Document of The World Bank

Report No: 28787

IMPLEMENTATION COMPLETION REPORT(TF-23922 TF-24762)

ON TWO

TRUST FUND GRANTS

IN THE AMOUNT OF US$ 12 MILLION

TO THE

UNITED NATIONS INTERIM ADMINISTRATION IN KOSOVOFOR THE BENEFIT OF KOSOVO,

REPUBLIC OF SERBIA AND MONTENEGRO

FOR AN

URGENT ROAD PROJECT

June 21, 2004

Infrastructure and Energy Services DepartmentSouth East Europe Country UnitEurope and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective May 2004)

Currency Unit = Euro 0.85 Euro = US$ 1

US$ 1.18 = 1 Euro

FISCAL YEARJanuary 1 December 31

ABBREVIATIONS AND ACRONYMS

AFD: Agence Francaise de DevelopmentCFA: UNMIK Central Fiscal AuthorityCPE: UNMIK Joint-Interim Central Procurement EntityDoR: Directorate of RoadsDoT: UNMIK Joint-Interim Administrative Department of Transport and InfrastructureEAR: European Agency for ReconstructionEC: European CommissionEMP: Environmental Management PlanERR: Economic Rate of ReturnEU: European UnionGTZ: Deutsche Gesellschaft fur Technische ZusammenarbeitHDM: Highway Design ModelIBRD: International Bank for Reconstruction and DevelopmentICB: International Competitive BiddingIRD: Information Road Data BankIS: International ShoppingKCB: Kosovo Consolidated BudgetKFOR: Kosovo ForceKfW: Kreditanstallt fur WiederaufbauKRSC: Kosovo Road Safety CouncilMOU: Memorandum Of UnderstandingMTC: Ministry of Transport and CommunicationsNCB: National Competitive BiddingNGO: Non-Governmental OrganizationNPV: Net Present ValuePMR: Project Management ReportQCBS: Quality and Cost Based SelectionRID Road Infrastructure DepartmentTRL: Transport Research LaboratoryTSS: Kosovo Transitional Support StrategyUNMIK: United Nations Mission in Kosovo

Vice President: Shigeo Katsu, ECAVPCountry Director Orsalia Kalantzopoulos, ECCU4

Sector Director/Manager Hossein Razzavi/Motoo Konishi, ECSIE Task Team Leader/Task Manager: Olivier Le Ber, ECSIE

KOSOVOURGENT ROAD PROJECT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 35. Major Factors Affecting Implementation and Outcome 76. Sustainability 87. Bank and Borrower Performance 88. Lessons Learned 99. Partner Comments 1010. Additional Information 13Annex 1. Key Performance Indicators/Log Frame Matrix 14Annex 2. Project Costs and Financing 15Annex 3. Economic Costs and Benefits 17Annex 4. Bank Inputs 18Annex 5. Ratings for Achievement of Objectives/Outputs of Components 19Annex 6. Ratings of Bank and Borrower Performance 20Annex 7. List of Supporting Documents 21Annex 8. Borrower's Contribution 22

Maps: IBRD 33123 & 33124

Project ID: P070295 Project Name: Urgent Road ProjectTeam Leader: Olivier Le Ber TL Unit: ECSIEICR Type: Core ICR Report Date: June 21, 2004

1. Project DataName: Urgent Road Project L/C/TF Number: TF-23922; TF-24762

Country/Department: KOSOVO Region: Europe and Central Asia Region

Sector/subsector: Roads and highways (90%); Central government administration (10%)

Theme: Conflict prevention and post-conflict reconstruction (P); Infrastructure services for private sector development (S); Access to urban services for the poor (S); Rural services and infrastructure (S)

KEY DATES Original Revised/ActualPCD: 03/17/2000 Effective: 08/16/2000 08/16/2000

Appraisal: 05/15/2000 MTR: 03/15/2002 03/15/2002Approval: 08/02/2000 Closing: 06/30/2003 12/31/2003

Borrower/Implementing Agency: United Nations Mission in Kosovo/Joint-Interim Administrative Department of Transport and Infrastructure

Other Partners: The Netherlands Republic - Ministry of Cooperation

STAFF Current At AppraisalVice President: Shigeo Katsu Johannes F. LinnCountry Director: Orsalia Kalantzopoulos Christiaan PoortmanSector Manager/Director: Motoo Konishi - Hossein Razavi Eva Molnar - Ricardo HalperinTeam Leader at ICR: Olivier Le Ber Aymeric-Albin MeyerICR Primary Author: Mirtha Pokorny

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: S

Sustainability: L

Institutional Development Impact: SU

Bank Performance: S

Borrower Performance: S

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time: No

3. Assessment of Development Objective and Design, and of Quality at Entry

3.1 Original Objective:The primary objective of the Project, as stated in the Project Appraisal Document (PAD), was "to contribute to the reconstruction and economic development of Kosovo, by: (i) supporting the Program's component (see below) aiming at an eventual re-establishment of a road management capacity in Kosovo; (ii) supporting emergency road maintenance activities on the main network; and (iii) helping, through road maintenance activities funded under the Project, to restore a local contracting capacity for road/bridge rehabilitation and summer/winter maintenance.

The objectives of the project were defined under very special circumstances. When the United Nations Mission in Kosovo (UNMIK) started its operations, there were no representative institutions. The withdrawal of all Serb public administrators at the end of the conflict combined with a decade of ethnic Albanian absence from the management of public institutions left a complete institutional vacuum. The institutional problem was compounded by a dramatic lack of basic infrastructure, the result of years of neglect and/or of the destruction that took place during the conflict. In the transport sector, roads were in dismal conditions with some bridges bombed and landslides affecting the movement of goods and the reconstruction efforts. Post-conflict traffic increased rapidly, with a high percentage of heavy vehicles, and it was not uncommon for trips of 70 km to take two and half hours. The road section Pristina - Prizren is an example of a vital section in which traffic speed was below 35 km/hr. Hence, one of the main challenges facing UNMIK was to start rebuilding from scratch governing institutions and public agencies, while restoring basic public services to the Kosovars and providing the necessary infrastructure to support the donors’ post-conflict undertakings.

This setting formed the background of the Urgent Road Project. The Project was the portion financed by grants from the IBRD and the Dutch Government of a comprehensive program (the Program) of interventions in the road sector for the two to three years following approval of the grants. The Bank was to coordinate with other donors the activities in the road sector so as to facilitate the funding of the Program and the achievements of its goals. The Program had been built up by the Bank and various donors on the findings of the reconstruction and recovery program prepared by the Bank and the EC ("Toward Stability and Prosperity, a program for reconstruction and recovery in Kosovo", dated November 3, 1999). The Program was inscribed in the Regional Strategy for South Eastern Europe prepared by the Bank in March 2000, and was part of the Quick Start Regional Infrastructure Projects that the international community agreed to fund under the Stability Pact. The Program, (with an estimated total cost of US$ 60 million) was to: (i) fund road rehabilitation/maintenance and bridge rehabilitation on the main network over a two to three year period; (ii) support the first steps toward the re-establishment of the Road Administration; and (iii) provide assistance in priority areas such as treatment of traffic congestion and traffic safety issues.

The project objectives were clearly articulated and highly relevant to Kosovo’s post-conflict policy reform and institutional development priorities. Building government institutions and policies from scratch constituted the first steps in a medium term program of reforms of economic institutions in Kosovo that was being develop by UNMIK and the local political and technical leadership. The operation was envisaged under and constituted important elements of the Transitional Support Strategy for Kosovo which included "reconstruction activities in sectors that may be critical to Kosovo’s sustainable recovery, and investment and policy reforms that will underpin the needs of an evolving market economy". As the road sector was until then mostly subjected to reactive emergency interventions and long term policies and strategies were not in place, the project correctly focused on (i) restoring as soon as feasible the serviceability of most of the damaged sections of the road network; (ii) reducing as much as possible the road maintenance backlog; and (iii) setting up an adequate road management capacity in Kosovo, including

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(a) a lean and efficient road administration; (b) mechanisms to fund road maintenance; and (c) an adequate contracting capacity.

