ODA Loan Project Mid-Term Review 2007
Evaluator: Hajime Onishi (Mitsubishi UFJ Research & Consulting)Field Survey: May 2008
Project Title: The Democratic Socialist Republic of Sri Lanka “Provincial Road Improvement Project” (L/A No. SL-P76)[Loan Outline]
Loan Amount / Contract Approved Amount / Disbursed Amount
Loan Agreement
Original Completion Date
Revised Completion Date
Loan Expiry Date
Executing Agency
Selection Criteria for Mid-Term Review: 5,811 million yen / 851 million yen 1 / 3,067 million yen (as of the end of May 2008): March 2003 (5 years after L/A)
: September 2008
: August 2009
: May 2011
: Ministry of Home Affairs, Provincial Councils and Local Government (today’s Ministry of Provincial Council andLocal Government): In order to support some of the NGO activities that will be implemented in the project areas, and thereby
generate a synergetic effect with NGO activities, the government of Sri Lanka plans to set up NGO coordination
funds (up to 10 million yen each) with grants by utilizing the consulting services funds.

[Project Objective]
To improve transport efficiency and stimulate the economy in Central and Sabaragamuwa provinces by repairing the rapidly deteriorating road surfaces and bridges and strengthening
the road operation and maintenance system.
Consultant : Nippon Koei (Japan) / Halcrow Group Limited (UK) / Engineering Consultants Ltd., MG Consultants (Pvt) Ltd. (Sri Lanka)
Contractor : Local enterprises, etc.
[Mid-Term Review Result]
Item
Relevance

Appraisal (January 2003)(1) National policy level
In June 2002, the government of Sri Lanka announced the final
draft of the “Connecting to Growth: Sri Lanka’s Poverty Reduction
Strategy” as a national development strategy that places
importance on poverty reduction. In this draft, as an importantsector for promoting the participation of the poor in the economic
growth process, the government indicated that along with thetelecommunications sector, the government would stress the

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review(1) National policy level
With regard to the PRSP (Poverty Reduction Strategy Paper)・ Implementation of the Economic Reform Programme (ERP) is cited in the PRSP
mentioned in the left column. Additionally, infrastructure development is set out as
one of the action plans to be implemented under the ERP, and “building a road
network” is stipulated as a concrete approach.
・ Building a modern road network, along with the immediate upgrading of existingroads, has been pointed out as a target of the concrete approach described above.
1

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Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review

Appraisal (January 2003)
importance of the transportation sector. In particular, thegovernment announced its plan to improve the flow of traffic fromregional to urban areas through the construction of an expressway
network, development of the existing expressway network, andimprovement of bus and railroad services; thereby providing theenvironment necessary to facilitate (i) the reduction in the cost ofaccessing the market for the poor and (ii) the mobility of labor.
On the policy level, in the National Road Policy, which was
adopted in 1997, the government points out the need forwell-planned road network development that will contribute to Sri
Lanka’s social and economic development, and specifies as its
goals, among other things, reduction of travel time withoutcompromising safety, improvement of transportation comfort, andresponding to the demand for passenger and freight transportation
today and in the days to come.
Additionally, in the National Transport Policy, which wasannounced by the Ministry of Highways in 2000, the government
cites four issues related to the road sector: (i) adoption of asystematic plan that takes into consideration the need for adevelopment project; (ii) coordination of strategy and policy within
the transportation sector; (iii) construction of a road network
connecting the area around Colombo to the countryside; and (iv)strengthening of the operation and maintenance of roads.
(2) Planning level
The road network in Sri Lanka was developed during the Britishcolonial days as a network for transporting crops grown onplantations. With a total length of about 100,000 km, the roaddensity in Sri Lanka is about 1,600 km per 1,000 km2, which

With regard to the Road Sector Master Plan (RSMP 2005)
・ As described above, in light of the importance given to infrastructure development in
the traffic and transportation sectors in the PRSP, the Road Sector Master Plan
(RSMP) 2005 was adopted as a higher-order guideline for preserving consistency
among various traffic development plans that had been adopted up to then, as well as
effectively implementing road development projects.
・ In the aforesaid master plan, for the 10 years since 2006 (2006–2015), there is a
development project for building a core road linking the Colombo metropolitan areawith eight economic development blocks scattered throughout the country. One of
the eight economic development blocks is Kandy, the capital of Central Province,
one of the target areas of this project.
In light of the above description, on the national policy level, the relevance of this project
has remained unchanged from the time of the ex-ante evaluation to the present, and isthus judged to be highly relevant.

(2) Planning level
・ Sri Lanka’s principal industries are mining, agriculture and fisheries. Road
transportation accounts for 92% of all domestic transport, so rail and airtransportation constitute only a fraction of the total domestic transport.
・ In Sri Lanka, there are 91,862 km of roads, 11,671 km of which are national roads
2

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Appraisal (January 2003)
makes Sri Lanka’s road density one of the highest in South-West
Asia (as of the time of appraisal). Additionally, since roadtransportation accounts for about 90% of surface transportation(passenger and cargo) in Sri Lanka, the road sector plays an
extremely important role in Sri Lanka’s social and economic
activities.
Meanwhile, the rehabilitation of the existing road network is notprogressing smoothly. This is evidenced by the fact that in the
countryside there are many spots along the arterial road network
connecting Sri Lanka’s principal cities where existing roads havebeen neither rehabilitated nor widened. The government is using its
own resources and donor support to construct new roads or widen
and improve existing roads. However, despite these efforts, thetransportation efficiency of existing roads has continued to remain
low for various reasons including: limitation on the scope and scaleof engineering works due to budgetary constraints; and lack ofsustained manifestation of project effects due to inadequate
operation and maintenance, even in cases where repairs are madeon existing roads and new roads are constructed.

