Document of

The World Bank

FOR OFFICIAL USE ONLY FILE COPY

Report No. 242lb-JM

STAFF APPRAISAL REPORT

FOURTH HIGHWAY PROJECT

JAMAICA

June 6, 1979

Projects DepartmentLatin America and the Caribbean Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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Currency Equivalents

Currency Unit = Jamaican Dollar (J$)US$1.00 = J$ 1.76

Fiscal Year

April 1 to March 31

System of Weight and Measures: British/US

1 foot (ft) = 0.305 meter (m)-1 mile (mi) 2 = 1.609 kilometers (km) 21 square mile (mi ) = 2.589 square kilometers (km )1 pound (lb) = 0.454 kilogram (kg)1 imperial gallon = 4.54 liters

Abbreviations and Acronyms

AAJ Airport Authority of JamaicaADT Average Daily TrafficCIDA Canadian International Development AgencyDC Directorate of ConstructionDEMS Directorate of Electrical and Mechanical ServicesDM Directorate of MaintenanceDMP Directorate of Major ProjectsDTS Directorate of Technical ServicesEDC Economic Development CouncilHDM Highway Design Model1DB Inter-American Development BankITA Island Traffic AuthorityJMM Jamaica Merchant MarineJRC Jamaica Railway CorporationKSAC Kingston and St. Andrews CorporationMA Ministry of AgricultureMLG Ministry of Local GovernmentMOW Ministry of WorksMPUT Ministry of Public Utilities and TransportNAMUCAR Naviera Multinacional del CaribeNPA National Planning AgencyPAJ Port Authority of JamaicaRMCS Road Maintenance Works Costing SystemROMGRAM Road Maintenance Programing SystemTJA Trans-Jamaican AirlineTPOS T.P.O'Sullivan and Partners, Consulting EngineersTRRL Transport and Road Research LaboratoryTTD Traffic and Transport DivisionVIF Venezuela Investment FundVPD Vehicles per day

FOR OFFICIAL USE ONLY

JAMAICA

FOURTH HIGHWAY PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

Page No.

I. THE TRANSPORT SECTOR ..................... .................. 1

A. General ................................................ 1B. The Transport System ...................... 2

C. Transport Planning and Coordination . ................. 4D. Financing ............................................... 5

E. Summary Status and Prospects ...... .................. 6

II. THE HIGHWAY SUBSECTOR ....... ..................... 6

A. The Highway Network .... ..................... 6B. Characteristics and Growth of Road Traffic . ......... 7C. The Vehicle Fleet ... . ............................... 7D. The Road Transport Industry ......................... 8E. Road Traffic Safety ................................. 9

F. Highway Administration ..... ......................... 9G. Road Planning and Financing ......................... 10H. Engineering and Construction ........................ 11

I. Highway Maintenance . ....................... .... .. ..... 12J. Summary and Prospects ...... ......................... 14

III. PAST BANK ASSISTANCE IN THE HIGHWAY SUBSECTOR ............ 14

A. Previous Bank Projects ................... * .......... 14

B. Summary Assessment . .. .......... * ........... 16

IV. THE PROJECT .............................................. 16

A. Objectives and General Description ....... .......... 16B. Project Components .................................. 18C. Cost Estimates and Financing ..... ................... 21D. Execution, Procurement and Monitoring ............... 24E. Project Risks ........ ......... e.............. O........... 25

This report is based on the findings of an appraisal mission which visited

Jamaica during November/December 1978. The mission comprised Messrs. J.

Sargent (Economist), G. Mahoney and A. van Dijck (Senior Highway Engineers)and Ms. K. Sierra (Economist). The report has been edited by Miss V. R.

Foster.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

TABLE OF CONTENTS (Continued)

Page No.

V. ECONOMIC EVALUATION ...................................... 26

A. General ............................................. 26

B. Methodology ........ ................................. 26C. Road Deterioration Model ..... ....................... 27D. Traffic Volumes and Vehicle Operating Costs ......... 28E. Benefits from the Project ..... ...................... 29F. Distribution of Benefits ..... ....................... 30G. Sensitivity Analysis ................................ 31

VI. AGREEMENTS REACHED AND RECOMMENDATION ...... .............. 31

TABLES

1.1 Characteristics of Railway Traffic, 1970-1978 .............. ... 341.2 Summary of Freight and Passenger Traffic by Mode, 1970-1978 ... 351.3 Transport Infrastructure Investment by Mode, in Comparison

with Total Public Sector Investment, 1973/74-1977/78 ........ 362.1 Retail Sales of Motor Fuel, 1972-1978 .... ..................... 372.2 Highway Expenditures and Road User Contributions,

1973/74-1977/78 ............................................. 38

2.3 Ministry of Works Expenditures on Roads, 1973/74-1977/78 ...... 392.4 Directorate of Maintenance Expenditures, 1968/69-1977/78 ...... 404.1 Estimated Five-Year Road Maintenance Budget Requirements

and Financing ............................................... 414.2 Details of Asphaltic Overlay Work ............................ 424.3 Details of Sealing and Resealing Works ..... ................... 434.4 Details of Equipment Overhaul Program ........................ 444.5 List and Cost of Maintenance Equipment ..... ................... 454.6 Estimated Schedule of Disbursements .............. ... 465.1 Summary of Vehicle Operating Costs ..... ....................... 475.2 Calculation of Economic Returns on Proposed Bank Project and

Total Five-Year Maintenance Program (including ProposedProject) . .................................................... 48

ANNEXES

1. Details of the Training Program ............................. 49 A

2. Selected Documents and Data Available in the Project File ... 53

CHARTS

Chart 19891 - Ministry of Works and CommunicationsChart 19892 - Directorate of MaintenanceChart 20063 - Implementation Schedule

MAPS

IBRD 14241 - Jamaica - Previous Bank Highway Projects

IBRD 14151 - Jamaica - Fourth Highway Project

JAMAICA

FOURTH HIGHWAY PROJECT

I. THE TRANSPORT SECTOR

A. General

1.01 Jamaica, with an area of 4,410 square miles, is the third largestisland in the Caribbean. The island extends a maximum of 150 miles fromeast to west and 55 miles from north to south. A mountainous ridge about2,500 feet high runs east to west, separating the island into northern andsouthern coastal areas. Jamaica's natural resources include bauxite; apleasant tropical climate and beaches suitable for tourism, especially onthe north coast; fertile soils for agriculture; and fishing and forestreserves. In 1977, Jamaica's population was about 2.1 million, and, withabout 490 persons per square mile, it has one of the highest populationdensities in the Caribbean. The population growth rate declined in recentyears from 2.2% in 1972 to 1.2% in 1977, largely because of an upturn in netout-migration. The Kingston metropolitan area, which accounts for 30% of thecountry's population, is the country's main market for agricultural produceand imported goods. Kingston's population is 12 times greater than that ofthe next largest city and main tourist resort, Montego Bay. The rest of theisland is dotted by over 1,150 towns and villages serving the rural popula-tion, which is dispersed relatively evenly throughout the island, except ininhospitable areas such as the Blue Mountains.

1.02 Jamaica's land transport system is well developed and consistsof about 8,100 miles of roads, a 200-mile long Government-run railway system,and a few miles of private railway (Map 14241). Because of Jamaica's smallsize, average surface haulage and travel distances are short. Nevertheless,the mountainous terrain makes road and rail transport between the north andsouth difficult. The transport requirements of the principal exports, bauxiteand sugar, are adequately met by the existing transport system which ensuresthat goods can reach export points quickly. Bauxite-related exports arecarried on railroads and conveyor belts. Apart from these commodities, allinternal freight is by road transport, and practically all passenger traffictravels on the road system.

1.03 The ports of Kingston and Montego Bay handle general cargo, andKingston operates a container terminal partly for transshipment. Six portsspecialize in bauxite exports, and four are principally for the exportof agricultural produce such as sugar and bananas. Air transport is servedby two international airports as well as by several small domestic airportsand airstrips, six of which offer scheduled services. The two internationalairports are at Montego Bay, which serves the north coast and the touristtraffic, and at Kingston, which serves Jamaica's southern coast and catersmainly to business and private travel by residents and Jamaicans abroad.

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B. The Transport System

(i) Railways

1.04 The public railway system operated by the Jamaica Railway Corpora-tion (JRC) consists of the 110-mile Kingston-Montego Bay line, the 62-mileSpanish Town to Port Antonio line and about 35 miles of yard, station andsiding lines. Bauxite, which is carried on the Kingston-Montego Bay line, isthe principal commodity carried by the railways. The bauxite companies ownand operate a number of short mine and plant-to-port rail lines (totaling50 miles), but these companies also provide 99% of the Government-owned railway'sfreight traffic. JRC's bauxite-related traffic reached a peak of about5 million tons in 1974, then fell to a low of 3.1 million tons in 1976 asbauxite exports declined because of a soft world market, reduced competitive-ness due to a Government levy introduced in 1974, and labor problems. In1977, this traffic recovered somewhat, with 3.6 million tons transported.General merchandise freight traffic declined by 45% since 1971 to 20,000tons in 1977 (Table 1.1).

1.05 Passenger and general merchandise tariffs have remained unchangedsince 1953; as a result, rail passenger fares remain well below bus fares.JRC charges contracted prices for bauxite-related traffic. These priceswere recently revised to bring revenue in line with cost, and it is expectedthat those lines serving bauxite-related traffic will be profitable in thefuture.

1.06 Throughout its history, JRC has operated with a working deficit.Up to 1972, these deficits were not serious enough for the Finance Ministry toconsider the railway a major financial burden to the Government. The situationhas since deteriorated; deficits have grown dramatically since 1973 and wereestimated to reach J$ 4.8 million (including depreciation) in 1978. Lossesare incurred on the lines serving passenger and general merchandise traffic.These lines are directly competitive with roads, and cessation of theirservices would not cause road capacity problems (para 1.07).

1.07 JRC has proposed additional investment totaling J$ 34 million overthe next five years to improve services to bauxite-related traffic, to attemptto attract general freight back from roads, to purchase passenger cars, and togenerally improve passenger service. In view of the lack of competitivenessof rail transport for passenger and general freight, such investments appearunjustified, particularly given the present tight limitations on Governmentspending. The Government agreed during negotiations to study JRC's opera-tions to identify the most economically viable rail system for Jamaica,taking into consideration the implications for public finances. The projectprovides technical assistance for such a study, which would start by March 31,1980 and be completed by October 31, 1980 (para 4.12). The precise scope andterms of reference for the study would be defined no later than December 31,1979 after a joint review by the Government and the Bank of existing studies.The Government agreed during negotiations that, unless agreed with the Bank,no investment of over US$500,000 in any year in rail transport, other thanspending directly related to improving services for bauxite-related traffic,would be undertaken prior to the above study.

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(ii) Highways

1.08 The highway subsector is reviewed in Chapter II.

(iii) Ports and Shipping

1.09 Twelve ports are currently operating in Jamaica, handling 13.4million tons of cargo in 1977 (Table 1.2). Of this amount, 10 milliontons were dry bulk (including bauxite-alumina exports totaling 9.5 milliontons), 2.6 million tons were liquid bulk and 0.7 million tons were generalmerchandise. The port of Kingston, which handles 85% of the island's generalcargo traffic, is situated in the world's seventh largest natural harbor andis Jamaica's most important port. It offers a large area of navigable waterand has a channel and berth depth of 40 feet. The recently constructedcontainer/transshipment terminal, nine break bulk wharves, roll-on/roll-offfacilities and cruise ship piers have transformed the port into a modern,efficient and profitable operation. It has become a major transshipment pointfor Europe-Orient trade through the Panama Canal. While the volume of cargopassing through Kingston was reduced by import restrictions in 1976, trans-shipment, which represents more than half the total traffic, was not affected.Indeed, traffic volumes increased by almost 100% in 1977. While it initiallyseemed that this increase was due to the US longshoremen's strike, 1978traffic continued to run at high levels and exceeded that of 1977. Thecreation of a Kingston Freeport Zone, which offers exemption from duty onmaterials imported for processing and reexport, has also attracted new traffic.

1.10 The Port Authority of Jamaica (PAJ) has total control only overthe port of Kingston. While it sets port tariffs for all Jamaican ports,it cannot control investment in other private and public ports. This hasled to uncoordinated port development, and PAJ is currently seeking Govern-ment support for a takeover of all port operations and development. Despitethe lack of coordination, however, the existing capacity for bauxite-relatedexports, which form the most important part of the island's exports, isadequate. The facilities for the less important commodities (in terms oftonnage), i.e., bananas and sugar, are also adequate at this time, and nofuture capacity constraints are foreseen.

1.11 The Jamaica Merchant Marine (JMM), which was established in 1976as Jamaica's national shipping company, is 75% Government-owned. It alsooperates JMM Atlantic, a subsidiary which is 80% owned by JMM. The JMMfleet currently consists totally of charter vessels. The company's principalgoal is to build up its net worth through accumulated profits and to undertakea program of vessel acquisition which it hopes to commence in 1979 with asmall entry into the US Gulf-Jamaica grain trade. Jamaica also participatesin Naviera Multinacional del Caribe (Namucar), a shipping company set up in1975 by seven Caribbean states.

(iv) Air Transport

1.12 The rapid increase in air traffic in the early seventies exertedconsiderable pressure on the facilities available at Kingston and Montego Bay

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International Airports. A Bank project (Loan 1043-JM, US$12.5 million, 1974)is providing financing for civil works to improve the operational capacityand levels of service at the two international airports, as well as for tech-nical assistance to improve management systems and planning. Project imple-mentation was hampered by financial and managerial problems. After a numberof delays, the civil works are now substantially completed.

1.13 Since 1975, the stagnation of the Jamaican economy and a declinein tourism have resulted in decreasing traffic flows at both airports, whichhas seriously affected the Airport Authority of Jamaica's (AAJ) financialperformance. Although the airport departure tax was recently increased fromJ$ 3 to J$ 8 per passenger, AAJ's financial situation has not improvedsince its share remains at J$ 1, while the balance goes to Government generalrevenue. Landing fees have also been increased by 55% to compensate for thedevaluation of the Jamaican dollar. AAJ's aggressive management has improvedits financial position in spite of the high inflation and reduced traffic.However, AAJ will be unable to supply its full contribution to the Bankproject's financing plan. The shortfall will be made up by the Governmentwith help from the Venezuelan Investment Fund. A determined effort by thetourist association brought about a recovery in tourist flows in the firstthree quarters of 1978. Traffic at Montego Bay was up by 34% over 1977 levelsand up 4% at Kingston.

