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Document of
The World Bank
Report No: 71699 - IN
RESTRUCTURING PAPER
ON A
PROPOSED PROJECT RESTRUCTURING
OF
PUNJAB STATE ROAD SECTOR PROJECT
LOAN 4843 – IN
(BOARD APPROVAL - DECEMBER 5, 2006)
TO THE
REPUBLIC OF INDIA
August 30, 2012
Sustainable Development Department
India Country Management Unit
South Asia Regional Office
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization
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CURRENCY EQUIVALENTS
(Exchange Rate Effective - August 23, 2012)
Currency Unit = Indian Rupees
US$ 1.0 = 55.48
Crore = 10 million
ABBREVIATIONS AND ACRONYMS
AC Asphalt Concrete
BoQ Bill of Quantities
CoI Corridor of Impact
DBMOT Design, Build, Maintain, Operate and Transfer
DEA Department of Economic Affairs
DOF Department of Finance
ERR Economic Rate of Return
FIRs First Information Reports
FMRs Financial Monitoring Reports
FWP Forward Works Program
GOI Government of India
GOP Government of Punjab
HDM Highway Design Manual
HLMC High Level Monitoring Committee
IBRD International Bank of Reconstruction and Development
IDA International Development Association
IRI International Roughness Indicator
KPM Key Performance Measures
MDR Major District Roads
MTR Mid-Term Review
NPV Net Present Value
ODR Other District Roads
OPRC Operating and Performance Based Road Contracts
PDO Project Development Objectives
PRBDB Punjab Roads and Bridges Development Board
PPP Public-Private Partnerships
PWD Public Works Department
RAP Resettlement Action Plan
RoW Right of Way
RMF Road Maintenance Fund
RP Restructuring Paper
SH State Highways
VOC Vehicle Operating Costs
Regional Vice President: Isabel M. Guerrero
Country Director: N. Roberto Zagha/Onno Ruhl
Acting Sector Manager / Director: Simon David Ellis/John H. Stein
Task Team Leader: Ben L.J. Eijbergen/Rajesh Rohatgi
INDIA: PUNJAB STATE ROAD SECTOR PROJECT
RESTRUCTURING PAPER
P090585
TABLE OF CONTENTS
Page
A. SUMMARY ........................................................................................................................... 3
B. PROJECT STATUS .............................................................................................................. 4
C. PROPOSED CHANGES ...................................................................................................... 5
D. APPRAISAL SUMMARY ................................................................................................. 10
ANNEX 1: RESULTS/ MONITORING FRAMEWORK ...................................................... 16
ANNEX 2: OPRC CONTRACTING SYSTEM ........................................................................ 19
ANNEX 3: PROPOSED OPRC NETWORK .......................................................................... 23
1
INDIA
PUNJAB STATE ROAD SECTOR PROJECT
RESTRUCTURING PAPER
DATA SHEET
Restructuring
Restructuring Type: Level two Last modified on date : 08/30/2012
1. Basic Information Project ID and Name P090585: IN: Punjab State Road Sector Project
Country India
Task Team Leader Benedictus Eijbergen
Sector Manager/Director John Henry Stein
Country Director N. Roberto Zagha
Original Board Approval Date 12/05/2006
Original Closing Date: 06/05/2012
Current Closing Date 09/05/2012
Proposed Closing Date [if applicable] 06/05/2017
EA Category A-Full Assessment
Revised EA Category A-Full Assessment-Full Assessment
EA Completion Date 10/10/2005
Revised EA Completion Date
2. Revised Financing Plan (US$M) Source Original Revised
BORR 83.40 157.30
IBRD 250.00 250.00
Total 333.40 407.30
3. Borrower Organization Department Location
Government of India India
4. Implementing Agency Organization Department Location
Punjab Roads and Bridges
Development Board
India
2
5. Disbursement Estimates (US$m) Actual amount disbursed as of 08/27/2012 138.78
Fiscal Year Annual Cumulative
2012 0.00 138.78
2013 14.99 153.77
2014 32.82 186.59
2015 23.33 209.92
2016 28.70 238.62
2017 11.38 250.00
Total 250.00
6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N
Does the restructured projects trigger any new safeguard policies? If yes, please select
from the checklist below and update ISDS accordingly before submitting the package.
N
7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes
The project objective is to improve operating conditions of State roads for road users, in a sustainable
way, thus helping to provide the business enabling environment necessary to support Punjab's
economic development strategy.
7b. Revised Project Development Objectives/Outcomes [if applicable]
3
INDIA: PUNJAB STATE ROAD SECTOR PROJECT
RESTRUCTURING PAPER
A. SUMMARY
1. This paper proposes to extend the loan closing date by five years until June 5,
2017, from the original closing date of June 5, 2012. The reason for seeking the five year
extension is to support Government of Punjab (GOP) in their endeavor to undertake a 10
year network based Output and Performance Based Road Contract (OPRC)1 to improve,
rehabilitate and maintain about 200 km of state road network as part of Road Upgrading,
Rehabilitation and Maintenance component. This network based demonstration project,
based on asset management principles is being implemented for the first time in India and
has the potential of being replicated elsewhere in the country.
2. The OPRC was envisioned early on in the project implementation, but being a
new and innovative contracting system, a significant amount of time was spent on
awareness raising and capacity building of Government of Punjab, PRBDB officials and
local construction industry representatives. Furthermore, the feasibility study of OPRC
suggested a different road network than the identified corridors during the project
preparation, which resulted in additional efforts and time for data collection and
feasibility study of the proposed OPRC network. Also, the preparation and finalization of
the customized bidding documents, taking into account the innovative principles of
OPRC, did not follow a standard process and as a result more time was needed to
complete and come to an agreement. All these factors contributed to delay and the
bidding of the OPRC contract could only be commenced in January 2012 i.e. about six
months before the original loan closing.
