Microenterprise-based routine road maintenance in China

First findings and recommendationsSerge Cartier, December 2007

Types of rural roads Administrative class

32% county roads 63% township roads 6% village roads

Technical class Class I, II, III Class IV Unclassified

Surface type Asphalt Concrete Unpaved

Based on interest, capacity and financing, this study will focus on paved county roads, both asphalt and concrete

Administrative classGuiyang Ganzhou

km % km %

County roads 1,243 9% 4,724 21%

Township roads 3,808 27% 4,552 20%

Village roads 8,994 64% 13,374 59%

Total 14,044 100% 22,650 100%

Ganzhou

Road classCounty Road

Township Road

Special Road 

Village Road

Total

Class I 11 1 - 11 23 0.1%

Class II 144 22 1 32 198 0.9%

Class III 388 16 2 33 439 1.9%

Class IV 1,991 731 56 860 3,638 15.9%

Unclassified 2,191 3,783 160 12,438 18,571 81.2%

Total 4,724 4,552 218 13,374 22,868 100.0%

Guiyang

Administrative class

Totalkm

Concrete Asphalt Unpaved

km % km % km %

County roads 622 117 19% 456 73% 48 8%

Township roads 1,904 693 36% 661 35% 550 29%

Village roads 4,497 1,544 34% 112 2% 2,840 63%

Total 7,022 2,354 34% 1,230 18% 3,438 49%

Maintenance types

Major maintenance Medium maintenance Minor maintenance Routine maintenance

Rehabilitation Periodic maintenance Minor repairs Routine (preventative)

maintenance

First findings

Similar characteristics to microenterprise-based model Standard cost per kilometre Performance-based contracts Penalties for non-compliance Local contracting Selection process for maintenance workers Technical training Contracting, financing and supervision by county

However, the technical quality and effectiveness of the maintenance activities is found to be lacking

Technical quality and effectiveness lackingDrainage system Vegetation controlSurface maintenanceRoad clearing

Causes

1. Inadequate execution of maintenance activities by workers Limited scope of maintenance activities Lack of sufficient appropriate tools Lack of adequate training Lack of adequate planning of activities and resources Performance indicators and penalties not applied

2. Lack of cooperation between maintenance workers Individual contracts Lack of team building or managerial training

3. Insufficient attention given to maintenance activities Labour allocations not based on labour requirements Low salaries (low productivity)

4. Lack of sufficient sustainable and continuous financing Insufficient allocation of funding Insufficient priority given to routine maintenance

Recommendations for improvement

1. Improvement and expansion of maintenance activities Inclusion of additional maintenance activities Increased allocation of tools Improvement of technical training (drainage system) Proper planning of maintenance activities Proper application of performance indicators and penalties

2. Organisation of workers into maintenance teams Team contracts Managerial training

3. Introduction of differentiated standard costs Appropriate average productivity rates (km/worker) Appropriate differentiated standard costs per kilometre

4. Development of an adequate financing system Earmarked funding based on the length of the road network Prioritisation of routine maintenance

1. Improvement and expansion

of maintenance activities

Maintenance activities

Road clearing Cleaning of the drainage system Vegetation control in the right-of-way

Repairs to road shoulders Repairs to the road surface

Temporary (stones and soil) Permanent (cement or asphalt)

Minor repairs to roadworks (bridges, retaining walls, culverts, etc.)

Conservation of road signs and signalling

What activities to include?

Tools and equipment Limited types and amount of tools Individual allocation

What tools to provide and in which quantities?

China

Tools and equipment Units per worker per year

Vests and hats 2

Wheelbarrows 1

Shovels 1

Hoes 1

Brooms 4-6 per year

Machetes 1

Latin America - Honduras

Tools and Equipment Units per worker per year

Machetes 12

Pickaxes 1

Shovels 2

Rakes 1

Files 24

Brooms 2

Rubber Boots 2

Work Boots 2

Trousers 5

Shirts 5

Ponchos 1

Hats 2

Safety Vests 2

Trash Bags 12

Latin America – HondurasTools and equipment Units per team Units per team

per yearWheelbarrows 6 1Axes 2 1Hammers 1 2Hoes 6 1Garden Scissors 2 1Large Brooms 2 2Earth Rammers 1 1Bars 2 1Ropes 1 1Buckets 8 1Trowels 2 2Chisels 4 2Sledgehammer 1 2Paintbrush 2” 6 2Paintbrush 4” 6 2Sandpaper metal 30 1Sandpaper concrete 30 1Measuring tape 20m 1 1Measuring tape 5m 1 1Torch 1 3First aid Kit 1 1Helmet 8 1Leather Gloves 8 1Hole Makers 3 2Cones 2 1Markers 10 1