1.14 Air Jamaica, Jamaica's international airline, was created withthe participation of Air Canada in 1968 and is now wholly owned by theJamaican Government. The company's fleet of aircraft consists of fourB727-200's, seven DC-8 jet aircrafts (one leased from another airline) andthree DC9-30's. Of these, three DC-8's and one DC-9 are on lease to otheroperators. Air Jamaica operates to North America and Europe, and recentlyhas added routes to Haiti and Grand Cayman Island. The airline has about1,200 employees and a route network of 10,400 miles. With the decline ofthe economy and the drop in tourist flows, the number of revenue passengerscarried on scheduled routes declined from a peak of 697,000 in 1975 to555,000 in 1977. In that year, the airline reported a profit of J$ 1.5million. Air Jamaica has operated regular charter service since 1976 and, in1977, carried 55,000 charter passengers. Internal air traffic, which isimportant, particularly to businessmen, is mainly served by Trans-JamaicanAirlines Ltd. (TJA), which is 75% Government-owned. TJA offers scheduledservices to six domestic airports, and a number of companies offer charterservices.

C. Transport Planning and Coordination

1.15 Transport planning and administration are fragmented among severalGovernment departments and agencies, and no single body holds a clear lineof authority. The National Planning Agency (NPA), while responsible forplanning public sector investments including transport investments, has amacro-orientation in its planning approach. The Ministry of Public Utilitiesand Transport (MPUT) is responsible for overall policy formulation for aviation,ports, railways and, more recently, for roads. JRC, AAJ, PAJ and JMM allreport to this Ministry. While the Ministry of Works (MOW) has traditionallybeen responsible for formulating policies for public roads, its lack of plan-ning and coordinating capability has resulted in the Government increasinglylooking to MPUT for investment and policy advice.

1.16 The lack of planning capability within the bodies responsible fortransport policy and the inadequacy of coordination between them becamea source of concern in the early seventies, given the Government's plans atthat time for sizable investments in the transport sector. These plans werelargely based on the recommendations of a national transport survey which wasfinanced by the Canadian International Development Agency (CIDA) and preparedby the consultants Lamarre Valois International (Canada) in 1968-1970.Because the Government lacked the staff to analyze modal investment and toupdate the survey in light of changing conditions, provision was made in BankLoan 1032-JM for technical assistance to establish a permanent TransportPlanning Unit. The Government, however, gave no priority to this initiative,and Cabinet action to establish the unit within MPUT was taken only in April1979. The objective of developing adequate capacity for transport planningwould be pursued under the proposed project. The work program of the TransportPlanning Unit for the period 1980/81 was reviewed and agreed during negotia-tions. Agreement was reached during negotiations that the Government wouldprepare and commence, by November 30, 1979, a plan, satisfactory to the Bank,for adequate permanent staffing of the Unit by June 30, 1980. This plan wouldinclude provision for at least two professionals with qualifications andexperience, satisfactory to the Bank, in planning and related disciplines.

D. Financing

1.17 Between 1973/74 and 1977/78, the Government invested about J$ 215million in the transport sector. In 1977/78, capital expenditures in thesector accounted for 26% of total investment by the non-financial publicsector, i.e., the Central Government and Public Enterprises together(Table 1.3). The investment program included a number of externally financedprojects. The ongoing Bank airports project is receiving local financingfrom the Venezuela Investment Fund (VIF), and the Port Authority's invest-ment program is partly financed by CIDA/EDC. Jamaica's road system hasbenefited during the last five years from two IBRD projects (paras 3.03 and'3.04), plus a road construction project with 50% financing from theInter-American Development Bank (IDB) and a bridges program 50% financed byCIDA. These projects were prepared before Jamaica's economic downturn andreflected the needs for expansion and improvement in the transport sectorduring that period. Given the island's current economic situation, however,the existing infrastructure is generally adequate in terms of capacity.Priority should be given to investment which ensures that existing infrastruc-ture receives adequate levels of maintenance and rehabilitation to preservecurrent levels of service and efficiency. Provisions for transport investmentin a proposed three-year investment program which is currently being reviewedby the Government reflect not only this concern but also the Government'sstrategy of diverting investment into directly productive activities. Underthis investment program, Central Government expenditures on transport invest-ment will drop from 12% to 9% of total Central Government capital spending.The decrease reflects the planned completion of ongoing road projects and thefact that only two new externally financed transport projects are envisagedin the next three years, i.e., the proposed project and a continuation ofthe CIDA-financed bridges program.

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1.18 The users of roads and ports generally meet the capital andoperating costs of these services. Road users, in fact, make a contributionwhich is greater than total spending on road improvement and maintenance(para 2.16). Airports were able to meet their capital and operating costsduring the pre-1976 tourist boom. However, with tourism less buoyant andgiven a reluctance to raise landing fees fully in line with costs, AAJ incomegenerates a net current surplus but does not adequately cover depreciation.Of railway users, only those served by the bauxite lines make a contributionwhich offsets operating costs. The agreed work program for MPUT's TransportPlanning Unit includes an analysis of transport sector user charges and costsand the formulation of recommendations concerning appropriate user chargepolicy for the future.

E. Summary Status and Prospects

1.19 The basic transport infrastructure which Jamaica will requireduring the process of economic recovery over the next five to ten years isin place. Adequate and serviceable infrastructure for international connec-tions is vital for this island country, and the seaport and airport facili-ties which exist or are currently being improved are adequate for the taskahead, although from time to time the ports will need additional specializedequipment. That part of the railway network which carries bauxite trafficis in need of some upgrading, and the road network is adequate for currentlevels of traffic. The basic problem facing Jamaica will be maintaining thelevel of serviceability and efficiency of this existing infrastructure tomeet the demands of a reviving economy. More attention will be needed inassessing the physical condition of transport infrastructure and in planningand financing its maintenance and, if necessary, rehabilitation.

II. THE HIGHWAY SUBSECTOR

A. The Highway Network

2.01 Jamaica's road network is relatively extensive and totals about8,100 miles (Map IBRD 14241). The main non-urban network, which is the res-ponsibility of MOW, totals about 3,000 miles, of which two-thirds, or 2,000miles, is paved. This network is composed of almost 500 miles of heavilytrafficked main arterial roads, 500 miles of secondary main roads connectingto arterials, and 2,000 miles of tertiary local roads which accommodate traf-fic in and between districts. The remainder of the island's roads total some5,100 miles, of which 4,500 miles are maintained by Parish Councils and about600 miles are urban-type roads administered by KSAC. The road network dev-eloped from horse-drawn carriage roads and bridle paths which were graduallyadapted for the use of motor cars, and, because of the island's rugged in-terior, it developed initially along the coast. Today the main road systemcan be characterized as a coastal ring with three main roads crossing themountains and connecting the northern and southern coasts directly.

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2.02 Over the last 15 years, the arterial roads have undergone somemajor improvements. Nevertheless, it is apparent that much of the networkwas not designed or built with any specific engineering standards in mind.Extremes and inconsistencies are found everywhere, and alignments are quitevariable and often tortuous. Subgrades and drainage characteristics varyconsiderably within short distances. Perhaps because of these factors,the pavement has been repaired, patched and resealed in very short lengths,leaving an impression of uneven, fragmented surfaces. Similarly, the qualityof pavement surfaces throughout the islands is variable. However, theasphaltic concrete surfaces laid as part of the Bank Road Improvement andMaintenance Project (Loan 899-JM, US$9.3 million, 1973, para 3.03), theprecursor of this project, consist of good quality material and have verygood riding characteristics. Some of the older machine-laid surface has alsoworn remarkably well. The standards of surfacing achieved in the recentresealing program are also acceptable. The surfaces of the older sealedsections vary from poor to good, and there does not appear to be a relation-ship between quality and age. In general, the present road system is adequate,but well planned and executed routine and periodic maintenance is needed toprevent further deterioration which would lead to expensive major reconstruc-tion works.

B. Characteristics and Growth of Road Traffic

2.03 MOW conducts regular traffic counts on the island's more heavilytrafficked roads, and each MOW Parish office annually submits order-of-magnitude assessments of the traffic volumes on each road section in theParish. In addition, ad hoc studies such as the axle load survey, conductedby consultants T.P. O'Sullivan and Partners (TPOS) (UK) under Loan 899-JM,have been carried out. MOW estimates of annual vehicle miles traveled onmain arterial roads indicate that traffic increased by 6% to 9% per annumbetween 1968 and 1974, and then, because of increased fuel prices andJamaica's economic downturn, stagnated and declined after 1976. The mostreliable indicator of traffic growth available is the volume of retail salesof motor fuel. Sales figures show that retail sales of gasoline anddiesel fuel fell by about 10% between 1976 and 1978 (Table 2.1), whichconfirms MOW estimates of a drop in traffic for this period. Traffic growthover the next few years is expected to be minimal, reflecting the gradualeconomic recovery.

2.04 MOW's and TPOS' traffic counts on the main road network indicatethat the highest traffic volumes on the island are found on the Kingston-Spanish Town road (ADT 23,700) and the Spanish Town-Mandeville road (ADT9,500). Other main roads near Kingston, Spanish Town, Montego Bay and OchoRios have relatively heavy traffic, with ADT's from 3,000 to 6,000.

C. The Vehicle Fleet

2.05 The only vehicle fleet data available report the number of vehicleswhich pass inspection. Inspection is not strongly enforced, however, andthese data underestimate the fleet since a growing number of older cars stillon the road would not pass inspection. The number of vehicles which passedinspection declined by 19% from about 89,000 units in 1975/76 to 72,000 in

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1977/78. Of the latter, 67% were cars, 19% were heavy vehicles (trucks andbuses) and 13% motorcycles. The age and average annual mileage of the fleethave changed considerably since 1976 as a result of the curtailment of theimport of motor vehicles in that year and the overall decline in the island'seconomy. With continuing import restrictions, older vehicles are remainingin service for much longer than in the past. As would be expected, expendi-tures on spare parts and maintenance labor have risen substantially in aneffort to keep the older vehicles on the road.

2.06 Jamaica's urban population receives service from two Government-owned bus companies which operate in Kingston and Montego Bay. Inter-urbanand rural passenger routes are served by 200 bus companies running 485 busesand by mini-buses. Rural public passenger services are important becausepeople frequently work, and children go to school, several miles from theirhomes. Eighty percent of the island's bus companies are small, with threebuses or fewer. The small and medium sized companies are experiencing anumber of problems ranging from a lack of spare parts to high insurancecosts, low fares, and, not least of all, tough competition from mini-buses.Mini-buses, with their greater frequency and door-to-door service, are highlypatronized. An MPUT all-island traffic survey conducted in January 1978estimated that 4,200 mini-buses are currently operating, of which 3,500 arenot licensed; about 1,250 are in Kingston, 1,200 in the north coast Parishes,and 1,750 in the south coast Parishes. Mini-buses have 35% of the marketshare in the Kingston and St. Andrews Corporation (KSAC) and about 65%elsewhere. The MPUT study concluded that only a few large companies shouldoperate scheduled bus services on highly trafficked routes, and that,in addition, mini-bus service should be provided on these and all otherroutes. The Government is actively supporting the importation of mini-busesfor rural services.

D. The Road Transport Industry

2.07 The trucking industry is regulated by the Traffic and TransportDivision (TTD) of the Island Traffic Authority. The industry is dividedinto two groups: (a) trucking companies and owner-operators which competefor general business and (b) specialized trucking companies which provideinland transport and transshipment services to the roll-on/roll-off shipoperators and container companies. Rates for the first group are set bycompetition within ceilings set by TTD, while rates for those companiesserving port-related demand are set by contract.

2.08 The downturn of economic activity in Jamaica has had a negativeimpact on the trucking industry. Trucking business has decreased by about40% since 1976, and, as a result, many companies have been forced to close.Furthermore, the scarcity of spare parts and inadequate maintenance facilitiesmay lead to the serious deterioration of about 40% of the remaining vehiclefleet in the next two years. If this occurs, the fleet will not be able tosatisfy freight transport demand, and transport rates can be expected to rise.The ceiling on road transport rates, which remained stable because of increasedcompetition between 1976 and 1977 in the face of the general economic decline,recently increased by 25%; a second increase of 10% has been authorized for

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March 1979. Those specialized trucking companies and owner-operators whichserve port-related demand are, in contrast, relatively healthy, and their ratesare adequate, having kept pace with inflation.

2.09 The road transport industry is not closely regulated by the Govern-ment. Present road traffic regulations are considered inadequate in thatthey specify permissible axle loadings for public service vehicles, but onlygross loadings for all other vehicles. In addition, the Government grantspermits which authorize operators to overload, but the permit price vastlyundercharges the vehicle users in relation to the damage caused to theroads. The cost resulting from the stress imposed on the country's road

pavements from heavy vehicles has concerned both the Government and theBank, and the Government agreed, as part of Loan 899-JM, to review its roadtraffic regulations. As part of this review, TPOS, under the loan's tech-

nical assistance component, conducted a review of appropriate vehicle weights,axle loadings and road user charges and recommended setting a maximum axleloading for all vehicles and increasing license fees for overweight vehicles

to recover the cost of damage (report of October 1978). On the basis ofthese recommendations, the Government has prepared an axle-load controlprogram, including proposals for necessary changes in present regulations,the purchase and installation of weighbridges (to be procured under Loan1032-JM), details of enforcement and a schedule for program implementation.Agreement was reached on this program during negotiations, and the Governmentwould initiate necessary legislative action to bring about the agreed changes

in present regulations by December 31, 1979.

E. Road Traffic Safety

2.10 The Island Traffic Authority (ITA), which is responsible to MOW,keeps records of traffic accidents and produces monthly accident statistics.ITA purportedly uses these data to pinpoint areas where accidents frequentlyoccur and, on that basis, posts traffic signs or lays dividing lines asneeded. Despite ITA's efforts, however, traffic signs in Jamaica are generallyinadequate, especially in the mountain areas where roads are very curved andnarrow. Indeed, road accidents on the island are more prevalent on roads with

restricted visibility and poor geometry. MOW, when carrying out the roadimprovement and maintenance works under Loan 899-JM, identified those parts ofthe road network which were accident-prone and, where possible, reduced the

dangers caused by poor geometry and visibility through preparatory works priorto the scheduled overlay or reseal and through the use of skid-resistantsurfacing materials. These same efforts will be made under the proposedproject.