3. The proposed 5 year extension would ensure Bank’s support to GOP for initial 5
years of OPRC implementation both in terms of finances and capacity building of the
implementing agency.
4. In addition, the proposed restructuring includes changes to (i) results monitoring
framework; (ii) scope of project components; (iii) applicability of January 2011 version
of Procurement Guidelines and Consultant Guidelines; (iv) changes in Project Costs and;
(v) corresponding changes to legal amendments including dropping of covenants related
to Road Maintenance Fund.
5. The proposed project restructuring entails no change to the Project Development
Objectives (PDO) which is “to improve operating conditions of State Roads for road
users, in a sustainable way, thus helping to provide the business enabling environment
necessary to support Punjab’s economic development strategy”. There are no changes to
1 OPRC is a new and innovative contracting philosophy focused on specifying the contractor’s outputs and
performance needed to achieve the enhanced performance of a road network. It avoids wherever possible,
specifying or measuring the contractor’s inputs, leaving the choice of how the work is undertaken up to the
contractor.
4
the project implementation and disbursement arrangements or to the loan amount. No
additional safeguard policy is expected to be triggered due to the proposed restructuring.
6. In order to review and appraise the five year loan extension request by GOP,
endorsed by the Department of Economic Affairs, Government of India, an interim
extension of three months until September 5, 2012 had been approved by the Bank in
June 2012.
B. PROJECT STATUS
Project Data and Performance
Key Project Data Current Ratings and Flags
Board Date Dec 05, 2006 Development Objectives Moderately Satisfactory
Closing Date Sep 05, 2012 Implementation Progress Moderately Satisfactory
Project Age 68 months Problem Flags Legal Covenant
% Disbursed 55.5%
7. The Project has two components– (i) Road Upgrading, Rehabilitation and
Maintenance; and (ii) Institutional Strengthening.
8. The Punjab State Road Sector Project was approved in 2006 and since its
effectiveness in 2007, the project is performing (moderately) satisfactorily. All civil
works, envisaged under the Phase I of the project stand completed since 2009 and most of
the activities, envisaged under the Institutional Strengthening components are in advance
stages of completion and their outputs/recommendations are being reviewed by the GOP
for adoption/implementation. Bids for Phase II Civil Works (OPRC) have also been
received and the evaluation has been completed by GOP. The Bank is currently
reviewing the Bid Evaluation Report.
9. Since January 31, 2008 the project had been in non-compliance with legal
covenants associated with the partial implementation of the Road Maintenance Fund and
insufficient allocation of a seed amount of US$25m through the state budget. The prime
intention for keeping these covenants was to ensure sustainability of investments and
improved maintenance of existing road network. However, during the project
implementation, GoP decided not to operationalize the Road Fund further and continue to
fund maintenance under their state’s budget head. The result was convincing – there was
a substantial reduction of poor road network from about 50 percent in 2006-07 to 4
percent in 2011 in the state.
10. The Project impact is being monitored through improvements in key performance
indicators relating to (i) Average Core Network Speed; (ii) Reduction in VOC; (iii)
number of fatal accidents; (iv) User Satisfaction and; (v) Efficiency of Road Agency
(PRBDB). All indicators have shown improvement from start of the project and the
current status demonstrates that most of the indicators have substantially met the end-of-
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project targets, indicating that the project has strong likelihood of continuing to achieve
its development objective. Please refer to Annex 1 for Result Monitoring Framework.
C. PROPOSED CHANGES
Summary:
11. Following changes are proposed
Scope of Project Components – (i) Road Upgrading, Rehabilitation and
Maintenance component; and (ii) Institutional Strengthening component
Results Monitoring Framework/Indicators
Applicability of January 2011 version of Procurement Guidelines and Consultant
Guidelines
Changes in Project Costs
Extension of loan closing date by five year from original loan closing until June 5,
2017
Corresponding amendments to legal agreements including dropping of covenants
related to Road Maintenance Fund.
12. There are no changes in the PDO, institutional/ implementation arrangements,
financial plan and disbursement arrangements. No additional safeguard policy is expected
to be triggered due to the proposed restructuring.
13. The proposed changes will ensure the project continues to meet the Project
Development Objective.
Change in the Scope of Component 1: Road Upgrading, Rehabilitation and
Maintenance
14. Introduction of OPRC. Under Phase II, the project envisaged (i) about 210 km of
up-gradation, about 40 km of rehabilitation; (ii) improvement of about 40 accident black-
spots and; (iii) maintenance through performance-based and regular contracting methods.
However, during the project implementation, the Bank and GOP agreed to undertake
improvement of about 200 km of state road network through innovative OPRC
contracting method to facilitate building the state’s capacity in asset management and
drop the initial identified corridors. The selection of the OPRC network was based on a
comprehensive feasibility study. Annex 4 shows the map of the OPRC network. The
following table presents a list of roads to be dropped from the project and the proposed
network to be improved under OPRC.