Effectiveness(Impact)(1) Operation and effect indicators(i) Quantitative effects
Average of the data collected from the 10 routes sampled
Name of indicator
Average daily traffic (No. of vehicles/12 hours)
Vehicle operation cost saving (million
rupees/year)
Time saving (million rupees/year)

Ex-anteevaluation(2000 actual)
677

Target value(2010, 2 years
after completion)
1,002

-

10.9

-

12.8

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review(categories A and B), 15,532 km are provincial roads (categories C and D), and64,659 km are local roads (as of 2006).
・ The traffic volume has increased dramatically since the 1990s, but because most of
the existing roads were built some 50 years ago, and because of the lack of proper
operation and maintenance as well as proper repairs, the roads in Sri Lanka havenoticeably deteriorated; thus resulting in greater cost for road users, reduced roadtraffic safety, lower quality and less efficient distribution of goods. In addition to theabove, in many regions, the lack of a road network has resulted in slower economic
activity and more Sri Lankans falling into extreme poverty.
・ It is against this background that, as part of its road development implementation
policy, the Ministry of Highways has declared that “It is necessary to build adomestic road network by immediately rehabilitating more than 19,000 km ofroads.”
In light of the above description, on the planning level, this project is judged to be highly
relevant.

(1) Operation and effect indicators(i) Quantitative effects
In this mid-term review, of the roads to be widened and improved (approx. 600 km), the
10 routes sampled to calculate the EIRR value at the time of appraisal were reviewed.
The table below summarizes the present condition of the 10 routes.

Internal rate of return: EIRR 27.2% (value related to the 10 routes
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Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
Table: Actual average daily traffic and state of construction in 10 sampled routes

Appraisal (January 2003)
sampled, project life: 20 years)

Road code1), road name and road length (km)(10 routes in the EIRR calculation sample)

Ex-antePresent2)

evaluation(May(2000)

2008)

TargetPhase(2010)

3)

Status3)

CP/KD/325

Nawayalatenna Jambugahapitiya

4.2

1,462

883

2,164

2-1

Under construction

CP/KD/344

Teldeniya Corbests Gap

14.0

733

276

1,086

3

Not yet started

CP/MT/042

Beligamuwa Nilagama Dewahuwa

17.1

418

220

619

1

Completed

9.2

438

356

648

1

Completed

10.6

834

359

1,235

1

Under construction

8.8

331

915

490

1

Completed

CP/MT/060
CP/NE/048
SP/KG/078

Dambuila Kandalama
Kumbukkadanwela
Barthford Valley Road
Andiramada Narambedde
Imbutgassdeniya

SB/KG/027

Morontota Arandara

N/A

451

N/A

667

3

Outside of project

SP/KG/035

Yatagoda Beligala Batuwatta

11.9

531

430

786

2-1

Under construction

SP/RP/032

Kahawatta Haupe Manandola

7.4

1,336

390

1,977

1

Under construction

SP/RP/052

Kaltota Right Bank Roads

15.9

236

198

349

1

Under construction

677

402

1,002

Average

Note 1: The road-code acronym CP stands for Central Province. The acronym SP/SB stands for Sabaragamuwa
Province.
Note 2: Based on the responses by PMU of the Development Bureau of the Ministry of Local Government andProvincial Councils (MLGPC) and the consultants (a traffic census was conducted from the beginning to the middleof May 2008).
Note 3: As a result of a review of existing F/S conducted by the consultants, it was decided that the road
improvement should be carried out in three phases. The details of the three phases are based on the Monthly Progress
Report No. 36 (March 2008) and hearings held at MLGPC and the consultants.
Note 4: Other data are those contained in appraisal material.

Present value of indicators and the outlook for the manifestation of quantitative effects(The present value of the traffic volume shown in the above table is the daily traffic at a
specific time and place in May 2008. Due to seasonal variations and other factors, there
remains the problem of data reliability.) With regard to those routes where improvements
are being made, there has not been any significant increase in traffic; in fact, traffic has
decreased by between 20% and 70% on each route due to construction work. Traffic has
both increased and decreased on routes where the construction work has been completed(e.g., the daily traffic on the Beligamuwa Nilagama Dewahuwa road in Central Province
was only about 50% of the average daily traffic at the time of the ex-ante evaluation [oronly 35% of the target value], while the daily traffic on the Andiramada Narambedde
Imbutgassdeniya road in Sabaragamuwa Province increased significantly after the
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Appraisal (January 2003)

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
construction work was completed and has already surpassed the target value). In the
future, it is desirable to check the extent to which the quantitative effects are manifested
by periodically confirming the traffic trends on each of the routes built or rehabilitatedunder this project and, at the same time, within the implementation period of the project,
develop at an early stage a system for collecting data on traffic volume.
As for those routes where the construction work has been completed, travel time has
been reduced exponentially (the travelling speed on the three routes that were observedin the field survey was anywhere from 10—30 km/hr 2 before the roads were improved,
but after the improvement, the travelling speed increased substantially to anywhere from40—60 km/hr). With regard to the time saving effect of the project on each route, it isbelieved that the desired effect assumed prior to the completion of the construction workor an effect greater than that can be expected. 3
Changes in target values
There is a need to change the target values. These changes will be detailed in the“Efficiency” column of this report. The lack of funds has forced a narrowing of the
project scope (the initial prescribed length of 600 km was shortened to 300 km). Of thefour project phases (Phase 1, Phase 2-1, Phase 2-2, Phase 3), the construction contract inPhase 1 and Phase 2-1 has been completed, but given the limited amount of funds
presently available, there is a strong possibility that road improvement work will not be
undertaken on target routes beyond these two phases.
Consequently, it will be necessary to change the sample routes selected for calculating
the target values of operation and effect indicators (selected at the time of appraisal for
calculation of target values) in order to avoid the impact of the reduced scope. The
details of the necessary changes are provided in the “Indicators set for use at time of
ex-post evaluation” column described below.

