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HFMSP Management Systems Promoting Effective Water Management Policies and Practices

ADB Staff Consultancy, October 2005 i 8/09/2006

Hunan Flood Management Sector Project

ADB TA 6219(REG):

Promoting Effective Water ManagementPolicies and Practices

(Phase 4)

A Pi lot Demonst rat ion Act ivit y

October 2005

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the AsianDevelopment Bank (ADB), or its Board of Directors, or the governments they represent. ADB does not guarantee the accuracyof the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may notnecessarily be consistent with ADB official terms.




ADB Staff Consultancy, October 2005 ii 8/09/2006

Hunan Flood Management Sector Project ADB TA – 6219(REG)

Promot ing Effective Water Management Polices and Practices(Phase 4)

Table of Contents

1. Introducti on -1.1 Summary Project Overview

1.1.1 HFMSP Situation1.1.2 Rationale1.1.3 Goals and Objectives1.1.4 Scope1.1.5 Summary Implementation Arrangements1.1.6 Project Management

1.2 Project Organisation

1.3 Project Management with Annual Plans2. Project Scope - Components and Activ ities

2.1 Projects, Subprojects and Key Components2.1.1 Flood Management2.1.2 Civil Works2.1.3 Project Management

2.2 Activities and Timeline2.2.1 Preparation2.2.2 Procurement2.2.3 Implementation2.2.4 Safeguards2.2.5 Project Timeline – Phased Implementation

3. Project Stakeholders – Organisation, Roles and Responsibilit ies3.1 Project Organisation – Provincial and Local3.2 Rules and Regulations for Implementation

3.2.1 Chinese National, Provincial and Local Laws, Regulations and Standards3.2.2 ADB Guidelines – Policies and Procedures3.2.3 PRC and ADB Systems Compatibility and Integration

3.3 Government – 3 levels3.3.1 Central Government3.3.2 Provincial Government3.3.3 Local Government

3.4 Government Line Agencies3.4.1 Technical3.4.2 Adminsitrative3.4.3 Regulatory

3.5 Service Providers3.5.1 Contractors3.5.2 Consultants – International and Domestic3.5.3 Technical Institutes

3.6 Benefits of Adopting a PPMS

4. Management Systems4.1 Annual Planning and Preparation4.2 Project Planning – use of a proprietary system tool4.3 Contracts Supervision4.4 Progress Measurement and Quality Control4.5 Financial Management




ADB Staff Consultancy, October 2005 iii 8/09/2006

4.6 Finance Sources4.6.1 Government4.6.2 ADB4.6.3 Beneficiaries

4.7 Safeguards Compliance, Monitoring and Management4.7.1 Environment4.7.2 Resettlement

4.8 Risk Assessment and Management5. Monitoring and Reporting Systems

5.1 Performance Indicators5.2 Progress and Quality Monitoring and Evaluation5.3 Monitoring Systems and Adherence to Safeguards5.4 Communications and Reporting Requirements5.5 Reporting Procedures5.6 Project Reporting

5.6.1 Subproject5.6.2 Project

6. Instituti onal Strengthening and Capacity Building6.1 Institutional Needs Assessment

6.2 Institutional Linkages6.3 Institutional Strengthening and Training6.3.1 LPMO Training Needs6.3.2 PPMO Training Needs

6.4 Management Performance Indicators

7. Recommendations and Next Steps7.1 Steps to be taken by PPMO7.2 Steps to be taken by LPMOs7.3 Steps to be taken by ADB7.4 Conclusions and Recommendations




ADB Staff Consultancy, October 2005 iv 8/09/2006

List of Tables

Table 1: Proposed City Flood Control Subprojects and their Key FeaturesTable 2: Summary Data Sheet on 35 SubprojectsTable 3: Summary of Responsibility for Subproject ImplementationTable 4: Verifiable Indicators to Assess Beneficial Change as a result of Project MeasuresTable 5: Monitoring System Matrix for Civil Works

Table 6: LPMO Training NeedsTable 7: PPMO Training Needs

List of Figures

Figure 1: Map of Hunan Province showing location of 35 proposed Subprojects in 4 main River BasinsFigure 2: Organisation Chart – Government, Leading Groups and PMOsFigure 3: Financing Arrangement Chart for HFMSPFigure 4: Repayments Arrangement Chart for HFMSP