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F. Highway Administration

2.11 MOW, MLG and the Ministry of Agriculture share responsibility formaintaining and improving the island's road network. MOW is responsible forthe construction and maintenance of arterial and secondary roads. MLG isresponsible for roads maintained by Parish Councils, while both MA and MOWconstruct, and MA maintains, agricultural feeder roads. Planning for thegreater Kingston area is performed by KSAC, which reports to MPUT.

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2.12 MOW is organized into eight directorates, of which five are technicaland three are responsible for administrative, financial and personnel matters(Chart 19891). The Directorate of Maintenance (DM) is responsible for ensuringthat the planning, execution, and administration of road, bridge, buildingsand drainage channel maintenance are carried out. The Directorate of Construc-tion (DC) executes and administers capital projects financed by MOW's budgetwhile the Directorate of Major Projects (DMP) administers externally financedprojects. The Directorate of Electrical and Mechanical Services (DEMS) isresponsible for purchasing, maintaining and repairing all Ministry vehicles.The Directorate of Technical Services (DTS) is responsible for the survey,design, estimates, specifications, progurement of contract work financed frombudgetary sources, land acquisition, traffic surveys and laboratory investiga-tions and research.

2.13 MOW's lack of technical staff has been and continues to be a seriousproblem which limits the Ministry's capability to execute ordinary works ingeneral and Bank-financed projects in particular. The staffing situation isprecarious since over 53 technical officers have been lost in the past twoyears, mainly through emigration or to higher paying parastatal and privateorganizations. While only a skeleton engineering staff remains in DM, thedirectorate is well staffed with overseers and supervisors, many of whombenefited from the training provided under Loan 899-JM. MOW and the FinanceMinistry acknowledge that the retention of suitable local staff may be depen-dent on the payment of special allowances (in Jamaica, a "project" and a"iscarcity" allowance have existed in the past). MOW is pursuing the intro-duction of this type for its engineering and its technical staff. TheGovernment has recently decided that professionals attached to internationallyfinanced projects will be paid at special rates which are adequate to retainqualified staff.

G. Road Planning and Financing

2.14 The planning responsibility at MOW is held by the Chief TechnicalDirector, assisted by DMP. Lacking a planning unit, the Ministry reliesupon foreign consultants to prepare major highway investment programs. TheFive-Year Road Maintenance Program which includes the proposed project was,for example, prepared with the aid of consultants under the technical assist-ance provision of Loan 899-JM. MOW, in turn, reviews the consultants' recom-mendations but does not have the staff to analyze the proposed investment'simpact on the network and on the transport sector. Under Loan 1032-JM, MPUTis establishing the Transport Planning Unit (paras 1.15 and 1.16). TheGovernment has decided not to invest in any new infrastructure over the nexttwo years and will limit capital spending to projects, such as the proposedproject, which preserve existing infrastructure through periodic maintenance.

2.15 Road expenditures are financed from annual budget allocationsprovided by the Central Government to those ministries responsible for roads,and from loans from international agencies. Table 2.2 provides a summary offunds provided for roads between 1973/74 and 1977/78. Total expenditures onroads increased in real terms by 78% between 1973/74 and 1976/77, and thendeclined by 36% the following year, reflecting a decrease in annual allocations

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due to tight Government spending strictures. Road investment expenditures by

MOW accounted for about 75% of all capital expenditures on roads during the

past five years. Of this amount, about 30% was spent on periodic maintenanceand minor improvements of roads (Table 2.3). While these expenditures have

reduced the backlog of periodic maintenance somewhat, increased expenditures

are needed in the coming years in order to restore the road network to

acceptable levels of serviceability and to prevent further deterioration.

MOW routine maintenance expenditures have declined, in real terms, by about

25% in the last five years (Table 2.3). As a result, routine maintenance has

been insufficient, especially for activities requiring equipment and materials.

Funds required to complete routine maintenance adequately have been identifiedin the Five-Year Road Maintenance Program and are presented in Table 4.1.

2.16 Revenues from road user charges, although not earmarked for highway

expenditures, are sufficient to cover all road expenditures, including new

construction (Table 2.2). In 1976/77, for example, total spending on roads

was J$ 60.4 million, of which 72% was for capital investment. Revenue from

road user charges totaled J$ 70.5 million in that year. Taxes on gasoline,

including a 10% consumption tax introduced in 1974, are the most important

revenue source (Table 2.4). The price of gasoline is now about US$2.00

equivalent per imperial gallon, of which 65% is tax, and US$0.55 per imperialgallon for diesel fuel, which is not taxed. The implications of not taxing

diesel fuel would be reviewed by MPUT's Transport Planning Unit. Other

revenue sources are import and license duty on motor vehicles, importduty on tubes and tires and driver's license duty.

H. Engineering and Construction

2.17 DTS is responsible for all aspects of engineering (surveys, site

and laboratory investigation and design) of capital projects financed wholly

from the budget. The standards and quality of this work are adequate. DMP

is responsible for similar services on projects financed externally and

utilizes consultants.

2.18 Construction is carried out both by force account and by contract.

DC often carries out earthworks and pavement base construction by forceaccount but bridges, major drainage structures and paving are executed by

contract after local competitive bidding and, in some cases, negotiations.

Externally financed construction projects are executed by contract after

international competitive bidding. Recent road resurfacing has been mostly

contracted through local competitive bidding because of the small contractsizes and scattered locations.

2.19 At present, the construction industry in Jamaica is in a very

depressed state, although there are sufficient qualified small paving contrac-

tors to execute the proposed project. During the economic recession over the

past few years, rapidly increasing material prices and labor costs, seriouslabor unrest, emigration of skilled workers and bans on import of equipment

and spares have forced many local contractors to close down temporarily or to

abandon the industry completely. The same factors make work in Jamaica at thepresent time extremely unattractive and risky for foreign contractors. Under

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Loan 1032-JM, the Third Highway Project, a UNDP-financed study of the domesticconstruction industry was carried out during 1978 with a view toward deter-mining ways and means of assisting industry development. The conclusion ofthe study is that direct assistance to the industry is not practical at pres-ent and that a period of economic growth and increased capital expendituresis necessary before a practical assistance plan can be prepared.

I. Highway Maintenance

2.20 DM is headquartered in Kingston and operates through its sevenarea offices which are divided into 14 Parish offices (Chart 19892). TheParish offices are further subdivided into 43 Divisions, 10 of which are con-cerned only with building maintenance in the KSAC Area. Supervision andcontrol of the area field organizations are shared by two Chief Superin-tendents at headquarters who report to the Director. In addition, the postof Chief Engineer (Maintenance) was created in 1973; his staff includes threeCounty Engineers who initially served as counterpart staff to the consultantssupervising the civil works and periodic maintenance carried out under Loan899-JM. Gradually, these engineers have taken the role of technical advisorsto the various Areas through the Chief Superintendents, but it has beenagreed that they will revert to their initial role of counterpart staff tosupervise the preparatory and periodic maintenance work proposed under thisproject. In contrast to almost all other units in MOW, DM is fairly wellstaffed, particularly in the field units, with generally competent personnel.Present strength is 23 officers at headquarters and a field staff of over1,400.

2.21 Considering the financial constraints (para 2.15) and the lowequipment availability (para 2.24), the overall quality of road maintenancework is good. However, there has been a tendency to utilize available fundsfor activities with a high labor content such as vegetation control and ditchcleaning, with the result that pavement patching, drainage improvementsand other works requiring equipment and materials have received insufficientattention. It is expected that the scope and balance of road maintenanceactivities will be greatly improved under the proposed project by provision ofadequate routine maintenance funds (para 4.05), proper work planning and costaccounting (paras 2.22 and 2.23) and increased availability of equipment(para 4.09).

2.22 In 1975, a system called Road Maintenance Programing (ROMGRAM)was introduced at the Parish level for the planning and scheduling of roadmaintenance work. Under this system, the type and timing of maintenancework on all roads by control sections (more or less homogeneous sections)were defined for the coming year and served as a basis for preparing thebudget request and determining the needs for equipment, materials and labor.However, since the system was fully implemented in 1976, such substantialcuts have been made in the annual budget requests that much of the forwardplanning effort has been dropped and the system is presently used only torecord the various types of maintenance work actually done. ROMGRAM is asimple and very useful system and, during negotiations, agreement was reachedwith the Government that it will be used as intended for road maintenanceplanning and budget preparation.

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2.23 A Road Maintenance Works Costing System (RMCS) was introducedtogether with ROMGRAM to provide all levels of DM with reports on expendi-tures, by maintenance activity, of each control section and breakdowns ofexpenditures by labor, materials, equipment and overhead. So far, however,reports only on total costs by work types have been produced, at somewhatirregular intervals, which provide little if any data for assessing pastperformance or to serve as a basis for forward maintenance planning.During negotiations, agreement was reached with the Government that thepresent use of RMCS will be reviewed and a reporting system introduced toprovide essential control and planning data at the various levels in DM.

2.24 Road maintenance equipment is provided from the MOW equipmentfleet administered and controlled by DEMS. At present, the fleet totalsabout 1,000 units (two-thirds vehicles and one-third equipment), of whichabout 430 units are assigned to DM for road maintenance and distributedthroughout the 13 Parishes. The size and type of the road maintenance fleetwould be generally adequate if an average 70% availability were maintained,but the current average is only about 43% because of the age of the fleet,serious shortages of spare parts and low productivity of the equipment main-tenance organization. In addition, utilization of available fleet is onlyabout 45%, mainly because of priority use of maintenance funds on mostlylabor-intensive work (para 2.21). The TPOS report presented a five-yearprogram for road maintenance equipment replacement, of which the first twoyears (1979/80-1980/81) will be financed under the proposed project, and,during negotiations, an assurance was obtained from the Government that itwill continue the program for the following three years (1981/82-1983/84) whenthe Hire Funding scheme (para 2.26) is expected to be fully operational.

2.25 As a result of serious economic problems during the past few years,there has been a substantial depletion of spare parts stocks, and it is esti-mated that less than 20% of needed parts are now on hand. To initiate andsupport a road maintenance equipment overhaul program, the proposed projectwould finance spare parts and major components needed to repair salvageableequipment over the first two years of a five-year program as well as theforeign exchange costs of essential workshop tools and some minor workshopadditions and improvements. The project would also aid in designing andimplementing a proposed parts stocking system, and assurance was obtainedfrom the Government during negotiations that it will maintain an adequatestock of spare parts in subsequent years.

2.26 In early 1976, a Hire Funding scheme was introduced in MOW as ameans of developing the funds needed for equipment replacement and spare partsby charging rental rates related to fuel consumption to users of the fleet.After some initial problems, billings are now being issued fairly promptly,but proper accounts were not set up for costing and allocation of income and,most importantly, funds generated were not used by MOW as intended and mostwere diverted to the Government's general revenue accounts. Thus, the systemhas not fully achieved its goal of providing funds for spare parts andreplacement units. The proposed project would aid DEMS in setting up theproper accounts, and, during negotiations, an assurance was obtained from theGovernment that, by March 31, 1980, a special fund will be established

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within which all proceeds generated by the Hire Funding scheme will beretained, and that equivalent foreign exchange will be made available asneeded for the purchase of spare parts and replacement equipment.

2.27 Under Loan 899-JM, Road Improvement and Maintenance Project,several training programs related to road maintenance were developed andconducted by TPOS together with MOW counterpart staff. The courses coveredmost aspects of road maintenance activities in the field, with specialemphasis on supervision and quality control of the periodic maintenance workto be carried out under the loan. Seminars on operating the Hire Fundingscheme and on equipment operation and maintenance were also carried out inDEMS. On-the-job training also played an important role in improving skillsof DM staff. Following substantial completion of the project, a number ofthe shorter courses were consolidated, and some general engineering subjectsadded to produce a 10-week course which has been conducted at about four-month intervals, mainly for work overseers from the field organization of DM.About 110 work overseers out of a total of 215 participated in these longercourses. In addition, 21 DM staff took part. While these training activitieshave been extremely beneficial, it is recognized in MOW that some additionaltraining, mainly in the more basic aspects of routine road maintenance and inequipment maintenance and repair, is badly needed. The proposed project willaid DM and DEMS in establishing these needed training programs (para 4.12).

J. Summary and Prospects

2.28 Jamaica's road network is basically complete. Major improvementsto the network, beyond those already included in the Third Highway Project(para. 3.04), would not be justified in the current economic situation orduring the next five years of expected gradual economic recovery. The basicneed over the coming years, as reflected in the design of the proposedproject, is for preservation of the existing road network. Some parts of thenetwork have, because of past lack of adequate maintenance, reached a criticalpoint. During loan negotiations, the Bank (para. 4.05) obtained formalagreement from the Government that the Five-Year Road Maintenance andImprovement Program (para. 4.03), directed at preservation of the country'sroad capital, will be the cornerstone of its policy for the subsector.

III. PAST BANK ASSISTANCE IN THE HIGHWAY SUBSECTOR

A. Previous Bank Projects

3.01 The Bank's previous involvement in the highway subsector consistsof three projects (Map IBRD 14241). The First Highway Project (Loan 408-JM,US$5.5 million, 1965) was made for detailed engineering and construction ofmain arterial roads. The Second Highway Project (Loan 899-JM, US$9.3million, May 1973) was for road maintenance and is the precursor of theproposed project. The Third Highway Project (Loan 1032-JM, US$13.5 million,June 1974) was for construction of about 20 miles of arterial roads.

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3.02 The Bank's First Highway Project was for detailed engineering andconstruction, including supervision, of (a) the Kingston-Spanish Town road (15miles of four-lane road); and (b) the Moneague Crescent Park Road (four milesof two-lane road). Initially, that project also included construction of theSpanish Town-Bog Walk road (eight miles of four-lane road) but this, with theBank's approval, was subsequently deleted as a result of increased costs.Execution of the project was delayed because of difficulties in right-of-wayacquisition, unsatisfactory performance of subcontractors, problems in relo-cation of public utilities and inter-union labor disputes, resulting in thecontractor, claiming frustration of contract, abandoning work after 90% com-pletion. The contractor's claims were settled through arbitration, and thework was satisfactorily completed by force account. The loan was closed in1973, and a Project Performance Audit Report was issued in August 1975.