Technical training and accompaniment

Findings Technical training exists, carried out by county staff Unstructured and informal (no training manuals) Limited to the different activities to be carried out

(no planning or priority setting)

Improve technical training received by maintenance workers and teams Different road elements, their function and their importance Effective and efficient execution of maintenance activities (individual / team) Planning of activities and management of labour and tools by the team To be carried out by CCB staff, possibly later training institutions

Accompaniment by CCB – in future best to be externalised in order to distinguish this role from that of supervision and inspection

Performance indicators

Unify performance indicators and penalties, based on road elements Attainable, measurable, practical/useful Introduce scoring system Ensure application of performance indicators

Ganzhou

Road element Performance indicator

Road pavement

The pavement should be kept free of soil, stones and other material, joints in concrete pavement should be repaired and kept free of sand, and potholes and slumped areas should be filled up.

Road shoulder The shoulder should be wider than 50cm, and in sections where this is not possible, slopes should be in place. The shoulder should be without ruts, potholes, caving or indentations, and should be free of weeds and other material. Filling material should be compacted.

Side drain The side drain should be outside the shoulder, 60 cm lower than the road surface and with a bottom width of 40 cm. It should be checked and cleaned regularly during the rainy season.

Right-of-way Vegetation should be shorter than 80 cm.

Slopes Loose material and stones on the slopes should be removed and the slope should be without rills.

Retaining wall The retaining wall should not be damaged, expansion joints should be maintained and weep holes kept free.

Bridges Damage to bridges should be reported and caution signs set up, mud and other material should be cleared.

Culverts Damage to culverts should be reported, and they should be kept clean so as to allow free drainage.

Xingguo

Road element

Maximum Score

Performance indicators

Road pavement

30 points

Road pavement is clean and neat (10 points). 1 point is deducted for each site that does not qualify.

Pavement is free of potholes (10 points). 1 point is deducted for each pothole.

Pavement is clear of obstacles (10 points). For each obstacle 1 point is deducted.

Right-of-way and side drains

35 points

Road shoulder is level, of sufficient width and free of vegetation (15 points). 1 point is deducted for each 20m that does not qualify.

Road side slope is stable and has no depressions (5 points). 1 point is deducted for each occurrence that does not qualify.

Side drains are clean and drain freely (10 points). 1 point is deducted for each 10m of ditch that does not qualify.

Bridges and Culverts

10 points

The road surface is level at bridgeheads and over culverts (10 points). 1 point will be deducted for each bump encountered.

The culverts drain freely (10 points). 1 point is deducted for each obstructed culvert.

Road works 10 points

Road works (including subgrade, pavement, retaining wall, slope protection and bridge railing) which are loose or damaged, are repaired in a timely fashion (10 points). 5 points are deducted for each site which is not repaired timely.

Inspections 15 points

The road is patrolled and inspected regularly, and any problems encountered are reported and caution signs are put up (15 points). If this is not done, 5 points are deducted for every instance that this is not done. If the failure to do this results in an accident, 15 points are deducted.

Contract supervision and inspection

Findings Inspections at least every month by CCB or TCB staff Not always based on performance indicators Penalties generally not applied

Capacity exists, at least at county level Ensure application of performance indicators and penalties Possibly include performance indicators for CCB and TCB staff

2. Organisation of workers

into maintenance teams

Organisational modality

Currently individuals Low motivation/productivity Low ability to efficiently respond to emergencies and other peaks in

maintenance requirements Difficult to supervise

Recommended to form maintenance teams Together responsible for maintenance of stretch of road Improved ability to respond efficiently to emergencies and peaks in

maintenance requirements Easier to supervise Higher productivity Introduction of entrepreneurship

Organisational modality

Public/Private Limited Liability Company Registered capital 30,000 CNY Enterprise income tax (20%)

Individual Enterprise Single-owner Registration with County Business Administration Bureau Individual income tax

Partnership Enterprise Registration with County Business Administration Bureau Individual income tax Additional employees Unlimited liability for paying debts

