53315 TRANSPORT NOTES ROADS & HIGHWAYS THEMATIC GROUP THE WORLD BANK, WASHINGTON, DC Transport Note No. TRN-39 February 2010 Improving Local Roads and Creating Jobs through Rapid Response Projects: Lessons from Armenia Lifeline Roads Improvement Project Satoshi Ishihara and Christopher R. Bennett The World Bank's Operational Policy 8.0 `Rapid Response to Crises and Emergencies' is used when there are major adverse economic and/or social impacts resulting from actual or imminent natural or man-made crisis or disaster. This invokes a set of stream-lined procedures which results in projects being prepared very rapidly. In late 2008 the Republic of Armenia requested the Bank's assistance to mitigate the impact of the global financial crisis. This technical note describes how the Lifeline Road Improvement Project (LRIP) was prepared and implemented as a Rapid Response Project, prepared in only six weeks. This project saw over 150 km of roads improved and almost 12,000 person- months of employment generated during an eight month period between May to December 2009. The lessons learned may guide other projects with similar objectives. The findings, interpretations, and conclusions expressed here are those of the author and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. Challenges facing Armenia following the addressing broader development challenges facing Financial Crisis and the World Bank's the country, would create jobs and mitigate the response negative impact of the financial crisis. The Lifeline Road Improvement Project (LRIP) was prepared in The 2008 world financial crisis had a major impact this context with the objective to upgrade selected on the Republic of Armenia. The GDP is projected sections of the Lifeline Road Network (LRN) and to have fallen by about 15.6 percent in 2009. The create temporary employment in road construction subsector was particularly hard hit, construction. The project was approved by the with output declining by some 38 percent and Board of Directors on February 24, 2009, with employment by some 40 percent. Exports Additional Finance to expand the project scope declined by about 6.3 percent in 2008 and 37.4 approved on August 27, 2009. Table 1 per cent in 2009. Foreign Direct Investment summarizes the financing for the project. dropped to 3 percent of GDP in 2009, down from 7.9 percent in 2008. Many migrant workers in Table 1: LRIP Project Financing Russia lost their jobs and returned home, further stressing local labor markets while depriving the Phase Financing (US$ million) rural poor of critical income in the form of IBRD Gov't of Total remittances. Armenia Original Project 25.0 5.4 30.4 As a result, a significant portion of the labor force Additional Finance 36.6 9.1 45.7 Total 61.6 14.5 76.1 became unemployed. By mid 2009 poverty had increased to 28.4 percent of the population, up from 23.5 percent in 2008. Extreme poverty Project Milestones · Identification Mission ­ 1/10/2009 increased to 6.9 percent of the population, · Concept Review ­ 1/13/2009 compared to 3.1 percent in 2008. A rapid · Appraisal ­ 1/14/2009 response was needed to help arrest this sharp rise · Negotiations ­ 1/26/2009 in poverty levels. · Bank Approval ­ 2/24/2009 · Signing ­ 2/26/2009 The Government of Armenia acted swiftly and · Effectiveness ­ 4/10/2009 requested support from the World Bank to help · All civil works contracts started ­ 6/15/2009 weather the economic shocks. In response, the · Additional Finance Approval ­ 8/27/2009 · Civil works (153 km); substantially completed Bank decided to utilize the "IDA Financial Crisis ­ 12/31/2009 Response Fast-Track Facility" to support "shovel · All Civil works (264 km); completion expected ready" investments which, in addition to before 12/31/2010 Page 2 Transport Note TRN-39 February 2010 The Lifeline Road Improvement Project Within eight months after the project became effective (April 2009), LRIP had rehabilitated The LRIP aimed to rehabilitate 100 km of the about 150 km of LRN under 42 civil works Lifeline Road Network, which connects rural contracts. Indeed, the original LRIP outperformed communities to the main road network, and to the project target by using cost savings to create 7,600 person-months of temporary jobs. rehabilitate an additional 18 km of LRN. It created The Additional Financing in the amount of $36.6 almost 12,000 person-months of employment in million was designed to rehabilitate an additional the form of new jobs, or people keeping existing 145.9 km of LRN and create some 10,000 person- jobs. In addition, local designers and contractors months of new employment. Table 2 summarizes successfully applied new technologies and the investments supported under the LRIP. Due to appropriate and cost-effective design standards lower bids than expected under the original based on international practice, strengthening the project, cost savings allowed