pam: indonesia: urban sanitation and rural infrastructure ... · pdf fileproject number:...

Project Number: 43255-01 3 November 2010

Indonesia: Urban Sanitation and Rural Infrastructure Support to PNPM Mandiri Project

Project Administration Manual

Contents ABBREVIATIONS I I. PROJECT DESCRIPTION 1 II. IMPLEMENTATION PLANS 6

A. Project Readiness Activities 6 B. Overall Project Implementation Plan 7

III. PROJECT MANAGEMENT ARRANGEMENTS 10 A. Project Implementation Organizations – Roles and Responsibilities 10 B. Key Persons Involved in Implementation 19 C. Project Organization Structure 20

IV. COSTS AND FINANCING 21 A. Detailed Cost Estimates by Expenditure Category 22 B. Allocation and Withdrawal of Loan Proceeds 23 C. Detailed Cost Estimates by Financier 25 D. Detailed Cost Estimates by Outputs/Components 26 E. Detailed Cost Estimates by Year 27 F. Contract and Disbursement S-curve 28 G. Fund Flow Diagram 29

V. FINANCIAL MANAGEMENT 33 A. Financial Management Assessment 33 B. Disbursement 34 C. Accounting 35 D. Auditing 35

VI. PROCUREMENT AND CONSULTING SERVICES 36 A. Advance Contracting 36 B. Procurement of Goods, Works and Consulting Services 36 C. Procurement Plan 37 D. Consultant's Terms of Reference 41

VII. SAFEGUARDS 45 VIII. GENDER AND SOCIAL DIMENSIONS 47 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION 50 A. Project Design and Monitoring Framework 50 B. Monitoring 53 C. Evaluation 57 D. Reporting 57 E. Stakeholder Communication Strategy 58

X. ANTICORRUPTION POLICY 58 XI. ACCOUNTABILITY MECHANISM 59 XII. RECORD OF PAM CHANGES 59

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Directorate General of Human Settlements (DGHS), Ministry of Public Works (MPW) are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by DGHS of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement shall prevail.

After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

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Abbreviations

ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CF = community facilitator CQS = consultant qualification selection CSS = city sanitation strategy DGHS = Directorate General of Human Settlements DMF = design and monitoring framework EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product ICB = international competitive bidding IEE = initial environmental examination IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PAM = project administration manual PIU = project implementation unit PNPM = Program Nasional Pemberdayaan Masyarakat (national program for

community empowerment) QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference

I. PROJECT DESCRIPTION

1. The Government of Indonesia requested ADB support to scale up ongoing assistance to the PNPM Mandiri scheme to (i) further upgrade basic rural infrastructure in poor villages located in provinces covered by ongoing ADB supported projects, and (ii) promote community-driven sanitation development to contribute to achieving the MDG target, to halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation. The Project is included in the Country Operations Business Plan (COBP 2010–2012).1 2. The Project forms part of the Government of Indonesia's ongoing flagship poverty reduction program—the National Program for Community Empowerment (Program Nasional Pemberdayaan Masyarakat, PNPM Mandiri), which was launched in 2006 with the commitment to reduce poverty by adapting a community-driven development approach and providing direct support to poor rural and urban communities to improve essential social services and basic infrastructure. 3. The Project will be implemented in a geographic slice of the PNPM Mandiri Program and include about 600 rural communities in four provinces; about 1,350 poor urban neighborhoods in 34 cities. The Project will benefit about 0.6 million rural poor people through the provision of access to improved rural infrastructure and better service delivery and about 0.5 million urban poor through improved sanitation facilities. 4. Impact and Outcome. In line with the overall objective of the PNPM Mandiri Program, the impact of the Project will be reduced poverty. The expected outcome of the Project is improved access to service delivery and healthy livelihoods for the poor, near poor, and women in the project communities. 5. Outputs. The Project will have three outputs: (i) strengthened capacity for community planning and development; (ii) improved rural basic infrastructure; and (iii) improved sanitation services.

6. Under Outputs 1, the Project will support and strengthen community participation, empowerment and capacity to prioritize, design, implement, manage and monitor community-based projects. Social mobilization and community facilitation are cross-cutting activities that will occur at all stages of the community empowerment process and are keys for ensuring pro-poor investments and sustainability. Following the PNPM Mandiri guidelines, the Project will deploy community facilitators2 (CF) to assist communities to carry out poverty mapping, identify problems and needs, evaluate community implementation capacity, develop efficient planning and decision-making processes; establish and run community implementing organizations (CIOs); formulate development plans and specific investment plans to be financed by block grants; prepare technical designs and implement civil works, and formulate and implement O&M plans to ensure sustainability of completed facilities.

7. CFs will be organized in teams. Under the rural infrastructure component, the CF-team will consist of four CFs, who will work in six villages. Out of the 600 villages that will receive block grants under the infrastructure component, about 200 villages have already received one cycle of block grants from other PNPM programs financed by government's own resources. The

1 ADB. 2009. Country Operations Business Plan (2010-2012): Philippines. Manila. 2 CFs will be contracted and financed by the Government.

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remaining 400 villages to be supported by the Project have not received any PNPM support. In villages that have not received any PNPM support and where community members are unaware of the PNPM procedures, intensive community empowerment and capacity building activities will be required, thus, each facilitator-team will consist of (i) two social development CFs, (ii) one CF for technical matters, and (iii) 1 CF for overall project management. In villages that are already familiar with PNPM and its procedures, CFs-teams to support communities to prepare investment plans for the second/third cycle of block grants, will consist of (i) one social development CF, (ii) one CF for technical matters, and (iii) two CF for overall project management. However, the above arrangements can be changed depending on the needs in the villages. Under the sanitation component, a group of five CFs will work in three neighborhoods.3 Each group of facilitators will consist of (i) two sanitation awareness CFs, and (ii) two CFs for technical matters, and (iii) one CF for overall management. At least 30% of the overall CFs will be women. CFs should ensure that the chosen investments represent the actual priority of the village and all stakeholders including the poor and women participated in the decision making processes.

8. With the assistance of these facilitators, villages/neighborhoods will:4 (i) receive information about the Project and the PNPM Mandiri program; (ii) conduct village/neighborhood surveys and poverty mapping;5 (iii) identify problems, needs and opportunities; (iv) assess community implementation capacity and gaps; (v) develop planning mechanisms and decision-making processes; (vi) formulate village medium-term poverty reduction (MTPR) plans or community sanitation improvement action plans (CSIAP); (vii) select priority investments/appropriate technologies and develop corresponding community project proposals, including O&M plans with corresponding costing and budgets; (viii) implement the selected investments with block grant support and technical guidance; and (ix) implement O&M plans to ensure the sustainability of the completed community investments. 9. The DGHS will execute a memorandum of understanding (MOU) with each participating/selected village/neighborhood, specifying the responsibilities of the village/neighborhood and the Project.6 The MOU will stipulate critical performance standards, such as support of the village government/neighborhood officials, commitment of counterpart contributions, participation rates at village/neighborhood meetings (including targets for 40% women participation and 50% of the poor), and anticorruption measures and other requirements for the approval of proposals. Once the preconditions are met and the proposal is approved, the village/neighborhood and the district project implementation unit (DPIU) will enter into a contract reflecting the specific arrangements and detailing the roles and responsibilities of each party. 3 Due to the limited community awareness on the importance of sanitation and hygiene, and the lack of

understanding on community-driven sanitation technologies, more CFs will be deployed under the sanitation component.

4 While the full facilitation and planning process that was undertaken in the 200 villages will not be repeated for villages in the second cycle, the results of the first cycle planning process, e.g., poverty mapping, priority problems, and MTPR–will be reviewed in the selection of priority investments for project funding. Socialization will be repeated to introduce or reintroduce RIS/Sanitation-PNPM approaches to the village/neighborhood, and to state or restate its objectives and emphasize how its participatory approach is different from those of other infrastructure assistance programs.

5 The objective of poverty mapping is to ensure the inclusion of women, indigenous peoples and other vulnerable and marginalized groups within the village/neighborhood. Community organizers will receive special training on the inclusion of all disadvantaged community groups in empowerment and facilitation processes.

6 The MOU and contract will be signed by the village head/neighborhood officials, the chiefs of all hamlets/head of family group/rukun tetangga (RT), and the CIO representing the village/neighborhood; and by the district satker representing the Government. The MOU signing will take place in the first village/neighborhood meeting when the CIO is established, while the contract will be signed once the village/neighborhood proposal is approved.

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10. Each participating village/selected neighborhood will work with the project through a CIO, which can either be an existing village/neighborhood organization (formal or informal) or a new project organization, as decided by the local village community/neighborhood residents through participatory meetings in the village/neighborhood. The CIO will comprise at least five members elected or reconfirmed by the community, at least 30% of them are women. The CIO will be approved by the village head/neighborhood official and registered with the district satker,7 which is a prerequisite for opening a CIO bank account. All decisions made by the CIO will be validated in participatory village/neighborhood meetings with at least 50% household attendance, including at least 50% of poor households. 11. This output will also support activities to strengthen local government capacity. This supports the current PNPM Mandiri strategy of enabling local governments to adopt the CDD approach, including key functions and implementation roles, for delivering services to communities once they have developed adequate capacity and experience with the program. The Project will provide significant capacity strengthening to prepare local governments for this task and to promote the sustainability of project gains. Particular attention will be given to local government units involved in project implementation, including the provincial and district steering committees and the provincial project implementation units (PPIUs) and DPIUs. Capacity building will include bottom-up planning and pro-poor budgeting, particularly integration of village plans into district plans and budgets, M&E, and financial management. This will be delivered through orientation and workshops, short training courses on specific functions, and information and communication materials. The Project will include a partnership agreement to be signed between DGHS and district governments,8 immediately following project orientation, outlining the responsibilities and rights of the districts under the Project. 12. Under Output 2, block grants for basic infrastructure upgrading will be provided to about 600 villages.9 Each village selected under the Project is planned to receive two cycles of block grants. Soon after the completion of the first cycle of block grants, the EA, assisted by the DPIUs and PPIUs, will carry out a village performance evaluation. Only villages that are evaluated as good performers will continue to receive the second cycle of block grants. Poor performing villages will be excluded and replaced, if necessary, with new poor villages within the project provinces. 13. According to the PNPM Mandiri Guidelines, villages selected for support under the PNPM are entitled to receive up to three cycles of block grants to implement their infrastructure investment plans. About 200 villages, selected under the Project, have received one cycle of block grants under another PNPM project financed by the government own resources. The remaining 400 villages will be poor villages that have not received any PNPM block grants. All 600 poor villages are located at the 215 project kecamatans in Jambi, Lampung, Riau and South Sumatra, previously covered under the RIS PNPM II.

14. Consistent with the PNPM Mandiri guidelines and the ongoing RIS-PNPM projects, the

7 District working unit of MPW. 8 The partnership agreement will be signed by the PPIU chief on behalf of the Government and the district head

(bupati)/mayor. 9 The list of villages will be confirmed by the Coordinating Ministry of People Welfare (the PNPM Oversight Body)

and verified by the concerned provincial and district governments to ensure that the poorest villages are selected and that no better-off villages are included. Villages originally selected for the project-list that are not willing to participate or have been effected by force major/disaster, which would encumber their participation, will be replaced by the EA with other poor villages within the project kecamatans

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menu of investment opportunities for communities will be open except for a short negative list of activities prohibited by the Government or ADB policies. The negative list includes all activities involving sensitive environment and harmful to the environment. Sensitive areas cover: (i) national reserved parks, protected forests and, (ii) national cultural protected areas, traditional/religious buildings, (iii) mangrove forests, ocean parks, coastal lines and swampy areas. Harmful activities include (i) construction of roads to protected forests, (ii) production, manufacturing, handling, trading, and storing of tobacco or tobacco-containing products. Other activities that cannot be financed under the Project are: (i) construction of new irrigation network, which covers an area more than 50 ha, (ii) construction of land reclamation larger than 50 ha, (iii) construction of reservoir with the capacity of more than 10,000 m3, (iv) use of block grants to purchase land/land acquisition, and (v) other economic activities involving revolving of funds.10 15. Activities that can be supported include (i) building and repairing basic infrastructure such as small roads, bridges, irrigation infrastructure, clean water supply systems and public sanitation; (ii) equipping or repairing social infrastructure such as school buildings, clinics, and providing supplies to school children and health clinics; and (iii) social and economic activities. 16. Following the same approach established under the ongoing RIS -PNPM projects, block grants will be transferred directly to community bank accounts managed by the CIOs. The CIO will take the lead in developing investment plans, with assistance from community facilitators and the DPIUs. After the village investment plans, which include the final technical designs and cost estimates, have been approved at a village assembly and submitted to the DPIU for approval; a contract will be executed between the CIO and the DPIU and the first installment of the block grant will be released. Civil works will be undertaken by communities with technical guidance from the community facilitators, DPIUs, and project management consultants.11 The proposed Project will utilize the same funds flow mechanism for block grants as in the ongoing RIS-PNPM projects. The first installment of 40% of the approved block grant will be transferred directly into the CIO’s bank account as an advance payment. The remaining funds, subject to certification of progress by the DPIUs, will be disbursed to communities in two additional installments.

17. Under Output 3, block grants will be provided to urban neighborhoods to specifically improve community-driven sanitation services. About 1,350 communities in 34 cities in the provinces of Central Java, DI Yogyakarta, East Java, South Sulawesi and North Sulawesi, will benefit from block grants to finance (i) construction of public bathing, toilets and washing facilities, (ii) improvement of communal sewerage systems and waste treatment,12 and (iii) improvement of disposal/reuse systems.13 18. In order to ensure that community sanitation facilities established under the Project will be integrated in city development plans and linked to city sewerages systems, only neighborhoods located in cities with an approved City Sanitation Strategy (CSS)14 will

10 A detailed negative list will be provided in the project implementation guidelines (Petunjuk Pelaksanaan) that will be

prepared by the Executing Agency. 11 When goods or services cannot be provided by a community, such as tasks requiring specialized expertise, this

should be confirmed in a community meeting and procurement should be conducted through the CIO. 12 The treatment system could include communal septic tanks, bio-digesters, buffle reactors, anaerobic filters, ponds, 13 This could include river disposal, disposal for use in fishery, sludge drying, use as fertilizer, and sucking by sludge

trucks. 14 The CSS is a strategic planning process for sanitation sector development, which is endorsed by the local

parliament. CSSs include indicative programs/projects that are/will be included in the annual budget plans.

