rap3 and the private sector

Rural Access ProgrammeDevelopment through access

RAP3 and the Private SectorPresentation for RAP3 Consultant’s Forum

Michael Green

June 2014


RAP3 RAP3 Implementation £31.5m –

Works with district and central GON and private sector (14 districts) Employment for the poor maintaining, upgrading, constructing rural roads. (14 districts) Savings, literacy, income training as in RAP2 (14 districts) Sustainable agricultural, small businesses, economic infrastructure (8 districts) Trail Bridge construction (8 districts)

Rural Employment Guarantee Programme Support £3.6m – GON Karnali Employment Program (KEP) in Mid and Far West regions. TA in pilot districts and at the national level. (2 districts) Improving targeting, awareness, wage payment systems, registration, planning and

monitoring, transparency, capacity and coordination with local government. Lessons learned inform a National Employment Guarantee Scheme

Results, Evaluation and Policy support, £1.35m – third party continuous monitoring (8 districts) separate studies to capture lessons on specific issues inform the design of future donor and government programmes.

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Strategic SWOT Analysis – 2012

Spending in LRN sector likely to continue to increase over next ten years and outstrip capacity of DDC and DOLIDAR to manage the sector.

Without a substantial improvement in management of the sector SWAp funding aspirations of GON will not be achieved.

Chronic weaknesses that need to be overcome a) span of control -1:75 agencies vs SRN 1:1 agency b) district level planning and implementation c) M&E impact and progress reporting.

These issues will take a long time to solve in terms of GON capacity to manage LRN sector.

GON needs a shorter term strategy


LRN Outsourcing Strategy Outsourcing to the private sector is probably the best

short term option and will appeal to the donors as well. DOLIDAR should therefore reposition its role as

management agency of the sector by outsourcing planning, design, supervision and M&E to the private sector through area contracts.

Payment for this support could be through TA assistance linked to donor projects or paid out of the LRN works budget.

Negotiate with donors for this in design of next generation projects post 2013.


Current Span of Control


Area Based Outsourcing Approach

MOFALD/DOLIDAR/SWAp

Area Contract 1 Area Contract 2 Area 3 Contract Area 4 Contract Area 5 Contract

9 15 16 19 16

DFID ADB SDC WB ADB

DDC’s supported by Area TA’s


Looking to the Future


RAP3 Districts


Budget and Components (GBP)


District Road Core NetworkNew Construction – (4)

Humla, Mugu, Bajura, Kalikot

Maintenance – (10) Doti, Achham, Dailekh, Jumla Dadeldhura, Parbat, Sindhupalchowk, Morang, Jhapa, Sankhuwasabha

SED (8) Humla, Mugu, Bajura, Kalikot (RAP2 style) Doti, Achham, Dailekh, Jumla

Capacity Building/Policy Harmonisation (14) Doti, Achham, Dailekh, Jumla, Humla, Mugu, Bajura, Kalikot Dadeldhura, Parbat, Sindhupalchowk, Morang, Jhapa, Sankhuwasabha


DRCN First Year FundingDistrict

RAP3: Year-1 fund allocation (NPR) Remarks

New construction Improvements Maintenance

(DDF) Total

ACH 0 0 96,000,000 96,000,000 Total allocated annual budget is from the programme and does not include budget from other sources of funding. Total length of 7 new construction corridors is 94.77km

DAD 0 30,173,725 49,826,275 80,000,000

DAI 0 52,296,000 43,704,000 96,000,000

DOT 0 7,346,000 57,654,000 65,000,000

JHA 0 71,175,000 98,825,000 170,000,000

JUM 0 42,606,000 17,394,000 60,000,000

MOR 0 91,205,478 112,794,522 204,000,000

PAR 0 41,703,000 74,297,000 116,000,000

SAN 0 0 84,000,000 84,000,000

SIN 0 0 100,000,000 100,000,000

BAJ 46,620,000 0 0 46,620,000

HUM 80,610,000 0 0 80,610,000

KAL 55,790,000 0 0 55,790,000

MUG 66,590,000 0 0 66,590,000

Total 249,610,000 336,505,203 734,494,797 1,320,610,000 Total (GBP) 1,560,063 2,103,158 4,590,592 8,253,813


Example of Outsourcing - UK The UK Highways Agency's operations are split into six

regions that are roughly based on the regions of England.