3.03 The Second Highway Project comprised (a) resurfacing of 440 miles ofroad with asphaltic overlay and resealing of 250 miles of roads with a doublesurface treatment; (b) procurement of maintenance equipment; and (c) technicalassistance by consultants to supervise the overlay and resealing, assist inthe procurement of maintenance equipment, introduce costing and better plan-ning of maintenance operations, and provide training to DM staff (para 2.27).The bituminous overlay works proved far more costly than estimated at appraisal,and only 210 out of the planned 440 miles were completed. Of the 250 milesscheduled for reseal, 240 miles were completed. MOW's capacity as a roadmaintenance organization was improved, a Maintenance Manual was prepared, andbudgeting and costing procedures were introduced. Some US$2.6 million worthof maintenance equipment was purchased, and an equipment Hire Funding scheme(para 2.26) was introduced under the Loan. However, because of an inadequateaccounting system and lack of Government support, the scheme has not evolved,as anticipated, into a self-financing fund for purchase of equipment and spareparts. The lack of spare parts and consequent unavailability of equipment hasemerged as one of the important problems addressed in the proposed new project.Despite the fact that only about half of the overlay works were completed, theproject has been successful in improving maintenance standards by eliminatingpart of the backlog of periodic maintenance work. The project was substantiallycompleted in February 1979. The project completion report for this project isscheduled to be issued in June 1979.

3.04 The Third Highway Project comprises (a) construction of about 20miles of two-lane new arterial road; (b) construction of five secondary accessroads totaling about 3.2 miles; (c) procurement and installation of four weigh-bridges; and (d) consulting services for supervision of works under (a) and (b)and for assistance in transport planning. The project also includes technicalassistance to aid the local contracting industry financed by UNDP and technicalassistance for pavement design and performance evaluation financed by theBritish Government. The project has encountered substantial time delays and,mainly because of them, some cost increases. These problems stemmed mostlyfrom unresponsive bids on one road section and a contractor failure onanother, mostly due to unexpected major inflation and serious labor problems.As a result, MOW attempted to carry out substantial major construction byforce account, which, until recent strengthening of equipment and staffinginputs, proved beyond its capabilities to manage and execute in a timely

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manner. There has been considerable recent improvement in the rate ofprogress, and it is now expected that construction will be completed in late1980, some three years later than scheduled at appraisal. MOW is presentlytaking steps to procure and install the weighbridges and will operate them inaccordance with the agreed axle load control program (para 2.09). Thetechnical assistance to the Transport Planning unit is expected to be com-pleted in 1980 (para 1.16).

B. Summary Assessment

3.05 Although it fell short of its initial objectives, the Second HighwayProject made a substantial contribution toward improving the quality of main-tenance works in MOW and toward the preservation of the road network. Theseadvances have proved to be particularly important in light of Jamaica's presentperiod of economic difficulty. The Third Highway Project was directed at re-lieving congestion on the most heavily trafficked sections of the network.This project was conceived before the country's economic downturn, and, althoughthe works are still justified, the project is somewhat out of step with thepresent need to concentrate scarce resources on maintenance and rehabilitation.As a response to the change in the country's economic situation since theproject's inception, the design standards have been reduced wherever possible.In addition, the earthworks and pavement base works are being completed byforce account, providing useful employment for MOW workers. The proposedFourth Highway Project would support the initiation of a Five-Year RoadMaintenance Program 1980-1984 which would provide a framework for the pre-servation of the road network and consolidate the advances made under theprevious project, particularly in maintenance planning and fleet management.

IV. THE PROJECT

A. Objectives and General Description

4.01 The objectives of the project are to continue the improvements inroad maintenance operations and management started under Loan 899-JM byfinancing a portion of a national Five-Year Road Maintenance Program. Theproject would further reduce the backlog of periodic road maintenance,initiate a maintenance equipment overhaul and replacement program andgenerally improve the standards of road and equipment maintenance management.

4.02 Under Loan 899-JM, the technical assistance consultant, TPOS,prepared a Five-Year Road Maintenance Program in 1973. Later, the Govern-ment and the Bank agreed that the program should be updated and an economicjustification prepared to serve as a basis for possible Bank and otherfinancing agency participation. The further study was carried out by TPOSwith financing by funds remaining in Loan 899-JM, and the draft final reportwas issued in October 1978. The Government has adopted the recommended RoadMaintenance Program for the fiscal five-year period April 1979 to March 1984,a part of which comprises the proposed project.

4.03 The proposed project would essentially cover the non-recurrentexpenditures over the first two years of the Five-Year Road MaintenanceProgram. The program and the portions proposed for the project are asfollows:

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(a) Routine maintenance of the almost 3,000 miles of road forwhich MOW has responsibility. The proposed project wouldnot participate directly in this work but the equipmentacquisition and overhaul (items (g) and (h) below) and thetechnical assistance (item (i) below) would provide essentialsupport to this activity.

(b) Asphaltic concrete overlay of existing pavement on about107 miles of primary and main secondary roads. The proposedproject would finance 76 miles of this work representing roadsections having the highest economic priority for implementationin the first two years of the program.

(c) Asphaltic resealing with double surface treatment of some544 miles of arterial, secondary and tertiary road. About253 miles of this work, selected on the same basis as for theoverlay work, would be carried out under the proposed project.

(d) Asphaltic sealing of 60 miles of gravel tertiary road, of whichabout six miles would be included in the proposed project.

(e) Preparatory work such as drainage improvements and surfacepatching for (b), (c) and (d). The proposed project wouldassist in financing such works on the road sections to beoverlayed and sealed under the project.

(f) Minor improvement works on some 37 miles of various classesof roads. As in the case of routine maintenance, the proposedproject would not participate directly in this work but wouldsupport it via the equipment acquisition and overhaul compo-nents of the project (items (g) and (h) below).

(g) The procurement over the five-year period of about 535 unitsof replacement road maintenance equipment. Of this, some210 units representing the first two years' needs would beacquired under the proposed project.

(h) The procurement of spare parts needed for a program of over-hauling salvageable units of the present road maintenanceequipment fleet together with workshop tools and minor work-shop improvements. The proposed project would finance theseelements.

(i) About 150 man-months of technical assistance by consultants(a) for the implementation of MOW's Five-Year Programand the training of MOW field maintenance and mechanicalstaff; and (b) to study the viability of the railway system.

4.04 Summary costs for the Five-Year Road Maintenance Program and for theproposed project are shown in the following table:

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(US$ Million) 1/

The Project 79/80 80/81 81/82 82/83 83/84 Total

-- Bank 4.8 6.1 3.0 0.6 0 14.5-- Government 2.4 3.0 1.5 0.4 0 7.3

Subtotal 7.2 9.1 4.5 1.0 0 21.8

Recurrent MaintenanceExpenditures by theGovernment 2/ 4.4 4.5 4.5 4.5 4.5 22.4

Remaining CapitalExpenditures by theGovernment andOther Sources 3.0 2.3 3.3 6.6 7.6 22.8

Total 14.6 15.9 12.3 12.1 12.1 67.0

1/ At June 1979 prices and including physical contingencies.2/ Excluding administration and overhead costs.

4.05 The Government has agreed to make the required budget provisionsto support the Program over the five-year period. During negotiations, thefollowing specific assurances regarding financing were obtained:

(a) that required counterpart funding for the proposed project(para 4.18) would be provided via annual budget allocations;

(b) that all funds would be provided for the recurrent expendituresrequired under the agreed Five-Year Road Maintenance Programas detailed in Table 4.1; and

(c) that, for the remaining capital cost elements of the Program,the Government would provide the local currency requirementsvia the annual budget and actively seek financing for anyforeign exchange costs which cannot be met from Governmentresources. It was also agreed that the Government would givepriority to the remaining capital cost elements of the Programover other highway capital expenditures with due exception forexpenditures related to emergency, safety and bauxite production.

In addition, agreement was reached with the Government that the Ministryof Finance and Planning and MOW would consult with the Bank on the amountsrequired for recurrent maintenance expenditures and for the remaining capitalcomponents of the Program (items (b) and (c) above), in the preparation ofMOW's annual budget proposals.

B. Project Components

(i) Asphaltic Overlay and Surface Treatment

4.06 The project provides for an asphaltic concrete overlay, averagingabout 2 inches in thickness, of about 76 miles of the most heavily traffickedarterial and main secondary roads. Some 11 different road sections would be

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involved (Table 4.2), most of which are located in the western part of theisland (Map IBRD 14151); the road sections were confirmed during negotiations.The overlays would substantially improve the riding qualities of the existingpavement (para 5.03) but, most importantly, would provide the added strengthrequired for the road structure to accommodate expected traffic withoutfurther serious deterioration.

4.07 About 253 miles of arterial, secondary and tertiary roads wouldreceive a double asphaltic surface treatment under the project, and aboutfour miles of gravel tertiary road would receive an initial asphaltic sealcoat. This work would be fairly well distributed throughout the island(Map IBRD 14151) with 36 different road sections involved (Table 4.3). Theseproject elements were reviewed and confirmed during negotiations. Althoughthese road sections show no obvious signs of structural distress or failure,surface deterioration due to age and traffic wear has reached the point whereroutine maintenance is no longer effective.

4.08 The project also includes limited works needed to prepare the roadsections for the project overlay and sealing. Included would be some minorgeometrical works to improve sight distances and traffic safety, improvementand some additions to essential drainage facilities and pavement patchingneeded to accommodate the new surfacing. Since delays in these preparatoryworks resulted in further delays and subsequent cost increases in the overlayand resealing work under Loan 899-JM, it was agreed that the MOW would beginthese works in April 1979 (works commenced April 17, 1979), so that contractorscould start initial surfacing work immediately after loan signing, estimatedto be July 1979. The estimated cost of these works up to July 1979 is aboutUS$1 million, with a foreign exchange component of about US$440,000, which isrecommended for retroactive financing.

(ii) Overhaul of Road Maintenance Equipment

4.09 The low (43%) availability of MOW's road maintenance equipment fleethas been described previously (para 2.24). Salvageable units of presentlydeadlined equipment were identified by TPOS which, together with DEMS, hasprepared an overhaul program which is expected to increase average availabilityto 70% after two years. Table 4.4 presents details of the program, which wasconfirmed during negotiations. The proposed project would finance procure-ment of the spare parts and replacement components necessary for this programand, in addition, would provide the necessary spare parts to establish basicstocks for future equipment maintenance which is expected to be funded ade-quately by revenues from the Hire Funding scheme (para 2.26).

4.10 A relatively small, but important, element of the project wouldbe the provision of workshop tools and minor additions and improvements toselected workshops to support the equipment overhaul program and facilitateproper routine maintenance of equipment in use. The list of tools to be pro-cured and the improvements to be made to the workshops were reviewed andagreed during negotiations.

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(iii) Road Maintenance Equipment

4.11 An essential component of the proposed project would be to replace,over a two-year period, about 210 units of MOW's road maintenance equipmentfleet which are obsolete or beyond repair. Table 4.5 presents a list ofequipment to be procured and estimated costs, which were reviewed and agreedduring negotiations. The project will initiate a continuous equipment replace-ment program by financing the first two years' needs, after which it isexpected that funds for annual replacement needs will be generated from theHire Funding scheme (para 2.26).

(iv) Technical Assistance and Training

4.12 The needs for technical assistance to DM and DEMS within MOW forimplementation of the agreed Five-Year Road Maintenance Program havebeen noted previously (paras 2.22-2.27). Specifically, the project wouldprovide techical assistance by consultants for the following:

(a) Preparing bidding documents for the periodic road main-tenance work, evaluation of bids and supervision ofconstruction;

(b) Supervising preparatory works required for (a);

(c) Reestablishing ROMGRAM as a means of annual road main-tenance planning and budgeting and RMCS as a means ofproviding necessary control and planning cost data;

(d) Setting up proper accounting procedures for the Hire Fund-ing scheme and a review of equipment rental rates;

(e) Designing and implementing a spare parts stocking systemand procurement of spare parts and workshop tools to supportthe road maintenance overhaul program;

(f) Preparing specifications and bidding documents for procure-ment of replacement equipment units;

(g) Designing local courses and training appropriate staff in DM andDEMS; and

(h) Assisting MPUT in a study of the viability of the railwaysystem.

4.13 In order that the surfacing and resealing work and the procurementof replacement equipment and parts for the overhaul program can proceed withminimum delay after the proposed loan is signed, some of the technical assis-tance under (a), (b), (d), (e) and (f) in paragraph 4.12 is being carriedout via an extension of TPOS' services under Loan 899-JM. The terms ofreference for this extension, involving 24 man-months, were approved by theBank; the extended services began on January 1, 1979 and will continue toNovember 1979. The consultants will provide two civil engineers, a mechanicalengineer and an accountant.

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4.14 The Bank has agreed that the services of TPOS for the remainderof the technical assistance requirements (except for the railway study) willbe continued under the proposed project by means of a new contract. About140 man-months will be involved, extending the services of the three engineersand accountant presently at work and adding two more civil engineers, a storesmanager and a systems analyst. The terms of reference for the extendedservices and the staffing plan for both expatriate and local staff were agreedduring negotiations. An additional 10 man-months of consultant technicalassistance has been included for the railway study (item (h), para 4.12).Proposals for this consultant service would be solicited by NPUT's TransportPlanning Unit. The 1980/81 work program of the Transport Planning Unitwas agreed during negotiations.

4.15 Many of the consultants' activities under the technical assistanceprogram will provide valuable "on-the-job" training, but a very importantelement of their services will be to assist MOW, particularly DM and DEMS,to implement some essential training in the areas of basic road maintenanceactivities and in equipment maintenance and repair. A comprehensive programfor such training, prepared by MOW with assistance from the consultants,was agreed during negotiations (Annex 1). During negotiations, an assurance wasobtained from the Government that the programs established under the projectwill be permanent and will be continued after the consultants have completedtheir assignment. The project would also provide selected opportunities fortraining abroad for qualified technical staff.