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Table 1: Phase II- Roads to be dropped from the project
SN Description of the Section Length (Km)
Phase II – Upgrading
1 Nakodar – Phillaur (MDR - 48) 35.6
2 Kapurthala-Nakodar (MDR – 48) 31.3
3 Handiaya – Harisinghwala (SH – 13) 38.2
4 A – Dehlon 9.50
5 Jalandhar – Kapurthala (MDR – 52) 13.8
6 Mansa – Sardulgarh (SH-13) 44.7
7 Jaitu - Bajakhana - Bhagta - Salabatpura - distt. Boundary (MDR – 43) 38.7
Phase II – Rehabilitation
1 Sahnewal – A 7.0
2 Harisinghwala – Mansa (SH – 13) 7.3
3 Barnala – Handiaya (SH-13) 3.5
4 Doraha – NH-95 (ODR) 24.0
Total Road Length 253.6
Table 2: Phase II - Proposed roads to be included (OPRC)
SN Description of the Section Length (Km)
S1 Sangrur-Sunam: (MDR21) 11.3
S2 Bhawanigarh - Sunam - Bhikhi – SH13 Intersection – Kotshamir:
(SH12A)
106.1
S3 Barnala – Mansa: (SH13) 7.3
S4 Mansa - Talwandi Sabo (upto intersection with B8) :(ODR9) 25.0
S5 Dhanaula – Bhikhi: (MDR14) 25.3
B8 Bathinda - Kotshamir - Talwandi Sabo (up to intersection with S4):
(SH17)
28.6
Total Road Length 203.6
15. Construction of Dehlon Bypass In Ludhiana-Malerkotla-Sangrur road corridor,
improved under the phase I of the project, about 4 km of the section passes through a
congested stretch of village Dehlon. As per geometric design and road safety aspects, the
road needed to be widened on the left hand side, which necessitated acquiring land of two
religious committees and two private owners. However, the title of the land occupied by
religious committees was not clear and commercial establishments were built by both on
the outer edge of the property, facing the road. These shops are being operated by 57
tenants (non titleholders) for the last 40 years, who would have been displaced due to the
acquisition, affecting their livelihood.
16. As per the Resettlement and Rehabilitation Policy (R&R Policy) adopted by the
project, if a minimum of 20 project displaced families (PDFs) affected in a continuous
stretch of 5 Km opts for assisted resettlement, the project will develop a resettlement site.
Therefore, it was agreed by tenants and religious committees that the tenants will be
accommodated in newly constructed shops within their premises. As per this proposal, a
tripartite agreement was signed by the PRBDB and both religious committees on August
22, 2007. However both the committees refused to honor the agreement, claiming that
more than 75 percent of the tenants are defaulters, who were not paying rent for the last
7
15 years. PRBDB then explored the option of resettling them on a common village land
on the right hand side of the road. However, this option could not be implemented as the
proposed resettlement site is under the No Construction Zone as per the Punjab Regional
and Town Planning and Development Act, 1995 of schedule roads. Therefore, it was
agreed that widening in this section will be restricted to the available clear space to
minimize the adverse social impact; and feasibility of construction of a bypass would be
explored instead.
17. It is therefore proposed to include construction of the said bypass of about 3km
length with an estimated cost of US$15million in the project. The alignment has been
finalized, socio-environmental assessment has been completed and the land acquisition
process is in the advance stages.
18. Intervention to provide structural adequacy to Kharar-Banur-Tepla Corridor.
This corridor, improved under the project in phase I, has observed a higher increase in
traffic volumes than estimated during the pavement design, which has led to pavement
failures at many places. As part of ongoing pavement engineering investigations, the
Central Road Research of India (CRRI) has recommended to provide additional
pavement crust on this corridor to maintain adequate structural adequacy of the created
asset and to ensure its sustainability. It is therefore proposed to fund this work under the
project, which will include pavement overlay of about 22 km with an estimated cost of
US$3million.
19. Road Safety Enhancements and Black Spot improvements works A total of 347
accident black spots were identified throughout the state, out of which about 90 have
already been addressed, instead of only 40 envisaged during the project. It is proposed to
include road safety enhancement and accident black spot improvement works on the
remaining state road network to improve road safety situation of the state with an
estimated cost of US$12 million.
Change in the Scope of Component 2: Institutional Strengthening
20. Removal of support to Road Maintenance Fund During the project preparation
more than 50 percent of the state road network was in poor condition and it was agreed
that to address this issue, the Road Maintenance Fund, which was already established
legally at that time, would be made operational by providing technical assistance through
the project. It was envisaged that a secretariat would be established and the maintenance
would be financed through the Road Maintenance Fund. Simultaneously, the state would
also explore additional revenue streams. However, this could not be achieved and GOP
decided not to operationalize the Road Maintenance Fund and establish its secretariat.
Despite this, the state was able to improve the condition of state roads with its own
budgetary support and centrally sponsored schemes, resulting in substantial reduction of
poor road network from about 50 percent in 2006-07 to 4 percent in 2011.
21. Furthermore, the GOP has recently constituted a High Level Monitoring
Committee (HLMC) under the chairmanship of Chief Secretary, Punjab to monitor
allocation of maintenance budget in the state. The Secretary Public Works has constituted
8
a technical committee to serve as the secretariat to the HLMC and to prepare a draft
proposal for undertaking a road maintenance program. A provision of US$60 million has
also been kept under the approved budget for the year 2012-13 for the maintenance of
state roads, which include roads covered under the project. In addition, proposed OPRC
contracts also have the potential of being replicated across the state network, resulting in
proper upkeep of its network governed by better asset management principles.
22. The overall improvement in condition of state road assets and developments
mentioned above, indicate state’s commitments to ensure maintenance and sustainability
of project investments. In view of the above, it is proposed to drop the technical
assistance to operationalize the Road Maintenance Fund and associated legal covenants.
23. Removal of support to PPP Transactions. All PPP Infrastructure projects are
being developed and managed by the Punjab Infrastructure Development Board (PIDB)
and are not under the mandate of the project implementing agency PRBDB. Therefore,
this activity is proposed to be removed from the project scope. However, in order to
undertake a comprehensive policy planning of the transport sector as a whole, a study
entitled Integrated Transport Policy and Strategy and Strategic Investment Plan
(Transport Sector Master Plan) was undertaken during the project. The final report has
been submitted by the consultants, which is being reviewed by the Government.
24. Removal of support to computerize Traffic Fine Collection System This activity is
being undertaken by the State Police Department and hence is proposed to be dropped.
Changes in Results Monitoring Framework and Indicators
25. The project has already completed its intended implementation period and most of
the indicators have met their targets as monitored and reported during 2011. It is now
proposed to revise the Results Monitoring Framework for the proposed extended project
period. The current and proposed result monitoring framework is attached in Annex 1.