(ii) Qualitative effects
・ Improvement of transportation efficiency in the countryside(ii) Qualitative effects
As noted earlier, on routes where construction work has been completed, travelling time
5

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Appraisal (January 2003)
・ Rejuvenation of the regional economy(2) Factors that may influence the effectiveness and impact(i) Coordination with NGO
In order to support some of the NGO activities that will be
implemented in the project areas, and thereby generate a synergetic
effect with NGO activities, the government of Sri Lanka plans to
set up NGO coordination funds (up to 10 million yen each) with
grants by utilizing the consulting services funds. The selection,
employment and activities of NGOs to be targeted will be decided
after due consultation with the government.

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
has been significantly reduced (on some routes, the travelling time has been reduced byabout 75%); thus resulting in improved transportation efficiency. Furthermore, in thecase of improved provincial roads and arterial national roads that have been connected,
local residents’ access to agricultural markets and social facilities (schools, hospitals,etc.) has been greatly improved.
In the vicinity of the Dambuila – Kandalama – Kumbukkadanwela road (CP/MT/060,
road improvement work completed), which was a target of the field survey conductedunder this review, there are many world heritages, including the Ancient City of Sigiriya,
various tourist facilities and large hotels 4 . Thus, as a result of improved access to thesesightseeing spots and facilities, it is believed that the road is contributing to an increaseof income from tourism. Additionally, the Kahawatta – Haupe – Manandola road
(SP/RP/032, currently being improved) goes through a precipitous area, and in its
vicinity, there are large-scale natural rubber plantations, tea plantations and the like. 5
After the road improvement work is completed, among other benefits, it will be easier totransport agricultural products from these plantations and purchase agents will be able toaccess them more easily; thereby contributing to the rejuvenation of the regional
economy.
(2) Factors that may influence the effectiveness and impact(i) Coordination with NGO
NGO coordinated projects were implemented from 2005 to January 2008, and the work
to improve the feeder roads 6 in Sabaragamuwa Province and Central Province wasfunded with grants drawn from part of the funds allocated to cover the consulting
services expenses.
The NGO coordinated projects were implemented as follows:・ As a result of consultations with the executing agency and consultants, from theperspective of securing the coordination with this project, the theme “Improvement
work on feeder roads by NGOs and CBOs (linking rural areas and quasi arterial
roads)” was adopted as a NGO coordinated project.
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Appraisal (January 2003)

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
・ NGOs and CBOs were publicly invited to participate in this NGO coordinatedproject. 21 groups submitted proposals.
・ Evaluations were made through a two-tiered selection process in accordance with the
project’s own evaluation criteria. 7 Two groups (CBOs) were selected.
・ After concluding contracts with the selected CBOs, road improvement work andconstruction of an assembly hall were carried out in the rural feeder road sections 8of the Kegalle District of Sabaragamuwa Province and the Kandy District of Central
Province, which are residential areas for the said CBO residents. Some 1.3 million
rupees 9 and 1.9 million rupees have been spent for projects conducted in
Sabaragamuwa Province and Central Province each, and in either case, theconstruction has already been completed.
According to an interview with a leader of one of the two aforesaid CBOs
(Sabaragamuwa Province), the project has had various positive impacts on thebeneficiaries. These include (i) significantly reducing the time it takes children tocommute to school; (ii) significantly reducing residents’ commute time; (iii) making it
possible to use vehicles to transport rice, the principal agricultural product; and (iv)enabling residents to possess motorcycles thanks to the improved road surface. 10
To maximize the effects of these NGO coordinated projects, in the future, in cooperation
with the aforementioned CBOs, it is deemed necessary to consider the possibility of (i)implementing a similar project in other regions or (ii) undertaking other activities
utilizing CBOs and NGOs.

(ii) Coordination with grants and technical assistanceNone(ii) Coordination with grants and technical assistanceNone(iii) Coordination with other donors
Coordination with ADB
While JBIC coordinates with ADB, its principal partner in Sri
Lanka’s road sector, and others, JBIC has adopted a policy of(iii) Coordination with other donors
Coordination with ADB
This project and ADB’s Road Sector Development Project are being actively
coordinated. 11 In addition, according to Central Province’s Road Development
7

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Appraisal (January 2003)
providing support centered on hardware, including improvement of
the existing road network, as well as support centered on software.
The latter includes improvement of the operation and maintenancesystem based on institutional and organizational improvements aswell as facilitation of implementation of residential relocation andimplementation of traffic safety measures.
In particular, with regard to the Road Sector Development Project,which ADB is currently implementing, JBIC is coordinating its
activities with ADB as follows:
・ The Road Sector Development Project (i) provides support on
the software front including making recommendations andoffering guidance on improving the operation system within
the road sector, and (ii) carries out road improvement work on
local roads in the Western, North Western and Uva provinces.
In particular, since component (ii) has many points in common
with this project regarding the civil works and capacity
building of the executing agency, JBIC will strive to facilitate
the progress of the project and improve its effectiveness inclose cooperation with ADB.
・ The Inter-Provincial Road Committee (established in
December 2002), comprised of representatives of provincial
governments and the Road Development Authority (RDA),
needs to promote inter-provincial government cooperation tofacilitate the progress of the project and improve its
effectiveness by, among other things, promoting informationexchange concerning ways to improve the project’s operationand maintenance system.
Since 1997, the World Bank has not provided support to the road
sector.