(v) Budgetary Requirements

4.16 If the amounts allocated to road maintenance in the annual MOW budgetrequests over the past four years had actually been approved and spent on main-tenance, the road system would be in generally good condition, with only anominal backlog of deferred periodic maintenance work. However, mainly becauseof the economic recession in recent years, the funds made available were con-siderably less than needed (the TPOS report estimates that only 60% of the fundsneeded in 1978/79 were released). In addition, there were some distortions inthe use of available funds (para 2.21) with the overall result that many routinemaintenance requirements were not fully met and the backlog of periodic main-tenance has been increasing. During negotiations, the Government confirmedthat MOW will adequately maintain the highway network for which it is respon-sible and that the funds needed for this purpose and for counterpart fundingof the agreed Five-Year Road Maintenance Program will be made available viatimely releases from the annual budget (para 4.05). These budget requirementsare in line with MOW's absorptive capacity.

C. Cost Estimates and Financing

4.17 Prevailing high rates of inflation, combined with a policy ofperiodic devaluation of the J$ and uncertainties in predicting local inflation,make it preferable to present cost estimates only in US$ equivalents. Theproposed project is estimated to cost about US$26 million equivalent based onJune 1979 prices and including contingency allowances as shown in the table onthe following page. The local tax content of this cost is estimated at about7.5%, consisting mainly of taxes on materials and equipment purchased for civilwork contracts. The total Five-Year Road Maintenance Program is estimatedto cost about US$67 million, as summarized in the table on page 18.

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PROJECT COST ESTIMATES

(Millions US$)

Bank

Items Local Foreign (%) Total ParticipationAmount (%)

A. Periodic RoadMaintenance

1) Pavement Overlay 1.65 3.05 (65) 4.70 2.632) Pavement Sealing and

Resealing 1.36 2.51 (65) 3.87 2.173) Preparatory Works

for 1) and 2) 2.95 1.96 (40) 4.91 2.75

Sub-Total 5.96 7.52 (56) 13.48 7.55 (56)

B. Road MaintenanceEquipment Overhaul

1) Parts, Components andWorkshop Tools 0.10 1.94 (95) 2.04 1.94 (95)

2) Workshop Improvements 0.15 0.15 (50) 0,30 0.t} (56)

Sub-Total 0.25 2.09 (89) 2.34 2.11

C. Road MaintenanceEquipment 0.14 2.76 (95) 2.90 2.76 (95)

D. Technical Assistance and Training 0.22 0.96 (80) 1.18 0.96 (80)

Base Costsl/ 6.57 13.33 (67) 19.90 13.38

E. Contingencies

1) Physical -/ 0.79 1.19 1.98 1.192) Price 2/ 2.41 1.48 3.89 1.45

Total Project Cost 9.77 16.00 (62) 25.77 16.00 (62)

1/ At June 1979 prices.2/ Physical - 10% of Al), A2), B and 15% of A3) and D.

Price Contingencies - The projected rates of price increase of local costs shownbelow are related to prices expressed in US$ and reflect the forecast that stageddevaluations in 1979 and 1980 will not fully compensate for local inflation.

Civil Works Equipment ConsultantsLocal Foreign

1979 - 20% (1/2 year) 7% (1/2 year) 6% 7% (1/2 year)1980 - 10% 7% 6% 7%1981 - 7% 7% 6% 7%1982 - 7% 7% 6% 7%

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4.18 The proposed loan would finance the foreign exchange costs of theproject estimated at US$16.0 million, equivalent to 62% of the total projectcost and about 24% of the total cost of the Five-Year Road Maintenance Program.The Government would finance the local component of project costs (includingtaxes and transfers) and the recurrent and other capital costs required tocarry out the agreed Five-Year Road Maintenance Program (para 4.05).

4.19 Cost estimates for the asphaltic overlays, sealing and resealingare based on TPOS estimates, which were prepared using quantity estimatesfrom detailed road condition inventories and current contract rates in Jamaicafor this type of work. Estimates for preparatory work are also based on TPOSroad condition inventories and on recent costs of similar work by MOW forceaccount. Estimates of parts and components for the equipment overhaul programare based on condition inventories of the present road maintenance equipmentfleet, and the costs of replacement equipment and workshop tools are based onlists prepared by TPOS and DEMS together with manufacturers' quotations andrecent purchases in the region. The estimate for workshop improvements isbased on preliminary plans prepared in DEMS. Technical assistance costs areestimated on the basis of an average rate of about US$7,300 equivalent perman-month (including transportation), which is in line with current costs ofthese services. Overseas training for 15 mechanics and equipment operatorswould cost about US$75,000.

4.20 The foreign exchange components of the surfacing, sealing andresealing, and preparatory works have been estimated from unit price analysesand from costs under Loan 899-JM at 65%, 65% and 40% of total costs respec-tively, with execution by local contractors except for the preparatory work,which would be done by force account. For spare parts, workshop tools andreplacement equipment, the foreign exchange component has been estimated at95% of total costs on the basis of c.i.f. prices at the port of entry and onthe assumption that all items would be obtained from foreign sources. Theforeign exchange component for workshop improvements is estimated at 50% sincethis work would be carried out by local contractors or by force account andwould utilize local materials to the maximum extent possible. The technicalassistance, apart from the railway viability study, would be provided by TPOS,and the foreign exchange component for these services is estimated at 80% onthe basis of foreign and local costs as specified in their present agreement.All estimates of local and foreign exchange costs were reviewed and verifiedduring negotiations.

4.21 Disbursements of the loan would be made as follows:

(a) 56% of expenditures for overlay, sealing, resealing,preparatory works, and workshop improvements;

(b) 100% of foreign expenditures for direct imports of spareparts, replacement equipment and workshop tools; and

(c) 100% of foreign expenditure for technical assistance byconsultants and for training.

- 24 -

Disbursement would be made against standard documentation for all itemsexcept preparatory works. In the latter case, disbursement would be againstcertificates of force account expenditures verified by the technical assistanceconsultants. The estimated schedule of disbursements is shown in Table 4.6.Disbursement upon the technical assistance for the railway viability study wouldbe conditional on Government submission of the plan for permanent staffing ofthe Transport Planning Unit (para 1.16).

4.22 Retroactive financing would be provided for expenditures made up toa total of US$440,000 equivalent for preparatory works (para 4.08) carried outafter April 17, 1979 to permit surfacing work to begin as soon as the loan issigned.

D. Execution, Procurement and Monitoring

4.23 MOW would be responsible for project execution, with DM and DEMSplaying key roles. To ensure proper management and control of the project,MOW confirmed during negotiations the full-time assignment by December 3, 1979of at least four civil engineers (two are already assigned), one mechanicalengineer and two accountants, acceptable to the Bank, who will serve as thekey counterparts to the techical assistance consultants' staff (para 4.14).The assignment of three of the civil engineers, the mechanical engineer, andone of the accountants would be a condition of loan effectiveness.

4.24 The implementation period for the project would be about three anda half years (mid 1979 through 1982). Chart 20063 presents an implementationschedule for all project elements, which was reviewed and agreed during nego-tiations. The preparatory and surfacing work would extend over slightlymore than a three-year period from early 1979 through about mid-1982; procure-ment of equipment, spare parts and workshop tools would require about twoyears from late 1979 to final delivery in late 1981, and the technical assist-ance would cover a three-year period from fall of 1979 to fall of 1982.

4.25 In order that MOW, assisted by the technical assistance consultants,can provide adequate supervision and control, and to afford maximum opportunityfor bidding by qualified local contractors, the asphaltic overlay and resealingwork would be awarded in eight packages, each consisting of several relativelysmall contracts (all less than about US$0.6 million) over a period of about 18months. Because of this schedule, the small contract sizes and the scatteredlocations of the roads involved, the work is considered to be of no interestto foreign paving contractors; none are presently established in Jamaica.Therefore, this work will be carried out by contract following local competi-tive bidding by prequalified contractors, with foreign firms afforded theopportunity to participate. This is similar to the procedure followed underLoan 899-JM which yielded responsive and competitive tenders. The makeup ofthe various contracts and packages was agreed during negotiations. The minorworkshop additions included in the project would also be carried out bycontract after local competitive bidding, or, if bids are not responsive,by force account.

4.26 Because the type and quantities of work involved cannot be estimatedto the required accuracy, the preparatory work for the surfacing is considered

- 25 -

unsuitable for execution by contract. Therefore, this work would be carried

out under force account by MOW, as was done successfully under Loan 899-JM.

Since the work would be accomplished over a time span of some 24 months, it is

well within the capabilities of the MOW field units; quality and quantity

supervision would be provided by the technical assistance consultant.

4.27 The procurement program for equipment, spare parts and workshop

tools indicating lot sizes and estimated costs, would be subject to prior

approval by the Bank. Contracts for equipment (including about one year's

supply of spare parts) and for workshop tools estimated to cost over US$75,000

would be awarded on the basis of international competitive bidding in accor-

dance with the Bank's "Guidelines for Procurement" (March 1977). Other

contracts for parts and tools with estimated costs of less than US$75,000,

but not exceeding an aggregate of US$500,000, would be procured in accordance

with current MOW procedures, which are satisfactory. This would include,

inter alia, contracts for proprietary procurement of spare parts for existing

equipment to be purchased directly from established dealers in accordance with

local procedures which are acceptable to the Bank.

4.28 All plans, specifications and bidding documents for surfacing work,

equipment, spare parts and tools would be subject to review and approval by

the Bank. All procurement procedures and schedules were reviewed and agreed

during negotiations.

4.29 Principal indicators by which the project would be monitored are:

(a) availability of road maintenance equipment (para 4.09

and Table 4.4);

(b) development of revenues under the Hire Funding scheme and

their use in acquiring necessary spare parts and replacement

equipment as compared with schedules and targets to be

prepared by MOW and the technical assistance consultants;

(c) execution of the preparatory works, overlays, sealing and

resealing under the project and the Five-Year Program as

compared with schedules prepared by MOW and the technical

assistance consultants; and

(d) budgeting of adequate funds for the project and the

Five-Year Program as agreed during negotiations and

annual consultations with the Bank (para 4.05) and the

prompt release of those budgeted funds.

The purpose of the project indicators and the reporting requirements to assure

timely collection of needed data were discussed and agreed during negotiations.

E. Project Risks

4.30 As previously discussed in paragraphs 2.13, 2.24 and 4.16, the main

reasons for past deficiencies in road maintenance have been lack of funds,

shortages of equipment and serious loss of technical staff. These problems

- 26 -

represent the principal project risks, and considerable attention has been

given to their solution in the preparation of the Five-Year Program and theproposed project. Detailed estimates of both local and foreign currencyrequirements for all elements have been prepared. They were reviewed withthe Government during negotiations, and the agreements reached were thesubject of specific commitments, including annual consultations on futurebudget requirements (paras 4.04, 4.05 and 4.16). The equipment overhaul andreplacement elements of the proposed project, coupled with technical assistance

to aid in making the Hire Funding scheme fully operational, will initiate acontinuous program for the proper maintenance and timely replacement of equip-ment and are expected to result in proper levels of availability. The problem

of serious losses of technical staff in MOW and other Government units has beendiscussed with the Government in the context of this proposed project and otherBank lending operations. However, this is a matter which must be addressed andsolved by the Government, and there is little else that the Bank can do otherthan provide technical assistance (para 4.12) and require assignment of keycounterpart staff as conditions for proceeding with the project as described inparagraphs 4.13 and 4.23. Therefore, in view of the above, it is believed thatthere will be sufficient reduction in the principal risks related to the proj-ect to warrant expectation of reasonable success in reaching the project'sobjectives.

V. ECONOMIC EVALUATION

A. General

5.01 Given the reduced economic activity in Jamaica and the country'stight fiscal situation, MOW's main objective should be to prevent furtherdeterioration of the road network through maintenance and rehabilitation.This objective is reflected in MOW's Five-Year Road Maintenance Program, whichprovides not only for the improvement and rehabilitation of about 711 miles ofroads through periodic maintenance but also for timely routine maintenance forthe whole network, and additionally for the training of MOW staff and strength-ening of the management of the equipment fleet, both of which are essential inensuring adequate maintenance in the future. The overall Program, includingperiodic and routine maintenance, equipment and spare parts purchase and tech-nical assistance, is well justified, with an economic rate of return in excessof 50% (para 5.10). Within the Program, those overlay, seal and reseal workswhich would be financed under the proposed Bank project have been identifiedand evaluated separately. All have an economic return greater than 50%.Details of the economic evaluation of the major components of the Bank projectfollow.

B. Methodology

5.02 The economic evaluation of the periodic maintenance works (overlay,seal and reseal) which would be financed under the Bank project has been basedon the assumption that, if the project works are implemented, the roads willreceive the appropriate periodic maintenance, which, considering their currentcondition and forecast traffic levels, will restore the roads to high levels

- 27 -

of serviceability. This "with" project case is compared to a "without" projectscenario, in which the roads receive only intensive routine maintenance and

continue to deteriorate until they fail. The consultants' estimate, based ontheir and MOW's long experience with overlays in Jamaica, is that the average

expected life of an overlay, with intensive patching, is 16 years. This islonger than normally expected in other parts of the world and is the resultof the peculiarly strong subgrade conditions and relatively low levels of

traffic. The economic life of a seal and a reseal is estimated at seven years,which is in the normal range. Quantifiable benefits to be derived from theoverlay, seal and reseal works are:

(a) vehicle operating cost savings through the improvementof road condition;

(b) passenger time savings through the reduction of traveltime; and

(c) reduction in annual maintenance costs on the roadswhich were overlaid or resealed.

The economic evaluation justifies the costs of the overlay and reseal work

financed by the Bank project.

5.03 The selection of roads for inclusion in MOW'S Program and the Bankproject is based on recommendations by the consultants TPOS after conducting aroad condition survey on about 3,000 miles of roads maintained by MOW plusroads recommended for improvement by MA and the Parish Councils. A screening

procedure, similar to a first-year benefit analysis, was used to identifypriority roads. This procedure took into account traffic levels, changes inroad surface roughness resulting from three alternative actions (patching,resealing and overlay) and consequent vehicle operating cost savings, as wellas the costs of these alternative actions. A first year benefit-cost ratiocalculated for each road section indicated the preferred action for therepresentative year (1980). Subprojects were ranked and aggregated into the

MOW Five-Year Road Maintenance and Improvement Program, of which the Bankproject forms part, subject to an estimated budget constraint. An economicevaluation of the Five-Year Program and the project was prepared, based on amodel of road deterioration formulated by the consultants (para 5.04), esti-mates of vehicle operating costs and travel time costs (paras 5.07 and 5.08).