Changes in Project Costs
26. The proposed changes would results in increase to project costs by about US$71
million. The Bank loan would remain as US$250 million and the additional amount
would be contributed by the Government of Punjab. The original and revised project
costs are given below.
9
Table 3: Project Costs (US$M) Components/Activities Original Proposed
A. Component 1 - Road Development 310.4 388.8
- Road Upgrading 221.5 109.6
- Rehabilitation 66.9 65.7
- Maintenance and Other works 22 15.3
- OPRC - 168.2
- Dehlon Bypass - 15.0
- Additional crust for increasing the structural
adequacy of pavement structure on UG1
- 3.0
- Road Safety enhancements and Black Spot
Improvements
- 12.0
B. Component 2 - Institutional Strengthening 11 12.3
Incremental Operating Cost 12 6.2
Total Project Cost 333.4 407.3
Front-end Fee 0 0
Sub-Total 333.4 407.3
Note: For Expenditure already incurred exchange rate of Rs. 45.64/US$ has been taken and for the future
works exchange rate has been taken as Rs. 50/US$.
Applicability of January 2011 version of Procurement Guidelines and Consultant
Guidelines
27. Additional procurement activities which may be undertaken following the
proposed restructuring and extension of loan would include- (i) Procurement of
monitoring consultants for OPRC work; (ii) Construction of Dehlon Bypass; (iii) Works
to provide structural adequacy to Kharar-Banur-Tepla Corridor; and (iv) Road Safety
Enhancements and Black Spot improvements works. For these additional procurement
activities and those that may further be agreed to during the extended period of the
project, Bank’s current Guidelines “Procurement of Goods, Works, and Non-Consulting
Services under IBRD Loans, and IDA Credits and Grants by World Bank Borrowers”,
January 2011 and “Selection and Employment of Consultants under IBRD Loans and
IDA Credits and Grants by World Bank Borrowers”, January, 2011 will be applicable.
The Procurement Plan would be updated to reflect additional procurement activities.
Loan Closing date Extension
28. In order to utilize the un-disbursed funds (US$111 million) under the project;
undertake additional activities; and to ensure technical support and handholding of the
GOP for at least first five years of the 10 year OPRC contract, it is proposed to extend the
loan by five year (from original loan closing) until June 5, 2017.
Amendments to Legal Agreements
29. In order to reflect changes described above, legal agreements are proposed to be
amended including dropping of following covenants associated with the Road
Maintenance Fund:
10
Establish and fully operationalize, satisfactory to the Bank, the Road Maintenance
Fund and its secretariat by January 31, 2008.
Take all necessary steps to ensure that from fiscal year 2007-08 to 2011-12, that it
disburses to the Road Maintenance Fund, through its Finance Department, at least
twenty five million Dollars (US$25,000,000) each fiscal year, for the purpose of
the maintenance of plan roads.
Carry out and furnish to the Bank, annual reviews of the Road Maintenance Fund,
under term of reference satisfactory to the Bank, commencing April 30, 2008.
Commencing March 31, 2009, prepare and furnish to the Project Implementing
Entity an annual report of the road maintenance fund, including its audited
financial statements and a summary of the PRBDB’s decisions. This report shall
be provided to the Project Implementing Entity no later than nine months
following the end of the preceding year.
Commencing January 31, 2009 and on January 31 of each year thereafter during
the period of Project Implementation, shall prepare and submit to the Project
Implementing Entity an annual maintenance program to be financed from the
Road Maintenance Fund
D. APPRAISAL SUMMARY
Economic and financial analysis
30. To examine the whole-of-life benefits that are likely to accrue as a result of the
implementation of the OPRC philosophy and a comparison of the anticipated pavement
and surfacing treatments before and after implementation has been undertaken.
31. The historical pavement management practices have seen regular interventions in
terms of pavement rehabilitation and resurfacing works, typically around 8 to 12 years
and 4 to 6 years respectively. Design and construction practices have perhaps contributed
to these short pavement lives. If current practices continue, traffic growth will put further
pressure on these pavement lives.
32. With the implementation of the OPRC concept it is expected that the combination
of robust pavement design solutions along with rigorous quality assurance and auditing
will result in significant increase in the lifecycles for these assets. The expected average
life for rehabilitated pavements under the OPRC are likely to be in the order of 20+ years
and with resurfacing required every 8 to 12 years respectively. While the initial
rehabilitation under OPRC will involve a significant increase in the depth of the
pavement, future treatments are only expected to involve 50 mm – 70 mm overlays and
the milling and replacement of 100 to 500mm of the AC as the next rehabilitation.
33. The network was modeled under these two scenarios in HDM to assess the user
benefits of the proposed approach over a 20 year planning horizon and then tested the
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sensitivity of both our cost and intervention period assumptions. The analysis assumes a
7.5 percent traffic growth.
34. The modeling indicates a very good economic return in terms of both Internal
Rate of Return and Net Present Value.
Economic Rate of Return (ERR) of the introduction of OPRC
35. If the frequency of the current strategy of treatments stays the same with cycles of
resurfacing at 5 years and rehabilitation at 10 years the model indicates that the
introduction of OPRC offers an ERR of 20 percent. However, if the frequency of
interventions changes, as mentioned in paragraph 32, under the increased loading to 4
and 8 years respectively, the ERR increases to 32 percent.
Net Present Value (NPV) of the introduction of OPRC
36. The table below shows the sensitivity to tendered prices. The analysis has been
undertaken at a discount rate of 12 percent.
Table 4: Sensitivity of NPV Analysis to Cost Rates
Basic of Cost rates NPV [Million USD]
Status quo Resurfacing/ Rehab Cycles
4 and 8 years 5 and 10 years
Base Rate US$44.20 US$23.70
Base Rate +25 % US$23.20 US$2.70
Base Rate -25 % US$65.30 US$44.70
37. As can be seen, even with a 25 percent increase in the tendered rates the project
still delivers a positive albeit marginal NPV.