Farmer Special Cooperation 80% farmers

Team formation

Develop clear guidelines regarding the call for candidates, ensuring wide participation

Elaborate simple objective selection criteria Eligibility criteria – Priorisation criteria Technical criteria

Work experience Educational level Entrepreneurial attitude Location

Socio-economic criteria Family size and structure Poverty level Employment situation Gender

Scoring system

Managerial training and accompaniment

Findings No managerial training provided Maintenance teams not stimulated to work together

Provide managerial training to maintenance teams Planning of activities and management of labour and tools by the team Management of the maintenance team or microenterprise (teamwork, conflict

prevention, etc.) Preparation of reports, paying taxes, accounting To be carried out by CBAB staff

Accompaniment by CBAB

3. Introduction of differentiated

productivity rates and standard costs

Productivity rates

Assumed that productivity rates per activity are similar to Latin America – to be confirmed in pilots

Amount of work by activity to be determined for different road categories based on experience from pilots

Average productivity rate (km/worker) to be determined for different road categories based on experience from pilots

Possible criteria for road categories Area of right-of-way Pavement type Number of drainage and other

roadworks Climate conditions (rainfall) Topography

Based on current productivity rates and maintenances levels, estimated average productivity rate 4 km/person

Maintenance costs – Salary level

Salary level – main determinant of maintenance costs Agricultural wage rates (occasional labour)

China 28.5 CNY/day Guizhou province 35 CNY/day Jiangxi province 25 CNY/day Kaiyang county 35-50 CNY/day Baiyun district 20-25 CNY/day Ganxian county 40 CNY/day

Minimum wage Guizhou province 18 CNY/day Jiangxi province 19 CNY/day

Current maintenance salaries Kaiyang county 30 CNY/day Ganxian county 20 CNY/day Xingguo county 30 CNY/day

Selected salary level: 30 CNY/day

Maintenance costs – standard cost

Salary 30 CNY/day – 7,920 CNY/year 4 km/person – 1,980 CNY/km/year

Allowances Tools, social security and transport 25% of labour costs (20% of total costs) – 495 CNY/km/year

Total cost – 2,475 CNY/km/year This does not include material costs

Standard cost for county roads - Township and village roads may be less (although salary levels will be the same, the average productivity rate will be higher)

County Salary costs Material costs Subtotal

Xingguo 1,680 1,200 2,880

Ganxian 1,200 1,300 2,500

Kaiyang 600 600

Baiyun

Contracting modalities

Government procurement law Single-source procurement

< 50,000 CNY Invited bidding (3 bidders) Public invitation

> 500,000 CNY Standard cost 2,475 CNY/km –

20 kilometres Division of road sections into shorter

stretches Team size < 5-6 persons

Guarantee for satisfactory completion (2%) – necessary?

Simple contract document

Ganxian county – Ganzhou municipality

Section name Total length

Section length Km/team

Shexi-Youzhen 24.0412.64

24.0411.40

Hujiang-Gutian 13.11 13.1126.21

Hujiangbridge-Shunfeng 13.10 13.10

Dahujiang-Jiangkou 29.4416.29

29.4413.15

Nantang-Huapin 13.80 13.80 13.80

Chuanxi-Jitan 14.54 14.5423.12

Jingouxing-Baohuasi 8.58 8.58

Meilin-Datian 13.90 13.90 13.90

Datian-Zhoujia 36.15 36.15 36.15

Datian-Wangmudu 40.6115.76

40.6124.85

Fengshu-Dalong 12.56 12.56 12.56

Xiaopin-Xiaoben 16.69 16.6922.91

Dashixia-Xinfeng 6.22 6.22

Meihu 32.03 32.03 32.03

Luchang-Qingqing Farm 2.99 2.993.62

0.63 0.63

Average 17.40 14.65 23.20

4. Development of an

appropriate financing system

Financing mechanisms

Lack of sufficient and timely financing Lack of funding Lack of priority given to routine maintenance Need to earmark funds for routine maintenance

Funding sources Regular vehicle maintenance fee

Collected at provincial level Allocated by PCD to counties (according to length of road network?) 7,000 / 3,500 / 1,000 CNY/km for county / township / village roads All maintenance types – however, also used for construction In general used for major and medium maintenance