These regions are subdivided into 13 operational areas. These areas are managed and maintained by an Area Team and a contractor, known as a Managing Agent (MA) or Managing Agent Contractor (MAC).

These combine supervision consulting and contracting. In addition, there are a number of sections of road that are managed by DBFO contracts separate from the area teams.

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Nepal LRN post 2013 Translated to Nepal a Central TA supports DOLIDAR DOLIDAR keeps its project managers in KTM as now

with Area TA’s supporting DTOs in Districts as per RTI Pilot.

In addition, there will be a number of projects eg SDC Bridges that can be managed through contracts that are separate from the area teams.

Once established and working move towards SWAp funding agreements with donors.

This will probably include elements of World Bank’s Program for Results

14


Post 2013 New Generation Projects

15

Pursue common set of LRN policies M&E able to demonstrate LRN impact to donors Adopt harmonised Asset Management approach to cover whole of LRN network

o Planning of entire LRN Network o Programming o Maintenance o Upgrading o Rehabilitation o New construction

Demand led TA support through DTMP to reflect capacity of different districts Use of area based clusters of districts for TA support funded by donors. Donor projects adopt single GON led approach and procedures Donor projects provide capacity building to GON staff, especially in management Update 5 year DTMP and make basis for upgrading and rehabilitation of network Use of annual condition surveys for maintenance using ARMP Include Modernisation Fund mechanism and annual support plans for

institutional capacity building Use out sourcing to private sector to improve capacity and governance issues

from 2013


SWAp Asset Management RAP3 supports GON SWAp programme in 14 districts LRN investment based on District Transport Master

Plans (DTMP). Identify minimum network to link VDC and District HQ-

District Core Road Network (DRCN) New GON policy puts maintenance first; upgrade to all-

weather; new last. DTMPs to guide short, medium and long term

investment by donors and GON ready by Dec. Annual investment based on ARAMP

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RAP3 Modality

LRN Maintenance through DDFLRN Upgrading – Start directNew construction – Start directIncome generation – PartnersEconomic infrastructure – Linked to IGCapacity Building – Annual Support Plans

Central GON, Districts DTOs and Private Sector

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The key to delivery of the new generation of results based LRN contracts are private sector consultants and contractors.

Can they do it?


The End

Rural Access ProgrammeDevelopment through access 20

Consultant Procurement & Performance

RAP3 Consultant’s Forum

Bill Seal (Engineering Team Leader)

5th June 2014


Purpose & ContextAn open and honest view of RAP3’s

experiences with our Consultants so far,Overview of the significant performance

issues and deficiencies (generalisations),Ambition:

Not to blame, ‘sling mud’ or squabble,Expose the issues, discuss openly and agree

on how we can improve (Consultant & Client).


Current EngagementsStage-1 Design: 5 num (3 months) – Lump

SumImprovement Design: 3 num (3 months) –

Lump SumConstruction Supervision & Stage-2

Design: 4 num (3 years) – Time BasedLRNAM Support: 10 num (2 years) – Time

BasedTotal: 22 ongoing assignments


Earlier ExperiencesMore than a decade of Consultant

partnerships (RAP1 & RAP2)Presumptions Summarised:

Company involvement low (‘body shops’) Inadequate care (to project / client)High staff turnover / dissatisfied staff / absenteeismLong-vacant positions (following resignations)Competency / skill issues


RAP3 LRN StrategyP4R (‘payment for results’) where possible

Lump Sum / Milestone contractsReward performance

Multi-year contracts with extensions linked to Consultant performance

Time-based contracts for supervision / support assignments due to complexity

Quality & Cost Based Selection (QCBS)Nepal Road Sector Assessment Study

DDCs to outsource services Support development of the Private Sector


Employment of ConsultantsWhy employ Consultants?

Flexibility for changes in work size and scopeManagement of man-power resourceTechnical back-stopping and expertiseChecking and quality assuranceValue for money

The Alternative?Develop large in-house teams (RAP3)?


Service Procurement ChallengesHow to …..

engage competent firms?ensure value for money (judging the

appropriateness of financial bids / relationship of higher fees to better quality?)

encourage assignment of capable / appropriate staff?

retain staff – adequate expenditure on staff employment / facility packages?