3.2 Revised Objective:The original objectives were not revised.

3.3 Original Components:The original project components as described in the Project Appraisal Document were:

Road Maintenance. The project was to fund about one-third of the Program’s road maintenance i.component. It was expected that about 570 km of roads would be maintained under the project.Road Rehabilitation. The Project would fund overlay on a 14 km high priority stretch of the Pristina ii.(Prishtine) - Gnjilane (Gjilani) road which had not been considered for funding by other donors.Support to Road Management Capacity. The Project would fund a study on the potential introduction iii.of road user charges, would provide for a site engineer to organize supervision of the works carried out under the project and strengthen supervision within DoR. The project was also to contain allocation for assistance in specific areas such as project implementation or DoR strengthening, in case commitments made by other donors failed to materialize in a timely manner. Finally, the project was to fund the costs of the annual audits.

The project components were well in line with its urgent character and the limited time available for its preparation. The Project was prepared in only four months. Works were spread throughout the network to provide an acceptable service level and were heavily weighted towards fairly simple maintenance activities, which could be prepared with a minimum of engineering without risking major mistakes in terms of design standards and/or cost estimates. This was particularly relevant since the existing technical data was scant and the available lead- time for design studies was negligible. The technical assistance component was well focused on (i) ensuring sound project implementation, (ii) setting the stage for discussions of the financial sustainability of road maintenance through a road user charge study and (iii) providing the necessary flexibility to compensate for the uncertainties surrounding donor’s participation in financing the program at the time of project preparation. Moreover, utmost importance was placed on know-how transfers to ensure continuance and sustainability when UNMIK would gradually shift responsibilities to local authorities.

3.4 Revised Components:The components of the project were not formally revised. However, on November 20, 2000, a Grant in the amount of US$ 7 million from the Netherlands Ministry of Cooperation, to be administered by the Bank, was approved to help co-finance the project. As a result, the scope of the project was expanded to include other works in the Program and so the Trust Fund funded: (i) maintenance of about 50 km of road sections and rehabilitation of about 10 km of road sections; (ii) reconstruction of the Lozica Bridge; (iii) a study on road safety; and (iv) the development of road material testing capacity.

3.5 Quality at Entry:The operation was not selected for a quality at entry assessment by the Bank’s Quality Assurance Group. The Region’s assessment is that the quality at entry of the operation was satisfactory.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:The project did achieved its objective of upgrading and improving the serviceability of the road network, thus contributing to Kosovo’s stabilization through the provision of basic infrastructure for (i) the normalization of the region’s economic activity, and (ii) attending the strategic needs of UNMIK and the

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donors’ teams in their post-conflict activities. The Bank/Dutch Fund- financed project, in close cooperation with the EU, GTZ and AFD did also positively contribute to shape the institutional framework of the sector and to inculcate in both the public and private sectors modern principles of road management. Taking into consideration the circumstances surrounding the project, the short period of preparation and implementation, and the potential coordination difficulties arising from the high number of local and foreign institutions involved in the program, these achievements are remarkable.

Project design included in the PAD a list of areas that would be the focus of evaluation of project performance, but it did not include specific quantifiable targets. These were developed during the early phases of project implementation, when the urgency factor subsided, data was collected, and a more thorough assessment of the local conditions permitted fine-tuning realistic targets. Annex I shows that the project reached, and sometimes surpassed, the performance targets as measured by the road quality index, the participation of the private sector in carrying out road maintenance, and the shaping of a modern institutional framework for road management. Because of the fairly short implementation period the program focused on developing a blueprint for road management institutions, and the approval in 2003 of a modern Transport Law provides an adequate legal framework for a modern road sector. The working of these institutions, however, is rather incipient and certainly not without problems. Nevertheless, there was substantial progress in defining the responsibilities of the different sector players and budding turf fights, which affected only marginally the execution of the project, were promptly resolved. The sustainability of these arrangements, once these institutions stop being under the financial support, close scrutiny and strict fiduciary guidelines of the donors, remains however a matter of concern.

Based on the above, the outcome of the project is considered as satisfactory rather than highly satisfactory.

4.2 Outputs by components:Road Maintenance and Rehabilitation. Achievements under these components were well above the original plan albeit with much more kilometers rehabilitated and less kilometers maintained because of further deterioration of the network after appraisal rendering meaningless basic routine maintenance on too deteriorated sections. Road maintenance was carried out on 503 km of roads (or about 81% of the 620 km originally estimated; the sections dropped were the less urgent), while about 205 km were rehabilitated (8.5 time the original plan of 24 km with about 120 km receiving both routine maintenance and rehabilitation). Two bridges (instead of one) were also rehabilitated under the project at a cost of US$ 2.5 million. The total cost of these components was US$ 10.6 million, about 16 % above appraisal estimates. The cost increase was the result of changes in the design standards of about 180 km of roads that were found to require more expensive rehabilitation rather than routine maintenance and the appreciation of the Euro during the last phase of the project. The project provided financing for supervision consultants, but as DoR strengthen its capacity through formal and on-the-job training and hiring of new staff, increasing responsibilities were gradually transferred to the Directorate of Roads (DoR). The consultants’ inputs, however, were not completely eliminated since there are certain specific technical capabilities (particularly on testing materials) that are not yet fully developed. The Project financed some basic equipment to set up a laboratory within the University of Kosovo. DoR and the University of Kosovo are collaborating in those areas in which DoR needs support for the supervision of civil works.

The Bank’s and the other donors’ intentions to strengthen the local construction industry through the program were fully realized. The EU provided relevant manuals on road standards and intensive training on the preparation of proposals. Contractors were also familiarized, through several courses with, the procurement requirements of each donor. Moreover, early during project implementation, Bank supervision missions found some unacceptable environmental flaws in the road maintenance works (e.g. drainage and disposal of materials). The problem, which was traced to a lack of inclusion of an

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Environmental Management Program (EMP) in the contract, was rapidly resolved. EMPs started to be included in all the contracts and DoR and the supervision consultants actively enforced them.

As a result of the project the local construction firms, many of them operating for the first time as strictly private sector, have learned to operate in a competitive environment under rigorous environmental and procurement rules. In spite of the limitations imposed by the lack of financial intermediation, newness of the “rules of the game”, and the probably confusing different requirements of the different donors, the local construction industry was indeed strengthened. Eventually, as contracts were implemented and the cash-flow of the firms improved, the more successful local firms invested in equipment and plants. In general, firms became fairly proficient on procurement matters, learned and applied acceptable environmental standards and, in addition, with the help of GTZ, created a fairly active association to support the technical and professional standards of the industry. The implementation team emphasized the importance of packaging the contracts in a way that would allow the participation of the Kosovar firms in project execution. The more technical demanding rehabilitation works were awarded through International Competitive Bidding (ICB) to foreign firms and the final rehabilitation costs of about US$ 100,000 per km for works with a useful life of about 10 years shows that competition was keen.

The overall program of civil works of road rehabilitation/maintenance was successfully implemented as planned by the different donors on about 1,000 km, of the 1,925 km main and regional road network. By the end of 2003, EU financed and completed the rehabilitation/maintenance of 250 km of roads, and the reconstruction of four bridges; GTZ and KFW financed and completed rehabilitation/maintenance of about 55 km of roads; while KFOR financed and completed rehabilitation/maintenance of about 230 km of roads. In general, the donor's community provided about US$ 50 million of what was originally envisaged as a US$ 60 million program. Donors funding for the road network has now been phased out, leaving to the central budget the responsibility of financing road works.

Clearly, the civil works program was implemented on time and well within the cost parameters originally estimated. These works, did accomplish the objective of substantially improving Kosovo’s road network. Overall, the quality index of the network was improved much more than anticipated at appraisal (1.93 instead of 2.78 see annex 1). Probably the only shortcoming of this component is that scarce resources limited the possibility of putting in place acceptable levels of vertical and horizontal marking. Thus, the need to improve the riding surface of the network compromised to a certain extent, basic traffic safety considerations.

Based on the above, the outcome of these project components is considered as highly satisfactory.