for an additional sustainability of investments and improving safety 18.5 km of improvements. for pedestrians. Table 2: LRIP Investments Key success factors Stage Construction Season Number Km There are six key factors that led to the success of of Improved the project, as summarized below. Contracts Original 2009 25 99.9 Key Success Factors Original Cost 2009 5 18.5 Savings · Full support of the Government · Critical rural road links called "Lifeline Roads" Additional 2009 11 35.0 had been pre-identified Finance · Basic data and designs were available, and Additional 2010 32 110.9 only needed to be updated Finance · Local capacity and willingness to try new (Estimated) designs and technologies to improve efficiency and maximize the impact Total 73 264.3 · Using technical supervision as a means of technology transfer · Competent and experienced Project All project roads were Implementation Unit (PIU) in poor or very poor condition, and many suffered from severe pavement failure. The Government pre-identified the Lifeline Drainage was Road Network as priority rural road links inadequate or missing in most locations, In 2004 the World Bank published a report which exacerbating pavement identified outstanding issues with regard to rural Typical unimproved road deterioration which was infrastructure in Armenia. 1 This report provided caused primarily by public policy makers with the information environmental factors and lack of timely necessary to develop a rural infrastructure maintenance. The project primarily repaired road strategy. pavements, drainage facilities and small bridges/culverts where necessary, in addition to The Government installing safety measures such as guardrails, adopted the Rural pavement markings and sidewalks in urbanized Infrastructure Strategy road sections, especially near schools and other and Action Plan, and public facilities. The addition of safety started its improvements and pedestrian facilities was a implementation as major contribution of the project to rural road conditions of design and construction in Armenia. The existing adjustment credits. One Typical unimproved road alignments were maintained to avoid land of the actions was the acquisition and resettlement. To ensure that there amendment in the Law on Automobile Roads was no resettlement, the project team visited each road prior to it being included in the work 1 Rural Infrastructure in Armenia: Addressing Gaps in program. Service Delivery. The World Bank, 2004. Available for download from: http://tinyurl.com/s5mmu. Page 3 Transport Note TRN-39 February 2010 stipulating that each rural community should have project roads. Also, further deterioration was a winter accessible road connecting the expected during the spring thaw. community to the national road network. It was therefore decided that designs would be About 3,000 km of such road links 2 were identified updated as best as possible with the available as the LRN. With road lengths ranging from one to information, and then updated immediately after 59 km, and traffic volumes from 50 to 2,500 contracts were signed through "walk over" vehicles a day, the LRN provides rural residents surveys (see below), which were jointly conducted with critical basic access to markets and social by the Armenian Roads Directorate (ARD), the services. More than 60 percent of LRN was in poor supervision consultant, the contractor and the or very poor conditions, imposing considerable designer. This aimed to identify all variations from challenges for the rural population. Farmers lose the design and reaching agreement upon the over 40 percent of produce due to difficulties in activities to be performed. The designer then getting crops to market on time, with losses as updated the design to reflect the situation at the high as 80 percent for the worst served start of work. 6 communities. 3 The poor road conditions limited access to basic education and medical services for many communities. Local capacity and willingness to try new designs The Government pre-identified priority rural road links of the LRN thereby ensuring that any new Under the LRIP, the detailed designs were not project road selected from the LRN would improve only updated but also significantly improved and basic access to rural populations and contribute to amended to achieve the following: improving their livelihood. The LRIP project only needed to conduct a cost-benefit analysis to verify · Where appropriate, more labor intensive designs that all project roads would have sufficient and specifications were adopted. For instance, economic rates of return, including consideration concrete was used for pedestrian sidewalks of basic access needs, to warrant investment. rather than asphalt which was commonly used Project preparation would have taken longer and in Armenia. Masonry parapets were used impact would have been smaller if the