38. It has been assessed that this project generates benefits to many stakeholders, and
an excellent return on the investments. The identified benefits include:
39. Benefits to Road Agency
Improved management of the asset
A doubling of pavement and surfacing lives which in turn will result in much
lower cost going forward
Development of staff
Informed sharing of risk
Introduction of consistent service levels i.e. a focus on the performance of the
network
Competitive rates
40. Benefits of road users
Reduced delays
More planned work and less reactive work
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Smoother roads
Safer roads
41. Benefits to Contracting Industry
Long term view to network health
Stable long term work i.e. staff development, innovation payback period,
increased efficiencies and reduced costs
Rewards for good performance
Technical
42. OPRC is an innovative contracting philosophy focused on specifying the
contractor’s outputs and performance needed to achieve the enhanced performance of a
road network. It avoids wherever possible, specifying or measuring the contractor’s
inputs, leaving the choice of how the work is undertaken up to the contractor. The
duration of proposed OPRC contract is 10 year. Please refer to Annex 2 for details.
43. Network Selection: The entire state road network was reviewed in detail by
undertaking numerous visual inspections, geotechnical investigations, pavement
deflections surveys and traffic data collection. The final set of corridors to be undertaken
in OPRC was then arrived bases on following key factors:
Length of network to make best utilization of contracting entity’s resources;
Connectivity to ensure efficient maintenance operations;
Mix of road types;
Indicative work load (and hence cash flow) to provide a meaningful level of
input; and
Risk, which should be neither too high or too low
44. Proposed scope of OPRC: Contract Scope includes both works and services.
The work includes:
i. Improvement Works - widening of Road Section S2 (Bhawanigarh - Sunam -
Mansa - Kot Shamir) from the existing 7.0m nominal width to 10.0m and S4
from existing 5.5m nominal width to 10.0m including all required drainage,
safety and intersection improvements.
ii. Rehabilitation, Resurfacing and associated routine drainage maintenance works -
The road proposed to be improved under the rehabilitation category are S1
(Sangrur-Sunam), S2 (Bhawanigarh-Sunam, Mansa, Kot Shamir), S3 (Barnala
Mansa), S5 (Dhanaula – Bhikhi) and B4 (Bathinda - Kotshamir - Talwandi Sabo)
with a total length of 74.78 km. The intent of rehabilitation contract is to have all
pavements within the network rehabilitated once during the term of the contract.
iii. Other potential capital improvement works not included or intended in the
conceptual designs and not included in the bidding documents but identified
afterwards which have the potential to significantly benefit road users and/or the
13
Employer over the life of the asset. This also includes the works undertaken to
comply with Environmental and Social Framework (Section VI Part 2B). At the
sole discretion of the Employer such additional improvement works would be
undertaken as a variation to the contract.
iv. All network performance works and associated activities such as pavement
surfacing, shoulder and drainage maintenance, routine bridge and minor structure
maintenance, sign maintenance, pavement marking, raised reflectorized pavement
marker and marker post maintenance.
v. Vegetation control, rubbish and litter removal (except those sections where
already some department / agency has the responsibility to do so, mostly in built
up sections under the jurisdiction of local bodies (such as Municipal Corporation,
Municipal Council, Nagar Panchayat, Gram Panchayat etc.),accident damage
reporting and emergency works as required.
vi. Providing appropriate resources to respond to all unplanned incidents which can
cause obstruction to the normal flow of traffic on the road (e.g. Road accident,
flooding, oil spillages, etc.).
vii. Structural repairs to bridges and large culverts required to maintain or re-store
overall structural integrity of its major components are excluded from scope.
The scope of Services under OPRC includes:
i. Maintaining the Contract Area.
ii. Delivering the Contractor’s obligations under the Contract.
iii. Proactive compliance of conformance measurement and performance systems,
and achieving the Performance requirements.
iv. Contractor‘s self-monitoring and reporting the contract conformance requirements
and performance.
v. Assisting the Employer and Project Manager with the development and
implementation of a Ten Year Forward Works Program (10 year FWP), and
associated maintenance management strategy for the contract‘s roads.
Environment
45. The restructuring of the project has no incremental or additional adverse
environmental impacts. The use of Output and Performance Based Road Contracting
system (OPRC) requires the Contracting Entity to undertake screening, conduct impact
assessment, formulate the environmental management plan and subsequently undertake
its implementation. The preparation of an Environmental Management Plan (EMP) has to
be adequate and commensurate to the scale of civil works proposed during various stages
of the contract. On the other hand, the Employer (PRBDB) through a monitoring
consultant would enforce the contract by verifying compliance with the agreed service
levels, including the conformity to all applicable environmental legislation and
regulations.
14
46. To ensure a sustained environmental performance for OPRC contracts, an
Environment and Social Management Framework (ESMF), including a set of codes of
practice has been prepared and integrated into the bidding document. These define a
minimum level of environmental process, mitigation and performance standards that the
contracting entity requires to meet under the project.
Social Safeguards
47. No additional safeguard policy is expected to be triggered due to the proposed
restructuring and there are no changes in the implementation arrangements. It is
anticipated that the majority of the required interventions under the OPRC will not
require land acquisition. However, land acquisition may be required where there is a need
for geometric improvement. The policy may be invoked when any road is required to be
cleared of any encumbrance including private land acquisition before being considered
for up-gradation, rehabilitation and maintenance under the OPRC contract. The
Contractor will prepare a Resettlement Action Plan (RAP), adequate and commensurate
to the scale of resettlement and rehabilitation involved in the project. PRBDB will be
responsible for implementation of RAP to provide the Corridor of Impact (CoI) required
for actual construction, free of all encumbrances to the Contractor. RAP will be
implemented only after approval of the Bank and PRBDB/PWD. In case of new
encroachment or re-encroachment of cleared Right of Way (RoW) that takes place post
contract award, the Employer will pay the compensation and/or resettlement assistance as
per the agreed R&R policy framework of Punjab State Road Sector Project. The
responsibility of monitoring and reporting re-encroachment shall be the responsibility of
the Contractor. The overall supervision and monitoring will be undertaken by
PRBDB/PWD.