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participate in the Project. By 2011, it is expected that local governments in the project provinces will have endorsed CSS for 34 cities. To assure support from the respective city administrations, local governments will provide a firm letter of confirmation documenting their readiness to participate in the Project and specific contributions to support community-lead sanitation development. Neighborhoods in these 34 cities will be selected based on (i) poverty incidence ranking using the latest available data, (ii) assurance that all community members participate in the decision making process to design and implement sanitation facilities, (iii) CIO will be established and accountability and governance mechanism will be in place, and (iv) willingness to improve overall hygiene and health environments in the neighborhood. 19. Given the limited community awareness on the importance of sanitation and hygiene, and the lack of understanding on community-driven sanitation technologies, the Project will allow sufficient time for the community empowerment process. The sanitation component is expected to be implemented over a four-year period. The neighborhoods to be covered will be staged as follows: (i) 151 locations in the first year, (ii) 302 locations in the second year, (iii) 397 locations in the third year and (iv) 500 locations in the fourth year. CFs will assist local communities to develop their own action plans for sustainable sanitation services and improved hygiene and heath environments. The process will start with the establishment of a long list of communities showing interest to participate. So-called Road Shows, providing information on community-driven sanitation, general health and hygiene aspects, and the Project concept and criteria for participation, will be organized in each city, to inform and register interested neighborhoods. 20. CFs will help community members in the project neighborhoods to (i) identify issues and needs related to health, hygiene and sanitation, (ii) formulate incusive and sustainable sanitation plans with specific investment plans to be financed by block grants, (iii) prepare technical designs, (iv) implement civil works, and (v) formulate and implement O&M plans to ensure sustainability of completed facilities. 21. The implementation mechanism will be similar to output 2 and follow good practices established under RIS-PNPM projects. Each participating neighborhood will work through a CIO; block grants will be transferred directly to community bank accounts; procurement process and fund flow mechanisms will be in line with procedures described under output 2 and established under RIS PNPM projects.

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Months

Indicative Activities Sep

2010 Oct 2010

Nov 2010

Dec 2010

Jan 2011

Feb 2011 Who responsible

Securing Local Governments’ Confirmation for Provision of counterpart Funds

X x X

Executing Agency (the Directorate General of Human Settlements)

Establish project implementation arrangements (provincial project management units, district management units, central project management unit, steering committee) x X X

EA and district administrations

ADB Board approval X ADB

Loan signing

X ADB and Ministry of Finance

Government legal opinion provided

x

EA and Ministry of Legal Affairs and Human Rights

Government budget inclusion

x x x x x

EA, BAPPENAS, MOF, participating local governments

Loan effectiveness x ADB/MOF

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B. Overall Project Implementation Plan

The following gantt chart records outputs with key implementation activities on quarterly basis. The EA will update and submit the updated gantt chart annually together with contract and disbursement projections for the following year.15

Activities 2010

(Mth/Qtr) 2011

(Mth/Qtr) 2012

(Mth/Qtr) 2013

(Mth/Qtr) 2014

(Mth/Qtr) 2015

(Mth/Qtr) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Output 1. Strengthened Capacity for Community Planning and Development

1.1 Recruitment and training of community facilitators x x x x

1.2 Deployment of community facilitators X X X X X X X X X X X X X X X

1.3 Socialization campaigns in project villages and neighborhoods X X X X X X X

1.4 Preparation and completion of community facilitation and planning in project villages/ neighborhoods, including separate women's meetings and poverty mapping X X X X X X X

1.5 Selection of investments in project villages and neighborhoods X X X X X X X 1.6 Implementation of Inter-village/ neighborhoods meetings to support coordination and potential complementarities X X X X X X X X X X

1.7 Finalization of community investment plans, drafting of O&M plans and execution of civil work contracts X X X X X X X X X X X 1.8 Implementation of Local government capacity building x x x x x x x

15 Gantt chart available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

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Activities 2010

(Mth/Qtr) 2011

(Mth/Qtr) 2012

(Mth/Qtr) 2013

(Mth/Qtr) 2014

(Mth/Qtr) 2015

(Mth/Qtr) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Output 2: Improved Rural Basic Infrastructure through Community Development Grants 2.1 Implementation of training for community members on the implementation of village infrastructure plans x x x x x 2.2 Implementation of gender reporting x x 2.3 Disbursements of first tranche of grants for investments X X X X X 2.4 Disbursements of second tranche of grants for investments started X X X X X X 2.5 Disbursements of third tranche of grants for investments X X X X X X X X 2.6 Commencement of civil works of community investment projects X X X X X X 2.7 Completion and implementation of operation and maintenance plans for the built facilities X X X X X X X X X X X X X

Output 3: Improved Sanitation Services and Infrastructure through Community Development Grants 3.1 Carry out road show to register interested neighborhood X X X X 3.2 Implement community members training on sanitation awareness and improvement plans X X X X

3.3 Implement gender reporting x x x x 3.4 Disburse the first tranche of grants for investments X X X X 3.5 Disburse the second tranche of grants for investments X X X X

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Activities 2010

(Mth/Qtr) 2011

(Mth/Qtr) 2012

(Mth/Qtr) 2013

(Mth/Qtr) 2014

(Mth/Qtr) 2015

(Mth/Qtr) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 3.6 Disburse the third tranche of grants for investments X X X X 3.7 Implement civil works of community investment projects X X X X X X X X 3.8 Complete the operation and maintenance plans for the built facilities X X X X X X X X

Management Activities

Selection of Management Consultants selection X X X

Establishment of Project Monitoring Information System/Reporting System X X X X X

Review Missions X X X X X X X X

Mid-term review X

Project completion report X

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations – Roles and Responsibilities

Project implementation organizations

Management Roles and Responsibilities

• DGHS and CPMU, MPW

The Executing Agency is responsible for the overall project management and implementation including: (i) setting policy directions for the Project, (ii) preparing annual program and budget including ensuring the timely and sufficient provision of government’s counterpart funds, (iii) providing implementation guidance and supervision, (iv) establishing the central project management unit (CPMU), and (iv) reporting on the project implementation to the PNPM Mandiri Oversight Body and ADB.

The DGHS as the key implementing agency, together with the CPMU is responsible for the day-to-day project management and implementation, including project supervision, monitoring, accounting, and consolidating reporting. Its tasks are:

developing and updating project implementation guidelines;

creating awareness, understanding and support for the project within the agency and with related ministries, project stakeholders, and public interest groups;

building partnerships with project stakeholders, in particular provincial and district governments;

coordinating activities in accordance with project guidelines;

leading the planning and programming (including ensuring the provision of government counterpart funds), coordination, oversight, and monitoring and evaluation of the project;

leading and coordinating activities related to financial management and financial audit;

developing and implementing the capacity building program and training for project staff and stakeholders;

establishing and ensuring the operation of the project's complaints and grievances mechanism;

reporting periodically on the progress of implementation, the resolution status of all grievances lodged under the Project, and any allegations of misuse of funds or corruption, to the director-general of human settlements and the PNPM Mandiri Oversight Body

selecting, contracting, giving direction and supervising the project management/ implementation consultants at the national and regional levels.

supervising and providing guidelines on the recruitment and training of community facilitators.

preparing withdrawal applications including retention of supporting documents and submitting the WAs (through MOF) to ADB.

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supporting/ facilitating the state auditor in the preparation and submission of the audited project accounts and financial statements.

• PNPM Mandiri Oversight Body/ PNPM Mandiri Coordinating Team and Steering Committee

Provides overall policy directions and assesses the results, benefits, and impact of Project implementation.

• Agencies /Dinas of Public Works of participating provinces

• Planning Department (BAPPEDA) of participating provinces

Provincial Project Implementation Units (PIUs) in the nine participating provinces are tasked to:

implement, monitor and supervise the project in their provinces

conduct socialization about the project among its staff, members of the provincial coordinating team, and local interest groups;

provide input for village/neighborhood level project site selection

coordinate with local stakeholders recruit community facilitators assist the CPMU in implementing capacity building

programs (including training program) for project staff, community facilitators, community members and other stakeholders

provide assistance to district administrations in project implementation

manage the handling of complaints and grievances at the provincial level;

carry out financial programming and management at the provincial level;

prepare physical and financial progress reports at the provincial level, based on the physical and financial progress reports of the districts, and submit these to the PCMU; and

prepare regular reports on the progress of implementation, the resolution status of all grievances lodged under the Project, and any allegations of misuse of funds or corruption to the provincial committee.

• Agencies /Dinas of

Public Works of participating districts/cities

• Planning Department (BAPPEDA) of participating districts/cities

District Implementation Units (DPIUs) in all participating cities/districts are tasked to:

Coordinate, implement and organize project activities within the district/city level;

conduct socialization activities among staff and in project areas, and ensure that policies and targets on women's equality and pro-poor are disseminated to the project villages/neighborhoods;

ensure that the aspirations of women and poor have

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been considered in the preparation of Medium Term Poverty Reduction Plan (MTPR), community sanitation improvement action plan (CSIAP) and community work/investment plan;

assist in the formation of community implementation organizations (CIO)s;

assist the CIOs to coordinate the village/neighborhood leadership and synchronize planning processes to produce common MTPR/community sanitation improvement action plans (CSIAP) for the project-related activities and for the village/neighborhood;

provide technical assistance to formulate MTPR and CSIA plans;

supervise physical implementation of the community investments and monitor CIO fund applications and disbursements;

supervise the O&M of the completed village and neighborhood facilities;

provide support to and monitor the outputs of the community facilitators and consultants;

assist villages/neighborhoods to lobby for integration of the MTPR/CSIAP into district development plans or city sanitation strategies and help the CIO to access resources for projects identified in the MTPR/CSIA that cannot be funded under the Project;

ensure openness and ready availability of information on all aspects of the implementation of the Project;

maintain technical data and accounting records; coordinate and monitor reporting at the village level; conduct investigations of complaints from the community

and submit a report to the PPIU within 10 days of receipt of any complaint, even if the investigation is ongoing;

prepare financial and physical progress reports based on reports collected from the CIOs and submit these to the PCMU through the PPIU;

report the results of all activities to the district committee on a regular basis; and

carry out performance evaluations of community facilitators every 3 months and submit them to the PPIU for review and further action such as additional training, if required.

• Community Members Community Implementation Organizations (CIOs) at selected villages and neighborhoods:

carry out social and poverty mapping and community meetings, with at least 50% participation by poor people and 40% participation by women in decision-making;

establish a CIO office that should serve as a center of information and holding of discussions at the community level;

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identify (i) poverty reduction constraints/problems in improving access to sanitation; (ii) social and infrastructure constraints in the village/ neighborhoods;

organize and facilitate village/neighborhood meetings/ assemblies

prepare the medium term poverty reduction (MTPR) and community sanitation improvement action plan (CSIAP)

prepare a village/neighborhood investment proposal based on the medium term poverty reduction (MTPR) plan (for the rural infrastructure component) and CSIAP (for the sanitation component)

after receiving a notice of approval of the village/neighborhood proposal, open and maintain a bank account as depository of the Project grant funds (the account will have two signatories i.e. the Chair and Treasurer of the CIO);

enter into a contract for works with the DPIU; facilitate the establishment of a management team (O&M

group) for construction and operation and maintenance; the management team will supervise infrastructure construction activities and related management programs (including O&M).

implement the approved village/neighborhood project funded activities;

prepare and maintain accounting records, including village level cash book and supporting documents on expenditure;

monitor construction works and reporting progress to the DPIU using the project performance management system (PPMS);

hold weekly meetings with the community and providing copies of daily records on village information boards to report physical and financial progress;

maintain a complaints and grievance recording system and investigate allegations, and report regularly to the PPIU on grievances and findings.

organize weekly village assemblies to report on the progress of activities;

publish weekly progress reports on village activities through the widely-accessible forms of media communication;

prepare a final report on the implementation of activities and organize a village assembly to deliver the final report and answer questions regarding implementation activities and use of funds;

submit a final report on community project implementation to the DPIU; and

facilitate the provision of data and supporting documents related to the conduct of project implementation audits.

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Management Roles and Responsibilities The community management team (O&M group) is responsible to:

formulate the Operation and Maintenance funding plan, e.g., obtaining financing through self-help or from the village or district government;

conduct supervision of community project implementation;

coordinate with the CIO, village organizers and community facilitators during implementation;

ensure the sustainability of the community project O&M system that has been established;

together with CIO, Village Organizers and Village Government, coordinate with the DPIU and district/city government in the operation and maintenance of the community project; and

provide reports on the status of operations and maintenance—including the collection and management of funds—to the village/neighborhood authorities.

Village/neighborhood organizers (cadres) are expected to perform roles as:

source of information related to the conditions of the village,

mediators, motivators for villagers to carry out implementation of the

project program in order to achieve the desired goals and objectives.

• ADB Lender Main project financer Monitoring project implementation and covenant

compliance Ensure compliance of ADB’s procedures and

safeguards. • Project Consultants

National management consultants: disseminate information on the project at the provincial,

district and village/neighborhood levels; provide direction and technical guidance to the regional

consultants in the implementation of USRI in all project areas;

monitor, supervise and evaluate the overall project implementation

provide assistance to the EA/CPMU in implementing their project-related tasks/ responsibilities

assist in preparation of progress reports assist in the design and implementation of a sanitation

baseline survey and subsequent sanitation related impact assessments in selected cities.

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Management Roles and Responsibilities Regional management consultants at province, district and city levels:

disseminate information on the project to the district/city administrations, villages and urban neighborhoods,

provide direction and technical guidance to community facilitators;

provide assistance to the PPIUs and DPIUs in the implementing their project-related tasks/ responsibilities;

monitor, supervise and evaluate implementation of the project activities at the district and city level;

ensure dissemination of project relevant information through the media;

support awareness creation on sanitation and promote efforts on hygiene behavioral change;

undertake documentation and prepare activity reports/periodical reports as required;

provide technical support and guidance to Cfs and community members in planning and implementing civil works at the villages and urban neighborhoods;

assist in approving MTPR/CSIAP and community investment plans

carry out, together with CFs, training for the CIO in funds administration and management, and in financial reporting;

provide advice to DPUIs and COIs on the handling of complaints;

verify the soundness of the technical specifications of the village projects;

facilitate the preparation O&M plans; support the preparation and conduct of the project

sanitation baseline and subsequent sanitation related impact assessments in selected cities

prepare and submit required physical progress and financial reports in accordance with established formats.