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
Department, the construction and procurement methods used in ADB projects werereferenced in undertaking civil works on routes targeted in this project.
Overall condition of Inter Provincial Road Committee Activities
The Inter-Provincial Road Committee (IPRC) is actively engaged in matters related toroads. 12 The main issues IPRC faces are: (i) budget allocation related to construction ofprovincial roads and their operation and maintenance; (ii) exchange of information
related to the operation and maintenance system of roads; and (iii) a host of problems
related to road administration. In particular, (i) appears to be at the center of discussion in
IPRC. Three of the individuals involved in this project – the national project director of
MLGPC’s PMU and the director of the Road Development Department of Central
Province and the director of the Road Development Department of Sabaragamuwa
Province (both are also provincial project directors) – are also participating in IPRC
activities.
Incidentally, with regard to the exchange of information between provincial
governments, since the National Project Steering Committee (NSPC) and the Provincial
Project Steering Committee (PPSC), which are described below, are always in close
communication, the significance of the activities of IPRC is limited in this project.

8

Item

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review

Appraisal (January 2003)(iv) Environmental impact
This project aims to rehabilitate the surface of existing roads andbridges, and as such, it is classified as Category B under JBIC’s
environmental guidelines. Moreover, even under Sri Lanka’s
Environment Law (enacted in 1980), EIA is not required.

(iv) Environmental impact
EIA is not required, and impacts unexpected at the time of appraisal have not emerged.

(v) Land acquisition and resident relocation
No large-scale land acquisition is expected to be required.
Likewise, resident relocation is not expected to be required.
However, if such relocation turns out to be required as a result of
detailed design, before the bidding procedure is commenced, the
MLGPC is supposed to consult with JBIC and examine the pro andcons of targeting the relevant routes under this project.

(v) Land acquisition and resident relocation
No large-scale land acquisition has been required, and there have not been any resident
relocation.

(3) Factors influencing sustainability(i) Project implementation structure
In this project, the Project Management Unit (PMU) set up in
MLGPC’s Development Bureau is responsible for interorganizational and inter provincial coordination, project planningand project monitoring and supervision, while the Project
Implementation Units (PIU), which are set up in each province
under PMU, are responsible for project monitoring and supervisionon the provincial level, procurement related to civil works, etc.
Additionally, a Project Steering Committee will be formed tomonitor and supervise the progress of the project.

(3) Factors influencing sustainability(i) Project implementation structure
PMU set up in MLGPC and the PIUs set up in the road development department in eachprovince are properly monitoring and supervising the project. There seems to be no
problems regarding the staff quality and size of both PMU and the PIUs.
Additionally, consultations are held periodically by the National Project Steering
Committee (NSPC) and the Provincial Project Steering Committee (PPSC) to ascertain
the progress of the project, identify the problem areas, and so on (the NSPC holds a
meeting once every three months; the PPSC, every month). Given that steeringcommittees often become a mere façade in projects implemented in developing
countries, it can be said that the implementation structure of this project is extremely
solid.

9

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Appraisal (January 2003)(ii) Operation and maintenance status
Operation and maintenance after the completion of road
improvement work will be conducted by the civil works
department of each provincial government.

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review(ii) Operation and maintenance status/system
The road development department of each province is responsible for all operation andmaintenance activities undertaken after the completion of road improvement work. The
operation and maintenance system of each province is shown in the table below.
Table: Operation and maintenance system of roadsin Central and Sabaragamuwa provinces
Item
CentralSabaragamuwa
Staff involved in operation and maintenance (total)
59
75
Executive Engineer (managing staff)
910
Senior Technical Officer / Technical Officer
35
32
Other (supervisor, engineer, etc.)
1533
Total length of provincial roads under jurisdiction
Approx. 2,500 km
2,656 km(categories C, D)
Length of roads per Executive Engineer
Approx. 278 km
Approx. 266 km
Source: Based on the hearings held at the road development departments of Central and Sabaragamuwa provinces
Note 1: The road categories (A, B, C, D, and E) are reviewed every year, and the budget allocation for operation andmaintenance is changed in accordance with the category change. (Source: Sabaragamuwa Province’s Road
Development Department)

In both provinces, the Executive Engineer is responsible for the overall management of
the operation and maintenance activities of the roads and various activities. Each
Executive Engineer has under his/her jurisdiction about 270 km of road, so additional
personnel are desired.
(Reference: Sri Lanka’s road operation and maintenance system)
・ Long-distance transport roads that run between cities (category A) and main arterial
roads that connect to category A roads (category B): Planning, designing,
construction as well as operation and maintenance are under the jurisdiction of theRoad Development Authority, which is under the Ministry of Highway.
・ Provincial roads (categories C, D): Under the management of the Provincial Road
Development Department / Provincial Road Development Authority of eachprovince.
10

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Appraisal (January 2003)

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
・ Other local roads (category E): Under the management of local governments andvillage councils.

(iii) Technical capacity
As part of the consulting services provided under this project,along the lines of an ADB project, capacity building fororganization control, road operation and maintenance planning,
operation and maintenance of equipment and materials, andprocurement monitoring and supervision will be carried out.

(iii) Technical capacity
As part of the consulting services provided under this project, training programs areprepared and conducted for personnel from three organizations: (i) provincial
governments, (ii) central government (MLGPC’s Development Bureau), and (iii) PMU
and PIU. Training provided includes project management, financial control, procurementmonitoring and supervision, core skills proficiency (PC, report writing, etc.). Up to now,
capacity building efforts have been made through implementation of the aforesaid
program, OJT, participation in overseas seminars and the like.
Capacity building appears to have progressed to some extent through the aforesaid
program, but continued efforts at capacity building need to be made as the project moves
toward completion.
As of March 2008, 90% of the capacity building component has been completed (Source:Monthly Progress Report No. 36 [March 2008]).