Answer: not just to ‘pay higher fee rates’


RAP3’s Procurement ApproachPre-qualification

Standing listsExpression of Interests

Specific & targeted invitation (i.e. on district-wise basis not generic)

Pre-bid Briefing MeetingQCBS

80% technical / 20% financial


Improved ‘Request for Proposals’ (RFP) Chapter limitations:

Standard methodology provided (LS contracts only) Methodology – 7 pages max Comments on ToR – 2 pages max, etc.

CVs: Provide a summary sheet (abstract) Need not be full-time employee (benefit for 6 months previous only) Realistic ceilings on full-mark experience

Staff Provisions: Allowances – to be the same or better than those of the Client Payment of Allowances – will be treated as ‘reimbursable’ items No ‘leave in lieu’ – Client will pay only for periods assigned i.e. rates to be

inclusive (leave, overtime, bonuses etc.) Ethics:

Strong emphasis ‘Whistle blowing’ etc.


Engineer’s Price EstimatesRAP3 intentions:

To promote the payment of ‘good’ rates (better than before)

Support private sector initiativesApproach:

Target adoption of ‘Society of Consulting Architectural & Engineering Firms’ (SCAEF) published schedule of ‘Monthly Billing Rates’

Bench-marking to earlier RAP experiences to gauge VFM


SCAEF Schedule of Fee RatesCurrent version is 2010 (not updated)Quotes a multiplier (OH, fees etc.) of 2.61High at ‘top end’, low at ‘bottom end’

Senior Eng: NRs 267,500 p.m. IoW: NRs 85,600 p.m. AutoCAD Operator: 35,000 p.m.

Applicable for staff with > 15 years exp. 30% reduction 7 to 15 years 60% reduction 3 to 7 years

Some necessary adjustments had to be appliedBenchmarking to RAP2: approx. 30-35% higher (like for

like with inflation)


Technical ProposalsVery little original thought – even in

‘comments / suggestions’Copy and pasteCVs (the biggest scoring section)

poorly presentedsummaries incorrect / overlooked, difficult to

evaluatenomination based on potential score not ability /

suitabilityauthenticity of CV content?


Financial Proposals / NegotiationsPrices widely dispersed (85% - 175% of Estimate)Patterns of bidding:

‘Scatter’ vs. ‘Cluster’ (several clusters ~ 150%) Significant suggestion of collusion / lack of competition

RAP3 negotiation approach: Competition / near Estimate: no negotiation on fees (5 out

of 14 packages) Grossly high / uncompetitive: offered at Estimate (9 out of

14 packages) – all bidders accepted Bidders in negotiated packages all formally agreed:

Rates still sufficient to meet ToR without reduced quality Rates still sufficient to retain staff


Mobilisation / ImplementationSlow mobilisation (far longer than agreed)Immediate staff changes / difficulties in finding

matching replacements (RAP3 provisioned 5% fee reduction for 6 months)

Poor understanding of ‘Inception’ / ability to design / tune an approach (HQ input needed?) Team organisation / logistics Supplementary staff proposals (LRAMS)

Late and poor quality provision of resources (office facilities, transport etc.)


Performance Issues (Firms)1) Late staff payment (pay-when-paid approach) – despite receiving an

advance2) ‘Pay-what-paid’ approach i.e. hints of unpaid leave, unpaid travel etc.3) Professionalism – narrow consideration limited to profit / fees /

cashflow, lacking professional duty on project delivery4) Self-checking absent (reliance on Client)5) Inadequate backstopping (HQ support)6) Slow replacement of unavailable / resigned staff (to the detriment of

project)7) Arbitrary assignment of staff (Lump Sum Contracts)8) Assign inappropriate staff (age, fitness, non-drivers, attitude,

suitability, etc.)9) Lack of responsibility (safety, project delivery / cost control)10) Lack of pride?


Performance Issues (Staff)1) Engineers or Technicians?

Technicians: apply technical procedure accurately, Engineers: direct, solve, evaluate, Interpret, judgement,

research, relevance, VFM, leadership, etc.)2) Over-reliance on software (‘blind’ application)3) Reliance on templates not understanding, inability

to truly ‘design’4) Unquestioned faith in design drawings (however

ridiculous)5) Lacking professional / self development6) Leave management / high absenteeism


Summary of Key Issues - 1Seq Issue Strategy?1. How ‘clean’ is the sector?