• community facilitators

The empowerment facilitators are responsible for the following tasks:

disseminate information on the project to their assigned communities/neighborhoods;

prepare villagers/neighborhood residents for project socialization, village/ neighborhood deliberations and decision-making;

facilitate training and capacity-building in the village/neighborhood;

assist the villagers/neighborhood residents, community groups and village/ neighborhood officials in the identification of the problems of poverty and the economic, social and environmental needs of the communities;

assist communities in the preparation of

16



village/neighborhood plans, including the MTPR/ CSIAP and community investment plan;

assist communities in determining the mechanisms for implementation and in the actual implementation of their projects;

assist villagers/ neighborhood residents in project preparation, planning, physical implementation and reporting;

assist communities in preparing their O&M plans; coordinate and communicate with District and village

leadership at each step of project implementation; prepare and submit accomplishment reports on each

phase of implementation in accordance with established format.

The sanitation awareness facilitators are responsible for (i) promoting health and hygiene as well as sanitation in the community and schools in line with the sanitation and health behavioral change (SHBC) programs, (ii) coordinating critical inputs to improve sanitation and hygiene behavior, (iii) coordinating resources and inputs for hygiene and sanitation promotion/campaigns, training, and monitoring. Their key tasks are to:

facilitate and assist the selected neighborhood, in particular the CIOs in planning, implementing and monitoring the SHBC programs at the community level;

carry out training for community members, local schoolteachers, local women’s groups on hygiene and sanitation behavioral change in their neighborhood;

carry out PHAST training workshops and sessions with groups of women (and men and youth) in project communities, in collaboration with locally resident school teachers, health workers, sanitation workers, midwives, and others related groups;

facilitate and assist the CIOs in preparing and implementing CSIAP and investment plans in accordance with the agreed guidelines and standards including reviewing CSIAP to ensure that SHBC related activities are included;

ensure that appropriate interests of all community members including women and vulnerable groups are accommodated during the preparation and implementation of the CSIAP and investment plans;

facilitate the process of assessment, analysis and action planning by community groups through the PHAST steps, leading to the preparation of a CSIAP and investment plans

support the hand-washing initiative and use of soap; support good practices in water treatment and water

17



storage provide appropriate support and assistance to the local

school teacher in the implementation of the school health program, including water quality monitoring, fecal contamination tests, worm infestation prevention activities and other outreach activities;

provide appropriate support and assistance to the local health team, including the sanitation workers, midwives and other local health resources for community health and sanitation activities;

monitor the effectiveness of school and community health and sanitation activities through routine monitoring systems, conducting of rapid surveys for water borne disease activities, and conducting focus groups with members of the community as well as teachers, sanitation workers, midwives and voluntary health workers;

assist local health centers and schools to promote improved health and sanitation behavior programs; and

assist local women’s groups to promote and raise the awareness of mothers with young children and infants in safe practices to reduce diarrhea and other water-borne diseases.

The technical facilitators are responsible for the following tasks:

disseminate information on the Project to their assigned communities;

facilitate village/ neighborhood deliberations and training to the villagers/ neighborhood residents and CIO on the technical aspects of project implementation;

assist the villagers/ neighborhood residents, community groups and village/neighborhood officials in the identification problems of poverty and infrastructure needs;

provide technical assistance in the preparation of the MTPR/CSIAP, community investment plan and technical plans;

provide technical assistance and supervision to the CIO and in the implementation of the community project;

provide technical assistance in the preparation of operation and maintenance (O&M) plans;

coordinate and communicate district/city and village/neighborhood leadership; and

prepare reports on the implementation of each phase of the project in accordance with established formats.

The management facilitators are responsible for the following tasks:

18



disseminate information on the Project to their assigned communities;

facilitate village/ neighborhood assemblies and training of villagers/community members and community groups on the management and financial aspects of project implementation;

assist the villagers/neighborhood residents, community groups and village/neighborhood officials in the identification of the problems of poverty;

provide assistance to the villagers in preparing the economic, social and financial sections of the MTPR;

provide assistance to the village in preparation, planning, physical implementation and reporting;

monitor fund disbursements, verify records of transactions; and safe-keeping of all financial documents;

coordinate and communicate with district and village leadership;

prepare report on the implementation of each phase of the project in accordance with established formats.

19

B. Key Persons Involved in Implementation

Executing Agency DGHS Mr. Budi Yuwono P.

Director General of Human Settlements Telephone No.: +62 21 727 96 155 Email address:

Office Address: Ministry of Public Works Directorate General of Human Settlements, Jl. Pattimura No. 20, Kebayoran Baru Jakarta Selatan 12110 Indonesia

ADB

Indonesia Resident Mission Country Director

James A. Nugent Country Director, IRM Telephone No. +62 21 251 2721 Email address: [email protected]

Mission Leader Wolfgang G. Kubitzki Sr. Social Sector Economist, IRM Telephone No. + 62 21 251 2721 Email address: [email protected]

20

C. Project Organization Structure

Regional Project Management Consultants

National Satker/PPK

Provincial PNPM Mandiri Coordinating Team and

Steering Committee

Provincial Project Implementation Unit

(PPIU)

Provincial Satker/PPK

District PNPM Mandiri Coordinating Team and

Steering Committee

District Project Implementation Unit

(DPIU)

District/city Satker/PPK

Provincial Project Mgt Consultants

District Proj Mgt Consultants

Village Apparatus/Neighborhood

Officials

OMS/ Community

Groups

O&M Team Village/neigh

borhood Cadres

Community Facilitators

National Project Management Consultants

Tim Pengendali PNPM Mandiri /Tim Pengarah Pusat

PNPM Oversight Body/ PNPM Mandiri Coordinating Team and Steering Committee

Executing Agency (EA) Directorate General of

Human Settlements

CPMU

Line of Supervision

Reporting Line

Coordination

Villa

ge/

neig

hbor

hood

D

istr

ict/c

ity

Prov

ince

N

atio

nal

21

22. The PNPM Oversight Body, also known as PNPM Mandiri Coordinating Team, (Tim Pengendali PNPM Mandiri/Tim Pengarah Pusat) reflects Government’s intention to have a common framework for all central government poverty reduction programs. The Government has designated the Coordinating Ministry for Social Welfare to chair the PNPM Oversight Body. Other members are the Ministers for BAPPENAS, Finance, Home Affairs, Public Works, Social Development and the Ministry for Development of Disadvantaged Regions. The PNPM Oversight Body provides overall policy directions and assesses the results, benefits, and impact of Project implementation.

IV. COSTS AND FINANCING

23. The ADB (OCR) loan proceeds of $100 million will be made available to the Ministry of Finance (MOF), which will channel the funds to the Ministry of Public Works and communities selected to receive block grants. The loan will finance 73.7% of the total project cost. The loan will have a 25-year term, including a grace period of 5 years, an interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, a commitment charge of 0.15% per annum on any undisbursed amount of the loan, and such other terms and conditions set forth in the draft project loan agreement. The Government has provided ADB with (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility, and (ii) an undertaking that this choice was its own independent decision and not made in reliance on any communication or advice from ADB. 24. The Directorate General of Human Settlements (DGHS) within the Ministry of Public Works will utilize the loan proceeds to finance (i) consulting services for project management/implementation support and (ii) services related to the provision of training for community facilitators, community members, local government staff and other related entities. The selected community members will utilize the funds to finance construction/rehabilitation of basic rural infrastructure or the urban sanitation facilities. Upon completion of the community works, the government will formally transfer the facilities to the communities for operation and maintenance. The remainder of project costs, which is estimated at $35.6 million, will be financed from the budgetary resources of the Ministry of Public Works, the provincial and district/city governments and beneficiaries (community members). The Government will cover financing charges, estimated at $7.0 million, from its own financial resources. All applicable taxes and duties will be financed from Government counterpart contributions. The Government will finance $27.6 million equivalent (20.4% of the project cost), which consists of $21.5 million (15.9% of the project cost) will come from the central government and $6.1 million (4.5% of the project cost) from local governments. Project beneficiaries will provide the balance of $8 million equivalent (5.9% of the project cost) as counterpart contributions to community investments.

22

A. Detailed Cost Estimates by Expenditure Category

($ million)

Percentage of Total

Taxes and

Base Cost DutiesA.

1 Block Grants (community civil works) 86.00 69.0% 0.00a. Rural Infrastructure 33.50 26.9% 0.00b. Urban Sanitation 52.50 42.1% 0.00

2 Training and Workshops: 4.10 3.3% 0.00a. Community Facilitators 2.70 2.2% 0.00b. Community Implementation Organization 0.50 0.4% 0.00c. User Groups 0.40 0.3% 0.00d. Capacity Building of Local Government Staff 0.50 0.4% 0.00

3 Consulting Services 7.90 6.3% 0.004 Community Preparation (Roadshows) 1.00 0.8% 0.105 Community Facilitation (CFs) 10.30 8.3% 1.00

6Beneficiaries' Contributions (in forms of lands, labors andother contributions during project implementation 8.00 6.4% 0.00

7 Project Management 6.00 4.8%a. Salaries (government staff involved in project management)

4.00 3.2%0.10

b. Accommodation and duty travel for supervision and monitoring during implementation)

1.00 0.8%0.05

c. Equipment Operation and Maintenance 1.00 0.8% 0.058 Taxes and Duties 1.30 1.0% 1.30

Total Base Costs 124.60 100.0% 1.30B.

1 Physical 1.70 40.0% 02 Price 2.30 60.0% 0

Subtotal (B) 4.00 100.0% 0C.

1 Interest During Implementation 6.40 91.4% 02 Commitment Charges 0.60 8.6% 0

Subtotal (C) 7.00 100.0% 0135.60 100.0% 1.30

Contingencies

Financing Charges During Implementation

Total Project Cost (A+B+C)

Item Total CostInvestment Costs

23

B. Allocation and Withdrawal of Loan Proceeds

a. General 25. The below table is attached to Schedule 3 of the draft Loan Agreement. The table sets forth the Categories of Goods, Works, consulting services and other items to be financed out of the proceeds of the Loan and the allocation of amounts of the Loan to each such Category (hereinafter called the Table). b. Percentage of ADB Financing 26. Except as ADB may otherwise agree, the items of the Categories and Subcategories listed in the Table shall be financed out of the proceeds of the Loan on the basis of the percentage set forth in the Table. c. Reallocation 27. Notwithstanding the allocation of Loan proceeds and the withdrawal percentages set forth in the Table, (i) if the amount of the Loan allocated to any Category appears to be insufficient to

finance all agreed expenditure in that Category, ADB after consultation with the Borrower may, by notice to the Borrower, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Loan which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditure in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made; and

(ii) if the amount of the Loan then allocated to any Category appears to exceed all agreed expenditures in that Category, ADB, after consultation with the Borrower, may, by notice to the Borrower, reallocate such excess amount to any other Category.

d. Disbursement Procedure 28. Except as ADB may otherwise agree, the Loan proceeds for financing goods, works, consulting services and other times shall be disbursed in accordance with ADB’s “Loan Disbursement Handbook” dated January 2007 (ADB’s Loan Disbursement Handbook), as amended from time to time. e. Imprest Account; Statement of Expenditure 29. (i) Except as ADB may otherwise agree, the Borrower shall establish immediately after the Effective Date, an imprest account at the Bank of Indonesia (the Imprest Account). The Imprest Account shall be established, managed, replenished and liquidated in accordance with ADB’s Loan Disbursement Handbook, and detailed arrangements agreed upon between the Borrower and ADB. The currency of the Imprest Account shall be Dollars. The initial amount to be deposited into the Imprest Account shall not exceed the lower of (i) the estimated expenditure to be financed through the Imprest Account for the first six months of project implementation, or (ii) the equivalent of ten million Dollars ($10,000,000). Subsequent amount to

24

be advanced to the Imprest Account shall not exceed the estimated expenditure to be financed through the Imprest Account for the relevant six month period of project implementation. The Imprest Account will be used for disbursement of expenditures other than the consulting services. The direct payment procedure will be applied for consulting services.

(ii) the Statement of Expenditure (SOE) procedure may be used for reimbursement of eligible expenditures for any individual payment not exceeding $50,000 and to liquidate advances provided into the Imprest Account, in accordance with ADB’s Loan Disbursement Handbook and detailed arrangements agreed upon between the Borrower and ADB. f. Condition of Withdrawal from Imprest Account for a Block Grant 30. Notwithstanding any other provision of the Loan Agreement, no withdrawal shall be made from the Imprest Account by the Borrower in respect of expenditures for a Subproject until (a) a CIO for the participating village/neighborhood has been established in accordance with Schedule 5 to the Loan Agreement; (b) a separate bank account has been established by the relevant CIO for the grant funds; (c) a management team (user group) for construction and O&M has been established; (d) a subproject proposal based on MTPRP/CSIAP together with the investment plan has been prepared and approved in accordance with selection procedures under the Project; and (e) subproject contract between the CIO and the DPIU has been signed, as described in Schedule 4 to the Loan Agreement.

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS

(Urban Sanitation and Rural Infrastructure Support to PNPM Mandiri Project)

CATEGORY ADB FINANCING BASIS Total Amount Allocated for

ADB Financing $',000

Number Item Category Subcategory

Percentage of ADB Financing from the

Loan Account 1 Community Development

Grants 86,000 100 percent of total

expenditure claimed* 1A Rural Infrastructure 33,500 100 percent of total

expenditure claimed* 1B Urban Sanitation 52,500 100 percent of total

expenditure claimed* 2 Training and Workshop 4,100 100 percent of total

expenditure claimed* 3 Consulting Services 7,900 100 percent of total

expenditure claimed* 4 Contingencies 2,000 Total 100,000

* Exclusive of local taxes and duties imposed within the territory of the Borrower. (The interest and commitment charges will be paid directly by the Borrower.)