(iv) Financial status
At the time of appraisal, JBIC and the central government of Sri
Lanka agreed to secure enough funds for the operation andmaintenance of local roads in each of the two provinces targeted inthis project including roads to be rehabilitated under the project.

(iv) Financial status
At present, the statement in the left column is not well known to stakeholders including
the executing agency
The central government has given subsidies to Central Province and Sabaragamuwa
Province for road operation and maintenance. The provincial government budget for road
operation and maintenance, including the said subsidies, is as shown in the table below.
The road development departments of both provinces state that “the budget for road
operation and maintenance tends to be inadequate.”

11

Item

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
Table: Road operation and maintenance budget in Central Province andSabaragamuwa Province

Appraisal (January 2003)

Budget FY
CentralSabaragamuwa
FY2007 actual
Unknown
105 million Rs
FY2008 actual (under implementation)
80 million Rs
150 million Rs
FY2009 plan
150 million Rs
Unknown
Total length of provincial roads under
Approx. 2,500 km
2,656 kmjurisdiction (C, D)
O&M budget per 1 km of provincial
Approx. 32,000 Rs/km
Approx. 56,000 Rs/km)
roads１
Source: Based on the hearings held at the road development departments of Central and Sabaragamuwa provinces
Note 1: Calculated on the basis of the actual performance in FY2008. The road categories (A, B, C, D, and E) arereviewed every year, and the budget allocation for operation and maintenance is changed in accordance with thecategory change, etc.

(v) Others (external factors which may influence the sustainability)
The table below shows the changes in the cost of improving 1 km of roads incurred by
the MLGPC’s Development Bureau. As is described later in the “Efficiency” column, thecost of construction materials (especially asphalt) and labor cost have risen sharply inrecent years, and this has caused the cost of road improvement to rise every year at a
breakneck speed. As of 2008, it is estimated that the cost of improving 1 km of road is
to be 22 million rupees, which is indeed four times the cost (5.5 million rupees) on which
the estimate made by the project’s F/S is based.
The main cause of the high cost is an external factor that cannot be controlled by the
executing agency. Thus, there is a need to monitor the unit cost of road improvement in atimely manner. As is described later, the construction contract in Phase 1 and Phase 2-1
has already been completed, and so there is a need to periodically check, throughmonitoring and supervision by the consultants, whether the section of the road where thecontract has already signed is improved within the contract amount.

12

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Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
Table: Changes in the unit cost of road improvement

Appraisal (January 2003)

Year

Project milestones

2001
2003
2005
2005
2007
2008

Premises of estimate at F/S
Assumption at project L/AConsultant’s estimate (Engineer’s estimate)
At the Phase 1 construction contract
At the Phase 2-1 construction contract
Present assumed cost
Pace of unit cost increase (2008/2001)

Road improvement cost(per 1 km, unit: rupees)
5,500,000
6,700,000
11,500,000
12,600,000
19,600,000
22,000,000
400%

Source: PMU of MLGPC’s Development Bureau

Reference
Efficiency(1) Output(1) Output(a) Civil works
・ Road improvement work (approx. 300 km in Central Province,
approx. 300 km in Sabaragamuwa Province)
・ Repair work on bridges (bridges, culverts, etc.)
・ Purchase of equipment and materials (equipment and materials
for emergency rehabilitation, trucks, computers, etc.)(1) Output(a) Civil works
Road improvement work
As a result of a review of existing F/S by the consultants, it was decided that the road
improvement work should be carried out in three phases. Details are shown in the tablebelow. Phase 2 is further divided into Phase 2-1 and Phase 2-2.
Table: Routes targeted for the project divided into phases and the progress situation
Central Province
Sabaragamuwa Province
No. ofTotal
No. ofTotal
No. ofNo. ofPhase
Phase
construction
lengthconstruction
lengthroutesroutescontracts(km)
contracts
(km)
1
6+2
14
101.7
1
6+2
16
100.7
2
6
11
108.1
2
5
9
100.1
3
5
8
96.6
3
6
14
110.1
Total
19
33
306.4
Total
19
39
310.9
Overall project plan (no. of contracts, no. of routes, total length)
38
72
617.3
Progress
Progress
8
19
143.2
10
22
161.4
to dateto dateNo. of contracts, no. of routes, total length as of May 2008
18
41
304.6
Source: PMU of MLGPC’s Development Bureau
Note: The additional number of contracts in Phase 1 (2 each in Central Province and Sabaragamuwa Province) are
ad-on contracts brought about by the cancellation of construction contracts accompanying the contractors’ poor
performance.