strategic instead of imported steel guard rails, since they rural road links had not been pre-identified. are more labor intensive and can be locally produced. Basic data and designs were available, and · Wherever possible, international standards for only needed to be updated low volume roads were used rather than the Armenian standards which called for the same Basic data and detailed designs for the priority minimum pavement road links to support the decisions on which roads design for all roads to select for investment were available by the carrying below time project preparation started. Road condition 1,000 vehicle/day. 7 and traffic volume had been surveyed, and cost More cost-effective benefit analysis conducted, for a sample of LRN 4 pavement designs under a study funded by the US Millennium were adopted for Challenge Account for Armenia (MCA) 5 in 2007. paved roads e.g. use of thicker, well- Road construction work While the availability of basic data and designs compacted crushed was helpful to prepare the project in a very short time, the designs needed to be updated to reflect current pavement conditions. Some data were collected before the winter season, which allowed 6 The Project allocated funds for designers to update updating of designs, but they were deemed designs during construction. Armenian law also requires insufficient to address varying degrees of that original designers would be paid up to 0.6 percent deterioration that occurred in different sections of of costs of construction to ensure compliance with designs and cover design updates to accommodate unexpected design issues found during construction. 2 7 Armenia has about 7,700 km of non-urban roads. The Republic of Armenia Construction Norms IV- 3 Rural Infrastructure in Armenia: Addressing Gaps in 11.05.02-99 for reconstruction calls for two asphalt Service Delivery. concrete surface layers of 3 cm and 6 cm, on top of a 4 4 SWECO Feasibility Study for Lifeline Roads. SWECO cm bituminous base, which is on top of additional Consultants in Association with Dorproject. 2008. subbase layers from 8 cm upwards. This was applied 5 Funding from MCA was sufficient to rehabilitate less using a 20 year design life, with a single maintenance than half the LRN studied. activity. Page 4 Transport Note TRN-39 February 2010 stone base instead of bituminous stabilized the "walkover surveys," the amount of variation base. For gravel roads, the Swedish design orders under the Additional Financing was less standard was adopted. than 1 percent. Also, all minor environmental issues initially observed were addressed in the · Special attention was paid to road safety. All later stage. roads passing through urban areas were provided with sidewalks, and designs sought to This clearly indicates that the design consultant allow the use of facilities by the handicapped and contractors quickly learnt the new where possible. A formal road safety audit, technologies and standards adopted under the which could not be done for the original project project. due to limited time, was planned for the second year program of the Additional Financing. The supervision consultant and the Bank team Technical supervision as technology transfer provided advice on ensuring adequate road safety provisions in project design. One reason behind the quick absorption of new · Traffic safety management at work sites was technologies is the emphasized, with an Armenian manual and approach employed checklist based on best overseas practice under the project. It prepared, and training courses held. emphasized the role of technical supervision as · An Environmental Management Plan (EMP) with a mode of technology a summary table describing the location of each and knowledge transfer. Road after improvement environmental issue and the specific activities to be carried out by the contractor was prepared For construction for each site and made an integral part of the supervision the project employed an international civil works contract. An environmental checklist consultant who had a local sub-consultant. In was attached to the EMP, to be completed by addition, well-staffed Bank supervision missions resident supervisors. Training was organized so and an independent technical auditor were used to that contractors and resident supervisors provide advice to the client on all aspects of the understood the requirements under EMP. project. This proved to be particularly valuable in improving the overall quality and effectiveness of The local designer and contractors quickly the supervision and the project in general. adopted the new designs and technologies, although the level of absorption varied across Throughout project implementation, the designer, contractors. Also, a significant variation was supervision consultant, technical auditor and observed for the quality of concrete sidewalks and contractors were all encouraged