25

C. Detailed Cost Estimates by Financier

Amount% of Cost Category Amount

% of Cost Category Amount


% of Cost Category Total Costs

Taxes and

Duties

A.1 86.00 100.0 0.00 0.0 0.00 0.0 0.00 0.0 86.00 0

33.50 100.0 0.00 0.0 0.00 0.0 0.00 0.0 33.50 052.50 100.0 0.00 0.0 0.00 0.0 0.00 0.0 50.00 0

2 4.10 100.0 0.00 0.0 0.00 0.0 0.00 0.0 4.10 02.70 100.0 0.00 0.0 0.00 0.0 0.00 0.0 2.70 00.50 100.0 0.00 0.0 0.00 0.0 0.00 0.0 0.50 00.40 100.0 0.00 0.0 0.00 0.0 0.00 0.0 0.40 00.50 100.0 0.00 0.0 0.00 0.0 0.00 0.0 0.50 0

3 7.90 100.0 0.00 0.0 0.00 0.0 0.00 0.0 7.90 04 0.00 0.0 1.00 100.0 0.00 0.0 0.00 0.0 1.00 0.105 0.00 0.0 10.30 100.0 0.00 0.0 0.00 0.0 10.30 1.00

6

0.00 0.0 0.00 0.0 0.00 0.0 8.00 100.0 8.00

0.007 0.00 0.0 0.70 11.7 5.30 88.3 0.00 0.0 6.00

a. Salaries 0.00 0.0 0.50 12.5 3.50 87.5 0.00 0.0 4.00 0.100.00 0.0 0.20 20.0 0.80 80.0 0.00 0.0 1.00 0.050.00 0.0 0.00 0.0 1.00 100.0 0.00 0.0 1.00 0.05

8 Taxes and Duties 0.00 0.0 1.00 76.9 0.30 23.1 0.00 0.0 1.30 1.30Total Base Cost 98.00 0.0 13.00 0.0 5.60 0.0 8.00 0.0 124.60

B 2.00 50.0 1.50 37.5 0.50 12.5 0.00 0.0 3.00C 0.00 0.0 7.00 100.0 0.00 0.0 0.00 0.0 7.00

100.00 73.7 21.50 15.9 6.10 4.5 8.00 5.9 135.6073.7% 15.9% 4.5% 5.9% 100%

Financing Charges During ImplementationTotal Project Cost (A+B+C)% Total Project Cost

b. Accommodationc. Equipment Operation and Maintenance

Contingencies

Community Preparation (roadshows)Community Facilitation (CFs)

Lands, labor and other contributions during implmentationProject Management

b. Community Implementation Organizationc. User Groupsd. Capacity Building for local government staffConsulting Services

a. Rural Infrastructureb. Urban SanitationTraining and Workshopsa. Community Facilitators

ItemInvestment Costs

Block Grants (community civil works)

($ million)ADB (OCR) Central Government Local Governments Beneficiaries

26 26

D. Detailed Cost Estimates by Outputs/Components

Amount% of Cost Category Amount


% of Cost Category

Taxes and Duties

A.1 Block Grant (community civil works) 86.00 0.00 0.00% 33.50 39.00% 52.50 61.00% 0.00

a. Rural Infrastructure 33.50 0.00 0.00% 33.50 100.00% 0.00 0.00% 0.00b. Urban Sanitation 52.50 0.00 0.00% 0.00 0.00% 52.50 100.00% 0.00

2 Training and Workshops 4.10 4.10 0.00% 0.00 0.00% 0.00 0.00% 0.00a. Community Facilitators 2.70 2.70 100.00% 0.00 0.00% 0.00 0.00% 0.00b. Community Implementation Organization 0.50 0.50 100.00% 0.00 0.00% 0.00 0.00% 0.00c. User Groups 0.40 0.40 100.00% 0.00 0.00% 0.00 0.00% 0.00d. Capacity Building of Local Government Staff 0.50 0.50 100.00% 0.00 0.00% 0.00 0.00% 0.00

3 Consulting Services 7.90 1.23 15.60% 2.93 37.10% 3.74 47.30% 0.004 Community Preparation (Roadshows) 1.00 0.50 50.00% 0.00 0.00% 0.50 50.00% 0.105 Community Facilitation (CFs) 10.20 3.12 30.60% 1.50 14.70% 5.58 54.70% 1.00

6Lands, labors and other contribution during projectimplementation (beneficiaries)

8.00 0.00 0.00% 2.60 32.50% 5.40 67.50%0.00

7 Taxes and Duties 1.30 0.32 30.70% 0.15 14.70% 0.83 54.60% 1.308 Project Management 6.00 1.22 7.90% 1.80 34.30% 2.98 57.80% 0.20

a. Salaries 4.00 0.80 20.00% 1.20 30.00% 2.00 50.00% 0.10b. Accommodation 1.00 0.22 22.00% 0.30 30.00% 0.48 48.00% 0.05c. Equipment Operation and Maintenance 1.00 0.20 20.00% 0.30 30.00% 0.50 50.00% 0.05Total Base Cost 124.50 10.49 20.30% 42.48 30.00% 71.53 49.70%

B.1 Physicalb 1.60 0.48 30.00% 0.56 35.00% 0.56 35.00% 0.002 Pricec 2.40 0.72 30.00% 0.84 35.00% 0.84 35.00% 0.00

Subtotal (C) 4.00 1.20 30.00% 1.40 35.00% 1.40 35.00% 0.00C.

1 Interest During Implementation 6.40 0.96 15.00% 1.92 30.00% 3.52 55.00% 0.002 Commitment Charges 0.60 0.09 15.00% 0.21 35.00% 0.30 50.00% 0.00

Subtotal (C) 7.00 1.05 15.00% 2.13 30.40% 3.82 54.60% 0.00135.50 12.74 9.90% 46.01 34.00% 76.75 56.60%

a bc Computed includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate: 5.6% for

d

($ million)

Total Cost

Output 1 Community Planning

and Development

Output 2Rural Infrastructure

Output 3Urban Sanitation

Investment Costsa

Contingencies

Financing Charges During Implementationd

Item

2011 an 6% for 2012-2014 includes interest and commitment charges. Interest during construction has been computed at the five-year forward London interbank-offered rate plus a spread of 0.3%.

Source: Asian Development Bank

Total Project Cost (A+B+C)

In mid-2010 prices.Computed at 10% for civil works; and 5% for training, community facilitation, workshops.

27

E. Detailed Cost Estimates by Year

($ million)

Item Total Costb 2011 2012 2013 2014 A. Investment Costs 1 Block Grant (community civil works) 86.00 14.26 28.51 23.81 19.42

a. Rural Infrastructure 33.50 8.38 16.75 8.37 0.00

b. Urban Sanitation 52.50 5.88 11.76 15.43 19.43

2 Training and Workshop 4.10 1.05 1.33 1.00 0.72

a. Community Facilitators 2.70 0.70 0.90 0.70 0.40

b. Community Implementation Organization 0.50 0.14 0.13 0.12 0.11

c. User Groups 0.40 0.11 0.10 0.08 0.11

d. Capacity Building for local government staff 0.50 0.10 0.20 0.10 0.10

3 Consulting Services 7.90 1.58 1.98 2.24 2.10

4 Community Preparation (roadshows) 1.00 0.11 0.23 0.29 0.37

5 Community Facilitation (CFs) 10.30 2.02 2.91 2.43 2.94

6 Lands, labors and other contributions during project implementation (beneficiaries)

8.00 1.90 2.51 1.59 2.00

7 Taxes and Duties 1.30 0.26 0.37 0.30 0.37

8 Project Management 6.00 1.30 1.70 1.30 1.70

a. Salaries 4.00 0.80 1.20 1.00 1.00

b. Accommodation 1.00 0.30 0.20 0.10 0.40

c. Equipment Operation and Maintenance 1.00 0.20 0.30 0.20 0.30

Total Base Cost 124.60 22.48 39.54 32.96 29.62B. Contingencies 4.00 0.72 1.27 1.04 0.97C. Financing Charges During Implementation 7.00 1.18 2.23 1.88 1.71

Total Project Cost (A+B+C) 135.60 24.38 43.04 35.88 32.30

% Total Project Cost 100% 18.0% 31.7% 26.5% 23.8%

28

F. Contract and Disbursement S-curve

contract award projections

0

5

10

15

20

25

30

2011-I 2011-II 2012-I 2012-II 2013-I 2013-II 2014-I 2014-II

Year

$ m

illio

n

cummulative disbursement projection

0

20

40

60

80

100

120

2011-I 2011-II 2012-I 2012-II 2013-I 2013-II 2014-I 2014-II

Year

$ m

illio

n

Table 1: Contract Awards and Cumulative Disbursement ($ million)

2011 2012 2013 2014 Half-year S1 S2 S1 S2 S1 S2 S1 S2 contract awards 1.2 22.48 1.85 27.95 1.55 23.07 3.4 18.5cumulative disbursement 1.2 10.2 21.2 49.15 53.7 76.77 81.5 100

Source: Asian Development Bank

29

G. Fund Flow Diagram

7 and 20 20

6 and 19

61 and 5 and 18

2

4 and 17 3 and 21

8

1610

11.a

12

9 13

14

Cash flow Document flow

DG = director general, DGHS = Directorate General of Human Settlements, MoF = Ministry of Finance, PCMU = project coordination and monitoring unit.Source: Asian Development Bank.

Regional Treasury Office11.b

Treasurer / Third Party / Community Bank Account at commercial bank

Operational Bank / Central Bank Branch Office

Community Implementation Organization

Implementation Unit

Executing Agency

Imprest Account

District / provincialProvincial Project Implementation Unit

District Project

Works as PCMU

DG DebtManagement, MoF

Bank Indonesia,

Asian Development Bank

Directorate Cash Management, DG Treasury, MoFDGHS, Ministry of Public

30

31. The Project will adopt the same funds flow mechanism as in the ongoing RIS-PNPM 2 which involves direct transfer of funds for block grants from the project imprest account to the CIO bank account. This will ensure that the communities receive the funds directly with minimal delay and no leaks. Under the rural infrastructure component, block grants of Rp250 million, will be provided to each of approximately 600 villages (each receiving two cycle of block grants) to finance their priorities as identified in their MTPR plans. While under the sanitation component, block grants of Rp350 million, will be provided to each of approximately 1,350 neighborhoods to finance their sanitation facilities as identified in the community sanitation improvement action plans (CSIAPs) The first installment of 40% of the approved block grant will be transferred directly into the CIO’s bank account as an advance payment. The remaining funds, subject to certification of progress by the DPIUs, will be disbursed to the community in two additional installments: 40% at the 36% completion point of the village works, and 20% at the 72% completion point.16 The Project will use direct payments and imprest account procedures. 1. Disbursement Steps

a. Step I: Release of Initial Deposit 32. The executing agency prepares a formal letter to the Directorate of Cash Management under the Directorate General of Treasury, Ministry of Finance (MOF), requesting the opening of a special account in the Central Bank (Bank Indonesia). 33. Directorate of Cash Management, Directorate General of Treasury, MOF, submits a request letter along with the loan agreement to the Central Bank for opening the special account. 34. The Central Bank opens the special account and informs the Directorate of Cash Management, Directorate General of Treasury, MOF that the account has been opened and can be used in accordance with the loan agreement. 35. MOF informs the executing agency that the special account has been established, and an initial deposit needs to be opened. 36. The executing agency prepares a draft withdrawal application of initial deposit for approval by the Directorate of Cash Management, Directorate General of Treasury, MOF. The withdrawal application should be supported by estimated eligible expenditures to be financed through the imprest account for the next 6 months as detailed in ADB's Loan Disbursement Handbook (2007, as amended from time to time). 37. MOF reviews the withdrawal application and supporting documents, and submits them to ADB for payment along with a covering letter signing by authorized persons. A copy of the withdrawal application should be sent to the Directorate of Evaluation, Accounting, and Settlements, Directorate General of Debt Management, MOF, for information and record. 38. Based on the withdrawal application received from the Directorate of Cash Management, Directorate General of Treasury, MOF, ADB deposits the initial amount to the special account. In parallel, a notice of disbursement can be downloaded from ADB website by the Directorate of Evaluation, Accounting, and Settlement, Directorate General of Debt Management, MOF, and 16 See paras. 9-13 for more details on block grant administration.

31

also by the Directorate of Cash Management, Directorate General of Treasury, MOF, for their information and record.

b. Step II: Disbursement and Liquidation 39. Following the issuance of the budget allocation for the executing agency, the Directorate of Cash Management, Directorate General of Treasury, MOF, prepares a regulation and notification letter to regional treasury offices (KPPN), which authorizes regional KPPN to release funds for the Project. 40. Community implementation organization (CIO) submits plans to district public works services as the budget user. 41. Once the plan document is approved, the district project implementation unit (DPIU) prepares a payment order (SPM), which will then be submitted to the nearest KPPN in the provinces and districts. The DPIU will also submit a copy of the plan and SPM to the provincial project implementation unit (PPIU). 42. Based on an SPM from the DPIU, the regional KPPN issues an instruction for disbursement (SP2D): (i) KPPN issues SP2D to the operational bank (Central Bank branch office) so that the operational bank can transfer the amount as specified in SP2D to the community bank account in a commercial bank or treasurer bank account; and (ii) KPPN issues a copy SP2D to the budget user for their accounting system and as evidence for processing withdrawal application for replenishment to ADB via the executing agency. 43. Funds get transferred from the operational bank directly to the community bank account in a commercial bank or treasurer bank account of the budget user. 44. Authorization by CIO and the appropriate check signatories for cash to be withdrawn from the CIO’s bank accounts. The withdrawal for payment request from the group of community will be signed by a minimum of two people—the head of the CIO and the treasurer. 45. Cash withdrawn for expenditures managed and implemented by CIOs. 46. CIOs may make payments to the third party suppliers based on fully substantiated documents (receipt or invoices) and supported by actual payment evidences.

c. Step III: Replenishment 47. The PIU sends a copy of the SPM and SP2D and support documents (including summary statements of grants made to villages in that district) to the project coordination and monitoring unit at the executing agency for replenishment process. 48. Following the request from the executing agency, the Directorate of Cash Management, Directorate General of Treasury, MOF, sends a copy of a special account bank statement (RKBI) to the executing agency for preparing draft withdrawal application. 49. The executing agency prepares draft withdrawal application for replenishment to the Directorate of Cash Management, Directorate General of Treasury, MOF, summarizing PIU submission from all districts, attached with the copy of SPM/SP2D and the RKBI.