13

Item

Appraisal (January 2003)

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
Of the four project phases (Phase 1, Phase 2-1, Phase 2-2, and Phase 3), the construction
contracts in Phase 1 and Phase 2-1 have been completed. As is shown above, the totalroad length already signed to this date is about 300 km.
The scope of the project has been reduced due to lack of funds (from the originallyplanned 600 km to about 300 km). 13 The main cause of the lack of funds is the sharp
increase in the cost of road improvement due to three factors that have appeared in recent
years: (i) the steep rise in the price of construction materials (mainly asphalt, cement 14 ,aggregate, etc); (ii) the increase in fuel cost accompanying the steep rise in the price ofoil; and (iii) the steep rise in domestic labor cost 15 (for details of road improvement cost,see “External factors which may influence the sustainability”).
The government of Sri Lanka is planning to infuse funds equivalent to about twice theamount originally planned for the local portion (3.6 billion rupees in total). However, it isjudged that unless more funds are injected, it will not be possible to complete the project
in its entirety. 16
Repair work on bridges
Repair work is being conducted on bridges in conjunction with the aforesaid road
improvement work.
Purchase of equipment and materials
After the launch of the project, the required equipment and materials were reviewed, andbidding was carried out for the procurement of the equipment and materials. As of end of
March 2008, except for several motor graders, all required equipment and materials havebeen purchased. 17(b) Consulting services
Consulting services M/MConsultant category
Team Leader
Expatriate(b) Consulting services
Consulting services M/M
Planned M/M(Based on Variation Order No.8)
52.0
59.18

Consultant category
Team Leader
Expatriate

14

Achieved as of March
2008
35.02
58.77

Achievement ratioof planned M/M
67.3 %
99.3 %

Item

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review

Appraisal (January 2003)

Local Staff
Construction Monitoring andSupervisory Engineer, etc.
Total (Reference)

Local Staff
144.18Construction Monitoring and
1,417.60
Supervisory Engineer, etc.
Total (Reference)
1,672.96
Source: Prepared from Monthly Progress Report No.36 (March 2008)
Note: Construction monitoring and supervisory engineers include resident engineers,material engineers, quantity surveyors and bridge engineers.

(2) Period

142.16
1,078.12

98.6 %

1,314.07

78.5 %

76.1 %

Source: Prepared from Monthly Progress Report No.36 (March 2008)

Details of consulting services
・ F/S review
9 Determination of routes to be targeted
9 Review of civil design, structure design, pavement
design and road design
・ Bidding assistance・ Construction monitoring and supervision
・ Environmental measures
・ Capacity building
9 Proposals and guidance on capacity building of the roaddevelopment departments of Central and Sabaragamuwa
provinces for organizational control, road operation andmaintenance planning, and operation and maintenance ofequipment and materials
9 Proposal and guidance on capacity building of MLGPC’s
personnel for project management and procurementmonitoring and supervision

Details of consulting services
・ F/S review
9 Determination of routes to be targeted → completed
9 Review of civil design, structure design, pavement design and road design →completed
・ Bidding assistance → being implemented
・ Construction monitoring and supervision → being implemented
・ Environmental measures→ being implemented・ Capacity building
With regard to capacity building of personnel in government agencies (MLGPC’s
Development Bureau, Central Province’s Road Development Department, andSabaragamuwa Province’s Road Development Department), it appears that the planned
training programs have been implemented in a favorable manner. Capacity building is
progressing without problems.

(2) Period: March 2003 — September 2008 (at the time of appraisal,
55 months)(2) Period
Delay
According to PMU of MLGPC’s Development Bureau, the project is expected to becompleted in August 2009, with a delay of 11 months. 18
The delay is caused by the fact that construction has been significantly delayed in someroad sections (Kaltota Right Bank Roads in Sabaragamuwa Province, etc.) because of
15

Item

Appraisal (January 2003)

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
poor performance of some of the contractors. As has been described, steps are being
taken to minimize the delays by cancelling the contracts of contractors whose
performance has been extremely poor or providing them with continuous guidance. 19
Definition of project completion
According to PMU of MLGPC’s Development Bureau, the project will be considered
completed by when: (i) the improvement work is completed; (ii) the roads are inspected;(iii) everything pointed out in the inspection report is resolved; and (iv) the routes arehanded over to the government. In other words, the completion of this project is defined
as when the last route is handed over to the government.
Contractors will be liable for one year for any defects found after the routes are handed
over to the government. If the contractors are deemed have caused the defects, it will betheir responsible to remedy them.

(3) Cost(3) Cost
Breakdown
Foreign currency: 5,811 million yen (same as the agreed loan
amount)Local currency: 1,859 million Sri Lankan rupees
Total project cost: 7,748 million yen (at the time of appraisal) 20

Lessons learned
andRecommendations(3) Cost
The financial plan to be carried out after the assumed reduction of the project scope(described in the above (a) civil works column) is implemented is as follows: 21
Foreign currency: 5,811 million yen
Local currency: 3,600 million Sri Lankan rupees
Total project cost: 9,447 million yen (1 rupee = 1.01 yen)[Lessons learned]
・ Since the steep rise in construction materials (asphalt, cement, aggregates, etc.) and labor cost in recent years are external factors that are out of control ofthe executing agency and consultants, the executing agency could not avoid reducing the scope of the project. The decision was made at a fairly early stage
with a view to minimizing the various risks involved. This is an afterthought, but it is believed that the appropriate monitoring of the external factors in atimely fashion paved the way for the brave decision to reduce the scope of the project and minimize the risks involved.
・ The Vice Minister of MLGPC has been deeply involved in this project. He has contributed significantly to the progress of this project by, among otherthings, (i) attending the steering committee meetings of NPSC, PPSC, etc., (ii) periodically calling meetings of contractors, (iii) frequently inspecting local
16