If fair competition is absent the procurement approach wont work.

1. SCAEF to promote honour, integrity and professionalism.

2. Clients urge ‘whistle blowing’ and enforce ‘black-listing’

2. Lump-sum contracts unworkable in the present context?

1. Abandon LS approach - make everything input / time based?

2. Introduce Liquidated Damages to combat ‘time at large’ delivery?

3. 80/20% QCBS is not delivering value or competition

1. Adjust the split more in favour of cost say 50/50 or 40/60 (Quality / Cost)

4. Engineers lacking structured professional development

1. SCAEF to move toward introduction of a professional qualification (not merely registration),

2. SCAEF to seek to influence university degree course content, practical training etc.

3. Increase professional training opportunities


Summary of Key Issues - 2Seq Issue Strategy?5. Take responsibility for

their deliverables (Consultants)

1. Consultants to take full responsibility for their service deliverables rather than rely on clients to do their checking and supervision i.e. develop internal systems for quality assurance.

2. Clients need greater redress; introduce requirement for Performance Securities, Indemnity Insurance etc.?

5. Lack of trust (in Consultants by Clients)

1. Earn it through delivery.2. Demonstrate a clean and competitive sector.3. More engagement workshops.

6. Commercial aspects not fully understood by Clients

1. SCAEF to lead in improving their schedule of rates, disseminating and developing credibility


‘Step forward, or backward?’

THANK YOU


RAP Consultants ForumSome Engineering Do’s and Dont’s

5th June 20147

TIMOTHY J.R STIFF Senior Technical Director (Management Services)

IMC Worldwide Ltd, UK


Safety, Safety SafetyDo enforce safety on the sites

Hard HatsWellington boots

Gloves and Goggles (especially when breaking rock)

Safety Harness when working on steep slopes

Check that First Aid pack is available and restocked as necessary in good time


Planning of the WorksDo Discuss, Plan and Agree how the

works are to be carried out

Ensure that everyone in the RBG understand the method of working and emphasise the key safety and

environmental issues Re-Brief as often as required so that

everybody is working to the same plan


Do check excavation and fill slopes for stability

Do look for signs of slope movement

Such as tension cracks upslope or down slope, loose rocks or stones loose soil etc and warn and take corrective

action in good time


The Gabions need for properly constructed gabion boxes with tightly wired edges

Do Ensure that only correctly made gabions are used in the works


Do take care to check the design and detailing of retaining walls

Retaining walls are a large capital investment and need to be dsigned in strict accordance with the RAP procedureCross Sections are required at a minimum of 10 metres along the length of the proposed wall and at least 10 metres past it on each side to ensure the wall geopmentry is appropriate


Gabion walls

Do bed the gabions in alternate stretcher and header courses so that it can distribute any movement most effectively


Do provide adequate drainage to the base of the the retaining wall foundation and back of wall drainage on

the wall itself


Do -Establish Semi permanent chainage markings

Establish chainage markers where they can be seen and on

permanent feature if possible. Re establish as necessary


Road Drainage The consideration of the drainage of the road is critical in ensuring the

long term stability of the asset. Do consider where the water is going Do Minimise drainage runs to prevent concentration of water at outfalls Optimizing surface cross drainage is often more easily accomplished by

site survey and analysis of an existing segment rather than during the preconstruction phase of road development, as concentration problems and opportunities for their reduction are then readily apparent.

Therefore do visit the road during, or straight after any rains to identify problems

Field inspection of cross drainage needs is especially enlightening during intense climatic events.

Analysis of a road segment from top to bottom allows dealing with concentrations as they develop ,preventing any single concentration from reaching problematical proportions.


Do pay close attention to cross Drainage Details

Do consider how the water can cross the road especially where large season streams are apparent

Use geotextile or bamboo mats under stone pitching where necessary to ensure that the raod formation does not soften and erode during each rainy season

Closely consider where the water will actually go taking account of the existing grades

Do use the Staged construction approach to fine tune any designs as necessary


Do look around to identify any potential problems

Familiarity breeds contempt and walking down the same section of road results in one not actually seeing what is there

Don’t take the same short cuts each site visit otherwise lengths of road could not be looked at for long periods

Do write down any issues identified (locating them accurately using the permanent chainage markers that should be visible)

Do identify any addition recommended work in good time with estimates of time and cost implications for discussion with the DTL/EO


Do Ask!