C. Road Deterioration Model

5.04 The consultants considered using the IBRD/TRRL Highway Design Model(HDM) but decided against its use because of the inadequacy of data in Jamaica

and their inability, within the time available, to determine the parametersrequired to calculate road deterioration in the HDM. Instead, the consultantsassessed the rate of road deterioration using experience gained under Loan899-JM backed with data available from several pavement deflection surveyscarried out over the years. Pavement roughness was measured by a "bump integ-rator," a device similar to that used in the Kenya experiments for recordingroughness of ride in a test vehicle; roughness was related to the time since

the most recent periodic maintenance had been performed, and to the traffic

- 28-

levels over that period. The results of this exercise indicate that a newlyoverlaid road has a surface roughness of 25 inches/mile, and a resealed road(double surface treatment), 125 inches/mile. Observations of roads whichreceived only routine patching between 1972 and 1978 indicate that intensiveremedial surface patching could maintain roughness at around 210 inches/mile;this is the "without" case for the proposed project. The analysis furtherindicated that, after a single surface treatment, a road would have a surfaceroughness of 135 inches/mile, which would increase by about 10 inches/mile (7%per annum) for two years, and then 15 inches/mile (10% per annum) thereafter toa ceiling of 210 inches/mile, when "breaking-up" would commence. After a doublesurface treatment, the road would deteriorate by 10 inches/mile for four yearsand then by 15 inches/mile for three years, when the 210 inches/mile limitwould be reached. After an overlay, road roughness is assumed to increase by5 inches/mile for seven years and then by 15 inches/mile for nine years. Itwas reasonably assumed in the "with" project case that very little patchingwould be required for at least three years after a reseal and for seven yearsafter an overlay. Bank staff observations of periodic maintenance work accom-plished under Loan 899-JM bear out these assumptions.

D. Traffic Volumes and Vehicle Operating Costs

5.05 The principal benefits from the proposed periodic maintenance workwill be derived from operating cost savings for vehicular traffic expectedon the roads. MOW conducted seven-day traffic counts at 17 locations andthese were augmented by "moving vehicle" counts on each of over 500 roadcontrol sections. Special surveys were conducted where access to possiblysignificant agricultural, industrial and tourist areas was involved and todetermine traffic composition. Cars accounted for about 50% of the traffic,vans and minibuses 25%, buses 2% and trucks 23%. Vehicle occupancy surveyswere also effected.

5.06 Historical traffic data were not sufficiently reliable for fore-casting purposes, and attempts by the consultants to correlate traffic witheconomic indicators and macro-economic time series produced highly variableforecasts. Therefore, the most directly related surrogate was used, i.e.,the volume of retail sales of motor fuel. Fuel sales have, in the past,closely paralleled traffic growth. The Jamaican oil refinery's recent fore-casts of fuel consumption are broadly in concurrence with economic expecta-tions, i.e., an initial decline in 1977 and 1978 and a possible return to slowgrowth in 1979. The appraisal mission verified the projected against theactual fuel consumption to end-November 1978. In light of the continuinguncertain economic situation, the consultants chose to project a zero trafficgrowth rate for the five-year road maintenance program period. On the basisof the Bank's analysis for the proposed Second Program Loan, this would appearto be a slightly conservative, although by no means unrealistic, assumption,and it has been adopted for the economic evaluation. The economic returns onthe proposed project are not very sensitive to alternative likely assumptionsregarding prospective traffic levels (para 5.14).

5.07 Table 5.1 provides summary information on operating costs for thethree vehicle types - cars, buses and medium (7-ton capacity) trucks - formajor road condition types and average speeds. For first class roads (i.e.,

- 29 -

recently overlaid) with a surface roughness of around 25 inches per mile,average traffic speeds of 35 mph were measured while, on paved roads in poorer

condition (second and third class), average speeds fell to around 30 and 25 mphrespectively, with higher vehicle operating costs. Some of the components ofvehicle operating costs have risen substantially in recent years, particularly

fuel, because of the international oil pricing situation and labor costs. The

latter have surged ahead as a result of the virtual embargo on importation ofnew cars since 1976 and the poor availability of spare parts due to the tight

foreign exchange situation. Thus, substantial additional labor has been

devoted to more intensive maintenance operations and repair of existing spareparts.

5.08 Accident costs under the various road conditions were not calcu-

lated; the benefits from reduction in the accident rate that would result fromimproved surface conditions have not been quantified and are not reflected in

the estimated economic returns of the project. Allowance was made in the

calculation of vehicle operating costs for savings of leisure and commutingtime, but these were insignificant (less than 5% of benefits) in comparison todirect operating costs and savings. The values allotted to leisure andcommuting time were J$ 0.07/ hour and J$ 0.28/hour, respectively, which appearreasonable.

E. Benefits from the Project

5.09 It was estimated from the observed vehicle operating cost-roadroughness relationship that a change of one inch of road surface roughnessper mile caused, on the average, a change of J$ 0.0018/mile (US$0.0011)in vehicle operating costs. The calculation of the average change in vehicleoperating costs takes into account the composition of vehicle types in Jamaica

(para 5.05) and the different operating costs by type of vehicle. These sav-ings, combined with the roughness model detailed in paragraph 5.04, enabled

estimation of road user benefits associated with alternative periodic main-tenance interventions as opposed to an intensive patching strategy. In

addition to the benefits from savings in vehicle operating costs from theperiodic maintenance activity, the analysis included routine maintenance cost

savings. The maintenance activity savings for the first several years afterresealing and overlays were estimated at J$ 200/mile (US$70/km) per annum andJ$500/mile (US$180/km) per annum respectively. These savings are of rela-tively minor magnitude compared with vehicle operating cost savings. Takinginto account the economic cost of the proposed works, the overlay works in theBank project have a benefit cost ratio of about 11.0:1 and the resealing worksabout 3.4:1 with a weighted average ratio for the civil works, including

preparatory works, of 7.3:1. The overall economic return on the proposed Bankproject is well in excess of 50% (Table 5.2). In terms of traffic, the Bankproject includes asphaltic overlay work, which is relatively costly (about J$

100,000 per mile including preparatory work) for roads with over 1,000 vehiclesper day (VPD) and resealing (relatively cheap at about J$ 48,000 per mileincluding preparatory work) for roads with 300-1,000 VPD. Tables 4.2 and 4.3set out traffic levels on all the major roads to be included in the project.

- 30 -

5.10 The benefits from investment in road maintenance and workshop equip-ment and overhaul of existing equipment will be reflected essentially in non-project works, i.e., routine road maintenance and Government's ongoing periodicmaintenance over the four years of the project. Thus, the entire 3,000 milesof road network maintained by MOW would benefit in some degree from the useof this equipment. While no separate evaluation has been effected for theequipment component, the depreciation costs of equipment were included in theconsultants' economic evaluation of the overall Five-Year Program, which hadeconomic returns well in excess of 50% (Table 5.2). Further, the routine roadmaintenance, after due account is taken of its share of the equipment costs,has even higher returns. In essence, the equipment provided under the projectcan easily justify its purchase in the first two years of its operation.

5.11 As in the economic evaluation of Loan 899-JM, the economic cost ofunskilled labor has been valued at 50% of wage cost. The general unemploymentsituation in Jamaica has not improved notably since 1972 and currently hoversaround 25% of the estimated work force. While most unemployment is concen-trated in the cities, extensive under-employment exists in rural areas. Theeconomic benefits of the project are not sensitive to alternative assumptionsabout the economic cost of unskilled labor since this constitutes a very smallproportion of total costs.

5.12 Over the four-year period, it is estimated that the direct incre-mental employment generation of the project would entail about 1,600 jobs,of which about 1,400 would be for unskilled laborers. The possibility ofincluding a higher labor-to-capital ratio was considered. However, therealready exists a high labor content in routine maintenance in Jamaica becauseof the lack of adequate working equipment, the socio-political need to keepon the payroll a large MOW field staff and the concentration in routinemaintenance on small labor contracts for activities such as grasscutting.The extra labor input needed in the future is in pavement patching, for whichat least semi-skilled labor is required. The conclusion is that the unskilledlabor content has already at least reached the minimum technical standardsfor good road maintenance.

F. Distribution of Benefits

5.13 While it is not possible to identify the beneficiaries of themaintenance works precisely, the direct benefit to the unskilled laborforce is not insignificant (para 5.11). Further, about 200 miles of pavedtertiary roads are included in the project, and these are principally farm-to-market roads. The great majority of small farmers have easy access to thesetertiary roads, and a significantly reduced cost of transporting agriculturalproduce to market and bringing in supplies will accrue mostly to them. Sav-ings will also accrue to consumers of staple food products, and, thus, reducedtransport costs will have a larger relative impact on the island's lower incomepopulation. The assumption that producers and consumers of goods which aretransported on the road system will benefit from the project is reasonablesince the trucking industry is in serious financial difficulties (tariffs havenot been keeping pace with inflation) and operators have been competing forbusiness in a declining economy (para 2.08). Bus passenger transport outside

- 31 -

the urban areas is also highly competitive, with bus companies and a largenumber of single vehicle operators offering service on principal routes.Therefore, it could be expected that a large proportion of the transport costsavings from the project would be passed on to consumers of transport serviceson the project roads, who are principally rural dwellers.

G. Sensitivity Analysis

5.14 The economic benefits of the works to be performed under the projectare so high, because of the backlog nature of the maintenance work, that theeconomic returns are not sensitive to pessimistic assumptions. Given therecent decline in traffic, to conceive of a future decline in traffic levelsof, e.g., 5% p.a., would imply a further major decline in economic activity.However, such a situation would have only a very minor effect, roughly propor-tional (or 5%) negation of benefits (Table 5.2). Charging to labor its fullwage cost instead of an economic cost estimate of 50% reduces the economic rateof return negligibly. Alternative pavement deterioration rates were alsotested, but found not to noticeably affect the overall level of viability ofthe project.

5.15 As for capital investment costs for the overlay and resealing works,as long as local contractors are used and the IMF wage guidelines continue tobe observed, the principal cost escalation would be in the price of asphalt.Since this varies in Jamaica broadly in line with exchange rate changes andinternational fuel prices, any major unforeseen price increase would immediatelyalso be reflected in vehicle operating cost savings, far and away the majorsource of project benefits.

VI. AGREEMENTS REACHED AND RECOMMENDATION

6.01 During negotiations, agreement was reached with the Government onthe following:

(a) scope and schedule for a study of the rail system; no investmentof over US$500,000 in any year in rail transport, other than spendingdirectly related to improving services for bauxite-related traffic,to be undertaken prior to the study (para 1.07);

(b) work program and plan for permanent staffing of the TransportPlanning Unit (para 1.16);

(c) an axle load control program and legislative action to changepresent road traffic regulations (para 2.09);

(d) ROMGRAM use for road maintenance planning and budget prepara-tion (para 2.22);

(e) RMCS to provide control and planning data (para 2.23);

(f) continuation of the equipment replacement program (para 2.24);

- 32 -

(g) maintaining an adequate stock of spare parts (para 2.25);

(h) retaining Hire Funding income in MOW accounts and makingequivalent foreign exchange available (para 2.26);

(i) required counterpart funding for the proposed project(para 4.05);

(j) funding requirements for recurrent expenditures underthe Five-Year Program (para 4.05);

(k) funding for remaining capital cost elements of the Five-Year Program (para 4.05);

(1) annual consultations with the Bank concerning budgetrequirements for the proposed project and the Five-YearProgram (para 4.05);

(m) road sections to be surfaced under the proposed project(paras 4.06 and 4.07);

(n) equipment overhaul program (para 4.09);

(o) list of tools to be procured and workshop improvementsto be made (para 4.10);

(p) list of replacement equipment to be procured and estimated costs(para 4.11);

(q) terms of reference for the technical assistance consultants andthe staffing plan for both expatriate and counterpart staff(para 4.14);

(r) the 1980/81 work program of the Transport Planning Unit ofNPUT (para 4.14);

(s) training programs under the project and their continuationafter the technical assistance consultants have completedtheir assignment (para 4.15);

(t) adequate maintenance of the road network by MOW(para 4.16);

(u) all estimates of cost (para 4.20);

(v) number and qualifications of key MOW counterpart staff(para 4.23);

(w) project implementation schedule (para 4.24);

(x) packaging of civil works contracts (para 4.25);

(y) procurement procedures and schedules (para 4.28); and

(z ) project indicators and reporting requirements (para 4.29).

- 33 -

6.02 Disbursement on the technical assistance for the railway viabilitystudy would be conditional upon Government submission of the plan for permanentstaffing of the Transport Planning Unit (para 4.21).

6.03 A condition of effectiveness of the proposed loan would be theassignment of approved MOW staff to key counterpart posts (para 4.23).

6.04 Subject to the above, the project provides a suitable basis fora Bank loan of US$16.0 million equivalent. The term would be 17 yearsincluding a four-year grace period.

June 6, 1979

- 34 - TABLE 1.1

JAMAICA

FOURTH HIGHWAY PROJECT

Characteristics of Railway Traffic, 1970-1978

Freight TrafficTonnage (thousand tons)

Bauxite- Freight ton Passenger TrafficAlumina General Miles JourneysIndustry Merchandise Total (million) (thousand)

1970 2,935 38 2,973 77.5 1,147

1971 3,095 37 3,132 83.6 1,067

1972 4,121 36 4,157 113.2 1,012

1973 4,288 32 4,320 116.3 1,018

1974 4,860 29 4,889 132.2 1,088

1975 3,906 24 3,930 99.2 1,186

1976 ,o078 22 3s100 97.2 1,193

1977 3,580 20 3,600 88.5 2,000

1978 n/a n/a 3,500 87.5 2,700

Source: Jamaica Railways Corporation

February 1979

TABLE 1.2-35 -

JAMAICA

FOURTH HIGHWAY PROJECT

Summary of Freight and Passenger Traffic by Mode, 1970-1978

Passenger Traffic(thousand passen'ers)

Railway Aviation

Domestic!/ International

1970 1,147 n/a 1,400

1975 1,186 24.4 1,719.5

1976 1,193 32.2 1,485.2

1977 2,000 35.0 1,371.1

1978 2,700 n/a 1,600.0 2/

Fraieht Traffirc

Railways Aviation Kingston Ports(million freight Thousand (million t

ton - miles) (metric tons) All Others Total

1970 77.5 14.0 3.0 12.7 15.7

1974 132.5 17.6 n/a n/a n/a

1975 99.2 18.0 1.2 11.0 12.2

1976 97.2 15.0 1.0 10.0 11.0

1977 88.5 17.2 1.9 11.5 13.4

1/ Does not include Mandeville with about 5,000 passengers per annum in 1977,nor domestic passengers to Montego Bay, estimated at 40,000 in 1977.