Support for Strengthening Road Management Capacity. The project financed consulting services in the amount of US$ 1.28 million for the design and supervision of civil works, including the design and supervision of the rehabilitation of two major bridges, for testing of materials and for a study on road user charges. The latter, carried out by a British firm, contributed to identify the needs of the network and explore alternatives of financing road maintenance through user fees. It also exposed a young generation of civil servants working on roads with the state of the art methodologies and current thinking on setting the problem and assessing the possible solutions of road financing. While the study served as the basis of several workshops and was widely disseminated, the RID/DoR were confronted with the usual reluctance of the financial authorities to consider a dedicated tax. A study on traffic safety which was planned to be financed under the project, will be carried out with financing from the Kosovo’s consolidated budget, since the preparation of the TORs were delayed and it was not possible to implement the study before the closing date of the Project. The latter had been extended from the original date of June 30, 2003 to December 31, 2003 to allow for the completion of the bridge works and the studies.

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While the project concentrated its institutional development activities in improving work supervision and addressing the issue of sector financing through a study, the lion share of the program to strengthen the local road management capacity fell on the shoulders of other donors, particularly the EU and GTZ. Nevertheless, as a co-financier of the program the Bank was actively involved in the dialogue that were to shape the road institutions and contributed to the substantial institutional impact discussed in section 4.5 below. The evolution of the sector organization, which required organizational changes and staffing, delayed the implementation of the study on road user charges and precluded the financing under the project of the traffic safety study. The latter is being carried out with domestic financing.

Based on the above, the outcome of this project component is considered as satisfactory.

4.3 Net Present Value/Economic rate of return:The economic re-evaluation was carried out for fourteen road sections. At appraisal, the road maintenance and rehabilitation works were estimated to have Economic Rate of Returns (EERs) ranging from 21.4% to well above 100%. The updated evaluation confirms the high economic pay-offs of the project, with estimated EERs ranging from about 23.3% and over 100%. The updated economic evaluation was based on actual economic costs and 2003 traffic counts in key sections of the network, and it was assumed that traffic would increase at a very conservative rate of 3% per year during the life of the projects. Benefits accrue to the users in the form of reduced vehicle operating costs, with the reductions based on parameters developed through the HDM model for other countries. The latter considers savings in vehicle operating costs of about 20% for a small car when road conditions improve from poor to good, and up to a 40% reduction in costs for heavy trucks for the same change in road conditions.

Estimated ex-ante, and ex-post EERs are presented in Annex 3. The results, however, are not readily comparable, since the works actually carried out not necessarily fully coincide with those envisaged at appraisal. This is particularly true of routine maintenance/patching, where works vary substantially from year to year. Also, many of the works, and their estimated costs, were part of a program that at the time of appraisal was only partially funded. The actual works carried out reflect the final available resources. Those works that were carried out as originally planned, were done at costs very much in line with original estimates.

4.4 Financial rate of return:No financial rates of return were calculated during project preparation since there were no revenue earning institutions involved in the project.

4.5 Institutional development impact:Institutional development was an important objective of this operation and the program supported by the project has provided substantial support to the authorities in their effort to re-establish a core road management capacity in Kosovo. Utmost importance was placed in the design of policies and institutions to ensure continuance and sustainability after UNMIK withdrawal and local representative authorities would take their place. The Joint Interim Administrative Structure established in early 2000 strengthened and formalized local Kosovar participation. Twenty administrative departments were created (akin to ministries), each with UNMIK and local Kosovar co-heads. Thus, the UNMIK Joint-Interim Administrative Department of Transport and Infrastructure was the initial Bank interlocutor for the sector. The actual road management was under the DoR, which is a revival of the Road Fund existing before the start of the crisis. The latter was operating with a cadre of former civil servants who had been separated from their duties for more than ten years and lacked the information and the state of the art tools for a sound approach to planning, programming and executing road works.

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The project and the program it supported were instrumental in the evolution of the sector institutions from a fairly basic skeleton to well defined sector normative, planning and implementing functions. Bank and donors contribution included the preparation of design manuals, training on preparation of bidding documents, the development of a relevant data base for road management (e.g. road inventories, development of road condition indexes, etc.), and the preparation of yearly programs and budgets for summer and winter maintenance to be presented to the central budget authority for timely funding. With the total transfer of responsibilities to the Kosovars and the creation of the Road Infrastructure Department (RID) within the Ministry of Transport and Communications (MTC), the Ministry, with the support of international consultants, evaluated different organizational structures until adopting the one now in place. The process culminated with the approval in 2003 of the Transport Law, which allocated to MTC/RID normative, planning and programming responsibilities, and to DoR control over execution of works. It can be claimed that the selected organization does not follow the current world trend towards a strong autonomous road agency. The Kosovars’ selection appears to have been strongly influenced by marked generational and personality differences, and if that is the case the organization might have to be revised in the future.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:Aside from the inherent political and social risks prevailing in Kosovo, there were substantial risks associated with the implementation of structural changes to support stability and growth. The long period of exclusion from civil life of the majority of the ethnic population and the legacy of the conflict had led to an erosion of skills, sense of civic responsibility, tolerance and adherence to the rules of the game. Conditions of political unrest and violence and deep distrust between the ethnic communities of Kosovo resulting in political and civic non-cooperation were clearly factors that undermined the incipient emergence of institutional organization in the road sector.

5.2 Factors generally subject to government control:There were various areas within government control that affected project outcome. Despite excellent collaboration from the central authorities during project preparation and implementation in ensuring funding for the core activities of the sector, budgetary systems and mechanisms in Kosovo, including tax administration and collection, were and are still at a formative stage and the weakness of the system might jeopardize the continuity and predictability of road funding. The challenge for the future are strong pressures to raise wages, increase staffing in public services and utilities and increase overall spending to amounts that would not be sustainable in the medium term. These pressures might lead to (i) an overstaffing of MTC, RID and DoR; and (ii) sector investments selected on the basis of other than economic considerations.

5.3 Factors generally subject to implementing agency control:Building up stronger synergies and seamless relations between MTC/RID and DoR were the main institutional challenges in the sector. The strong focus of their activities on the implementation of a program subjected to the donors’ close scrutiny and strict targets, helped to minimize the potential friction of these institutions. The challenge for the future is to fine-tune the chosen organization and continue with its staffing and training. But more importantly, future institutional development will require a longer term view to cement the gains under the project and strengthen what is now only an incipient culture of delegation of responsibilities and accountability to the professionals and middle managers in the public sector.

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5.4 Costs and financing:The total cost of the implemented project was US$ 12.5 million of which 40% was financed by the IBRD grant, 56% by the Dutch grant and 4% by the central budget of Kosovo. While domestic financing was not originally envisaged, the 100% pari-passu was reduced to 70% for the civil works funded under the IBRD grant because changes in the Euro/dollar exchange rate increased the dollar cost of the project as almost all of the ongoing contracts were denominated in Euro. At the end of the implementation period, when it was clear that because of the delays in contracting it, the traffic safety study was not going to be financed under the project, the IBRD grant financing reverted to 100%. This measure affected the last US$ 500,000 disbursed under the grant. Both grants were fully disbursed by the end of their respective grace period.

6. Sustainability

6.1 Rationale for sustainability rating:The overall sustainability of the institutional development and infrastructure improvements supported by the grant appears as moderately likely. The policy and institutional measures implemented provide a basic framework for a well managed road sector. The RID and DoR are well established and, while further development is necessary, good progress was made in the preparation of annual programs and budgets, drafting bidding documents and contracting works with a strengthened construction industry, carrying out acceptable levels of project supervision, and developing a reliable data base for road management. Funding from the central budget for road maintenance was adequate and reflecting the gradual increases in tax revenues during the project period. This demonstrates that the central authority recognizes the importance of sustaining investments in infrastructure through adequate maintenance.

Going forward, it remains to be seen to what extent the high standard of efficiency and accountability will be preserved once the presence of the donors comes to an end. Experience time and again shows that institutional development is a long term effort and requires clear objectives and the right incentives to accomplish them. The Urgent Road Project provided only the basic tools for a core institution to function, but the incentives for results and accountability came from the outside in the form of donors financing and close supervision. A longer period of donors support would help cement the achievements to date and would support the cultural changes that are required to design and internalize a self-sustained incentive system. The latter is particularly relevant for institutions that were not exposed to a substantial level of delegation of responsibilities and in which decision making is usually stiffened by a highly hierarchical, bureaucratic and risk-averse culture.