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50. MOF authorizes a withdrawal application after verification and submits it to ADB for payment (a copy of the withdrawal application should be sent to the Directorate of Evaluation, Accounting, and Settlement, Directorate General of Debt Management, MOF, for information and record). 51. ADB replenishes the funds into a special account and, in parallel, the notice of disbursement can be downloaded from ADB website by the Directorate of Evaluation, Accounting, and Settlement, Directorate General of Debt Management, MOF, for its information and record. 52. The Central Bank, for purposes of special account disbursement notification, regularly dispatches a copy of the RKBI to the Directorate of Cash Management, Directorate General of Treasury, MOF.

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

53. The Directorate General of Human Settlements (DGHS) within the Ministry of Public Works is the Executing Agency of the Project. DGHS has acted as EA for many ADB-financed projects in urban and rural development and water supply and sanitation projects since 1990s. Along with the National Planning and Development Agency (BAPPENAS) and the Ministry of Home Affairs (MOHA), MPW has played a significant role in the implementation of several community driven development (CDD) projects. Prior to RIS-PNPM I, MPW, through the Directorate General of Human Settlements (DGHS) acted as the executing agency of the World Bank’s Urban Poverty Project (UPP), which is very similar to the Kecamatan Development Project or KDP except that it operates in urban areas; the ADB's Rural Infrastructure Support Project (RISP) and the Neighborhood Upgrading and Shelter Sector Project (NUSSP). 54. Although DGHS is the executing agency, it cannot directly implement the project up to the village/neighborhood level where the targeted communities are located. With decentralization, the MPW no longer have offices at the regional level. Public Works offices at the provincial and district levels are now administratively under the respective local government units. Implementation of USRI will involve, therefore, the participation of the provincial and district governments just the way it is done in RIS-PNPM II. 55. Under the rural infrastructure component, the same four provincial governments will be involved in RIS PNPM II: Jambi, Lampung, Riau and South Sumatra. At the district level, 37 district governments will be involved in implementing the Project in 600 villages. For the local governments already participating in RIS-PNPM II, the same PIUs already established will be used. Despite the experience, however, the capacity assessment still revealed certain weaknesses that have to be addressed to improve implementation of the Project. Under the sanitation components, the Project will cover five provinces (Central Java, DI Yogyakarta, East Java, South Sulawesi and North Sulawesi) and 34 cities. In these areas similar structure like under the rural infrastructure component will be established. 56. Unlike the DGHS, the provincial and district implementing units have limited experience in implementing externally-financed subprojects. 57. There are certain skills that are essential to the project that are not among the fields of expertise of the implementing units. Thus, the Project will acquire the services of consultants who can fill the gap. Consultants were hired for the following fields: (a) financial management; (b) social development and social safeguard; (c) monitoring and evaluation; (d) management information system; (e) environmental safeguard; (f) project management; (g) rural infrastructure; and (h) rural infrastructure – operations and maintenance. The reason for hiring consultants for rural infrastructure, however, could not be due to lack of expertise in this field but due to inadequate number of staff. Even with an open menu, it is still expected that a very large proportion of the community projects would be physical infrastructures. More staff would be needed to provide backstopping to the community facilitators, conduct the review and validation of the medium-term poverty reduction pans, investment plans, and detailed project proposals, as well as monitoring of actual construction for quality assurance. The huge demand of the Project for capability building, specifically the conduct of training programs does not seem to have been accorded major importance. CPMU and the PIUs do not have the capacity to undertake this program since their staff members themselves should be part of the target for

34

capability building. However, while the tasks of the National Project Management Consultants include the development of guidelines and implementation of training programs for staff both in technical and empowerment aspects, there is no specific Training Specialist from among the pool of management consultants hired by the Project who would be responsible for these tasks. It would be up to the team leader of NPMC to share these tasks with the other consultants. Similarly, there is no consultant designated as gender specialist, although gender concerns have been included in the description of tasks in the consulting packages. Since it is not expected that these expertise would soon be acquired by the implementing units, consultants would be needed in the Project.

B. Disbursement

58. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),17 and detailed arrangements agreed upon between the Government and ADB. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),18 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 59. The Project is classified by the Government as a national project, which means the central government will provide the loan proceeds directly to participating communities. 60. The Government will establish a separate imprest account at the Central Bank (Bank Indonesia) to facilitate the timely release of loan funds. The imprest account will be administered by the Ministry of Finance. The imprest account will be established, managed, replenished, and liquidated in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). Project expenditures during the first 6 months of implementation, consisting of the first tranche of community grants in all villages, are estimated at about $10 million. Considering the imprest ceiling of $17 million for the ongoing RIS-PNPM 219 and the Project’s utilization of implementation arrangements already in place for the PNPM Mandiri, the imprest ceiling is considered justified. The maximum amount to be deposited into the imprest account will not exceed $10 million or 6 months estimated expenditures to be financed through the imprest account, whichever is lower. Liquidation will be carried out under the statement of expenditure procedure, for which the limit will be $50,000 per individual payment. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.20 61. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet21 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the 17 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 18 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 19 The ongoing RIS-PNPM 2 covers about 1,500 villages. 20 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

21 Available in Appendix 29 of the Loan Disbursement Handbook.

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imprest account has been duly opened. For every liquidation and replenishment request of the imprest account, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against the EA’s records.22

62. Before the submission of the first withdrawal application, the Borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing.

63. Sufficient supporting documentation, as defined in ADB’s Loan Disbursement Handbook (2007, as amended from time to time) will be kept at each level of project management to substantiate all expenditures incurred from the loan proceeds. Concerned DGHS and regional government staff will be trained in ADB’s disbursement procedures. Financial due diligence undertaken during project preparation found that DGHS has significant financial management experience and capacity, and will be able to ensure effective and appropriate project financial management.

C. Accounting 64. The Directorate General of Human Settlements will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices or those prescribed by the Government's accounting laws and regulations.

D. Auditing

65. DGHS will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and/or in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest accounts, and the SOE procedures. The Government and DGHS have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

22 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook.

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VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

66. All advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (February 2010, as amended from time to time) (ADB’s Procurement Guidelines)23 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time) (ADB’s Guidelines on the Use of Consultants).24 The issuance of invitations to bid under advance contracting will be subject to ADB approval. The borrower and DGHS have been advised that approval of advance contracting does not commit ADB to finance the Project

B. Procurement of Goods, Works and Consulting Services

67. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines, which allows the use of national competitive bidding procedure. The procedures to be followed for national competitive bidding (for procurement of goods and works) shall be those set forth in Presidential Regulations No.54/2010 of the Republic of Indonesia, dated 6 August 2010, with the clarifications and modifications described in paragraph 78. 68. All procurement to be financed under the ADB loan will be carried out in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). Civil works for village/neighborhood investments will be contracted out to the communities based on an agreement between a CIO and a DPIU, and in compliance with the requirements for community participation in procurement as specified in ADB’s Procurement Guidelines. Community contracts, to be based on the format of the community contracts under the overall PNPM Mandiri, will include evidence of community facilitation, the design of facilities to be constructed under the contract, a community O&M plan for these facilities, and clear duties and responsibilities of both parties for the project activities. The first two community contracts in each participating province will be submitted to ADB for prior approval. All contracts will be monitored under the management information system 69. Before the start of any procurement ADB and the Government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Guidelines. 70. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C. 71. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants.25 The terms of reference for all consulting services are detailed in Section D. 72. The Project will require an estimated 4,195 person-months of national consulting services at national, provincial, and district levels. To strengthen training, particularly for community facilitators, a training design and management team will be responsible for developing and managing the project training program. In addition, a national team of 23 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 24 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf 25 Checklists for actions required to contract consultants by method available in e-Handbook on Project

Implementation at: http://www.adb.org/documents/handbooks/project-implementation/

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management consultants will assist the CPMU and five regional teams of management consultants will cover the following provinces: (i) Lampung, (ii) South Sumatra, (iii) Jambi and Riau, (iv) Central Java and DI Yogyakarta, and (v) East Java, South and North Sulawesi. Each regional team will also have district teams; each district team will cover about four districts. The consultants will assist the central, provincial, and district governments in (i) overseeing community facilitators in empowering communities and ensuring participation in project implementation, (ii) providing technical and managerial support to the PCMU and PIUs, (iii) establishing and implementing a sound financial management and monitoring system, (iv) implementing the complaints-handling mechanism, (v) implementing the PPMS, which is a part of the M&E framework for the PNPM Mandiri, and (vi) undertaking training of community facilitators and local governments. 73. The consultants will be recruited in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). The national training design and management team will consist of three consultants to be contracted as individuals. The management consultants will be recruited through national firms. The fixed budget selection method, which requires submitting a simplified technical proposal within 35 days, will be used to select the management consultants. The fixed budget selection method is justified to ensure recruitment of highly competent consulting firms with the required mix of specialties, the demand for which has increased considerably because of PNPM Mandiri. The terms of reference of project management consultants will follow the format and contents of those developed under PNPM Mandiri. 74. The PPIUs will recruit community facilitators to provide about 23,100 person-months of services. The community facilitators will be recruited as individuals. As they will be financed by counterpart funds, Government procedures will be followed.

C. Procurement Plan

Project Name: Urban Sanitation and Rural Infrastructure Support to PNPM Mandiri Project

Loan Number: To be determined

Loan Amount: $100.0million Executing Agency: Directorate General of Human Settlements (DGHS), Ministry of Public Works

Date of first Procurement Plan: 3 November 2010

Date of this Procurement Plan: 3 November 2010

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

1. Project Procurement Thresholds

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

Procurement of Goods and Works Method Threshold

Community Participation in Procurement Not more than Rp250 million (equivalent to

about $27,800) per village contract for the rural infrastructure component and Rp350 million (about $39,000) per neighborhood contract for the urban sanitation component.

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2. ADB Prior or Post Review

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

Procurement of Goods and Works Procurement Method Prior or Post Comments Community Participation in Procurement Prior and

Post Only first two community contracts in each participating province will be submitted to ADB for prior approval. The rest will be subject to post review on selected basis.

Recruitment of Consultants

Individual Prior Three national consultants for

national training design and management team

Fixed Budget Selection (FBS) Prior Six consulting services packages for management consultants

B. Project Procurement Plan

1. Indicative List of Packages Required Under the Project

77. The following table provides an indicative list of all procurement (goods, works, and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the Comments section.

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement

Method

Domestic Preference Applicable

Comments

Grant 86,000,000 2,550 Community participation in procurement

Estimated

Value (cumulative)

Estimated Number of Contracts

Recruitment

Method

Type of

Proposal

Comments Consulting Services – Individuals

250,00026 3 Individual

78 person-months, national.

Consulting Services 1. Firms for National

7,900,000 1,320,000

6 FBS

Simplified To be procured through

26 Financing will covered under the training and workshop category

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management consultants 2. Firms for Regional management consultants South Sumatra 3. Firms for Regional management consultants Riau and Jambi 4. Firms for Regional management consultants Lampung 5. Firms for Regional management consultants Central Java and DI Yogyakarta 6. Firms for Regional management consultants East Java, South and North Sulawesi

900,000

740,000

710,000

2,310,000

1,920,000

advance procurement 4,195 person-months, national. National: 360 person-months Regional South Sumatra: 560 person-months Regional Riau and Jambi: 400 person-months Regional Lampung: 340 person-months Regional Central Java DIY: 1,405 person-months Regional East Java, South and North Sulawesi: 1,130 person-months

Facilitators

10,300,00027

3,050

Individual N/A

To be recruited by the provincial project implementation units. About 23,100 person-months of CF will be required.

C. National Competitive Bidding

1. General

78. The procedures to be followed for national competitive bidding (for procurement of goods and works) shall be those set forth in Presidential Regulation No.54/2010 of the Republic of Indonesia, dated 6 August 2010, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the Procurement Guidelines.

2. Registration

(i) Bidding shall not be restricted to preregistered firms and such registration shall not be a condition for participation in the bidding process.

(ii) Where registration is required prior to award of contract, bidders: (i) shall be

allowed a reasonable time to complete the registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to

27 Facilitators financing will be from government own resources.

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successfully perform the contract, which shall be verified through post-qualification.

3. Prequalification

79. Post qualification shall be used unless prequalification is explicitly provided for in the loan agreement and/or procurement plan. Irrespective of whether post qualification or prequalification is used, eligible bidders (both national and foreign) shall be allowed to participate.

4. Joint Ventures 80. A bidder declared the lowest evaluated responsive bidder shall not be required to form a joint venture or to sub-contract part of the supply of goods as a condition of award of the contract.

5. Preferences (i) No preference of any kind shall be given to domestic bidders or for domestically

manufactured goods.

(ii) Regulations issued by a sectoral ministry, provincial regulations and local regulations which restrict national competitive bidding procedures to a class of contractors or a class of suppliers shall not be applicable.

6. Advertising

(i) Invitations to bid (or prequalify, where prequalification is used) shall be advertised in at least one widely circulated national daily newspaper or freely accessible, nationally-known website allowing a minimum of twenty-eight (28) days for the preparation and submission of bids and allowing potential bidders to purchase bidding documents up to at least twenty-four (24) hours prior the deadline for the submission of bids. Bidding of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the Procurement Plan.

(ii) Bidding documents shall be made available by mail, electronically, or in person, to all who are willing to pay the required fee, if any.

(iii) Bidders domiciled outside the area, district, or province of the unit responsible for procurement shall be allowed to participate regardless of the estimated value of the contract.

(iv) Foreign bidders from ADB member countries shall not be precluded from bidding.

7. Bid Security 81. Where required, bid security shall be in the form of a bank guarantee from a reputable bank.

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8. Bid Opening and Bid Evaluation

(i) Bids shall be opened in public, immediately after the deadline for submission of

bids. (ii) Evaluation of bids shall be made in strict adherence to the criteria declared in the

bidding documents. (iii) Bidders shall not be eliminated from detailed evaluation on the basis of minor,

non-substantial deviations. (iv) No bid shall be rejected on the basis of a comparison with the owner's estimate

or budget ceiling without the ADB’s prior concurrence. (v) The contract shall be awarded to the technically responsive bid that offers the

lowest evaluated price.

9. Rejection of All Bids and Rebidding

(i) Bids shall not be rejected and new bids solicited without the ADB’s prior concurrence.

(ii) When the number of responsive bids is less than three (3), re-bidding shall not

be carried out without the ADB’s prior concurrence.