Appendix

1 Project Design and Monitoring Framework2 HFMSP PPMO’s Management System for Project Implementation3 Workshop on PPMS4 Provincial Water Resources Department Annual Plan (example forms)5 Chinese Laws, Regulations and Rules

A. Activity Implementation Gantt ChartsB. Procedural and Financial Flow ChartsC. Institutional and Stakeholder Organisation ChartsD. Reporting Formats and ProformasE. Environment Safeguards Monitoring and ManagementF. Resettlement Monitoring and Management




ADB Staff Consultancy, October 2005 v 8/09/2006

List of Acronyms and Abbreviations

ADB Asian Development Bank ADTA Advisory Technical Assistance AP Annual PlanBER Bid Evaluation ReportCEMP Consolidated Environmental Management Plan

CIEE Consolidated Initial Environmental ExaminationCSE Construction Supervision EngineerCW Civil WorksDI Design InstituteEA Executing AgencyEAF Environmental Assessment FrameworkEIA Environmental Impact AssessmentEIR Environment Impact ReportEMDF Ethnic Minority Development FrameworkEMDP Ethnic Minority Development PlanEMP Environmental Management PlanEPB Environmental Protection BureauESD Environmental and Social DivisionESE Environmental Supervision Engineer

ESIHP Environmental Science Institute of Hunan ProvinceFSR Feasibility Study ReportHEPB Hunan Environmental Protection BureauHFCP Hunan Flood Control ProjectHFMP Hunan Flood Management ProjectHFMSP Hunan Flood Management Sector Project (previously HFCP and HFMP)HHB Hunan Hydrology BureauHHPDI Hunan Hydro and Power Design InstituteHnPG Hunan Provincial Government (sometimes HPG)IA Implementing AgencyICB International Competitive BiddingIEE Initial Environmental ExaminationIP Implementation PlanIS International ShoppingJBIC Japanese Bank for International CooperationLCB Local Competitive BiddingLDRC Local Development and Reform Commission (where local may mean Muncipal and/or

County Level Government)LEPB Local Environmental Protection BureauLESD Local Environmental and Social DivisionLFB Local Finance BureauLLD Local Land DepartmentLPLG Local Project Leading GroupLPMO Local Project Management OfficeLRMO Local Resettlement Management OfficeLS Local ShoppingLWRB Local Water Resource BureauMOF Ministry of FinanceMOU Memorandum of UnderstandingMS Microsoft (as in relation to Microsoft Project planning and management software)MWR Ministry of Water ResourcesNDRC National Development and Reform CommissionPAI ADB’s Project Administration Instruction (available on the Web)PAM Project Administration MemorandumPDMF Project Design and Monitoring FrameworkPDRC Provincial Development and Reform CommissionPFD Provincial Finance DepartmentPIU Project Implementation UnitPLD Provincial Land DepartmentPMF Project Management Framework




ADB Staff Consultancy, October 2005 vi 8/09/2006

PMR Project Monitoring and ReportingPPLG Provincial Project Leading GroupPPMO Provincial Project Management OfficePPMS Project Performance and Monitoring SystemPPR Project Performance ReportPPTA Project Preparatory Technical AssistancePRC People’s Republic of China

PRMO Provincial Resettlement Management OfficePWRD Provincial Water Resources Department (sometimes HWRD)QPR Quarterly Progress ReportRCMO River Course Management OfficeRF Resettlement FrameworkRP Resettlement OfficeRRP Report and Recommendation to the President (of ADB)SEPA State Environmental Protection AdministrationSIEE Summary Initial Environmental ExaminationSOE State Owned EnterpriseSPIA Social and Poverty Impact AssessmentSS Suspended SolidsTA Technical AssistanceTOR Terms of ReferenceUCMC Urban Construction Management CompanyWB World Bank




ADB Staff Consultancy, October 2005 vii 8/09/2006

Figure 1: Map of Hunan Provinc e showing l ocation of 35 proposed Subprojects in 4Main River Basins




ADB Staff Consultancy, October 2005 1 8/09/2006

Hunan Flood Management Sector Project

Promoting Effective Water Management Policies and Practices A Pilot Demonstration Activity

1. Introduction

1.1 Summary Project Overview

In September 2004, the Asian Development Bank (ADB) provided technical assistance (TA) to help theHunan Provincial Government (HnPG) formulate the Hunan Flood Management Sector Project(HFMSP). 1 A Loan Fact-Finding Mission visited the PRC in June 2005 to discuss the Project with thecentral, provincial, and municipal governments. Findings of the TA, Government feasibility studies, ADBmissions, and discussions with Government officials, other aid agencies, and stakeholders concluded thata need existed to promote more effective water management policies and practices, in line with PRC andHunan Government polices and strategy for integrated water resources and flood management. It wasconcluded that a substantive contributory step that could be undertaken through implementation ofHFMSP would be to develop and follow an integrated management approach that primarily follows thePRC’s and HnPG’s project implementation management system but which incorporates the specific ADBloan management and monitoring requirements.