6.2 Transition arrangement to regular operations:The Bank, in the context of its current dialogue with the Kosovar authorities to continue its support for the region's development (new Transitional Support Strategy for Kosovo approved by the Board of Directors on April 13, 2004), is in the process of identifying a technical assistance project to further strengthen the capabilities of the MTC.

7. Bank and Borrower Performance

Bank7.1 Lending: Project preparation was thorough in those areas in which the Bank could make important institutional inroads, yet pragmatic in understanding the urgent character of the project and the lack of reliable data for in-depth preparation of the civil work components. The civil works financed under the project were in general of a very simple nature. Thus, the actions recommended using a visual approach because of lack of data, would have not been substantially different from the outcome of a more sophisticated analysis. Project design allowed and expected that the information gaps encountered during the short project

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preparation, particularly for the development of benchmarks and targets, would be addressed during the implementation period. On the other hand, the institutional component was developed in detail, and the DoR acknowledges that Bank’s preparation documents provided an invaluable blueprint for shaping the responsibilities of the agency.

7.2 Supervision:Bank missions visited Kosovo regularly twice a year to assess progress in the implementation of the project and the program. A constant dialogue took place between the Bank and the other donors and findings during supervision missions (e.g. weaknesses in environmental aspects of the work) triggered prompt remedial actions to ensure good project implementation. The mid-term review was particularly thorough and provided detailed technical information to refine the quality of the works. There was high staff continuity during the implementation period and there was always good working relations with the interim government, the executing agencies and the donors. Supervision reports were comprehensive, never loosing sight of the fact that the project was only a small component of a much larger program involving many partners.

7.3 Overall Bank performance:In view of the difficult environment and considering the very sound and fast design (it took five months between concept stage and Board approval) of the project as well as the thorough supervision, the Bank’s performance was highly satisfactory for all the stages of project development and satisfactory for supervision.

Borrower7.4 Preparation:The authority's performance was highly satisfactory, UNMIK collaborated in every aspect of the project and took decisive policy and legislative actions to foster the evolution of the sector.

7.5 Government implementation performance:The ability of the officials of the interim administration to effect wide-ranging reforms and address the pressing issues of the sector, despite limited institutional capacity, is commendable.

7.6 Implementing Agency:The implementing agencies were always eager to do their best to implement the project and showed a strong level of commitment and ownership. They made good progress in the areas of programming, budgeting and project supervision, and were able to keep the project on track despite of the sweeping institutional and staff changes that were taking place in the sector. Although these changes delayed the implementation of the traffic safety study beyond the termination of the grants, the DoR and RID took the necessary actions to keep the study in their program with domestic financing. On the other hand, all the road works under the project were completed before June 30, 2003, the original closing date, which is quite a remarkable achievement for an institutions that had only recently started to operate as such (the two bridges were completed in August 2003 and the Road User Charge study in December 2003 by the revised closing date).

7.7 Overall Borrower performance:Because of the above, the overall Borrower performance is considered fully satisfactory.

8. Lessons Learned

The main lesson of this project is that the Bank can play a productive role in providing support in urgent operations dealing with post-conflict situations, provided there is a pragmatic approach to the issues at hand. The success of the Kosovo Urgent Road Project can be explained by:

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the simplicity of the project, which focused on the indispensable capacity needed in the public and i.private sectors to keep the operability of the road network; and the willingness of the Bank to adapt the requirements of project preparation to the urgency of the ii.project, accepting the trade-offs between short lead-times and limited data gathering and background studies. This was done with the knowledge that the recommended actions would not be substantially changed if there would have been time for extensive preparation.

The project highlights the importance of the long term efforts necessary to achieve lasting improvements in institutional performance, the more so when those improvements are not limited to technical know-how but involve a profound revision of cultural mores. The transition stage of the road sector of Kosovo is far from completed, even when the project was very successful in putting together working institutions. But the project started with an extremely low base of sector capabilities and an inherited system of decision making that is not conducive to individual initiatives and proactive problem-solving attitudes. Thus, in spite of the strong political resolve to change things, the sustainability of the project is still in question. The current generational change taking place in the sector provides a golden opportunity to move from the conceptual ideas of transparency and accountability to the development of incentives within and outside the sector institutions to make those ideas are actually affecting institutional behavior. Further bilateral and multilateral support for these efforts should certainly help project sustainability.

9. Partner Comments

(a) Borrower/implementing agency:The following letter was received from UNMIK on June 21, 2004. In addition, MTC/RID provided a detailed contribution to the ICR (see Annex 8) which is reflected in the final ICR.

EUROPEAN UNION

June 21, 2004

Subject: ICR Comments - Kosovo Urgent Road Project (TF-23922 TF-24762)

Dear Mr. Le Ber,

Let me first express my gratitude for the excellent assistance of the World Bank during the Kosovo Urgent Road Project through supervision missions, aide – memoires and report reviews. It was reported to me that the availability of WB staff and your personal commitment to the project has been highly appreciated by MTC - Road Infrastructure Department.

While I have not been involved in the day to day monitoring of the project, my senior adviser in MTC, Jozef Zuallaert, has prepared the comments report in Annex, which I have read and am satisfied with. I am also pleased by the extensive Borrower’s Contribution in Annex of the Draft ICR, which was prepared by MTC / RID.

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UNMIK is looking forward to continuing the well-established good cooperation with the Bank within the forthcoming Transitional Support Program.

Yours sincerely,

Nikolaus Graf LambsdorffDeputy Special Representative of the

Secretary General

ANNEX

EU PILLAR Comments Report to the World Bank

Implementation Completion Reportfor the Kosovo Urgent Road Project

(TF-23922 / TF-24762)

Well balanced Emergency Package Based on the finding of the reconstruction and recovery program prepared by the Bank and the EC (1999), the Urgent Road Project served as a Quick Start Road and Bridge Infrastructure and Institutional Re – Establishment program for the Kosovo Road Administration in the period 2000 – 2004. Given the very special circumstances, under which UNMIK political and technical leadership had to re-establish a representative Ministry of Transport and Communications (MTC) and Road Administration, the project offered a well balanced kick – off package covering both infrastructure emergency activities (18 contracts for maintenance and rehabilitation works) and road management capacity building activities (6 contracts for services and 2 contracts for the purchase of goods).

Roads Sector Reform and Competitive Bidding During the Project Period road management responsibilities were transferred from UNMIK to the Provisional Institutions of Self – Government, in casu the Ministry of Transport (September 2001). With the help of the Project and technical leadership and assistance by UNMIK internationals, a Road Infrastructure Department (RID) was established giving opportunities for an incoming generation of local staff of engineers and other personnel. RID is currently the leading lean Roads Division in the planning and tendering of the roads , whereas the Directorate of Roads (DOR) is almost being turned in fulfilling the role of the operational division under the Ministry. Both Divisions are acting within the new Law on Roads (June 2003) and the Administrative Instruction on Directorate of Roads (September 2003). Competitive bidding is now applied to the domestic and joint venture market of contractors and in some major projects international bidding using WB procurement guidelines were applied.

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Emerging institutional performance The capacity building component of the Bank’s Project, EU and GTZ helped to strengthen the sector organization, in particular in the tendering activities for basic road and bridge maintenance and rehabilitation works by RID, in annual budgeting procedures for winter and summer maintenance and in the establishment of a basic road data base and an independent roads laboratory at the Pristina University. Moreover, new personnel with specific competence in road related environmental and traffic safety issues are recruited and trained. It is envisaged to recruit further capacity in roads planning activities. Although the institutional performance is relatively good and well in line with the initial Bank Project objectives, some inefficiencies in doubling efforts between RID and DOR remain due to persistent routines of the past. Prioritization of road works based on proper road data base management remains a major concern.