Motorcycle and farm vehicle maintenance fee Collected at county level – transferred to PCD Allocated by PCD and subsequently by municipality to counties In general used for routine and minor maintenance, but also medium and major

maintenance, construction and management costs

Financing mechanisms - Guiyang

Guiyang regulations Regular vehicle maintenance fee for major

and medium maintenance Motorcycle and farm vehicle fee for routine

and minor maintenance 80% county,

20% municipality Result in disincentives and lower priority for routine maintenance Much higher than the proposed standard cost of 2,475 CNY/km Insufficient funding

Administrative level

Concrete Asphalt Unpaved

County 10,000 7,000 5,000

Township 7,000 7,000 2,000

Village 1,500 1,500 500

Administrative levelConcrete Asphalt Unpaved Total

km RMB km RMB km RMB km RMB

County roads 117 1,169,390 456 3,194,464 48 241,705 622 4,605,559

Township roads 693 4,848,333 661 4,628,071 550 1,099,978 1,904 10,576,382

Village roads 1,544 2,316,479 112 168,453 2,840 1,420,080 4,497 3,905,012

Total 2,354 8,334,202 1,230 7,990,988 3,438 2,761,763 7,022 19,086,953

Maintenance fee Jiangxi Province Guizhou Province

Car maintenance fee 1,542,845,100 1,000,780,000

Motorcycle and farm vehicle maintenance fee 139,845,000 12,750,000

Late fee 25,234,800

Interest 483,200 310,000

Total maintenance fee 1,708,408,100 1,013,840,000

Financing mechanisms - Ganzhou

Financing routine and minor maintenance with farm vehicle fee Much higher collection by counties (Ganzhou – 70 million CNY), but only half

allocated to road maintenance (35 million CNY)

Sufficient funding for application of standard cost

But allocated funding used for all maintenance and management costs – 40% used for routine and minor maintenance (14 million CNY)

Only enough to cover county roads – not including minor maintenance

Road type County Township Village

Applied cost 2,475 2,475 900

Road length 4,724 4,552 13,374

Maintenance cost (million CNY/km) 11.7 11.3 12.0

Maintenance fee Jiangxi Province Guizhou Province

Car maintenance fee 1,542,845,100 1,000,780,000

Motorcycle and farm vehicle maintenance fee 139,845,000 12,750,000

Late fee 25,234,800

Interest 483,200 310,000

Total maintenance fee 1,708,408,100 1,013,840,000

Financing mechanisms – priorities

Priority needs to be given to (preventative) routine road maintenance, which neither municipalities currently does

Saving of 8,850 CNY per kilometre per year! Need to develop incentives for prioritising routine maintenance

Clear distinction of different maintenance types and their funding Funding based on use of regular vehicle maintenance fee Allocation based on length of road network Taking into account creation of a fuel tax in the future

Alternative Construction costs/km

Periodic (medium) maintenance costs/km

Routine maintenance costs/km

Lifespan (years)

Overall costs/km

Yearly costs/km

Without routine maintenance

500,000

7,000 - 10 570,000 57,000

With routine

maintenance4,000 2,475 12 577,700 48,142

Next steps

Decisions to be taken during this mission Focus on paved county roads Include additional maintenance activities (which?) Provide additional tools and in larger quantities Develop improved technical training Elaborate system of performance indicators and ensure application Continue with inspection by CCB Organisation of workers into teams Application of the legal organisational modality of Partnership Enterprises Develop guidelines for calling and selecting candidates (technical/social criteria) Develop a managerial training Apply average productivity rate of 4 km/worker Use salary of 30 CNY/day Apply standard cost of 2,475 CNY/km Develop road categories and differentiated productivity rates / standard costs Limit road sections to 20 km to allow for single-source procurement Apply waiver for guarantees and use simple contract documents Prioritise routine maintenance over other maintenance types Ensure sufficient funding (for pilots)

Preparation for next mission

GCB, CCB and consultants Selection of county for pilots Selection of 2 road sections (paved county roads) Selection of CCB and CBAB staff to assist in the pilots Ensure funding for pilots (one year) Select villages to participate in pilots and inform them of process

Consultants Prepare general guidelines on microenterprise-based routine road

maintenance Prepare technical training manual (road elements, maintenance

activities and planning, management of resources) Prepare entrepreneurial manual (call and selection of candidates,

enterprise formation, managerial training)