1.1.1 HFMSP Situation.Many cities and industrial centers in PRC are adjacent to the major rivers of the country resulting in a highproportion of the country's economic activity being at risk from periodic floods. Major floods and poordrainage (water-logging) are the most frequent and severe form of natural hazard in PRC, and particularlyin Hunan Province, irrespective of whether these floods are localized in the four main provincial rivers andtheir tributaries, or as a result of cumulative effects on the Dongting Lake area. The 4 main rivers - Lishui,Xiangjiang, Yuanjiang, and Zishui - drain a total area of 179,000 square kilometers (km 2) (84% of theprovincial area), and are home to 56.4 million people (84% of the provincial population). The security ofHunan’s economic growth and development is dependent upon improved management and control offloods in the middle and upper reaches of these mountainous river basins. Following substantive study,review and policy adjustments for flood management in PRC, HnPG's flood management efforts withinthe 11th Five-Year Plan will now combine flood control engineering measures with non-structural floodmanagement (forecasting systems and emergency response systems for the flood prone municipal andcounty-level cities in the mountainous upper and middle reaches of the four river basins). Combiningstrategic structural measures for short term needs with non-structural measures for medium to longerterm goals is now deemed by the concerned governments to be a more cost effective approach toproviding public and economic security against flood hazards, and a better overall approach to effectivepublic investment for flood management.

1.1.2 Rationale.There is an urgent need to reduce public and investor concern about flood hazards in Hunan, by adoptingimproved flood control and management measures to support sustainable economic growth anddevelopment in the flood prone areas. Hunan’s urban and industrial base is developing rapidly, but itsfuture long term success will depend on security being provided against natural hazard and relateddetrimental economic impacts. Many cities are expanding quickly, due to the migration of rural people asthey search for work and opportunities to help ease them out of poverty. These cities are generallyadjacent to the four main rivers or their major tributaries, and measures are needed to protect these ‘at-risk’ communities from floods. Continual development in the river catchments is likely to increase theincidence of flooding and the costs of personal loss and overall recurrent economic damage. Therefore,HnPG’s investment priority includes providing structural and non-structural flood protection for the keygrowth municipal and county cities in the mountainous river basins.

1 ADB. 2004. Technical Assistance to the People’s Republic of China for Preparing the Hunan Flood Management Project. Manila





1.1.3 Goal and Objectives.The national Government’s long-term development goal is to establish and maintain a viable andsustainable society centred on the regional and county cities through steady economic growth andimprovement of people’s living standards. To support this strategy, ADB’s operations focus on fourstrategic pillars 2. The Project promotes: i) sustainable economic growth by reducing investor concernsover flooding and thus promoting industrial development and employment; ii) social inclusiveness througha focus on the middle and upper reaches of Hunan's mountain rivers; iii) protection of the environment

through the use of integrated flood management; and iv) will provide assistance to HnPG to implementpolicies and strategies for integrated flood management in Hunan Province by supporting HnPG to buildlocal government capacity for the implementation of flood control and management projects, andstrengthen their capacity to manage and monitor essential resettlement and environmental safeguards.

The Project will be implemented under a sector approach, with representative subprojects. Eight havebeen selected from 35 proposed subprojects (as shown in Figure 1 and Table 1 ) for which draft FSRshad been prepared by Hunan Hydro and Power Design Institute (HHPDI). These were reviewed duringproject preparation, when key technical, financial, economic, social safeguards and environmentalaspects were assessed. Upgraded FSRs for eight model representative subprojects, termed coresubprojects, have been prepared. They were selected on the basis of size of investment, geographicalrepresentation of the watersheds in the province, severity of environmental and resettlement impact,severity and types of flooding, types of proposed flood protection measures, impact on indigenouspeoples, and poverty impact. Details on these eight core subprojects are presented in Supplementary

Appendix C to the PPTA Final Report3

. The remaining 27 subproject FSRs will be further developed byHHPDI or their associate institutes, based on the eight model core subprojects during the early stages ofHFMSP loan implementation.