Item

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
construction sites, and (iv) expediting disbursements to consultants and contractors. Such positive involvement in the project by the top management of theexecuting agency has been extremely effective in project monitoring and supervision (although such involvement by top management may not always be
available because of different degrees of incentive among high officials of the government regarding the relevant project).
・ As for the long delays observed in some sections due to the poor performance of the contractors, efforts have been made to minimize the delays bycancelling the contracts of the contractors concerned and promptly inviting contractors to rebid. These steps taken to minimize the delays may be praised
as a timely response by the executing agency and consultants.
・ To avoid commissioning low-performing contractors in the future, it is advisable, among other things, to build a database on domestic contractors as wellas adopt a prequalification (PQ) system for bidding, and thereby prevent a recurrence of similar risks.
Appraisal (January 2003)[Recommendations]・ It appears that both Central Province and Sabaragamuwa Province have secured the budget necessary for operation and maintenance of the completedroads. From the perspective of effective utilization of the budget, the two provinces should consider the possibility of adopting a performance-based
contract, 22 which has been adopted in ADB’s Road Sector Development Project. Many of the target routes are located in precipitous mountain areas, so thesuccess or failure of operation and maintenance activities hold the key to the successful manifestation and secured sustainability of the project’s effects.
Consequently, the possibility of outsourcing the operation and maintenance of the roads should be considered in the hope that this will lead to a more
careful execution of operation and maintenance.
・ The cost of carrying out the road improvement work is soaring. This is due to external factors that are outside the control of the executing agency, so theunit cost of improving roads needs to be monitored. Also, there is a need to periodically check, through monitoring and supervision by the consultants,
whether the section of the road for which the contract has already been signed is improved within the contract amount.
・ With regard to NGO coordinated projects implemented as part of this project, until now, only two model projects have been implemented in cooperation
with CBOs in Central and Sabaragamuwa provinces. Thus, the effect of NGO coordinated projects is still limited. The consultants contracted under thisproject have already achieved all of their Man/Month related to their coordination with NGOs. However, since the CBOs that implemented the model
project have reported that the CBO coordination had some impact, the executing agency should begin examining the pros and cons of (i) transferring its
project implementation skills to other NGOs and CBOs; (ii) implementing similar projects in other regions; or (iii) undertaking other activities that makeuse of CBOs and NGOs. (For example, with regard to the operation and maintenance of feeder roads that have been improved, it may be possible totransfer the relevant operation and maintenance skills [road cleanup activities, etc.] in cooperation with NGOs and CBOs in other regions.)
・ At present, operation and effect indicators (daily traffic volume) are collected through the consultants in an ad hoc manner, and so the executing agency’s
collection system is very weak. There is thus a need to strengthen the said system with an eye to conducting ex-post evaluation (details will be describedlater). As for the types of operation and effect indictors, the ones currently being used should continue to be used.
17

Item

Indicators set for
use at time of
ex-postevaluation

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
・ Since there will be routes that will be excluded from the project targets accompanying the reduction in the project scope, it will be necessary to change thesample routes to be targeted for collecting the operation and effect indicators in order to avoid the impact of the reduced scope (details will be describedlater).
・ In light of the fact that ADB’s Road Sector Development Project will be completed in June 2008, experts associated with the ADB project who were hired
on a project basis should be considered as possible recruits for this project, which in many ways are similar to the ADB project. Should circumstances
allow, these experts should be considered for participation in NPSC, PPSC, PMU, and PIU as advisers.
Appraisal (January 2003)

Indicators set for use at time of ex-post evaluation(1) Average daily traffic(2) Vehicle operation cost saving(3) Time saving

Development of a system for collecting operation and effect indicators
At present, operation and effect indicators (daily traffic volume) are collected through theconsultants in an ad hoc manner, and the executing agency’s collection system is thus
very weak. Going forward, it is desirable that a system be promptly developed in theexecuting agency for collecting traffic data. 23
Target routes of operation and effect indicators (proposal)
There will be routes that will be excluded from the project targets accompanying the
reduction in the project scope. Thus, it will be necessary to change the sample routes tobe targeted for collecting the operation and effect indicators (selected at the time ofappraisal for calculation of target values) in order to avoid the impact of the reduced
scope. The target routes (proposal) are shown in the table below (the target route will be
reduced from 10 to 8.)
With regard to Kaltota Right Bank Roads in Sabaragamuwa Province (SP/RP/052), as
has already been described, there have been significant construction delays. Therefore itis necessary to determine whether these roads should be included in the target routes byclosely monitoring the progress of the construction work.

18

Item

Result of mid-term review and ex-post evaluation results
as estimated at the time of the mid-term review
Table: Target routes for operation and effect indicators (proposal)

Appraisal (January 2003)

Road code, road name and road length (km)(10 routes in the EIRR calculation sample)
CP/KD/325
Nawayalatenna Jambugahapitiya
CP/KD/344
Teldeniya Corbests Gap
Beligamuwa Nilagama
CP/MT/042
Dewahuwa
Dambuila Kandalama
CP/MT/060
Kumbukkadanwela
CP/NE/048
Barthford Valley Road
Andiramada Narambedde
SP/KG/078
Imbutgassdeniya
SB/KG/027
Morontota Arandara
SP/KG/035
Yatagoda Beligala Batuwatta
SP/RP/032
Kahawatta Haupe Manandola
SP/RP/052
Kaltota Right Bank Roads