10. ADB Member Country Restrictions 82. Bidders must be nationals of member countries of ADB, and offered goods and services must be produced in and supplied from member countries of ADB.

D. Consultant's Terms of Reference

A. Description of Consulting Requirements 1. NTDMT 83. Three specialists, a lead training specialist, a technical training specialist and a participatory training specialist, will be recruited individually to constitute the NTDMT. The NTDMT will be responsible for the design and management of the different training activities to strengthen the capabilities of community facilitators and other project stakeholders. 84. The NTDMT will assist the project coordination and monitoring unit (PCMU) to

(i) design the overall training plan for the Project;

(ii) develop the concepts, strategies, modules and materials for community facilitator training programs, and national, regional and district level project staff (including local government staff and auditors); and ensure that gender equality concerns are incorporated in the training plans (e.g., gender sessions) and modules;

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(iii) organize a pool of resource persons for the different training programs from the project management consultants, provincial project implementation unit (PPIU), district project implementation unit (DPIU), experienced/good performing community facilitators, and other subject matter experts and conduct training of trainers;

(iv) manage the conduct of the training programs; and

(v) conduct monitoring and evaluation of the results of training.

85. The lead training specialist will (i) prepare the overall training plan for the Project that will identify the different training programs required by the community facilitators, project staff, and local government units; (ii) design the curriculum of the different training programs; (iii) develop the training modules and materials; (iv) organize a pool of trainers and resource persons, in coordination with the PCMU, PPIU and DPIU; (v) conduct training of trainers for the different training programs; (vi) assist, monitor and ensure the quality of the conduct of training by the regional project management consultant training specialists; and (vii) evaluate the results of training activities and propose recommendations for improvement.

86. The technical training specialist will (i) assist the lead training specialist in the preparation, implementation, monitoring, and evaluation of the overall training plan; (ii) assist the lead training specialist in identifying subject matter experts who can be tapped as resource persons; and (iii) ensure that the training design, modules, and materials adequately cover the major subjects of the training program. 87. The participatory training specialist will (i) assist the lead training specialist in the preparation, implementation, monitoring, and evaluation of the overall training plan; and (ii) introduce participatory learning methods in the modules to improve the effectiveness of the training programs. 2. Package 1: Project Management Consultants – National Level 88. The consultants will work closely with the national, PPIUs and DPIUs in overall project planning, management, and implementation. Their services will include (i) assisting in project planning and programming, including incorporation of the Project’s gender action plan (GAP); (ii) assisting in project management and quality assurance; (iii) developing media and communication materials for information campaign and knowledge sharing; (iv) developing guidelines and implementing training programs for staff on technical and community (including gender) aspects; (v) preparing quality assurance procedures and assisting in their implementation; (vi) assisting in coordinating and supporting district consulting teams; and (vii) establishing guidelines and procedures for social and environmental safeguard screening, and overseeing preparation and implementation of the safeguard documentation. The consultants will assist the central PCMU in the management of all project activities, including planning, budgeting, supervision, monitoring, reporting, and coordination to ensure implementation of the Project in accordance with the original design and other provisions in the loan agreement. The consultants will also oversee the operation and performance of the three regional consulting packages for the provincial and DPIUs. 89. The consultants will assist in financial management of the Project. They will ensure that procedures are in place to assist the PIUs in regular collection of transaction documents (invoices and contracts) from all implementing locations, arranging data entry into a computerized accounting system, preparing project financial statements on a quarterly basis for

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each PIU, consolidating financial statements for the entire Project, comparing the financial statements against physical progress and contractual obligations, analyzing key variances and recommending appropriate actions and measures, and preparing quarterly financial monitoring reports. The consultants will also train government staff in developing their capacities in accounting and financial management. 90. The National Project management consultant will consist of the following experts: (i) a Team Leader, (ii) a Deputy Team Leader for the Rural Infrastructure component, (iii) a Deputy Team Leader for Sanitation), (iv) a Financial Management Specialist, (v) a Community Development/Gender Specialist, (vi) a Public Campaign and Awareness Specialist, (vii) a Project Performance Monitoring and Evaluation Specialist, (viii) a Safeguard Specialist, and (ix) a Training Specialist. 91. Specifically, the consultants will assist the CPMU to

(i) ensure timely and well-targeted planning of project activities; (ii) ensure that the implementation of the Project reaches the targeted indicators of

achievement; (iii) ensure sufficient understanding of the project design and optimal performance of

the regional project management consultants; (iv) finalize technical documents related to implementation of the Project, including

technical guidelines and code of conduct; (v) make revision and modification, if necessary, to the existing PNPM Mandiri

technical documents based on the needs of the Project; (vi) disseminate all project technical documents to all relevant parties; (vii) develop the concepts, strategies, and modules for training activities; ensure that

gender equality concerns are incorporated in the training plans (e.g., gender sessions) and modules; closely coordinate with the Ministry of Health in developing training strategies/materials to promote sanitation and hyiene behavioural change ;

(viii) conduct monitoring and evaluation of the results of training activities through field visits, field audience, information gathering, and field samplings;

(ix) collect gender-disaggregated data in baseline, benchmark, and completion surveys; ensure that the collected gender-disaggregated data are properly analyzed and reported in quarterly and annual progress reports;

(x) ensure the targeted gender equality indicators as specified in the GAP are met; (xi) monitor the social, environmental, and economic impacts, including the

establishment of benchmark information and data; (xii) establish project a website and update project progress on the on a weekly basis; (xiii) prepare all financial reports related to project financing in line with the prevailing

procedures; (xiv) make compilation and summary of all requests for payment, payment orders, and

fund disbursement orders related to the use of loan proceeds; (xv) monitor the process of disbursement of loan proceeds; (xvi) develop draft documents for the disbursement of grants at the community level; (xviii) monitor availability of community grants remaining balance; (xix) monitor and update the project implementation schedule; (xx) prepare unaudited project financial reports; (xxi) establish complaints and grievance handling mechanism and monitor resolution

of cases received; (xxii) conduct evaluation surveys;

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(xxiii) draft the project impact assessment report. (xxiv) provide inputs to the NTDMT in the preparation of training modules and

materials; (xxv) act as resource persons in the different training programs; and (xxvi) support the design and implementation of the sanitation baseline in selected

project cities and subsequent impact assessments.

3. Packages 2–6: Project Management Consultants – Regional Level 92. The consultants will work closely with the PPIUs and DPIUs in ensuring efficient project implementation in the villages. Consulting services will include assistance in (i) implementing village community development and facilitating technical aspects; (ii) implementing project information campaigns; (iii) community project selection and planning processes, design, and construction; (iv) implementing quality assurance, financial management systems, and project performance management systems; (v) preparing and implementing the social and environmental safeguard compliance; and (vi) establishing the complaints and grievances handling mechanism. 93. In each of the five regional consulting services packages, there will be a team of provincial project management consultants. In addition, district consulting teams will also be recruited. Each district team is expected to cover about four districts/cities. For the rural infrastructure component, the regional team will consist of: (i) a Team Leader, (ii) a Financial Specialist, (iii) a Training Specialist, (iv) a Safeguard Specialist, (v) Rural Infrastructure Specialists, (vi) Community Development Specialists, and (vii) Financial Management Specialists. For the Sanitation component, the regional management team will consist of: (i) a Team Leader, (ii) a Financial Specialist/Co Team Leader, (iii) Sanitary Engineers, (iv) Community Development/Behavioral Change Specialists, (v) Training Specialist, and (vi) Safeguard Specialist. 94. The regional consultants will assist the PPIUs and DPIUs to

(i) select community facilitators (ii) provide technical assistance and guidance to community facilitators; (iii) monitor and evaluate performance of the community facilitators; (iv) assist community facilitators in conducting an awareness campaign to familiarize

the community members with the program; (v) assist community facilitators in conducting community facilitation that includes

poverty mapping at the village level, identification of problems and needs, evaluation of community implementation capacity, and development of planning mechanisms and decision-making processes;

(vi) ensure that the community facilitation activities incorporate measures to enhance gender equality as outlined in the Project’s GAP;

(vii) assist community facilitators in the establishment and capacity building of community implementation organizations; ensure that the establishment and capacity building activities incorporate measures to enhance gender equality as outlined in the GAP;

(viii) assist communities in formulation of village medium-term poverty reduction plans and community sanitation improvement action plans and related annual investment plans for funding by block grants;

(ix) provide technical assistance for the planning and design of village proposals;

45

(x) facilitate kecamatan (sub-district) discussions to promote development of inter-village/neighborhood cooperation;

(xi) ensure good governance in channeling of infrastructure grants to communities; (xii) assist community facilitators in developing community financial management

procedures and training community members in implementing them; (xiii) provide technical guidance during the implementation of the activities identified in

village/neighborhood infrastructure proposals; (xiv) assist communities in formulation and implementation of operation and

maintenance plans to ensure sustainability of completed facilities; (xv) ensure compliance of project activities with Asian Development Bank's social and

environmental safeguards and related guidelines of the PNPM Mandiri; (xvi) monitor implementation of project activities (including the activities outlined in the

GAP) and prepare quarterly and annual progress reports; (xvii) formulate and operate the complaint handling procedures; (xviii) implement the monitoring and evaluation activities. (xix) assist the NTDMT in preparing the overall training plan for the Project; (xx) assist in the preparation of the training modules and materials; (xxi) assist in the identification and selection of resource persons; (xxii) organize and manage the conduct of the training programs at the local level,

including serving as resource persons; (xxiii) assist the NTDMT in the monitoring of the results and in the evaluation of the

training programs; and (xxiv) support the design and implementation of the sanitation baseline in selected

project cities and subsequent impact assessments.

VII. SAFEGUARDS

95. Land Acquisition and Resettlements. The Project has been classified as category B as the scope of land acquisition and resettlement is expected to be insignificant The Project will require limited land acquisition for very small community facilities and will not involve any resettlement of people, relocation of houses, or significant impact upon productive land or other productive assets. Based on existing National Program for Community Empowerment Program (PNPM Mandiri) activities, very minimal plots of land are required for community investments—usually fewer than 500 square meters per village investment, which affect fewer than five households (or 25 persons). It is expected that these small amounts of land will be acquired mainly through voluntary contribution by project beneficiaries. 96. The Ministry of Public Works will have overall coordination responsibility for the resettlement activities in the subprojects. The existing PNPM Mandiri Oversight Body will provide policy directives, guidance, monitoring, and managerial oversight. District and provincial PIUs will ensure project activities comply with ADB’s Safeguard Policy Statement dated 2009 during implementation. The PNPM Mandiri coordinating teams at the district level will review the resettlement plans and monitor their implementation. The members of district PNPM Mandiri coordinating teams will include staff of various district government agencies, members of local legislative bodies, and representatives from local nongovernment organizations or universities. Safeguards consultants will be hired at the national, provincial, and district levels to assist the executing agency and communities in screening involuntary resettlement impacts, preparing resettlement plans and undertake monitoring. 97. Costs of land acquisition and resettlement will be provided by communities as counterpart contributions or from the community development grants. Safeguards specialists at

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national, provincial and district levels have been included and budgeted for in the consultant packages. 98. Environmental. The Project is categorized as environmental category B. Due to the small scale of expected civil works, most of the environmental impacts are short-term and temporary, and easily mitigated to acceptable levels. Such impacts include (i) site-specific impacts, including excavation of construction materials; (ii) impacts on water availability and quality, (iii) construction impacts, and (iv) operation impacts. 99. The initial environmental examination was prepared for sample infrastructure interventions. As the Project follows a sector-like approach, an environmental assessment and review framework (EARF) has been prepared to guide each of the project villages to carry out environmental screening during the formulation of village rural infrastructure proposals and to facilitate compliance with the environmental requirements of the Government and the Asian Development Bank (ADB) during project implementation. 100. The Project will have significant positive impacts on the quality of life and environment of the project communities. Potential negative impacts associated with the design, construction and operation of the proposed subproject activities will be temporary, minor, localized in extent, and can be mitigated to acceptable levels. It is expected that a detailed environmental impact assessment is not warranted for any of the village/neighborhood infrastructure proposals. 101. Indigenous Peoples. The Project is not expected to have any negative impacts on indigenous peoples. It will not discriminate against them or other marginalized groups. Because it is based on CDD principles, the Project will include opportunities for screening project impacts on indigenous groups and incorporating mitigation measures, if any, into the overall design and implementation of any investment. In accordance with the ADB's SPS (2009), the Project has been classified as category C. Specific actions have been included in the Project: (i) the selection criteria for community investments includes provisions to ensure that indigenous peoples and other vulnerable groups are part of the capacity-building, planning, implementation, and post-implementation processes; (ii) minority and marginalized groups will be represented on CIOs and CIO representation committees in proportion to their overall population in the community; and (iii) indigenous groups will benefit proportionally from easier access to service delivery, rural infrastructure, training, and construction-related jobs.

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VIII. GENDER AND SOCIAL DIMENSIONS

GENDER ACTION PLAN Urban Sanitation and Rural Infrastructure Support to PNPM Mandiri Project

GENDER ACTIVITIES

GENDER TARGETS OVERALL Selection, recruitment, training and performance monitoring of consultants and community facilitators: • Mobilize full-time specialist with appropriate expertise

and experience in Gender and Development to supervise the implementation of the Project GAP

• Outline specific tasks in the Term of Reference (TOR) for district advisers and community facilitators to enhance gender equality and women empowerment in Project activities.

• Ensure sufficient representation of women in the Community Facilitators Teams

• Conduct gender equality training/module for all consultants (at national and district level) and community facilitators soon after their mobilization.

• Regularly monitor, evaluate and report the performance of district advisers and community facilitators in executing the gender related tasks outlined in the TOR (i.e. in quarterly gender monitoring report)

• Full-time specialist (at the National Consultant Team) with

appropriate expertise and experience in Gender and Development hired by The Executing Agency (PCMU) to supervise the implementation of the Project GAP

• Specific tasks to enhance gender equality explicitly outlined in the TOR for district adviser and community facilitator.