Financing Roads The Bank 2004 Road User Charges Study reported that the quality of the maintenance and rehabilitation works is good, but the lesson learned is that the quantity of interventions is still too limited. The Study recommended for all Kosovo Roads per annum € 14.2 million for recurrent maintenance (€9.8 in 2003, uplifted to €13.45 million in the 2004 KCB budget) and it was estimated that €48 million for road, bridges and tunnel rehabilitation (€4.2 million in 2004 KCB budget) is needed over the next 10 years to bring the whole of Kosovo’s road network, including local roads, up to a good standard of maintenance. This recommendation assumes no significant expansion of Kosovo’s road network.

Consequently it is recommended to earmark the budget for road maintenance through a Road Fund and to raise additional funding, particularly if Kosovo is aiming for a road network, which meets international standards. However, it should be noted that at this time residents of Kosovo could not afford to meet the whole of the requirement for additional funds. The Road User Charges Study estimated that an additional €18 million per annum could be raised at this time through additional fuel duties and charges for foreign registered vehicles.

Financing new major infrastructure such as the Pristina Bypass and the Motorways will require even more additional funds separated from the Road Fund and, above all, new financing techniques will have to be put in place.

The need to prioritize and to integrate transport modes A solid base for mid and longer term planning is currently lacking. Accordingly a more integrated approach in MTC’s process of prioritization for road, public transport and rail projects is needed. This challenge will be taken up in the drafting of a Multi Modal Transport Document in the second half of 2004 and in a second generation of TA projects in 2005 and beyond.

Further Institutional Reform The Project’s Road User Charges Study recommended a substantial program for institutional re-structuring, changes to budget management, and new road management techniques. In particular six areas for further reform have been identified as being necessary: - The setting up of a Road Board, which would be a mix of public and private sector interests.- The expansion of the road information database;- The specification of roles within the re-structured MTC;- A national transport policy and road network strategy as mentioned before;- Updated methods of contracting;- Using HDM4 for economic appraisal of road investments

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Progress on Road Safety Management Provided that Kosovo recorded accident data are correct, the Road Safety Improvement Study reported that road safety problems on the Kosovo network are not equally expanding as they did in EU accession countries in their early transition stage. This conclusion relates to specific factors such as active enforcement by UNMIK and Kosovo Police, low level of driving under influence, road conditions which retain most drivers from speeding. However, it is expected that road accidents may rapidly increase with the economic development, the growth of motorization and the retreat of UNMIK Police in the future. Therefore, Traffic Safety should become and remain a preventive priority concern and a proper traffic safety management should be put in place, lead by a Kosovo Road Safety Council.

(b) Cofinanciers:The following comment was received from the Ministry of Cooperation - The Netherlands Republic.

The Netherlands appreciates the comprehensive reporting on the overall project implementation of the 'Urgent Road Project'. Our decision to contribute to this project at the time was our policy goal to contribute to emergency assistance in Kosovo. The project succeeded not only to reach that objective, the most urgent needs in the road sector, but also to initiate institutional structures, such as the Road Board, to support further development of the road sector. Unfortunately, it became clear that development in the road sector cannot be sustained financially by the Kosovo authorities, which are not (at all) able to maintain similar levels of investments in the public sector. One of the lessons learnt you mentioned is that if bilateral and multilateral donors would support these efforts this would promote the sustainability of the project. The Netherlands would, however, like to stress that, like many other bilateral donors, donor contributions have diminished and will continue to diminish. The Netherlands would much rather like to see multilateral organizations, referring mainly to International Financial Institutions, to become involved in sectors like infrastructure through borrowing to Kosovo. The Netherlands is aware of the hurdles that need to be taken in order to make this possible, but nevertheless would like to stress that this seems one of the best ways to assist Kosovo in overcoming its economic problems.

(c) Other partners (NGOs/private sector):There were no other partners.

10. Additional Information

There is no additional information.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Outcome / Impact Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Core Road Administration set up, and able to carry out basic tasks on an efficient basis. Indicators: quality of road maintenance programs and progress reports; adequacy of contract management capacity; proactivity of DoR in dealing with donors;

New ambitious strategy to strengthen DoR implemented

Administrative decision taken and implemented

Improved main road network condition by December 31, 2003 (1 = excellent; 5 = very bad)

2.78 1.93

Percentage of road maintenance on the main road network contracted out.

80% 100%

Output Indicators:

Indicator/Matrix

Projected in last PSR1

Actual/Latest Estimate

Length of road sections rehabilitated/maintained by project completion

620km/24km 503 km/205km

2001, 2002 and 2003 level of funding raised locally for road maintenance equal to an acceptable level.

DEM30 million in 2004 DEM40 million in 2004.

1 End of project

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Annex 2. Project Costs and Financing

Project Cost by Component (in US$ million equivalent)AppraisalEstimate

Actual/Latest Estimate

Percentage of Appraisal

Component US$ million US$ millionWORKS Road Maintenance (IBRD) 2.86 1.25 37 Road Rehabilitation (IBRD) 1.01 2.52 217 Bridge reconstruction/rehabilitation (IBRD) 0.00 1.30 Road and bridges works (Dutch TF) 5.40 6.27 114GOODS Equipment and testing materials (IBRD) 0.18 0.04 22 Laboratory Equipment (Dutch TF) 0.30 0.10 33SERVICES Technical Assistance/Studies (IBRD) 0.45 0.30 67 Technical Assistance /Studies (Dutch TF) 1.30 0.98 58

Total Baseline Cost 11.50 12.76 Physical Contingencies 0.27 0.00 0 Price Contingencies 0.23 0.00 0

Total Project Costs 12.00 12.76Total Financing Required 12.00 12.76

Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 2.40 2.10 0.00 0.00 4.50(2.40) (2.10) (0.00) (0.00) (4.50)

2. Goods 0.15 0.00 0.05 0.00 0.20(0.15) (0.00) (0.05) (0.00) (0.20)

3. Services 0.00 0.00 0.30 0.00 0.30(0.00) (0.00) (0.30) (0.00) (0.30)

Total 2.55 2.10 0.35 0.00 5.00(2.55) (2.10) (0.35) (0.00) (5.00)

This table refers only to the Bank financed portion of the project. No procurement method for the Dutch financed portion of the project was included in the PAD, as the grant at that time was still under consideration. Dutch funds were disbursed for eligible expenditure procured following Bank Guidelines.

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent)

Expenditure Category ICBProcurement

NCB Method

1

Other2 N.B.F. Total Cost

1. Works 9.40 1.94 0.00 0.00 11.34(9.09) (1.49) (0.00) (0.00) (10.58)

2. Goods 0.00 0.00 0.14 0.00 0.14(0.00) (0.00) (0.14) (0.00) (0.14)

3. Services 0.00 0.00 1.28 0.00 1.28(0.00) (0.00) (1.28) (0.00) (1.28)

Total 9.40 1.94 1.42 0.00 12.76(9.09) (1.49) (1.42) (0.00) (12.00)

Figures in parenthesis are amounts financed by the Bank and Dutch grants. Differences due to rounding.1/ Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2/ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units.

Project Financing by Component (in US$ million equivalent)

Component Appraisal Estimate Actual/Latest EstimatePercentage of Appraisal

Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF.Works 3.28 0.00 5.40 4.69 0.76 5.89 143.0 0.0 109.1Goods 0.20 0.00 0.30 0.04 0.00 0.10 20.0 0.0 33.3Services 0.30 0.00 1.30 0.27 0.00 1.01 90.0 0.0 77.7

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Annex 3. Economic Costs and Benefits

Estimated Economic EvaluationNr. Road Section Appraisal

Costsin US$

Actual Cost in US$

Appraisal Estimated EER (%)

Current Estimated EER (%)

1 Prístina - Gjilan 3,600,000 1,396, 892 69.20 75.402 Prístina - Gjilan 380,000 164,793 Over 100 Over 1003 Prístina-Peje 1,176,000 157,616 Over 100 Over 1004 Dolc-Ponoshec 397,000 222,810 44.60 53.255 Gjilian-Konculi 770,000 123,072 67.30 84.256 Mitrovica-Peje 663,000 229,687 77.40 Over 1007 Kucice-Komaran 185,000 123,072 38.90 33.288 Peje-Prizren 4,300,000 1,561,195 71.00 82.239 Arlat-Malsheve n.a. 235,414 44.90 43.00