to collaborate compliance with EMP, indicating that some under the leadership of ARD. It was stressed that contractors failed to learn as quickly as others. supervisors and technical auditor should not just For instance, some contractors were observed to be concerned about checking the quality of works dump waste materials on embankments, while and ensuring contractors' compliance. Their role stabilization of slopes, provision of drainage and was also to include advice on how to improve spacing and sawing of joints on concrete quality by providing hands-on guidance and sidewalks were not adequate on some roads. showing practical examples, and thus transferring However, others rigorously followed the technology and knowledge to contractors, requirements in the EMPs. designers and ARD. The Supervision Manual prepared by the international supervision Nonetheless, many contactors as well as the consultants under the LRIP will be a guideline for design consultant future LRN construction management. acquired considerable knowledge and The international supervision consultants were experience as they encouraged to meet resident supervisors on implemented the regular basis, and provide training where original project. Indeed, necessary to ensure that they fully understand the while the cost of original innovations. Workshops were held jointly with the projects increased by ARD specialists on environmental issues and about 15 percent to traffic management. However, as the project incorporate new designs progressed it would have been better to vary the Road Construction Work staffing schedule of the supervision team and technologies as well as to address findings of Page 5 Transport Note TRN-39 February 2010 "Renewed [LRIP] roads will allow us to take our produce to the market quickly and in a better state." according to the civil works progress and site Spartak Mkrtchyan from the Village of Haykavan geographic location. The technical auditor makes important contributions to the project by providing an Other positive project impacts include improved independent review of all aspects of the project, road safety with concrete sidewalks in urbanized from design through implementation. areas and through villages; this is highly appreciated by village residents. The project also successfully developed the capacity of many Competent and experienced clients contractors who gained knowledge and experience in the use of cost effective pavement solutions Another reason for the quick absorption of new and environmental and traffic management too. technologies and knowledge, and indeed for the success of the project, is the strong implementation team. ARD project managers Impact on employment regularly visited contractors to oversee Job creation was a key objective of the project. works, although the ARD New jobs were created, and workers retained in environmental supervision positions which otherwise would have been was under-resourced. The terminated. In the period June-December 2009, ARD staff was very more than 7,000 person- supportive of the adoption months of workers were of new designs and directly hired for road technologies and, working construction, and almost Road after improvement closely with the 3,000 person-months for supervision consultant, workers to produce and helped ensure the quality of designs and works. supply materials. 8 Taking into account workers The PIU was very efficient in processing more retained, almost 12,000 than forty civil works contracts over a very short person-months of Road after improvement period. With so many small contracts spread employment was created. across the country with many small contractors, procurement processes ware extremely time The job creation impact of the project is in fact consuming. greater than suggested by the number of jobs created. The project rehabilitated roads near Due to the rapid nature of the project, it was factories and mines which had been closed agreed to provide shorter times than usual for bid following the economic crisis. Contractors in preparation and submission: 30 days for Armenia typically hire local villagers near International Competitive Bidding and 21 days for construction sites for manual labor due to their National Competitive Bidding. To increase lower cost than importing laborers from competition and attract more construction elsewhere. 9 Some of those people hardest hit by companies, the large contracts were divided so as the economic crisis benefited from the project to to have lots estimated to cost in the range $2.0- weather the crisis. 