• Women represent about 30% among all community facilitators (i.e. 2 out of 5 in each CF Team)

• Gender equality training provided to all consultants and community facilitators soon after their mobilization (i.e. within the first three months of their mobilization)

• Gender Monitoring Report on the performance and achievement of district advisers and community facilitators regularly (i.e. quarterly) produced by DPIUs and approved by the PPIUs

National and local government capacity development: • Assign one person in the PCMU and each DPIU as

Gender Focal Point, to be responsible for mainstreaming gender activities in the project

• Provide gender equality briefing and/ or training for all PCMU, PPIUs, DPIUs staffs to improve their understanding about gender perspectives and develop their capacity to implement the Project’s GAP sufficiently

• Review all gender related training programs to ensure they are gender sensitive prior to delivery

• One person assigned in the PCMU and each DPIU as

Gender Focal Point, to be responsible for mainstreaming gender activities in the project

• Specific gender trainings are developed and provided for all PCMU, PPIUs, DPIUs staffs

Development of annual work plans for the Project: • Annual project work plans should reflect gender-related

activities (identified in the Project GAP) • Each annual work plan shall be reviewed to ensure

gender-related activities are clearly accommodated and monitoring progress against these activities is adequately recorded

• Gender-related activities (identified in the Project GAP)

reflected in annual project work plans • Each annual project work plan reviewed to ensure

gender-related activities are clearly accommodated and monitoring progress against these activities is adequately recorded

Monitoring and evaluation: • Identify and integrate gender sensitive indicators in the

Project Performance Monitoring System (PPMS) • Collect gender/sex disaggregated data on stake holders’

participation in community activities (planning, implementation and O&M) in baseline survey and completion surveys.

• Ensure that the gender/ sex-disaggregated data collected is properly analyzed and the analysis is included in the project progress report

• Project consultant (i.e. district adviser) regularly conducts field visits, review progress in gender mainstreaming and supervise community facilitators.

• Gender sensitive indicators identified and integrated in the

PPMS • Gender/sex disaggregated data on stake holders’

participation in community activities (planning, implementation and O&M) collected in baseline survey and completion surveys

• Gender/ sex-disaggregated data collected properly analyzed and the analysis included in the project progress report

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OUTPUT 1: Strengthened capacity for community planning and development Social mapping: • Identify vulnerable households (e.g. female-headed

households) and constraints of women’s participation as part of the poverty mapping exercise

• Community facilitators guide communities in collecting gender/ sex disaggregated data

• Use the results of poverty mapping exercise to identify common and different problems, needs, and capacity between men and women in the community.

• Gender/sex disaggregated data collected in the poverty

mapping at the village level; and used in i.e. project statistics, monitoring and progress report and investment plan.

Community capacity development directly supported by Community Facilitators and District Advisers: • Ensure gender balance in all consultation and evaluation

forums • Encourage participation of women in all consultation and

evaluation activities • Organize separate consultation with women to ensure

that they receive sufficient information about the project and create opportunities for them to voice their opinion, needs and preferences

• Ensure sufficient participation of women in the CIOs • Review the level and degree of women’s participation in

CIOs under RIS PNPM I and II and identify additional actions to enhance women participation in CIOs

• Ensure balanced representation and equal access of both genders in capacity development

• Provide skill development and equal opportunities for women (especially the CIOs members) to improve their capacity to effectively participate in various stage of project implementation.

• Conduct at least one separate consultation meetings with women prior to village wide meeting to formulate village development plan and at least one separate consultation with women prior to meeting to formulate specific investment plan.

• Ensure sufficient participation of women in the meetings to formulate village development and specific investment plan

• Development and investment plans should include specific actions aimed at addressing the needs of women expressed at the consultations.

• At least 30% of participants in consultation and

socialization forums and activities are women • At least 30% of the elected members of each CIO are

women. • At least 30% of participants in capacity development are

women • At least 30% of participants in meetings to formulate

village development and specific investment plan are women

• Specific action aimed at addressing the needs of women expressed at the consultations included in the development and investment plans.

Formulate and implement the operation and maintenance (O&M) plan: • Ensure active involvement of women in O&M of the

completed infrastructure facilities (e.g. development of O&M plan, establishment of unit and/ or group that is responsible for O&M, management of financial resources for O&M)

• Provide relevant O&M information and/or training/briefing for men and women in the community

• Men and women equally represented in the development

of O&M plan • Those who are responsible for O&M are gender balanced

OUTPUT 2 Improved rural basic infrastructure through community development grants Enhancement of gender equality in the implementation of civil works: • Integrate appropriate contribution of women to

construction of infrastructure facilities (e.g. in the quality control of the construction materials)

• Whenever women are involved in the construction/ upgrading, ensure equal pay for work of equal value.

• Conduct a gender audit of all community investment plan/ proposal to ensure they are gender-sensitive, prior to release of funds

• Men and women equally paid for equal work • Gender reporting of all community investment plans

conducted prior to the release of fund.

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OUTPUT 3 Improved sanitation services through neighborhood development grants Community consultation of sanitation improvement and behavioral change: • Encourage balanced representation and

participation of men and women in all consultation activities related to the sanitation improvement and behavioral change in the community.

• Organize separate consultation with women to ensure that they receive sufficient information about the sanitation improvement and behavioral change activities; and create opportunities for them to voice their opinion, needs and preferences

• 50%: 50% (balance) of representation and participation of

men and women in all consultation activities related to the sanitation improvement and behavioral change in the community.

Design development for sanitation facilities: • Consult women on the construction/ upgrading of

communal sanitary facilities (e.g. community sewerage systems, communal toilets/ washing/bathing units and septic tank)

• Ensure balance involvement and representation of men and women in the O&M of the communal sanitary facilities.

• Women consulted on the construction/ upgrading of

communal sanitary facilities (e.g. community sewerage systems, communal toilets/ washing/bathing units and septic tank)

• At least 30% of those who are responsible for O&M of the communal sanitary facilities, are women

Promotion of sanitation and hygiene behavioral change: • Conduct training, briefing, campaigns related to

improvement of personal, domestic and environmental hygiene.

• Training, briefing, campaigns related to improvement of

personal, domestic and environmental hygiene are conducted

• At least 30% of participants in the training, briefing, and campaign related to improvement of personal, domestic and environmental hygiene are men.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

DESIGN AND MONITORING FRAMEWORK Design Summary

Performance Targets and/or Indicators

Data Sources and/or Reporting

Mechanisms

Assumptions and Risks

Impact Reduced poverty in the project areas.

By 2017:

Number of households in project villages living below poverty line reduced by at least 15% from project baseline

PNPM Mandiri evaluations

PODES village-level and National Statistic (SUSENAS household surveys)

Assumption National and regional governments continue to support community-driven development. Risk Natural or financial disasters will impact the project areas.

Outcome Improved access to both service delivery and healthy livelihoods for the poor, near poor, and women in the project communities.

By 2014:

About 0.6 million poor people in 600 villages will have access to improved rural infrastructure and better service delivery

At least 50% of villagers in project villages, of which half are women, are satisfied with improvements in local roads, drinking water, sanitation, and other basic infrastructure.

At least 50% of men and women in project urban neighborhoods have increased awareness of sound hygiene and sanitation practices. Increase in population with access to improved sanitation services by 20% in 2014 from baseline that will be established at the project start; about 0.5 million people will have access to improved sanitation and new facilities in the 34 cities.

PPMS reports

PODES village-level and SUSENAS household surveys

Baseline and follow-up impact evaluation surveys in target project areas (MPW)

Independent NGO M&E reports

PNPM Mandiri MIS and evaluations

Assumptions National budget funds are adequate and provided in a timely manner.

Central and local governments continue to prioritize reduction of environmental pollution in urban areas

Outputs 1. Strengthened Capacity for Community Planning and Development

By 2014:

Functioning community implementing organizations (CIOs) established in about 600 villages and 1,350 urban neighborhoods (rukun warga/RW), with at least 30% representation of women in each CIO.

At least two separate planning meetings for women conducted in each village and neighborhood.

MTPR plans formulated in a participatory manner in about 600

PPMS reports

CF reports

NGO reports

District/city administration evaluation reports

Risks Prioritization and planning are captured by a few influential community members.

A sufficient number of suitable applicants are available for recruitment, training and deployment as effective village community facilitators.

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Design Summary



Mechanisms


villages; and neighborhood sanitation improvement plans in about 1,350 neighborhoods, with at least 30% women participation and 50% of poor residents in planning meetings.

Well-designed investment and implementation plans for community-driven development projects formulated and approved in about 600 villages and 1,350 urban neighborhoods.

2. Improved rural basic infrastructure through community development grants

By 2014:

Two cycles of block grant investments have been implemented in each of about 600 rural villages in the project provinces, addressing community needs (including those of the poor, women, and other marginalized groups). Gender reports completed for all block grant investments in about 600 villages. More than 70% of infrastructure works are evaluated as being of high quality and have functioning O&M arrangements. At least 230,000 person-months of immediate employment opportunities generated in the project villages, with at least 30% provided to women.

PPMS reports

Impact evaluation mid-term and final reports

NGO M&E reports

District government plans and budgets

Assumption Communities have surplus labor and adequate resources to undertake civil works and maintenance of investments.

3. Improved sanitation services through neighborhood development grants

By 2014, Neighborhood sanitation improvement block grant investments (Rp350 million per neighborhood) have been implemented in each of about 1,350 urban neighborhoods (Rukun Warga, RW) in the project districts/cities, addressing community needs (including those of the poor, women, and other marginalized groups).

Community based sanitation facilities, in accordance with the agreed-upon criteria and standards are completed by end of 2013 (in about 1,350 neighborhoods) By end of 2013, gender reporting completed for all block grant investments.

PPMS reports

Impact assessment report

City administration plans, budgets and reports

Assumptions National, provincial and district governments allocate adequate staff and resources for project operating entities.

District government counterpart funds are provided in a timely manner.

Communities are fully committed to the Project and have sufficient resources to maintain project investments

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Design Summary



Mechanisms


At project completion, more than 80% of infrastructure works are evaluated as being of high quality and have functioning O&M arrangements. At project completion, at least 500,000 person-months of immediate employment opportunities generated in the project villages, with at least 30% provided to women.

Activities with Milestones 1. Strengthened Capacity for Community Planning and Development 1.1 Recruitment, training and deployment of community facilitators (Q3 2011). 1.2 Socialization campaigns completed in project villages and neighborhoods (Q4 2011). 1.3 Community facilitation and planning completed in project villages/neighborhoods,

including separate women's meetings and poverty mapping in cycle 1 (Q4 2011) and cycle 2 (Q4 2012)

1.4 Selection of investments completed in project villages and neighborhoods (Q4 2011) 1.5 Inter-village/kelurahan meetings for village/kelurahan-level representatives to support

coordination and potential complementarities between investments starting in Q4 2011 1.6 Community investment plans finalized, O&M plans drafted and contracts executed

starting in Q4 2011. 2. Improved Rural Basic Infrastructure through Community Development Grants 2.1 Community members trained to implement village infrastructure plans starting Q4 2011 2.2 Quality audit and gender reporting undertaken starting Q1 2012 2.3 Disbursements of first tranche of grants for investments completed (Q4 2011) 2.4 Disbursements of second tranche of grants for investments started completed (Q2

2012) and cycle 3 (Q2 2013) 2.5 Disbursements of third tranche of grants for investments completed for cycle 1 (Q2

2012) and cycle 2 (Q2 2012) 2.6 Civil works of community investment projects completed for cycle 1 (Q3 2012) and

cycle 2 (Q4 2012) 2.7 Completion of operation and maintenance plans for the built facilities for cycle 1 (Q4

2012) and cycle 2 (Q4 2012) 3. Improved Sanitation Services and Infrastructure through Community Development Grants 3.1 Carry out roadshows to register community interest starting Q1 2011 3.2 Implementation of training for community members on sanitation awareness and

improvement plans starting Q4 2011 3.3 Implementation of quality audit and gender reporting starting Q1 2012 3.4 Disbursements of first tranche of grants for investments completed (Q4 2011) 3.5 Disbursements of second tranche of grants for investments started completed (Q2

2012) and cycle 3 (Q2 2013) 3.6 Disbursements of third tranche of grants for investments completed for cycle 1 (Q2

2012) and cycle 2 (Q3 2012) 3.7 Civil works of community investment projects completed for cycle 1 (Q3 2012) and

cycle 2 (Q4 2012) 3.8 Community O&M plans for cycle 2 investments finalized for cycle 1 (Q4 2012) and cycle

2 (Q1 2013)

Inputs ADB: $100.0million Government: $27.6 million Beneficiaries: $8.0million Consultants: 4,195 person months of national consultants; Community Facilitators: - for rural infrastructure:

9.600 person-months; - for the sanitation

component: 13,500 persons-months

ADB = Asian Development Bank, M&E = monitoring and evaluation, MIS = management information system, MOHA = Ministry of Home Affairs, MPW = Ministry of Public Works, MTPR = medium-term poverty reduction, NGO = nongovernment organization, O&M = operation and maintenance, PNPM = Program Nasional Pemberdayaan Masyarakat (National Program for Community Empowerment), PODES = Potensial Desa (Village Potential Statistics), PPMS = project

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B. Monitoring

1. Project performance monitoring. 102. The Project will continue and strengthen the PPMS that was established under RIS-PNPM I and II. Specific elements include (i) conduct of baseline and completion surveys for individual villages/neighborhood by staff and community facilitators; (ii) participatory monitoring by communities based on self-defined indicators; (iii) internal monitoring of inputs, process, and outputs; (iv) independent external monitoring and evaluation by third parties, such as civil society groups; and (v) the design and implementation of a high-quality impact evaluation. 103. Consistent with PNPM Mandiri’s Guidelines on Implementation of Monitoring and Evaluation, the Project’s M&E will encompass the following elements: (i) monitoring physical and financial progress and the efficiency of village investments; (ii) monitoring the level and adequacy of village and stakeholder participation in planning and implementing project activities; (iii) monitoring the capacity of CIOs and local governments; (iv) collecting gender disaggregated data on stakeholders' participation in training and planning, and the accrual of benefits, including employment generation; (v) monitoring social, environmental, and economic impacts, including establishment of baseline data; (vi) conduct of physical and financial audits; and (vii) assessing the impact and utilization of the investments. The framework has employed quantitative and qualitative methodologies, as well as a mix of internal and outsourced evaluations. The M&E guidelines describe the responsibilities of all stakeholders (including central and local governments, community facilitators, consultants, CIOs, and NGOs) in carrying out M&E, and require a mixture of strong supervision and quality checks through internal project channels and external M&E. 104. The PPMS will follow the PNPM Mandiri’s Guidelines on Implementation of MIS) and will be part of the program management information system (MIS). The MIS for the Project will form part of the integrated MIS for PNPM Mandiri, which is managed by the data and information center of BAPPENAS. The PNPM Mandiri’s MIS includes validation and verification processes to ensure the quality of data and information. Inputs from sector program systems are submitted to the national level and data are updated monthly. M&E findings are updated on the PNPM Mandiri website on the 15th of every month, and will be incorporated in quarterly project progress reports that the PCMU will prepare within 1 month of the end of the reporting period. It will submit these to ADB and the PNPM Mandiri Oversight Body. PCMU will also prepare and submit a consolidated project completion report to ADB within 6 months of project completion.