2/ Estimated

Source: Jamaican Railway Corporation,Airports Authority of Jamaica, Department of Civil Aviation,Port Authority of Jamaica.

February 1979

- 36 - TABLE 1.3

JAMAICA

FOURTH HIGHWAY PROJECT

Transport Infrastructure Investment, by Mode

In Comparison with Total Public

Sector Investment, 1973/74 - 1977/78(millions of J$)

1973/74 1974/75 1975/76 1976/77 1977/78/

Transport Sector

Roads-/ 12.9 28.3 37.8 43.6 38.6

3/Railways- 3.0 2.3 3.2 2.4 1.3

Airports Authority-/ 4/ 0.2 0.7 1.0 5.3 3.0

4/Air Jamaica- - - 1.4 1.1

Port Authority-/ 3.4 3.4 16.5 5.0 2.3

Jamaica Omnibus Service- - - 1.1 0.2

Total 19.5 33.4 58.8 57.4 46.2

Total Central Govt. &Enterprises Investment 212.4 181.3

Total Public Sector Investment-/ 453.1 395.0

Transport Sector InfrastructureInvestment as a Percentage of:

Central Govt. & Public Enter-prise Investment 27.0 26.0

Total Public Sector Investment 13.0 12.0

1/ Preliminary2/ Includes expenditures by MOW, MLG, Ministry of Agriculture, KSAC3/ Adjusted for fiscal year.4/ Public Enterprises.5/ Includes Fixed Investment by the Nonfinancial Public Sector (Central Govern-

ment and Public Enterprises) Public Sector Capital Grants, Public FinancialInstitutions and the Jamaican National Investment Corporation.

Source: Ministry of Finance, Jamaica Railways Corporation, Port Authority of Jamaica,Airports Authority of Jamaica.

February 1979

Table 2.1- 37 -

JAMAICA

FOURTH HIGHWAY PROJECT

Retail Sales of Motor Fuel, 1972-1978

(1,000 Imperial gallons)

Year Petrol1/ Diesel Total

1972 57,400 12,425 69,825

1973 62,125 14,035 76,160

1974 55,195 14,875 70,070

1975 59,185 16,240 75,425

1976 63,280 15,365 78,645

1977 58,030 14,350 72,380

1978 56,175 14,000 70,175

Annual Average Growth Rate

1972-1976 2.5% 5.4% 3.0%

1976-1978 -5.6% -4.3% -5.2%

1/ Regular and Premium

Source: Shell Oil Company

February 1979

- 38 - TABLE 2.2

JAMAICA

FOURTH HIGHWAY PROJECT

Highway Expenditures and Road User Contributions

1973/74--1977/78

(millions of J$)

1973/74 1974/75 1975/76 1976/77 1977/7 4 A. Expenditures on Roads

Recurrent -9.5 14.0 12.6 16.8 11.4Capital 12.9 28.3 37.8 43.6 38.6

Total 22.4 42.3 50.4 60.4 50.0

Total US$ equivalent 1978 prices 52.0 81.9 87.0 92.5 59.6

B. Motor Vehicle Contributions

Import Duty on road motorvehicles 13.9 12.4 13.7 21.0 14.1Import Duty on tubes and tires 0.4 0.3 0.3 0.7 n/aLicense Duty on motor vehicles 6.6 6.8 9.4 10.0 12.4Excise Duty on gasoline 2/ 8.7 10.7 38.1 37.6 37.4Driver's License Duty 0.7 0.8 0.9 1.2 1.5

Total 30.3 31.0 62.4 70.5 n/a

Total US$ equivalent 1978 prices 82.1 71.9 120.8 121.7 n/a

1/ For expenditures, budget figures; for contributions, actual figures.2/ After 1974/75 includes consumption tax.

Source: Expenditures: Ministry of FinanceContributions: Ministry of Public Utilities and Transport

February 1979

TABLE 2.3

-39 -

JAMAICA

FOURTH HIGHWAY PROJECT

Ministry of Works Expenditures on Roads 1973/74-1977/78

(thousands of J$)

Item 1973/74 1974/75 1975/76 1976/77 1977/78

Recurrent Expenditures

Road Maintenance 2.1 2.3 2.2 3.0 3.2Walls, Bridges and Culverts Maintenance 0.4 0.4 0.3 0.5 o.6

Flood Danage Repairs 1.3 1.5 1.3 1.1 2.3

Sub-Total 3.8 4.2 3.8 4.6 6.1

Capital Expenditures

Main Road Construction and Major 1.8 3.8 2.4 2.5 3.4

ImprovementsMinor Improvements of Main Roads 0.4 3.3 3.1 4.2 3.3Asphalting and Resurfacingi/ o.6 0.5 o.6 1.1 1.1

Farm Roads 3.0 4.7 8.5 1.8 1.8

Special Roads2/ 0.9 0.5 2.4 3.6 1.8Secondary Main and Parish Council Roads 0.1 0.1 1.3 4.0 5.0

Bridges 1.6 2.4 2.5 2.3 3.5

Flood Damage Preventive Measures 0.2 0.3 0.4 0.2 0.5

IBRD Projects

-- First Highway Project

Loan 408-JM 1.3 - - - -

-- Road Improvement and

Maintenance Project Loan 899-JM 0.5 2.3 5.2 5.7 4.6

-- Third Highway Project

Loan 1032-JM - 1.2 4.7 6.1 4.5

Sub-Total 10.4 19.1 31.1 31.5 29.5

Total Expenditures 14.2 23.3 34.9 36.1 35.6

Total, US$ equivalent 1978 prices 32.9 45.1 60.3 55.3 42.4

1/ Reported as Recurrent Expenditure in Ministry of Works accounts; see Table 2.5.2/ Allocations made under a Government employment program.

Source: Ministry of Works

February 1979

JAMAICA

FOURTH HIGHWAY PROJECT

Directorate of Maintenance Expenditures, 1968/69-1977/78

(thousands of J$)

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78Item

Road Maintenance

Maintenance of Road 934 1,018 1,344 1,507 3,255 2,127 2,280 2,218 2,997 3,159Maintenance of Bridges,Walls and Culverts 198 206 289 308 343 364 402 282 506 601Emergency Flood Damage Repairs 460 693 847 453 299 1,278 1,466 1,247 1,114 2,274Asphalting and Resurfacing 1/ 315 337 506 529 639 571 619 613 1,113 1,084

Sub-Total 1,907 2,254 2,986 2,797 4,576 4,340 4,767 4,360 5,730 7.118

Non-Road Maintenance 2/ 954 1,206 1,647 1,772 2,638 2,036 3,399 3,530 4,667 5,833 1

General-Administration & Supervision 1,594 1,548 1,963 2,177 2,560 3,377 4,602 5,639 5,390 5,842

Total g=456 =,===8 6,= 6766 7Z 1=2= 12J76 18,===

Total US$ equivalent 1978 prices 18,851 20,105 24,679 23,632 29,140 32,705 24,727 23,363 24,186 22,387

1/ Does not include asphalting and resurfacing under Bank Loan 899-JM (see Table 2.2).2/ Includes buildings maintenance and minor works and maintenance of drainage channels and flood control areas.

Source: Ministry of Works

February 1979

- 41 - Table 4.1

JAMAICA

FOURTH HIGHWAY PROJECT

Estimated Five-Year Road Maintenance Budget Requirements and Financing(J$ Million at June 1979 Prices)

I. Routine Maintenance TotalBudget 1979/80 1980/81 1981/82 1982/83 1983/84 1979-1984

Administration andOverhead 2.53 2.53 2.53 2.53 2.53 12.65

Labor 3.20 3.40 3.40 3.40 3.40 16.80Materials 1.20 1.30 1.30 1.30 1.30 6.40Equipment Operationand Spares 1.80 1.80 1.80 1.80 1.80 9.00

Emergency Repairs 1.65 1.65 1.65 1.65 1.65 8.25

Sub-Total 10.38 10.68 10.68 10.68 10.68 53.20

II. Capital Budget

Administration andOverhead 1.35 1.35 1.35 1.35 1.35 6.75

Minor Improvement Works 2.59 2.59 2.60 2.61 2.61 13.00Periodic Maintenance 11.39 13.52 6.48 8.87 9.05 49.31

(Bank Financing) (4.80) (6.95) (2.51) (0.91) (0) (15.17)Equipment Acquisition 0 2.61 4.51 2.00 2.00 11.12

(Bank Financing) (0) (2.51) (2.46) (0) (0) (4.97)Equipment Overhaul 3.82 0.79 0 1/ 0 1/ 0 1/ 4.61

(Bank Financing) (3.41) (0.77) (0) (0) (0) (4.18)Technical Assistance 0.54 0.88 0.52 0.32 0 2.26

(Bank Financing) (0.44) (0.70) (0.41) (0.27) 0 (1.82)

Sub-Totals 19.69 21.74 15.46 15.15 15.01 87.05(8.65) (10.93) (5.38) (1.18) (0) (26.14)

Total Maintenance Budget 30.07 32.42 26.94 26.63 26.49 140.4

1/ Contributions to hire funding scheme for recurrent spares andoverhaul parts included in routine maintenance budget.

Source: Consultant and Mission Estimates

February 1979

- 42 - TABLE 4.2

JAMAICA

FOURTH HIGHWAY PROJECT

Details of Asphaltic Overlay Work

Shown on Map IBRD 14151

Length ADT Est. Cost 1/Road Section (miles) 1978 (J$000)

Morant Bay - Leith Hall 7.03 1500 852

Port Morant - Hordley 5.52 1000 659

South of Ocho Rios - Moneague 7.25 2000-2400 764

Runaway Bay - Discovery Bay 4.20 2400 443

Anchovy - Shettlewood 4.16 2200 438

Ferris - Shettlewood 12.62 1400 1,398

Clarendon Park - Williamsfield 7.37 2400-3200 1,058

Green Island - Iucea 9.33 950 983

Savanna-La-Mar-Little London 5.47 1300 576

Grange Hill-Savanna-La-Mar 7.32 2250 887

Mt. Diablo - Ewarton 5.66 2750 - 404

Totals 76.33 8,462

1/ At June 1979 prices

Source: TPOS Road Improvement and Maintenance Study,October 1978

April 1979

- 43 - TABLE 4.3

JAMAICA

FOURTH HIGHWAY PROJECT

Details of Resealing and Sealing Works

Shown on Map IBRD 14151

Length ADT Est. Cost

Road Section (miles) 1978 (J$000)

Resealing

Hordley - Port Antonio 27.34 500-600 729Trinitvville - Cedar Valley 5.64 500 151Buff Bay - Balcarres 6.08 250 163Gayl - Union Hill 4.42 400 118St. Ann's Bay - Golden Grove 12.89 1300-1400 344

Davis Town - Greenwich Park 2.02 400 55Brown's Town - Watt Town 5.70 500 152Bamboo - Priory 6.10 400 163Sour Sop - Turn - Mears Bridge 12.17 1000 325Freetown - Alley - Rest 14.90 7490-830 396

Rowe's Corner - Southfield - Malvern 23.22 200-800 619Mile Gully - Union 11.43 400-700 306Siloah - Vauxhall - Lacovia 10.59 700-800 282Park - Mountainside 2.21 400 59Middlequarters - Newmarket 8.93 600 239

Falmouth - Kinloss 10.54 500 280Adelphi - Salt Marsh 5.81 400 154Wait-A-Bit - Lorrimers 5.57 450 148Cambridge - Montpellier 4.78 750 128Adelphi - Hampden 2.60 650 68

Shettlewood - Chester Castle 2.72 600 74Salt Spring - Moreland 4.15 300 112Lucea - Glasgow 7.85 700 210Lucea - Bushmouth 9.16 300 244Hopewell - Haughton Grove 5.29 350 142

Negril - Little London 9.55 900 254Amity Cross - Georges Plain 2.04 650 55Galloway - Torrington 4.72 1700 125Glasgow - Grangehill 2.69 1000 74Whithorn - Newmarket 10.78 500 288

Struie - Lamb's River 2.89 300 78Vanity Fair - Tavern Hill 8.63 900 229

Totals Resealing 253.41 6,764

Sealing

Davis Town - Greenwich Park 1.27 400 64Salt Spring - Moreland 1.03 300 49Lucea - Bushmouth 0.74 200 36Hopewell - Haughten Grove 1.03 150 49Culloden - Caledonia 1.85

Totals Sealing 5.92 198

1/ At June 1979 prices.

Source: TPOS Road Improvement and Maintenance Study, October 1978

April 1979

TABLE 4.4- 44 -

JAMAICA

FOURTH HIGHWAY PROJECT

Details of Equipment Overhaul Program

Units to be Rehabilitated Planned Average 1/

over 24 month period Availability - -

Pift By June By Dec. By June By Dec.

Unit Total Month 1980 1980 1981 1981

Land Rovers 70 5 45 50 55 55

Pickups 27 2 50 60 65 70

Flat BedTrucks 50 4 50 55 55 55

DumpTrucks 60 4 55 60 65 70

PassengerCars 6 1 50 70 75 75

Rubber TiredTractors 12 1 40 50 60 70

Front EndLoaders 6 1 65 70 75 75

Graders 3 1 60 65 70 70

Steel WheelRollers 30 2 50 55 60 65

Crushers 3 1 50 60 65 75

AirCompressors 2 1 75 75 75 75

BitumenDistributors 4 1 30 45 55 65

WaterTrucks 30 2 55 60 65 70

Misc. Items 10 1 50 60 65 70

Totals 313

Averages 50 60 65 70

1/ Availability percentages include effect on fleet size resultingfrom procurement of replacement equipment shown in Table 4.5.

Source: Ministry of Works and TPOS Road Improvement andMaintenance Study, October 1978.