1

Phase

Status

4.2
14.0

2-1
3

Under construction
Not yet started

Target routes(proposal)
○
×

17.1

1

Completed

○

9.2

1

Completed

○

10.6

1

Under construction

○

8.8

1

Completed

○

N/A
11.9
7.4
15.9

3
2-1
1
1

Outside of project
Under construction
Under construction
Under construction

×
○
○
△

In the case of civil works (which is one of the components of this project), since the loan is made according to a special account formula, the contract approved amount is less than the disbursed amount.
Based on the hearings held at MLGPC and the consultants.
3
In the present survey, it was not possible to obtain quantitative data on vehicle operation cost (VOC) and time saving effect. Thus no attempts were made to compute two of the operation and effect indicators, namely, (i)vehicle operation cost saving and (ii) time saving.
4
Examples include the world famous Heritance Kandalama Hotel and Amaya Lake Hotel Dambulla. Particularly noteworthy is the fact that, since the Amaya Lake Hotel is located along the said road, it has become
significantly easier to access the hotel from the historical city of Dambulla.
5
Haupe Estate’s plantation stretches out over this area.
6
These feeder roads fall into Category E of the road category used in Sri Lanka. For the relationship between the road category and the responsible government agencies, see the “Factors influencing sustainability” column
described below.
7
The evaluation criteria include: (i) the years of experience of the CBOs and NGOs (number of years since establishment); (ii) the number of staff members; (iii) the ability to implement a project (number of projects
implemented); (iv) the scale (value) of projects implemented; and (v) the number of beneficiaries of the feeder roads targeted in this project. Based on these criteria, the first tier of the two-tiered selection was made by
conducting a documentary screening. Then after the consultants commissioned by this project conducted the visiting evaluation, in the end, two groups were selected (one is Panana Grameeya Samurdhi Society, with 3,000
resident participants; and the other is the Vishaka Rural Development Women Society).
8
The targeted feeder road in the Kegalle District of Sabaragamuwa Province connects to the Colombo – Kandy road, the principal national road, via the Udukumbura – Othnapitiya road (SP/KG/034), which is a routetargeted in this project. In addition, the targeted feeder road in the Kandy District of Central Province connects the Poojapitiya – Ankumbura road, which is also a route targeted in this project.
9Under the initial contract, a section about 1 km in length (contract amount: about 1.7 million rupees) was to be improved, but due to the rising cost of construction materials as described below, the length of the section to
be improved was reduced to 600 m, and the cost was likewise reduced. (Source: Based on an interview with S.H.M. Jayaranthna, a CBO leader)
10
Source: Based on an interview with the CBO leader S.H.M. Jayaranthna.
11
For example, experts whose contract with the ADB project has expired are hired to work in this project, and contractors who performed well in the ADB project are selected and given contracts. Moreover, since the officeof the ADB project is located in the same building as PMU of MLGPC’s Development Bureau, staff members of the two offices were observed exchanging information with each other through their day-to-day operations.
(Source: Based on the hearings held at the office of the ADB Road Sector Development Project, PMU of MLGPC, the consultants, and the Central Province’s Road Development Department.)
12
The committee meets about twice a year.
13
Discussion on the reduction of the project scope by the parties concerned began in May 2006. (Source: PMU of MLGPC’s Development Bureau)
2

19

14
As a result of measures to limit the extraction of aggregate from rivers in Sri Lanka, the domestic price of cement has soared; thereby decreasing Sri Lanka’s self-sufficiency rate in cement to 25–30%. At present, Sri
Lanka is forced to rely on imports from India and other neighboring countries to meet its cement needs. However, this supply of foreign cement is unstable, which causes uncertainty as to whether the project can be properly
implemented. (Source: Based on the hearings held at MLGPC’s Development Bureau and the consultants)
15
With regard to the factors of these steep price increases, in addition to the steep rise in the price of asphalt accompanying the sharp increase in the price of crude oil, the fact that the price of domestic construction
materials soared in the process of undertaking the reconstruction work in the aftermath of the tsunami disaster is considered to be a remote cause. (Notably, prominent NGOs from Europe and the United States repeatedly
procured materials and human resources at exorbitant prices, compelling some to point out that this caused the price of construction materials to rise precipitously.)16
To complete the entire project, it is estimated that about 7.5 billion yen in additional funds (including construction costs, consulting fees, contingencies) would have to be injected. (Source: PMU of MLGPC’s
Development Bureau)
17
Source: Monthly Progress Report No. 36 (March 2008).
18
The parties concerned in the National Project Steering Committee (NPSC) are already said to be in agreement regarding the expected delay of the project completion, and the JBIC has been notified of this agreement.
(Source: PMU of MLGPC’s Development Bureau)
19
In the case of the Kaltota Right Bank Roads in Sabaragamuwa Province (Phase 1), the performance of the contractor was so poor that cancelling the contracts and rebidding were considered. However, since rebidding
risked causing further delays, it was decided that the contractor concerned should be provided with continuous guidance. The Vice Minister of MLGPC is fully aware of this problem and is himself providing continuous
guidance to the contractor concerned.
20
Source: Appraisal document
21
Source: PMU of MLGPC’s Development Bureau
22
The performance based contract is a type of contract under which orders for services related to the operation and maintenance of a road network are comprehensively placed, and the outcome of the services thus provided
is determined by the performance requirement. A performance based contract, unlike contract methods that are based on inputs (labor cost, material cost, etc. for operation and maintenance), is concluded on the basis of a
specification sheet that stipulates the level of achievement in terms of output (road pavement condition, etc.) or outcome (lower incidence of accidents, etc.). (Contract amount fluctuates in most output-type contracts, but isfixed in most outcome-type contracts.) Various countries began adopting the performance based contract on an experimental basis from the mid-1990s, and countries in Europe and Oceania and the United States have now
adopted it as a component of road assessment management. It has been reported that the performance based contract is 10–40% less costly than the conventional contract methods. In recent years, some developing countries
have also adopted this type of contract.
23
The following two actions are possible concrete steps to take to strengthen the capacity for collecting operation and effect indicators: (i) consider transferring “indicator collection skills” from the consultant to the
executing agency (addition of tasks such as “support for creating a system of collecting indicators” to the consultant TOR), or (ii) give NPSC and PPSC the duty to periodically check how the indicator collection isprogressing. Additionally, since the executing agency does not have instruments to measure traffic volume, it is desirable to begin examining the pros and cons of introducing such instruments.

20