10 Javice-Xerxe n.a 1,973,640 80.10 52.2911 Zhur-Restilice n.a 96,062 23.60 Over10012 Dhul-Jashanice 365,000 1,158,000 21.40 23.2713 Lebane-Janjeve 682,000 67,272 71.20 Over 10014 Magure-Ljpian n.a. 96,062 n.a. Over 100

n.a. not available

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Annex 4. Bank Inputs

(a) Missions:Stage of Project Cycle Performance Rating No. of Persons and Specialty

(e.g. 2 Economists, 1 FMS, etc.)Month/Year Count Specialty

ImplementationProgress

DevelopmentObjective

Identification/PreparationMarch 2000 3 TL, Ec, Co

Appraisal/NegotiationMay/July 2000 3 TL, Ec, PS

SupervisionSeptember 2000 2 TL, Co S SApril 2001 1 TL S SOctober 2001 1 TL S SMarch 2002 1 TL S SOctober 2002 1 TL S SMarch 2003 2 TL, Co S SSeptember 2003 1 TL S S

ICRMarch 2004 3 TL, PO, Co S S

Abbreviations: TL = Team Leader, PO = Project Officer, Ec = Economist, Co = Consultant, PS = Procurement Specialist

(b) Staff:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 53.6Appraisal/Negotiation 41.0Supervision 192.9ICR 17.5Total 305.0

No. Staff Weeks not available

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Annex 5. Ratings for Achievement of Objectives/Outputs of Components(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)

RatingMacro policies H SU M N NASector Policies H SU M N NAPhysical H SU M N NAFinancial H SU M N NAInstitutional Development H SU M N NAEnvironmental H SU M N NA

SocialPoverty Reduction H SU M N NAGender H SU M N NAOther (Please specify) H SU M N NA

Private sector development H SU M N NAPublic sector management H SU M N NAOther (Please specify) H SU M N NA

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Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

Lending HS S U HUSupervision HS S U HUOverall HS S U HU

6.2 Borrower performance Rating

Preparation HS S U HUGovernment implementation performance HS S U HUImplementation agency performance HS S U HUOverall HS S U HU

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Annex 7. List of Supporting Documents

Project Appraisal Document No. 20555-KOS.World bank Mission Project Supervision Reports and Aide Memoires.

AM2000-09.doc AM2001-04.doc AM2001-04Annex.xlsAM2001-10.doc AM2001-10Annex.xlsAM2002-03.doc

AM2002-03Annex.xlsAM2002-10.doc AM2002-10Annex.xlsAM2003-03Final.docAM2003-09.doc

AM2004-03Final.doc"Towards Stability and Prosperity: A Program for Reconstruction and Recovery in Kosovo".

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Additional Annex 8. Borrower's Contribution

Borrower's Contributionto the World Bank

Implementation Completion Reportfor the Kosovo Urgent Road Project

1. Works: Road Maintenance and Road Rehabilitation

Overall objectivesAfter the war the level of service of the road and bridge sub-sector in Kosovo was problematic as a result of absence of maintenance works for several years. Hence, the Kosovo Urgent Road Project was initiated to improve the Kosovo main and regional road network based on an initial damage assessment report and Estimation done after just after the war (1999).

The overall goal for the Roads and Bridge sub-sector was to support emergency road and bridge maintenance and rehabilitation activities on the main and regional road network in order to provide a road network that is safe, smooth and accessible for the people of Kosovo, not only to destinations within Kosovo but also to the regional and international road network.

Fourteen road sections were selected and were to cover some 473 km for main and regional road maintenance and 305 km for main and regional road and bridge rehabilitation works

I. WORKS a) Road Maintenance Contract Ekrem-Gursan PRM/BM/02 28-May-01Four road sections

NTNT Shkoza RTM/BM/10 16-Sep-02Road Malisheve-Xerxe

NTNT Shkoza RTM/BM/11 16-Sep-02Road Zhur-Dragash

Magjistrala RTM/BM/01 7-Aug-00Road Prishtina-Gjilan

Morava e Binces RTM/BM/02 7-Aug-00Road Mitrovica-Peja

Magjistrala RTM/BM/03 7-Aug-00Road Leban-Sllatine-Lipjan-Janjeve

Transkompekt PRM/BM/01 29-Aug-00Road Prishtina-Gjilan

Magjistrala RTM/BM/04 14-May-01Road Arllat-Malisheve

Magjistrala RTM/BM/05 14-May-01Road Prishtina-Komaran

Magjistrala RTM/BM/06 14-May-01Road Dollci-Gjakove-Ponashec

b) Road Rehabilitation Freyssinet International WB/SP/0102 4-Sep-02Lozica-Dobrava

Carta Isnardo PRM/BM/07 30-Aug-02Road Magure-Lipjan

Carta Isnardo PRM/BM/08 16-Oct-02 Road Malisheve-Kijeve

Carta Isnardo PRM/BM/03 22-Aug-01Rehabilitation of Mitrovica to Peja Road

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Achievement of Objectives and Outputs These maintenance and rehabilitation projects have all been successfully completed in 18 contracts and the works noticeably achieved the objectives. It significantly improved the main and regional road network conditions between major cities and towns in Kosovo. Recurrent maintenance works gradually became a routine under RID and DOR; the expenditure for maintenance yearly increased and are at date 9.8 million euro under KCB budget.

The works helped to decrease the cost of transport and travel time, made the roads safer and the traffic flow has been improvement also into the urban areas. The improvements have been successfully achieved into all contracted road sections.

The set of contracts enabled the construction industry to establish a competitive market with stronger companies, mostly joint ventures with foreign firms. The Project also benefited from International Competitive Bidding. It was reported that the level of price was low for all the main contracts.

In the first phase very limited attention was paid to mitigation measures to limit the impact of the works remains on environment. At date an EMP is included in the tendering procedure and a RID environmental officer supervises the environmental impact of the road works.

Although some black spots have been eliminated within the program, the later Road Safety Improvement Study showed new ways to include a traffic safety audit and traffic safety measures into all bidding documents and into designs for rehabilitation.

Unfortunately, RID/DoR didn’t succeed substantially in raising he level of service of road markings and signing and the quality of the material that is used remains poor.

Lessons learned From the 2003 – 2004 Road User Charges and Road Safety Improvement Studies RID gained respectively new understandings regarding planning of maintenance and rehabilitation works: 1. The quality of the maintenance and rehabilitation works is good, but the lesson learned from the later Road User Charges Study is that the quantity of interventions is still too limited. The Study recommended for all Kosovo Roads per annum € 14.2 million for recurrent maintenance (€9.8 in 2003) and €48 million for road, bridges and tunnel rehabilitation. 2. The quality of the pavement improved significantly but the level of service to the users should be expanded to the field of Roads Safety and Environmental Measures. The Road Safety Improvement Study recommends the establishment of Traffic Safety Council, the introduction of traffic safety audit, and a sharp raise in maintenance of horizontal markings, signings and signaling, including training and recruitment of personnel.

2. Goods and Services After the war the road management capacity had to be re-established and the local contracting capacity for maintenance and rehabilitation works had to be restored.

The first phase of the Urgent Road Project, 2001 – 2003, strategically focused on institutional reform, performance improvement and individual competency enhancement of the Road Infrastructure Department

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and the Directorate of Roads. In the second phase, mid 2003 till early 2004, it was intended to raise awareness for financing the roads sector and for traffic safety by preparing strategies and action plans in both areas.

The Services and Goods component of the Urgent Road Project have all been successfully completed respectively under 6 contracts for services and 2 contracts for the purchase of DoR vehicles and for the testing materials at the Roads Laboratory.

II. GOODS

Equipment for DOT/Material Testing Equipment

Global Development Four Purchase of vehicles

Laboratory Equipment Laboratory Equipment

III.

SERVICES

Other Services, Technical Assistance, Studies

Aspen Burrow Assist DOT with contract preparation     

Aspen Burrow Assist DOT with contract preparation  

Consultancy Service 2-Aug-01    Assist DOT (SMEC)   

Consultancy Service 31-Aug-01  Project for Lozica and Dubova Bridges (Louis Berger Group)

Consultancy Service 18-Aug-03 Road User Charges Study (Roughton International, UK) 

Consultancy Service       Jan 04 Road Safety Improvement Study (BCEOM, France) 

Institutional Development and Capacity Building

Objectives To raise the performance of the Road Infrastructure Department (RID) and the Directorate of Roads (DoR) two services were contracted, one dealing with contract preparation and one technical assistance package.