February 1979

- 45 - TABLE 4.5

JAMAICA

FOURTH HIGHWAY PROJECT

List and Cost of Maintenance Equipment(US$ at June 1979 prices)

Number Cost Per TotalItem of Units Unit Cost

Cars 12 8,000 96,000

Pickups - 3/4 ton 60 7,000 420,000

Dump Trucks - 7 ton 40 16,000 640,000

Water Trucks - 1500 gal. 24 20,000 480,000

Steel Wheel Rollers -10 to 12 ton 16 25,000 400,000

Rubber Tired Tractors 13 18,000 234,000

Bitumen Distributors -1000 gal. 3 45,000 135,000

Low Bed Trailer 1 18,000 18,000

Miscellaneous Items-/ - - 200,000

Workshop Tools - 60,000

Spare Parts (about 10%of equipment cost) - 277,000

Total 2,960,000

1/ Includes items such as mobile pumping units, lighting plants,spreader boxes, bitumen kettles, pavement breakers, tampers, etc.

Source: TPOS Road Improvement and Maintenance Study, October 1978

February 1979

- 46 - TABLE 4.6

JAMAICA

FOURTH HIGHWAY PROJECT1/

Estimated Schedule of Disbursements(US$ millions)

IBRD Fiscal Year Cumulative Disbursementsat end of Quarter

1980

December 1979 0.6March 1980 1.6June 1980 3.4

1981

September 1980 5.2December 1980 7.0March 1981 8.7June 1981 10.2

1982

September 1981 11.5December 1981 12.7March 1982 13.7June 1982 14.5

1983

September 1982 15.2December 1982 15.6March 1983 16.0

1/ Assumes Loan Effective September 1979

Source: Mission Estimate

February 1979

JAMAICA

FOURTH HIGHWAY PROJECT

Summary of Vehicle Operating CostsJ Cents/Mile (At June 1978 Prices)

C A R S B U S E S T R U C K SItem Class 1 Road 1/ Class 2 Road 2/ Class 1 Road Class 2 Road Class 1 Road Class 2 Road

Running Costs 3/ 12.6 16.1 54.3 73.4 32.9 44.1

Time and OverheadCosts 4/ 24.5 29.0 91.4 113.3 48.1 65.4

Total 37.1 45.1 145.7 186.7 81.0 109.5

1/ A road with pavement surface in good condition immediately after an asphaltic overlay, with little surfaceroughness and average traffic speed of 35 mph.

2/ A road with pavement surface in fair to poor condition, with considerable surface roughness and averagetraffic speed of 30 mph.

3/ Running costs comprise fuel, lubricants, tires and tubes and routine maintenance cost including labor.

4/ Time and overhead costs comprise crew and passenger time, company overheads, particularly for trucks andbuses, interest and depreciation. Passenger time costs were valued at J$0.28/hour for personal businesstrips and J$0.07/hour for leisure trips.

Source: T. P. O'Sullivan and Partners Feasibility Study and revised costs from consultant during appraisal.

February 1979

- 48 - TABLE 5.2

JAMAICA

THIRD HIGHWAY PROJECT

Calculation of Economic Returns on Proposed Bank Project andTotal Five-Year Program (Including Proposed Project)

Benefit Cost Ratios 1/

Proposed IBRD Project Overall 5-Year Maintenance Program

Overlay 11.0 10.7Resealing 3.4 2.8Total 7.3 5-7

Sensitivity for 5%Decline in Traffic

Overlay 10.4 10.2Resealing 3.3 2.7Total 6.9 5.5

Net Present Value of Benefits(J$ Million at June 1978 Prices)

Overlay 85.6 115.7Resealing 20.2 37.6Total 105.8 153.3

Sensitivity for 5%Decline in Traffic

Overlay 81.2 109.4Resealing 18.8 34.7Total 100.0 144.1

1/ To compare benefits with costs over the period 1980-96 for overlays and 1980-96for resealing and discount them at 11%, the Bank's estimate of the cost of capitalfor Jamaica, the consultants did the following. A mean date of sub-projectimplementation, June 1980, was chosen, at which time average sub-project roughnesswas put at 140 inches/mile for overlay proposals and 175 inches/mile for resealingproposals. The benefits were then calculated from the roughness saving achievedby the works,and the consequent vehicle operating cost saving, which were applied tothe traffic forecast for the road sections included in the project and correspondingly,the overall 5-year program.

Source: TPOS Road Improvement and Maintenance Study, October 1978.

March 1979

- 49 -ANNEX 1Page 1

JAMAICA

FOURTH HIGHWAY PROJECT

Details of the Training Program

1. Details of the training program for MOW staff, which it is proposedto carry out under the project, are described in some detail in the TrainingProgram Document prepared with the help of consultants T.P. O'Sullivan andPartners (TPOS). This document is set out in diagrammatic form on page 4 ofthis annex.

2. The program has two parts. One element is related to supervision ofroadworks and associated technology. The other element is related to the effi-cient operation, rehabilitation and maintenance of equipment and is intendedto help lift the availability of the fleet from 43% to 75%.

3. The supervision-related element consists of:

(a) continuation of existing three-month in-service training coursesfor works overseas;

(b) two special technology courses in contract supervision andengineering materials;

(c) 12 one-day courses in new systems--ROMGRAM, RMCS, HIREFUND, etc.;

(d) seven courses to equip field staff for advancement and managementsuccession; and

(e) three seminars for contractors.

4. All the courses in this element will be run locally in Jamaica underthe supervision of TPOS.

5. The equipment-related element of the training program consists of:

(a) continuation of existing mechanic apprenticeship programs;

(b) continuation of local one-week equipment courses for mechanics--the courses are led by manufacturers' representatives (five orsix courses are envisaged);

(c) a special composite overseas course for three senior technicalworkshop staff; they will attend the training schools attached tothe factories which manufacture Perkins Engines, Land Rover, andFargo Trucks in the UK and Caterpillar Tractors in the US; and

- 50 -ANNEX 1Page 2

(d) two special courses at North Eastern Technical Institute in the

US, each course for six persons; these 12 persons will return toJamaica and lead two more local operators' courses, thus passingon their knowledge and skills to 80 other operators--an operation

boot-strap exercise.

6. This second element of the project will be supervised by the Director

of Electrical and Mechanical Services in consultation with MOW's central

personnel section. Sufficient administrative experience and know-how exist

to run this element, since a similar program was conducted for a USAID project

in 1974.

7. It is recognized that successful completion of this project depends

upon efficient performance of equipment, satisfactory maintenance, rehabilita-

tion and repairs, and high availability. The effect of the overseas courses

on performance and morale is usually dramatic. There is need to build a strong

and motivated team to carry the project after the consultants leave. Judicious

selection of the persons to undertake overseas courses will, as in the past,

reduce the likelihood of staff loss through emigration or change of job. (MOW

has lost none of the 27 personnel trained through USAID in 1973/74.)

8. Both elements of this training program aim at making an input at the

front line of operations. The cost of the program is US$80,000 in foreign cost

and US$18,000 in local cost, making a total of US$98,000.

May 1979

- 51 -AN11EX 1Page 3

Training Program Costs Related to Project in US$

Overseas Local TotalProject Element Cost Cost Cost Remarks

A. Supervision of Road Works

(a), (b), (c), (d), (e)

13 weeks X $100 1,300

B. Equipment Courses

(a) Apprenticeship -- --

(b) Courses by Manufacturers'Representatives 5,000 4,000

(c) Workshop Technology (UK) 10,000 --

(d) Equipment Operation (US) 65,000 --

C. Administration

Lecturers' fees, salaries andtraveling to lectures, staffmembers 12,700

TOTAL 80,000 18,000 98,000

Training Program

Months Equipment Supervisionof Related of Roadworks

Project Training

1 Equipment Workshop/ Existing Existing Specialist SystemOperation Equip.Repair Apprenticeship in Service Courses Courses

2 & Care Techn logy Program Courses

3

4 ____ ______12 CoursesU.K. Course 1 day each

5 1st U.S.1 12 weeks-3 Persons 1 Technology & CoveringCourse i at Factory Courses; Contract Program Hire

-6 for 10 Perkins Engines, Supervision lRMCS etc.Persons L.Rover, Fargo, 1 week W

7 T_ Caterp 1lar

8 |lst Local |l|Course I I 1 |Materials|

9 5 Local Courses Led Courseby Manufacturers' 2 weeks

10 2nd Local factory LecturersICourse 3 Seminar

for11 X I T Contractor1. A.C. Delco lternators

12 2nd U.S. Cour'se Starters, Generators - USAfor 10 Persons 2. Toyota Land Cruiser - Japan

13 3. Ford Trucks - UK4. Leyland Trucks - UK I

14 3rd Local 5. Etnyre Distributor - USACourse 7 Courses of

15 1-2 weeks forAdvancement of |@|

16 Field Staff & 414th Local Management Success.

17 0Course l_I

18

ANNEX 2- 53 -

JAMAICA

FOURTH HIGHWAY PROJECT

Selected Documents and Data Available in the Project File

1. "Road Improvement and Maintenance Study, Stage II, DraftFinal Report" Volumes I and II T. P. O'Sullivan andPartners, October 1978.

2. "Road Improvement and Maintenance Study, Stage II - RoadCondition Survey" T. P. O'Sullivan and Partners,October 1978.

3. Miscellaneous papers and maps related to project impactand economic evaluation.

4. Calculations of cost estimates.

5. Miscellaneous documents related to Equipment Replacementand Overhaul Program.

6. Calculation of Local Taxes.

7. Axle Load Control Program agreed at negotiations (side letter).

8. Terms of Reference for Consultants T. P. O'Sullivan andPartners (UK) agreed at negotiations.

9. Time to be spent by Consultants T. P. O'Sullivan on TrainingProgram.

10. Counterpart Staffing Arrangements agreed at negotiations.

May 1979

JAMAICAFOURTH HIGHWAY PROJECT

MINISTRY OF WORKS AND COMMUNICATIONS

PERMANENTSECRETARY

CHIEF TECHNICALDIRECTOR

MANAGEMENT DFINANCE

INFORMATION ~~~~PERSONNEL ADMINISTRATION DVSO

INFRMTION DIVISION DIVISION FINANCIALX

SYSEMS SYSTEM INENL AUI TRNACTIO I

SETON ERTINCoACSN

IDIRECTORATE OF DIETRT OFl

ELEC. L MECHl. DRCONTORUCTION

SERVICES _ ._

| ADMINISTRATION ADMINISTRATION

UNIT UNIT

I MECHANICAL * WORKSHOP *SBUI OING(PLANT HOSPITAL ELECTRICAL/ DLDING SPECIAL RURAL

MECHANCL WORKSHOP MANENNT. R DOIES &EM YNT FDRROS

UJNITS MAINENANEAMCHANCALCONSTRUCIN CMLOMNT FEDRROD

BRRANCH RRANCH BRANCH DESI BRANCH BRAUCTI WORKS BRANCH BRANCH

DIRECRATE OF DIRECIORATELO DIRECTORATE OF

MAJOR PROJECT STECHNICAL MAINTENANCESERIVICES

ADMINISTRATION CONTRACTS CHIEF ENGINEER ADMINISTRATION

| | UNIT ll UNIT 0 SECRETARIAT (MAINTENANCE) UNIT

MAJOR ROJECT F ANNIN ARNS ON ACIETRL CIIQUANTITY LANDS & TRAFFIC

MaJOR RJCH I NGIEERNGH SURVEYING SURVE YS ENGINEERING HDALC HE HE

BACBRNHANNUBRNH DSGRANANHBRANCH BRANCH BRANCH BAC UEITNET SPRNEDN

Wood Bonk - 19891

B~~~~~~ I

JAMAICAFOURTH HIGHWAY PROJECT

DIRECTORATE OF MAINTENANCE

DIRECTOR

MAINTENANCE

| ACCOUNTANT i . w CHIEF~~~~~~~~~~~~~~~~~~~~~~~ CHIEF

i l SUP~~~~~~~~~~~~~ERINEDT SPERINTENDENT

SYSTEMS 3 COUNTY MECHANICAL Z~~~~~ARE ( } AREA 5-,I

AREA1 AREA2 AREA3 AREA4 AREA5 AREA6 AREA7

SENIOR SENIOR SENIOR SENIOR SENIOR SENIOR SENIOR

SUPERINTENDENT SUPERINTENDENT SUPERINTENDENT SUPERINTENDENT SUPERINTENDENT SUPERINTENDENT SUPERINTENDENT

ST ANDREW ST TMAS ST MAR PORLAND ST CATHERINE ST ANN MANCHESTER CLARENDN WETMORELAND ST ELIZABETH ST JAMES HAN VER Z TRELAWNY

| PARISH l PARISH l PARISH l PARISH l PARISHOR PARISH l PARISH PARISH PARISH PARISH PARISH PARISH PPARISH S PCORPORATEAARE

| SUPERINTENDENT | | SUPERINTENDENT | | SUPERINTENDENT | | SUPERINTENDENT | | SUPER INTENDENT | | SUPERINTENDENT | | SUPERINTENDENT || SUPERINTENDENT | LSUPERINTENDENT || SUPERINTENDENT ||SUPERINTENDENT SUPERINENDEN SUPERINTENDENT SUPERINTE T | -

Wodd 8Bnk -ISII

JAMAICAFOURTH HIGHWAY PROJECT

IMPLEMENTATION SCHEDULE

1979 1980 1981 1982

J |IF | M Al Ml J i IA is M N| D J |I Al i JII 8 N | F|D A rMli J AI O |N |D JFI~ AItMI J!, I o |NI|DPROJECT ITEM

A. LOAN EFFECTIVITY _

B. OVERLAY WORKS (4 PKGS.)

1. Prequalification & Bidding

2. Contract Approvals & Awards

3. Construction -

4. Preparatory Work

C. SEALING & RESEALING (4 PKGS.)

1. Prequalification & Bidding

2. Contract Approvals & Awards

3. Construction -

4. Preparatory Work

D. MAINTENANCE EQUIPMENT

1. Procurement of Spares & Workshop Tools _

2. Improvement of Workshops _

3. Procurement of Replacement Equipment _ _

E. TECHNICAL ASSISTANCE AND TRAININGIFinancedoUndUreLoanan899J

World Bank - 20063

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