48. Affected persons will be consulted and provided opportunities to participate in
planning and implementing resettlement programs during the course of the contract. The
Contractor will display and provide complete information to the local community on (i)
plans and range of proposed activities; (ii) measures adopted to reduce the inconvenience
including traffic management; and (iii) proposed intervention for emergency works at
least three (3) days in advance of the work commencing. The contractor will give
sufficient time to allow individuals to relocate. An external agency will be engaged to
monitor and evaluate implementation of RAP.
49. The proposed by-pass of 2.8 km of 45 meters Right of Way at Dehlon will require
approximately 38 acres of irrigated land (125 plots), two houses and two boring wells to
be acquired for which Resettlement action plan will be prepared in accordance with the
Bank’s Operational Policy on Involuntary Resettlement.
Risk
50. Contractual Mechanisms and agreed Compliance Framework are made available
in the OPRC contract to manage the risk of the client with respect to non-completion of
work and non-compliance by the contractor with the required Road User Service and
15
Comfort and Key Performance Measures2. Even minor breaches in KPM will usually
attract an agreed level of payment reduction and is aligned with the reduction in road user
comfort and/or safety that has resulted.
2 KPMs are measurable asset condition parameters that will be used to define the required service level
targets required to be achieved.
16
Annex 1: Results/ Monitoring Framework
INDIA: PUNJAB STATE ROAD SECTOR PROJECT
RESTRUCTURING PAPER
(a) Results/ Monitoring Framework till Year 5 of the project
Target Values3 Data Collection and Reporting
YR1
(2008)
YR2
(2009)
YR3
(2010)
YR4
(2011)
YR5
(2012)
Project Outcome Indicators Baseline (T)
(T)
(T)
(T) (A) (T)
Frequency and
Reports
Data Collection
Instruments
Responsibility
for Data
Collection
Average Network Speed (kmph) 33.5 NA NA 39 43 45 MTR and end-
of-
implementation
PRBDB Report
Surveys PRBDB
Reduction in VOC (%) 0% NA NA 6% 19%4 20% MTR and end-
of-
implementation
PRBDB Report
Surveys PRBDB
Maintain number of fatal
accidents
2655 2655 2655 2655 2655 26425 2655 Aide memoire,
every six
months
First
Information
Reports (FIRs)
Police/ PRBDB/
Bank
User Satisfaction 61.11%
(Baseline
survey
undertak
en in
2009)
NA NA NA NA 63.33% User satisfaction
Survey Report,
every two year
Survey PWD/ PRBDB
Efficiency of Road Agency
(PWD, PRBDB)
60.27%
(Baseline
survey
undertak
en in
2009)
NA NA NA NA 63.27% User
Satisfaction
Survey Report,
every two year
Survey PWD/ PRBDB
Results Indicators for Each
Component
3Target Values have been compared with initial target values and actual results achieved till date.
4 19 percent reduction in VOC achieved on improved road and 8 percent reduction achieved on entire state road network.
5 The number of fatalities i.e. 2,655 pertains to year 2003, for year 2006 the fatalities were 3,060. For the calendar year 2011 (up to Sept) the fatalities were 2,462.
17
Target Values3 Data Collection and Reporting
YR1
(2008)
YR2
(2009)
YR3
(2010)
YR4
(2011)
YR5
(2012)
Project Outcome Indicators Baseline (T)
(T)
(T)
(T) (A) (T)
Frequency and
Reports
Data Collection
Instruments
Responsibility
for Data
Collection
Component 1: About 1050 km
of roads rehabilitated, resurfaced
and maintained
To be
undertak
en YR1
550 km 640 km
(Phase I
works
complet
e)
Monthly
Construction
Supervision
Reports;
Quarterly
FRMs, Aide
Memoire (every
6 months)
Certification of
Quantities by
the Engineer
Construction
Supervision
Consultant;
PRBDB
Reduction in IRI (m/ km) 6.9 5.3 2.6
m/Km
PRBDB’s
Annual Report,
Yearly
Roughness and
Condition
Surveys
PRBDB
Reduction in network in poor
and bad condition from 52% to
10%
52% 25% 4% PRBDB’s
Annual Report,
yearly
Roughness and
Condition
Surveys
PRBDB
Component 2: Routine and
periodic maintenance fully
funded during the project period;
training program
INR 750
mn
2200 mn -
Once a year
Quarterly
reports by DOF,
Implementation
Support Mission
DOF/ PRBDB/
Bank
About 250 km of roads
maintained through performance
based contracts
0 Annual Aide
Memoire
Implementation
Support Mission
(every six
months)
PWD/ PRBDB/
Bank
Department wide
computerization and use of
integrated systems for planning,
management, financial
accounting, monitoring
Partial Full
Computeriza
tion
Not yet
done
As per
implementation
schedule
- PWD/ PRBBDB
18
(b) Proposed Results/ Monitoring Framework for extended term
Target Values Data Collection and Reporting
Project Outcome Indicators Baseline
YR6
(2013)
YR7
(2014)
YR8
(2015)
YR9
(2016)
YR10
(2017)
Frequency and
Reports
Data Collection
Instruments
Responsibility for
Data Collection
Average Network Speed (kmph) 33.5 46 48 MTR and end-of-
implementation
PRBDB Report
Surveys PRBDB
Maintain VOC (%) 0% 20% 20% MTR and end-of-
implementation
PRBDB Report
Surveys PRBDB
Reduction in number of fatal accidents 2655 2522 2390 Aide memoire, every
six months
First Information
Reports (FIRs)
Police/ PRBDB/
Bank
Increase in User Satisfaction 61.11% 64% 67% User satisfaction
Survey Report, every
two year
Survey PWD/ PRBDB
Improvement in efficiency of Road
Agency (PWD, PRBDB)
60.27% 63% 65% User Satisfaction
Survey Report, every
two year
Survey PWD/ PRBDB
Results Indicators for Each
Component
Component 1: Total km of roads
improved and rehabilitated under the
project w.e.f. YR 6
0 km 27km 82km 136km 161km 166km Monthly
Construction
Supervision Reports;
Quarterly FRMs,
Aide Memoire (every
6 months)
Certification of
Quantities by the
Engineer
Construction
Supervision
Consultant; PRBDB
Maintain IRI (m/ km) 6.9/km 2.6/
km
2.6/km PRBDB’s Annual
Report, Yearly
Roughness and
Condition Surveys
PRBDB
Maintain poor and bad network
condition @ 4%
52% 4% 4% PRBDB’s Annual
Report, yearly
Roughness and
Condition Surveys
PRBDB
Component 2: Department wide
