Review of Sector Wide Road Study and Priority Investment Plan (2015)

Borrower’s Implementation Completion and Results Report (ICR) for the Bridges Improvement and Maintenance Program, December 29, 2017

Pictures taken during the inspection of one of the bridges using the Bridge Inspection Vehicle which was introduced under the Program—please see the images provided below.

46

Annex 9: Project Map

48