The Law on Road, June 2003, and the Administrative Instruction on Directorate of Roads, September 2003, regulated the MTC activities in the Roads Sector and the responsibilities of. RID.

The objectives were to review the Directorate of Roads and to improve contract management capacities and supervision of maintenance/rehabilitation works within RID and DoR.

Achievement of objectives Both RID and DoR welcomed the vast technical assistance offered by UNMIK, WB, KFOR , EAR and other donors during the past four years. This resulted in a basic but solid level of technical, administrative and contract management skills. Contracting of standard maintenance and rehabilitation works has become a routine within RID by now. New personnel with specific competence in road related environmental issues are recruited and trained. However, integrated traffic and transport projects, procurement and project implementation of new major infrastructure planning and works will need special attention in the near future.

With respect to the institutional reform and refinement of structures, RID is currently acting as the leading Roads Agency in the planning and tendering of the roads program (Employer role), whereas DoR is

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expected to fulfill the role of the operational agency (Project Manager) under the Minister within RID. Despite the efforts to optimize the responsibilities for Kosovo roads some duplication of efforts and inefficiencies remain, basically due to persistent routines of the past. The 2004 Road User Charges Study outlined necessary steps in its further Institutional Reform.

The project established an Information Road Data Bank (IRD) based on visual surveys of the network. It did not fully succeed, however, in turning this IRD into a multi-user road management information system addressing accountability based on HDM4 and prioritization schemes and on reporting requirements. Nevertheless the existing capacity for further progress exists but needs to be fully and sensibly expanded and exploited.

Furthermore, lessons should be drawn from the weak relationship between RID and Municipalities. It is suggested that, in order to overcome current ad hoc cooperation with municipalities, a structured framework for roads and transport management and cooperation between MTC and municipalities is developed in the near future.

Establishment of a Central Testing Laboratory

Objectives and Objectives AchievementThe project aimed at raising the domestic capacity for quality control of roads structures and construction materials such as soils, aggregate, concrete, cement, asphalt, and bitumen. The project successfully provided testing material for the Laboratory.

The establishment of the Laboratory was based on a MOU signed in 2002 between MTC and University of Pristina, represented by the Civil Engineering Faculty. The following (selected) objectives and activities for the Central Laboratory were agreed:· to cooperatively work towards improvements in the availability and standardization of road material testing in Kosovo, specifically within the provision of quality assurance services and improved teaching programmers within the area of road engineering. · In pursuit of this aim, the following specific actions and obligations were agreed (selection);- Provide material testing services to the road sector industry on a cost recovery basis, in addition to teaching functions and independent laboratory accreditation;- Provide priority material testing services to MTC (on an agreed, actual marginal cost basis);- Ensure that the Laboratory is established and operates as an independent cost center on a commercial type basis under the Civil Engineering Faculty- Other

Lessons learnedAt date most tests performed by the Laboratory are requested from private contractors on a commercial basis. Certified reports are produced for each of these tests. There remains a need, though, for Mobile Labs to do “on site” testing control, a service, which cannot yet be provided by the Central Lab. . It is intended to establish a Mobile Laboratory under a forthcoming EAR projectMTC – RID should also act as a demanding supervisor and user of the Central Lab. Whenever findings of poor road material and structure conditions are reported to RID, it would be appropriate that RID itself actively and regularly demands the Central Lab to do specific tests and to recommend actions for improvementFurthermore, it is recommended that the Lab Management presents an annual activities report to the MTC

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and establishes a users board.

Reconstruction of Lozica and Dubova Bridges

Objectives and Objectives AchievementThe Project was initiated in 2001, in order to replace two major bridges. These are the Lozica bridge on the main Prishtinë-Pejë road and the Dubova Bridge on the regional Pejë – Mitrovicë road. Designs were completed and tenders called by May 2002. By September 2002 the contract for Reconstruction of both bridges was awarded and the works were successfully completed in June 2003 (final cost: 2,332,923 Euro).

Under The Urgent Road Project a consultant was contracted (price: 406,995 USD) to supervise the works, to monitor contractor’s progress on both sites and to handle the administration of the contract. Increased attention was paid to the quality control and MTC staff members got on site training with respect to specialist bridge items.

MTC learnt to use proper EUROCODE standards for bridge construction and received useful on - job training for MTC and DOR staff to manage international bridge contracts and to supervise capital investments.

Road User Charges Study

Project objectives The Project Objectives for the Road User Charges Study, August 2003 – January 2004, were defined as follows:· Define the road user charges system;· Define the common accounting framework;· Calculate costs to be recovered from users;· Advise on concessions and cross subsidies;· Develop a phased implementation program; · Ability of Kosovo residents to pay extra charges;· Comply with IMF – WB and EU guidance and rules

The Study aimed to raise the awareness that: · everybody should pay to use roads;· charges should be based upon the marginal costs of driving;· there should be rebates or reduced charges for those using less damaging or polluting vehicles;· all roads should receive an allocation for maintenance from the road fund;· and priorities for expenditure should be identified on the basis of transparent and fair rules, using up to date and complete information.

The study had to ascertain that appropriate procedures and techniques are adapted in the agencies dealing with road user charges issues and that the project was to be carried out in close liaison with the agencies responsible for managing and charging of the use of roads.

77.240 Pound Sterling and 61.203 euro was allocated to the Study.

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Achievement of objectives Revenue Requirements and proposed chargesThe Study allowed RID to define the Kosovo Road Network Management as a manageable system by specifying a series of requirements such as prioritization of expenditures, keeping road and bridge condition data, prediction of future deterioration, interaction with HDM4, monitoring works and performance and other.

Based on road and bridge pavement and condition surveys as laid down in the Annex, the Study provided the following indicative annual revenue requirements for all road and bridge maintenance and rehabilitation efforts for Kosovo, including local roads:· Roads recurrent maintenance - €10.8m· Bridge recurrent maintenance - €3.0m· Tunnel recurrent maintenance - €0.4m· Roads rehabilitation - €41.8m per annum· Bridge rehabilitation - €6.0m per annum· Tunnel rehabilitation - €0.3m per annumThese estimations require per annum additional 18 million euro revenues from the KCB budget apart from whatever needs for new roads.

Aforementioned revenues requirements include external costs to cover the environmental and health costs of vehicle emissions, the external costs of road accidents and the costs of traffic congestion. As part of this study each of these external costs have been reviewed with a view to recommending an appropriate way of capturing some of these costs within the road user charges system.

Accordingly, a set of charges were recommended, which include: · Increased Fuel Duties

– to cover road maintenance costs– to recognize the health effects of leaded petrol– to reflect the environmental damage from emissions

· Charges for Foreign Vehicles Entering Kosovo· Excess Axle Load Fines· Parking Charges - for local funding

Rebates and Cross – Subsidies were proposed such as fuel used in agriculture, road based passenger transport, Rail freight and an additional duty on leaded petrol.

Recommended Institutional Reform and ResponsibilitiesIn assessing the existing institutional structure the Study has identified a number of deficiencies. It is important to recall some of these deficiencies:· A network strategy within which to determine priorities for investment, needs to be put in place· A formal system for determining maintenance priorities needs to be incorporated into the road information database· Maintenance budgeting and planning needs to be undertaken over an extended period allowing improved contracting methods· The currently inefficient split of responsibilities for roads between Road Infrastructure department and Directorate of Roads needs further operational reform giving all responsibility to a central organization

It was reported that a two-stage evolution would be necessary to establish a sounder basis for road management and maintenance in Kosovo.

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The setting up of a Road Board is an important element in this first stage. The recommended make up of the Road Board would be a mix of public and private sector interests, with representatives from road user groups, interested ministries, the Municipalities and external donors, such as the World Bank. Initially the Road Board would be an advisory body, assisting the Director of Roads and monitoring the performance of the Road Agency. Furthermore the responsibility for local roads should be transferred to the MTC and MTC should establish a framework for technical and financial assistance to municipalities in order to strengthen their traffic management capabilities. The method of MTC budget management should be refined with a dedicated budget heading for road maintenance and the proposed new charges should be put in place. It was recommended that this be done as soon as possible with a target date of April 2005 for completion.