computerization and use of integrated
systems for planning, management,
financial accounting, monitoring
Vendor
on-
board
Pilot
testing
Final Roll-
out to the
entire
department
As per
implementation
schedule
- PWD/ PRBBDB
19
Annex 2: OPRC Contracting System
INDIA: PUNJAB STATE ROAD SECTOR PROJECT
RESTRUCTURING PAPER
1. Basic Concept of Road Asset Management with OPRC. Output- and Performance-based
contracting for Roads is designed to increase the efficiency and effectiveness of road asset
management and maintenance. It should ensure that the physical condition of the roads under contract
is adequate for the needs of road users, over the entire period of the contract which is normally several
years. This type of contract significantly expands the role of the private sector, from the simple
execution of works to the management and conservation of road assets.
2. In traditional road construction and maintenance contracts, the Contractor is responsible for the
execution of works which are normally defined by the Road Administration or the Employer, and the
Contractor is paid on the basis of unit prices for different work items, i.e. a contract based on “inputs”
to the works. The results of traditional road contracts are in many cases less-than-optimal. The problem
is that the Contractor has the wrong incentive, which is to carry out the maximum amount of works, in
order to maximize his turnover and profits. Even if the work is carried out according to plan and
considerable money is spent, the overall service quality for the road user depends on the quality of the
design given to the Contractor who is not accountable for it. In many cases the roads do not last as long
as they should because of deficiencies in the original design, aggravated by inadequate maintenance.
3. The OPRC as a model for road asset management is similar to Design, Build, Maintain,
Operate and Transfer (DBMOT) model of contracts which addresses the issue of inadequate
incentives. During the bidding process, contractors compete among each other by essentially proposing
fixed lump-sum prices for bringing the road to a certain service level and then maintaining it at that
level for a relatively long period. It is important to understand that contractors are not paid directly for
“inputs” or physical works (which they will undoubtedly have to carry out), but for achieving specified
Service Levels, i.e., the Rehabilitation of the road to pre-defined standards, the maintenance service of
ensuring certain Service Levels on the roads under contract, and specific improvements, all represented
in outputs or outcomes, expressed in Service-Levels criteria. A lump-sum periodic remuneration paid
to the Contractor will cover all physical and non-physical services provided by the Contractor, except
for unforeseen emergency works which are remunerated separately. In order to be entitled to these
periodic payments, the Contractor must ensure that the roads under contract comply with the Service
Levels which have been specified in the bidding document. It is possible that during some months he
will have to carry out a rather large amount of physical works in order to comply with the required
Service Levels and very little work during other months. However, his periodic payment remains the
same as long as the required Service Levels are complied with.
4. A fundamental feature of the OPRC is that the “Contractor” must not necessarily be a
traditional works contractor, but can be any type of firm or business venture “Contractor” having the
necessary technical, managerial and financial capacity to fulfill the contract. In any case, the contractor
is responsible for designing and carrying out the works, services and actions he believes are necessary
in order to achieve and maintain the Service Levels stated in the contract. The Service Levels are
defined from a road user‘s perspective and from a “strength of the pavement” point of view and may
include factors such as, riding comfort, safety features, residual strength of pavement, etc. If the
20
Service Level is not achieved in any given month, the payment for that month may be reduced or even
suspended.
5. Under the OPRC, the Contractor has a strong financial incentive to be both efficient and
effective whenever he undertakes work. In order to maximize profits, he must reduce his activities to
the smallest possible volume of well designed interventions, which nevertheless ensure that pre-
defined indicators of Service Level are achieved and maintained over time. This type of contract makes
it necessary for the Contractor to have a good management capacity. Here, “management” means the
capability to define, optimize and carry out on a timely basis the physical interventions which are
needed in the short, medium and long term, in order to guarantee that the roads remain above the
agreed Service Levels. In other words, within the contract limitations and those required to comply
with local legislation, technical and performance specifications and environmental and social
regulations, the Contractor is entitled to independently define (within the limits indicated in the
schedule of payment): (i) what to do, (ii) where to do it, (iii) how to do it, and (iv) when to do it. The
role of the Road Administration and of the Employer is to enforce the contract by verifying compliance
with the agreed Service Levels and with all applicable legislation and regulations. The Contractor will
be responsible for the detailed design of the rehabilitation and other consequent phases included in the
life-span of the project (the Contractor is not entitled to any payment for the design). The Design
Standards and specifications shall be recommended by the Project Manager and meet at least the
minimum specified design standards The bidder can propose higher standards if it serves better his
optimal Programming for the project designed for 10 years period.