1. Compliance monitoring 105. In addition to the standard assurances, the Government and the Executing Agency have given the following assurances: (i) the loan proceeds and sufficient corresponding counterpart contributions, are to be

allocated and made readily available, with the submission of budgetary allocation requests to be conducted in a timely manner throughout the project implementation period.

(ii) implementation of the project activities will be undertaken in accordance with the applicable local environmental laws and regulations and ADB’s Safeguard Policy Statement (2009). In the event of any conflict, ADB's policy will prevail. all investments in project villages and project urban neighborhoods will be reviewed and assessed for environmental impacts in accordance with (i) the Project’s environmental assessment

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and review framework, and (ii) the respective mitigation and monitoring measures prescribed in the relevant ADB-approved initial environmental examinations.

(iii) all land acquisition and resettlement activities under the Project will be implemented in accordance with (i) applicable local laws and regulations, (ii) ADB’s Safeguard Policy Statement, and (iii) the Project’s land acquisition and resettlement framework. All land acquisition and resettlement plans will be prepared in accordance with the Project's land acquisition and resettlement framework.

(iv) no withdrawal will be made from the imprest account in respect of expenditures related to a subproject until a contract for the relevant subproject between CIO and the DPIU has been signed.

(v) each village or neighborhood will establish a separate bank account for the village or neighborhood-level activities to be funded under the Project. The Government will further ensure that the amount to be transferred to the bank account will be in three tranches. The first tranche will be 40% of the approved amount, the second tranche will also be in the same percentage amount, and the last tranche will be the remaining approved amount. The release of each tranche will be made upon verification by DPIU of actual implementation progress.

(vi) no civil works contracts will be awarded until: (a) a CIO for the village or neighborhood has been established; (b) a separate bank account has been established by the relevant CIO for the funds to implement a subproject; (c) a management team for construction and O&M has been established; and (d) a subproject proposal based on MTPRP/CSIAP together with the investment plan has been prepared and approved in accordance with selection procedures under the Project.

(vii) within 6 (six) months of the loan effectiveness date, the EA will create a project website to disclose information about relevant matters on the Project, including detailed accounts of procurement. The website shall be regularly updated within 1 week of each award of contract.

(viii) the Gender Action Plan as agreed between ADB and the Government is fully implemented and resourced. In particular, the Government will ensure that (a) women comprise 40% and the poor comprise 50% of the participants in village training programs; (b) 30% of community facilitators are women; and (c) gender audit for each selected community investment is conducted. The Government will further ensure that the Project Executing Agency will submit periodic reports on the implementation of the Gender Action Plan to ADB and the Oversight Body.

(ix) keep ADB informed of policy discussions with other stakeholders about measures that may impact the effective implementation of the Project.

2. Safeguards monitoring 106. Land Acquisition and Resettlements. Land acquisition will be kept to a minimum, as the location of rural/neighborhood infrastructure will be determined through a community-based approach. Site selection for community investments will be made in full consultation with people living on land (titled and non-titled holders). Screening of potential land acquisition and resettlement impacts on communities will be built into the community decision-making process and addressed during the preparation of the village investment plans. The social assessment will help to identify the affected people during the community facilitation process or preparation of the village mid-term poverty reduction plans. It also will help identify any special needs of indigenous peoples or other disadvantaged groups (e.g., landless, poor, elderly, and disabled villagers and female-headed households).

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107. If land acquisition is required, community facilitators will work closely with the community to formulate a resettlement plan for an infrastructure proposal using the procedures outlined in the framework. Voluntary contributions will be acceptable only if (i) there has been full consultation with landowners and any non-titled, affected people on site selection; (ii) voluntary donations do not severely affect the living standards of affected people and are linked directly to benefits for the affected people, with community-sanctioned measures to replace any losses that are agreed through verbal and written records by affected people; (iii) the voluntary donation is confirmed through a verbal or written record and verified by an independent third party; and (iv) adequate grievance redress mechanisms are in place. 108. Before land acquisition, project impacts will be discussed with all stakeholders, including the identified affected people. Project information and land acquisition procedures will be shared and disclosed to communities in accordance with ADB's policy. Separate focus group discussions and community meetings with men and women will be held, especially with the affected people. The CIOs will disseminate information on possible land acquisition and resettlement activities to the affected people through verbal communication and written materials in a language that is easily understood by them. All consultations will be recorded and submitted as part of village investment plans. The framework, including complaint and grievance procedures, will be part of the project implementation guidelines. These will be disseminated by the subproject facilitator to the communities during the facilitation process and project implementation. Local government and CIO offices will have resettlement plan copies, which will be posted on the ADB’s website. 109. Affected people will have the right to file complaints and/or queries on any aspects of land acquisition and resettlement activities. Community complaints will be managed following the PNPM Mandiri’s Implementation Guidelines on Management of Complaints and Grievances, which meets ADB’s requirements on complaint and grievance mechanisms. At the village level, complaints from any affected people can be filed with CIO members and local government staff for immediate resolution whenever possible. If the problem cannot be resolved, the CIO members and local government staff will assist the affected people to submit their complaints to the Project’s grievance and redress committee at the district level and to the provincial and/or national level if desired. Community facilitators will record the complaint and report to the Project’s management teams. The Project will dedicate staff at district, provincial, and national levels to receive and follow-up on complaints from affected people. 110. The members of the grievance and redress committee will include affected people (including representatives of women, the poor, and minority groups) and government officials with functional and legal authority. The committee will review grievances involving all resettlement benefits or issues, except for disputes related to ownership. Grievances will be redressed two to four weeks from the date of lodging the complaints at the district level and within eight weeks at the provincial and/or national levels. If consensus cannot be reached, the dispute resolution will follow Presidential Decree No.36/2005.28 The affected people may also file their complaint on the PNPM Mandiri website or via a written submission to the PNPM Mandiri administrator. 111. The project M&E mechanism for land and social safeguard issues will be included in the internal monitoring and evaluation report prepared by Ministry of Public Works. One section of the regular internal monitoring report will be dedicated to reporting and discussing issues related to social safeguards in project activities. The district PNPM Mandiri coordinating teams will serve as the external monitoring agencies of the Project. The external monitoring activities specifically

28 Affected peoples may complain to the district head or provincial governor in accordance with their respective

scope and authority to change or validate decisions related to land acquisition and resettlement in project activities.

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focusing on land acquisition will be conducted twice a year during the project implementation period. Monitoring reports will be submitted to ADB and uploaded to ADB’s website. 112. Environment. The Project is categorized as environmental category B. Due to the small scale of expected civil works, most of the environmental impacts are short-term and temporary, and easily mitigated to acceptable levels. Most of the rehabilitation and upgrading work for roads will be within the existing right-of- way. The existing environmental screening checklist being implemented by the PNPM Mandiri will exclude any infrastructure interventions that would directly affect protected, conservation, or archeologically significant areas. Construction materials will be procured locally. Close coordination with the local government units in charge of the environment will be sought to monitor any illegal excavation activities in the river or embankment areas. 113. A site for a drinking water supply system will be kept at least 10 meters from septic tanks and leach fields to avoid any potential contamination of drinking water sources. Water quality sampling will be conducted before well or pipe water supply systems are built to ensure that groundwater and surface drinking water will meet drinking water quality standards. District engineers will provide technical inputs to ensure adequate water distribution from the secondary to tertiary canals and to avoid any downstream impacts caused by reduced flow and increased pollution levels. 114. Any impacts will be temporary and can be minimized by the mitigation measures specified in the existing government guidelines for construction of community-based civil works. Construction activities will be avoided during the rainy season as much as possible. Before construction, communities will receive technical training from the community facilitators in appropriate design, construction methods, and operation practices. 115. Communities will be responsible for properly maintaining improved facilities and an operation and maintenance (O&M) plan is one of the eligibility requirements for each village. O&M activities will be fully implemented and partly financed by the communities. District governments will also monitor surface and groundwater quality through their ongoing monitoring programs. 116. Since the Project will be implemented as part of PNPM Mandiri, it will use the existing program’s implementation mechanisms. The Ministry of Public Works through its Directorate General of Human Settlements will be the executing agency for the Project and will establish a central project management unit (CPMU) at the national level. The CPMU will be responsible for the management, coordination, and monitoring of project activities. The Project will utilize the existing project implementation units (PIUs) established at the national, provincial, and district levels under the respective PNPM Mandiri coordination teams. Each participating village will establish a CIO or utilize an existing community organization. 117. Environmental responsibility will mainly reside with a CIO, assisted by a team of community facilitators. CIOs will be responsible for conducting environmental screening and identifying mitigation measures. Community facilitators will receive technical training before project implementation in order to provide appropriate technical awareness to each CIO. Safeguards specialists will be recruited at the national and regional levels to assist community facilitators, provincial and district PIUs, and the CPMU in managing the Project’s environmental aspects. The existing guidelines for community-based civil works developed under the RISP and to be used under the Project, and the technical guidelines developed by the Ministry of

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Public Works for PNPM Mandiri, have specific provisions to ensure environmental considerations in design, construction, and operation. 118. Gender and social dimensions monitoring: The Rural Infrastructure Support to the PNPM Mandiri Project II will reduce poverty and improve local governance of rural communities in the project areas. It will improve access of the poor and near poor in the project communities to services and basic rural infrastructure. A gender action plan (GAP) has been prepared to ensure attention is paid to the different needs of men and women and to ensure equal opportunities for both in terms of access to project benefits and participation in community mobilization and facilitation activities. This GAP is based on gender analysis undertaken as part of the poverty and social analysis, and is prepared in accordance with the ADB Policy on Gender and Development.

119. Implementation arrangements. This GAP will be overseen by the project coordination and monitoring unit and implemented by communities with assistance of the consulting teams at the national, provincial and district levels. Tasks related to gender equality have been reflected in the terms of reference of all consulting packages and social development and gender experts will be mobilized at the district and provincial levels. Tasks related to gender equality at the national level will be performed by the gender specialist. 120. At the national level, the consultants will incorporate this GAP into project planning and programming, including training plans. In addition, they will collect gender-disaggregated data in baseline and completion surveys, analyze the data, and report the findings in project progress reports. At the province and district levels, the consultants will ensure that measures to enhance gender equality, as outlined in the Project’s GAP, will be incorporated into community facilitation, establishment, and capacity building of community implementation organizations. 121. The Project will have significant positive impact on communities’ capacity to promote their own development. The bottom-up planning processes of the Project present more opportunities for the inclusion and participation of poor women and other disadvantaged groups in community and local governance processes. The Project offers better accountability—transparency in decision making and procurement and the increased use of audits, which expected to reduce corruption and leakage.

C. Evaluation

122. MPW and ADB will carry out joint project reviews at least twice a year, including midterm and project completion reviews. The reviews will assess project impacts, particularly the institutional, administrative, organizational, technical, environmental, and social aspects. The reviews will also examine compliance with covenants specified in the Loan Agreement. MPW and ADB will conduct a midterm review after 2 years of project implementation. MPW and the district governments will make sure that their staff visit the field frequently and join ADB for all project review missions. Within 6 months of physical completion of the Project DGHS will submit a project completion report to ADB.29

D. Reporting

123. The DGHS will provide ADB with (i) quarterly progress reports in a format consistent with

29 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

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ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed.

E. Stakeholder Communication Strategy

124. Within 6 months following the loan effective date, DGHS will create a project website to disclose information about relevant matters on the Project, including detailed accounts of procurement.

X. ANTICORRUPTION POLICY

125. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.30 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.31 To support these efforts, relevant provisions are included in the loan agreement/regulations and the bidding documents for the Project. 126. The ADB's Anticorruption Policy (1998, as amended to date) was explained to and discussed with the Government and DGHS. ADB will require the Borrower to institute, maintain, and comply with internal procedures and controls following international best practice standards for the purpose of preventing corruption or money laundering activities or the financing of terrorism and covenant with ADB to refrain from engaging in such activities. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of the DGHS and all contractors, suppliers, consultants, and other service providers as they relate to the Project. Village-level contracts between CIOs and DPIUs will also include relevant anticorruption provisions. Any allegations of corruption can be reported to the DPIU, who will report these to the PPUI. All allegations of corruption will be reported to and reviewed by the PNPM Mandiri Oversight Body. 127. The Project will incorporate the following good governance features: (i) advanced socialization of the overall project objectives so communities understand the process of funds disbursement; (ii) transparent, consistent, and cost-effective subproject planning and implementation through well-defined procedures, guidelines and institutional arrangements, including community signboards with summaries of plans, progress reports, and financial records, and a project website; (iii) well-defined procedures and mechanisms to transfer investment funds to community-managed bank accounts; and (iv) comprehensive monitoring and evaluation. To ensure transparency during project implementation, within 6 months

30 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 31 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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following the loan effective date, DGHS will create a project website to disclose information about relevant matters on the Project, including detailed accounts of procurement. The existing financial management systems and fiduciary controls under PNPM Mandiri, which have been developed with assistance from international development agencies, are sound and have adequate checks and balances to minimize corruption risks. DGHS will further strengthen the project complaints and problem management unit, which was established under RIS-PNPM I and II, to (i) review and address grievances of project stakeholders in relation to the Project, any of the service providers, or any person responsible for carrying out the Project; and (ii) set threshold criteria and procedures for handling such grievances, responding to them, and notifying stakeholders. The complaints handling unit will carry out its functions in coordination with the PNPM Mandiri complaints and problems management unit and in accordance with PNPM Mandiri’s Implementation Guidelines on Management of Complaints and Grievances.

XI. ACCOUNTABILITY MECHANISM

128. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.32

XII. RECORD OF PAM CHANGES

129. All revisions/updates during course of implementation should be retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.

32 For further information see: http://compliance.adb.org/.