The second evolution has more uncertain timing as it relies upon the economic and institutional development of Kosovo. This stage would involve setting up an independent Road Fund, with an independent Roads Board. At this stage new contracting methods would also be introduced, with multi-year performance based contracts for routine maintenance, greater use of consultants to undertake maintenance management and supervision tasks and a return of responsibility to the Municipalities.

Outreach In order to raise full awareness for the Study, a multi agency Seminar, chaired by MTC permanent secretary, was held with representatives of MTC, Ministry of Finance, Commission of Finance of Kosovo Parliament, Municipalities, EAR and other. Furthermore an executive summary of the findings and recommendations was widely distributed. MTC and the Consultant joined Macedonian colleagues in Skopje to participate in a World Bank videoconference on pricing of roads, directed from Washington.

Lessons Learned Key MTC personnel assessed the RUC Study as very valuable, well documented and important for the near future.

RID has welcomed the estimations of the recurrent maintenance and rehabilitations costs and is taking initiatives to get the ‘pre- road fund vote’ earmarked in the KCB. In line with the RUCS recommendations, new personnel are to be recruited in order to strengthen respectively the roads policy, the roads prioritization and roads data base components within RID.

The project failed, however, in raising immediate high-level political commitment to the recommendations. Although serious efforts have been undertaken to include representatives from Ministry of Finance in the MTC RUS working group, MTC failed to get active involvement from Finance. To date, the Minister of Transport and Communications has repeatedly confirmed to take the initiative for a joint MTC / Finance working group. Co- ownership and copartnership between MTC and Ministry of Finance in an early stage seems to be key for success in these matters.

Road Safety Improvement Study

Project objectives, activities, sectors, manuals and training The Project Objectives for the first Kosovo Road Safety Improvement Study, February 2004 – June 2004, were defined as follows:a) quantify the scale and nature of the road safety problem in Kosovo and to provide initial estimates

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of the annual cost of road accidents to the economy;b) review all sectors affecting road safety and develop a comprehensive, prioritized [3-year?] Action Plan for the improvement of road safety in Kosovo.The Study aimed to ascertain that appropriate procedures and techniques are adapted in the agencies dealing with traffic safety issues and that the project was to be carried out in close liaison with the agencies responsible for road safety. The development objectives of the consultancy services were to enhance the efficiency of the administration, development and management of the classified road network as regards road safety, and to improve traffic safety along sections of the road network.

The broad review had to include the following sectors: · Road Safety Planning, including accident black spot improvement, identification of accident black spots and preparation of remedial measures to improve road safety. · Motor insurance and traffic accident cost estimation.· Information, road safety publicity, propaganda, road user education· Driver training and testing,· Traffic education of children, traffic education of drivers,· Pedestrian and cyclist safety,· Vehicle licensing,· Road worthiness inspections and surveys.· Emergency Services, including vehicle breakdowns and towing, Police, firefighting services, ambulance and medical.

The Consultant was expected to produce working manuals and to provide training to counterpart staff so that they can continue road safety activities in their respective organizations during and after the plan period of the program.

An amount of 147,400 euro was allocated to the Study.

Achievement of objectives, activities, sectors, manuals and training Road Accident Data and ManagementThe UNMIK Police has developed an ACCESS database for accidents. To date they have recorded accident details for the period 2000 – 2003.

The Road Accident Data for 2003 are :· 93 fatal accidents with 130 people killed, 14 killed pedestrians and 9 killed youths; · 1377 injury accidents with 2012 injured persons, 117 injured pedestrians and 65 injured youths; · 4019 damage accidentsThese figures mean that one person was killed in traffic every 3 days in Kosovo, and every day 5 people were injured and 11 damage accidents occurred.

UNMIK Police reports a striking decrease in fatalities over the period of 2000 to 2003. The total numbers of people killed in road traffic accidents decreased from 250 in 2000 to 125 in 2003, as shown in the following graph.

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The Kosovo annual costs of accidents (the net lost production + human cost) based on the 2003 accident data are estimated: • total cost - € 17 million (1% GNP)• one fatality - € 60 223• serious injury - € 6 847

The Study recommends the introduction of the MAAP accident database software (TRL, UK) and at date of this report the discussion about a joint Kosovo – Albania MAAP software application is ongoing with MTC, Police and other. A MAAP demo will be provided to the Pristina University and a first training is foreseen.

Organizational and institutional setting With the aim to provide a pre - setting for the Kosovo Road Safety Council (KRSC), MTC established a multi agency forum in which all traffic safety partners met on a regular basis. In de period September 2003 – May 2004 the forum held three meetings chaired by the MTC Permanent Secretary. The WB draft actions plans were presented at a first Traffic Safety Seminar, 8 April 2004, which coincided with the United Nations Traffic Safety Action Week and with a campaign on Control of Aggressive Speeding by KPS and UNMIK Police.

Traffic Safety Sectors covered The 2004 Kosovo Road Safety Improvement Study outlined actions plans in the following fields:· Kosovo Road Safety Council;· Two Road Safety Campaigns: one on safety belts and one on speeding; · Road Accident database management; · Black spot analysis, prioritization and remediation;· Traffic Safety Audit;· Traffic Signalling;· Road Safety training in aforementioned areas.

Although MTC selected a firm that offered broad expertise in the sectors of roads traffic safety management, safety campaigns, education, establishment of a Traffic Safety Council, accident data management and Police Works, the Study did not cover, due to time constraints, the following traffic safety areas with action plans:· Emergency Services, including vehicle breakdowns and towing, Police, firefighting services, ambulance and medical;· Driver training and testing;

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· Traffic education of children, traffic education of drivers,· Pedestrian and cyclist safety,· Vehicle licensing, road worthiness inspections and surveys.

Lessons Learned The challenge to maintain the 2003 road accident level The prevailing impression is that Kosovo specific factors have a mitigating impact on traffic accidents:1. Active Enforcement: As UNMIK and Kosovo Police is very visible and actively present in Kosovo, its control and enforcement has presumably a preventative impact on traffic behavior and offenses in general and on speeding behavior in particular;2. Substandard road conditions which retain most drivers from speeding;3. Relatively favorable speed limit regulations in built up areas and on regional roads and main roads;4. Driving under influence is reported to be a very minor cause of traffic accidents.

These specific factors justify the fact that road safety problems on the Kosovo network are not equally expanding as they did in EU accession countries in their early transition stage. It is expected, however, that road accident might rapidly increase with the economic development, the growth of motorization and the retreat of UNMIK Police in the future. Therefore, Traffic Safety should become and remain a preventive priority concern to be included in all traffic safety related areas.

The challenge to establish Kosovo Road Safety Council in 2005 The aforementioned pre – KRSC forum will be continued in 2004 and will prepare the political decision to turn the forum into a formal Kosovo Road Safety Council. Due to elections in November 2004, it is expected that this decision will be delayed and that the KRSC will be established in 2005. The Study didn’t deliver operational guidance in the establishment of the KRSC; it assisted, though, in structuring a multi agency Traffic Safety Action Program, including training and involvement of Pristina University. The expert team facilitated the communication about roles of all stakeholders and sectors involved and about the why and how’s of the various strategies and action plans. MTC and UNMIK and Kosovo Police are expected to act as key players in further steps towards the establishment of the KRSC and towards the implementation of the actions outlined in the Study.

Immediate actions to take Furthermore the Study specified a series of immediate actions such as two campaigns, a traffic signaling engineer, tasks for the traffic safety coordinator and black sport remediation actions. Immediate implementation of these actions is an indicator for MTC’s willingness to proceed in its traffic safety program.

Follow up initiatives MTC and related traffic safety partners are very appreciative for the WB assistance in this first Kosovo Traffic Safety Improvement Project. It is expected that the forthcoming Transitional Support Program for Kosovo offer MTC the opportunity to review the progress in the outlined Traffic Safety Action Program and to cover those areas, which have not been dealt with in this first Study.

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