6. The project managing triangle is composed of the Employer, Contractor and the Project
Manager from the Monitoring Consultant.
7. Maintaining a road network includes both routine and periodic tasks. Routine Maintenance
consists of many different tasks frequently necessary to maintain the function of the road (such as
pothole repairs, cleaning of drainage, sealing of cracks, cutting of vegetation, etc.). Periodic
Maintenance consists of predictable and more costly measures of a less frequent nature designed to
avoid road degradation (such as grading, drainage work, resurfacing, asphaltic concrete overlays, etc.).
Intelligent management, the timeliness of interventions and the adequacy of technical solutions are
critical. It is expected that the use of private specialized firms under output- and performance-based
contracts will unleash significant efficiency gains, and stimulate innovation in comparison with
traditional road administration practices.
8. Minimum road conditions and Service Levels are defined through output and performance
measures, and these are used under the OPRC to define and measure the desired performance of the
Contractor. In the OPRC, the defined performance measures are thus the accepted minimum thresholds
for the quality levels of the roads for which the Contractor is responsible.
9. The performance criteria should ideally cover all aspects of the contract and take account of the
fact that different sub-areas within the contract area might require different Service Levels. Criteria can
be defined at three levels (although simpler contracts will not use all of the criteria identified below):
(a) Road User Service and Comfort measures, which can be expressed in terms such as:
Road Roughness
Road and lane width
21
Rutting
Skid resistance
Vegetation control
Visibility of road signs and markings
Availability of each lane-km for use by traffic
Response times to rectify defects that compromise the safety of road users
Attendance at road accidents
Drainage off the pavement (standing water is dangerous for road users)
(b) Road Durability measures, which can be expressed in terms such as:
Longitudinal profile
Pavement strength
The extent of repairs permissible before a more extensive periodic maintenance treatment is
required
Degree of sedimentation in drainage facilities
(c) Management Performance Measures, which define the information the Employer requires both
to govern the asset during the term of the contract, and to facilitate the next tender round.
Requirements should include:
Delivery of regular progress reports to the Road Controlling Authority
Inventory updates and other data sharing requirements
Maintenance history (so subsequent tenders can price the work).
10. Together the performance measures define the minimum acceptable Service Level for the
particular road. In setting the measures various criteria (both technical and practical) need to be
carefully considered, such as (i) traffic volume and composition, (ii) urban vs. rural roads (iii) flat,
hilly or mountainous terrain, (iv) sub-grade quality and type, (v) quality of available construction
materials, (vi) capacity of available contractors, (vii) any environmental constraints, such as protected
areas, parks, forest reserves, etc. However, probably the most important criterion is the question of
what Service Level can be afforded and economically justified for the road in question.
11. Under the terms of the contract, the Contractor will also be responsible for the continuous
monitoring and control of road conditions and Service Levels for all roads or road sections included in
the contract. This will not only be necessary to fulfill the contract requirements, but it is an activity
which will provide him with the information needed to be able (i) to know the degree of his own
compliance with Service Level requirements, and (ii) to define and plan, in a timely fashion, all
physical interventions required to ensure that service quality indicators never fall below the indicated
thresholds. Under the OPRC model, the Contractor will not receive instructions from the Employer
concerning the type and volume of road maintenance works to be carried out. Instead, all initiative
rests with the Contractor who must do whatever is necessary and efficient to achieve the quality levels
required. This concept is expected to lead not only to significant efficiency gains, as mentioned earlier,
but also to technological innovation.
22
12. The beneficiaries of the new concept are expected to be the road users, the Road
Administration, and the contractors or other private sector enterprises. In a wider sense, future
generations will be able to benefit from a better preservation of past investments in roads. Road users
will be able to know the Service Level they can expect in return for the payments they make for the use
of the infrastructure (tolls, tariffs, user fees, taxes, etc.). The Road Administrations should benefit by
obtaining better overall road conditions at the same levels of expenditure. For contractors and other
private sector enterprises, the new type of contracts should open up new business opportunities, in
which longer contract periods provide a more stable business environment, and for the establishment
of true Public-Private Partnership relations. However, it may be the future generations who will
perhaps benefit most, since they will not have to pay for the reconstruction of roads destroyed because
of a lack of maintenance today.
13. Output- and Performance-based Road Contracts as the model for road asset management
transfers a significant burden of risk onto the contractor. It is important that this burden is both
equitable and within the capacity of the industry. The contract defines the risk profile carried by the
contractor arising from storm events, legislation changes, changes in traffic volumes, and roadside
development.
14. Some emergency works should always be foreseen. Those are meant to remedy unexpected
damage which occurs as a result of extraordinary natural phenomena, and which affect the normal use
of the road network, or the safety and security of the users. For emergency works, the contract limits
the responsibility of the Contractor, establishing that the Employer will approve execution of services
and separate remuneration based on specific amounts proposed by the Contractor for each case, on the
basis of volume of works estimated at each time and on unit prices included in the bid and in the
contract.
15. The agreed periodic payment for maintenance works and services will be made to the
Contractor if he has complied, during the month for which the payment is to be made, with the agreed
Service Levels on the road network under contract. Together with his Periodic Payment Report, the
Contractor will report the result of his own evaluation of compliance with the required Service Levels,
based on his own monitoring system which is mandatory. His statement will then be verified by the
Employer or his representative (supervision/monitoring consultant) through inspections. If the Service
Levels are not met, payments are reduced, based on a schedule given in the contract, payments may
even be suspended, and the contract cancelled, if the contractor fails during an extended period to
achieve certain minimum thresholds values of Service Levels. The contract describes the formulas
used to calculate payment reduction and potential contract suspensions.
23
Annex 3: Proposed OPRC Network
INDIA: PUNJAB STATE ROAD SECTOR PROJECT
RESTRUCTURING PAPER
Legend:
Improvement Works (Widening)
Resurfacing and Rehabilitation