2.5 million. To publicize the project, there was broad advertisement through the Government's official procurement web site and the Union of Lessons learned Builders was requested to inform its members about upcoming contract opportunities. Training · Sound sector strategy was also organized for representatives of the with a list of priority construction companies on bid preparation. investments helps prepare and implement successful projects in a Project impact short time. About 150 km of the LRN, including 40 km under Urban sidewalks the Additional Financing, were rehabilitated within · Do not shy away from eight months after the project became effective. Travel time was reduced on average by about 40 8 Job Creation on the LRIP Project. Consultant's Report, percent. More importantly, the project enabled January, 2010. rural populations to travel to urban centers where 9 On average, about US$500 is paid per month to each markets and social services are available. worker. Also, contractors usually provide cash incentives to highly performing workers on top of regular wages. Page 6 Transport Note TRN-39 February 2010 using new approaches, but make sure the client · Engage the services of a good technical recognizes it as a learning opportunity and auditor--and implement the recommendations. requires supervisors to actively engage in knowledge transfer. "I heard about the project not long ago, and am very glad that I was immediately hired to do work on the · Detailed design drawings and technical project. I am not only building the road that will link specifications should be provided for any new our village to the town, but I am also able to stay technologies or standards introduced. employed for the coming months, and sustain my family." Artem Hakobyan, from the village of · Where possible, provide sidewalks within Meghrashat. urbanized areas and settlements to ensure safety of pedestrians. Acknowledgements · Ensure that local resident supervisors fully understand the applicable technical The authors would like to acknowledge the specifications and the full scope of civil works support and contributions of the LRIP team: contract. Alexander Astvatsatryan Procurement · Walk over surveys help detect and address Anarkan Akerova Legal design oversights, and are especially useful Anders Bonde Engineering when projects need to be prepared quickly. The Ani Balabanyan Bank Operations design and supervision consultant's TORs should Anil Somani Environment clearly spell out any follow-up actions that must be taken based on the result of the walkover Arman Vatyan Financial Management surveys. Armine Aydinyan Procurement Arthur Kochnakyan Economics · Mid-way through the project, undertake a Asif Faiz Engineering comprehensive design review, including site Christopher R. Bennett Team Leader inspection. Coral Bird Administrative Support Darejan Kapanadze Environment · Ensure the technical specifications call for the David Silcock Road Safety contractors to construct pavement trial sections. Elena Y. Chesheva Institutional Capacity Building · Pay particular attention to drainage, especially Elizabeth C. Wang Financial Management in urban areas. Gibet Camos-Daurella Engineering Marie Laygo Administrative Support · Include the test requirements as part of the technical specification in the bill of quantities at Ning Jiangbo Engineering the time of bidding. Require the contractor to Satoshi Ishihara Co-Team Leader/Social carry out tests at a frequency identified in the Tamara Sulukhia Co-Team Leader technical specification or as deemed necessary Terje Wolden Engineering by the supervision consultant. We also acknowledge the contributions of our · Road safety audits, even in the simplest counterpart staff from Government of Armenia, manner, improve road safety and should be Armenian Road Directorate, the Transport PIU, pursued even if preparation time is limited. and others: · The EMP should be an integral part of the Mr. Tigran Davtyan Minister of Finance contractor contract. The Bill of Quantity should Mr. Gurgen Sargsyan Minister of Transport and specify provisional sum of EMP works and there Communications should be clear penalties for non-compliance. Mr. Nerses Yeritsyan Minister of Economy Mr. Karen Gevorgyan ARD · In-house capacity of the road administration Mr. Karen Badalyan ARD should be developed so designers and Mr. Aram Vardanyan ARD contractors can be properly supervised. Mr. Gurgen Tadevosyan ARD · If the project needs to be implemented in a very Mr. Alex Bakhtamyan Transport PIU short period, the procurement and construction Mr. Samvel Badalyan Dorproject Design Inst. schedule should be carefully planned to ensure Mr. Janusz Sobieniak Technical Auditor that they fit with weather, logistical, budgetary Mr. Michel Peiffer Team Leader Safage and other conditions. Supervision Consultants Page 7 Transport Note TRN-39 February 2010 TO LEARN MORE Satoshi Ishihara, Social Development Specialist (sishihara@worldbank.org) Christopher R. Bennett, Senior Transport Specialist (cbennett2@worldbank.org) World Bank Transport website: http://www.worldbank.org/transport Transport projects in the Europe and Central Asia region: http://go.worldbank.org/OTO14241H0