If you are not sure about any details or cause of a problem - ask don’t leave it to get worse!

Nobody will think any less of you and you may just save a large embarrassment to the Project!

Don’t be afraid to suggest alternative solutions to a problem – you may just have come up with an innovation!


Thank you for listening

Any questions, comments or observations to share?


Supporting the Private Sector – International ExperiencePrivate Sector Workshop

Kirsteen Merrilees

June 2014


Overview

Strong (Civil) Engineering Sector Examples of Support to Private Sector Private Sector in Nepal


STRONG (CIVIL) ENGINEERING SECTOR


Features of a strong sector

Strong Sector

Influence Policy

Environment

Self Regulation

Professional and Ethical Standards

Professional Developmen

t

Performance rewards


Civil Engineering Sector in UK

Association for Consulting and Engineering register of firms – code of business practice and ethics

Engineering Council regulatory body for engineering profession standards for professional competence, ethics

Institution of Civil Engineers professional development and qualifications influencing government policy and strategy


Professional Engineers

Professional Engineer

A. Innovation and technology

B. Engineering solutions

C. Management and leadership

D. Communication

skills

E. Professional standard and

ethics


EXAMPLES OF SUPPORT TO PRIVATE SECTOR


Projects with PS SupportProject Country DescriptionCross Roads Uganda • Capacity building

• Policy reform (outsourcing)

TAQA Ethiopia • Quality Management System

TA to UNRA Uganda • Model Procurement Documents

IEB Bangladesh • Professional development (ICE)


ICE support to Bangladesh

Support to Bangladesh Institution of Civil EngineersProfessional QualificationsGraduate training programmeContinuing Professional Development (CPD)

Working with Universities Improve technical contentBroaden curriculum for engineers


Technical Assistance to Uganda National Road Authority

Improving performance of national road sector through contracts that include / require: detailed TOR (requirements) CD with all technical manuals, specifications etc. Managing and sharing risk (time, quality, budget) Promotion of national resources (incl. expertise) Technical Audit Transfer of Knowledge Consultant QMS and Project Control Plan Address Skills Gap – technical assistants, graduate

development programme


Technical Assistance for Quality Assurance, Ethiopian Road Authority

Addressing poor quality services through Quality Management Improved procurement & contract management by

ERAClearly defined requirements for service providersCompliance with legal and funding requirementsTraining in QMS requirements Auditing QMS implementation


Cross Roads - GoalsCreating Opportunities for Sustainable Spending on RoadsCapacity Building

improve services, create opportunities and competitive environment

Improved Government planning long term planning, adequate & consistent funding, regulation, continuous work opportunities


Cross Roads ApproachesMarket System Approach

tackling underlying causes of market inefficiencies

Policy Reform outsourcing to Private Sector, dedicated Government agency & maintenance funds

Incentives Construction guarantee fund: affordable credit for bid bonds,

performance bonds, equipment Challenge fund: develop innovative solutions to roads issues

Capacity Development Support professional and industry associations to provide better

services Develop skills of association members


PRIVATE SECTOR IN NEPAL


Addressing WeaknessesCurrent Weakness Possible solutionLimited sense of professionalism and responsibility within engineering community

• Develop tiered registration within Engineering Council

• Develop formal professional qualification• Develop graduate training programme• Promote Continuing Professional

DevelopmentPoor contract management by all parties

• Strengthen GON planning, procurement and contract management processes

• Improve contract documents, TOR• Training in basic contract management• Enforce contract penalties

No incentive for good performance

• Develop appropriate incentives for individuals and organisations (awards?)


Addressing WeaknessesCurrent Weakness Possible solutionPoor resource planning and management

• Improve GON planning processes to better fit with construction seasons

• Ensure adequate resource provisions in contracts

• Training of managers in basic resource management (human, financial, physical)

Poor quality management – poor end product

• Develop QMS for standard engineering processes

• Training in basic QMS


Weak to Strong Private Sector

Poor performance

Weak Sector

Solutions to challenges

• Technical• Management

• Business Environment

• Social and Political

Good Performance

Strong Sector


Thank you.

The End.

rap3 and the private sector

Documents

rural roads

lrn sector likely

central gon

outsourcing planning

terms of gon capacity

private sectorpresentation

design of future donor

accessdfid rap3 programme