The impact of the Project will be to enhance sustainable and inclusive economic growth in flood-proneareas of Hunan Province. Priority municipal and country growth centers in the mountain river basins willbe targeted to reduce investor concerns over floods, thereby facilitating increased investment in industrialand commercial enterprises that drive urban and rural growth in the area. The outcome of the Project willbe to reduce flood risks on a sustainable basis in priority municipality and county cities along the middleand upper reaches of Hunan Province's four main river basins. The Project will construct and buildcapacity in the management of a range of structural and non-structural flood protection measures andflood warning systems. Lowered flood risks are expected to reduce private property losses in the Projectarea, including residences, businesses, and factories, increase investment in employment generatingindustrial and commercial growth; reduce loss of life, and reduce government expenditure on flood repairsand compensation..

1.1.4 Scope.The project consists of three components to: i) strengthen non-structural flood management systems forflood monitoring, forecasting and warning capability within the river basin, by upgrading the local cityfacilities; ii) provide structural flood protection measures (civil works) to protect city urban and ruralcommunities against infrequent and unpredictable floods (at up to 35 locations), with associatedresettlement and environmental safeguards management; and iii) strengthen project management andbuild institutional capacity for future structural interventions and flood management activities. The scaleand cost of the proposed civil works for each city varies, as will the overall implementation period for theplanned works, flood management facilities, and institutional strengthening to be completed. The broadscope of the works is summarised in Table 2 and further detail on the scope of the project components ispresented in Section 2.

2 Four pillars of CSPU (2006-2008) include: (i) promoting equitable and inclusive growth, (ii) makingmarkets work better, (iii) improving the environment, and (iv) promoting regional cooperation.3 Hunan Flood Management Sector Project, Final Report, Sogreah Consultants, July 2005.





Table 1: Proposed City Flood Control Subprojects and their Key Features

No Name City Type RiverBasin

EarthDikes(Km)

FloodwallDikes(Km)

Culverts(No.)

PumpingStations

(No.) 8 Core Subprojects to s tart in Year 0 (2005)

1 Yongzhou M X 21.50 23.37 16 62 Wugang C Z 5.47 10.76 14 43 Loudi M X 30.91 5.89 19 24 Leiyang C X 11.29 1.05 5 05 Chengxi C Y 0.00 0.73 3 16 Huaihua M Y 13.39 9.64 10 47 Xinhua C Z 12.25 0.00 4 28 Sangzhi C L 0.00 7.29 7 28 Core Subproject s - Sub Totals 94.81 58.73 78 21

Proposed 27 Non-Core Subprojects^ to start in Years 1 to 4 (2006 to 2009)9 Hengyang ** M X 39.21 18.30 88 3110 Chenzhou M X 23.30 23.80 39 0

11 Shaoyong M Z 1.60 7.40 9 812 Jishou M Y 0.00 22.40 27 013 Zhuzhou ** C X 8.66 0.00 18 714 Youxian C X 10.90 1.40 15 415 Hengyang C X 14.60 0.34 6 416 Longhui C Z 4.50 3.60 5 317 Jiangyong C X 4.43 2.61 4 018 Xintian C X 11.70 7.52 3 319 Ningyuan C X 4.80 8.30 4 020 Zhongfang C Y 5.62 0.50 3 221 Xupu C Y 5.71 2.57 5 222 Lianyuan C X 4.07 13.10 17 023 Shuangfeng C X 4.40 5.41 12 224 Cili C L 11.99 5.70 5 125 Zhuzhou M X 24.50 8.50 7 1426 Xiangtan M X 12.90 0.00 5 227 Qiyang C X 9.70 5.40 10 328 Lilling C X 3.49 7.90 5 429 Shimen C L 12.95 0.00 7 230 Shaodong C Z 11.10 0.54 7 431 Jianghua C X 2.87 0.74 3 332 Xinhuang C Y 0.00 6.35 4 333 Lengshuijiang C Z 5.40 1.69 9 334 Fenghuang C Y 0.00 5.15 0 035 Baojing C Y 1.30 3.65 6 027 Non-Core Subproject Sub-Totals 239.70 162.87 323 10535 Subproject Totals 334.50 221.61 401 126

Rivers (Subprojects) – Xiangjiang (18), Zijiang (7), Yuanjiang (8), and Lishui (3)City Type (Subprojects) – Municipal (9) or County (27)Note: For flood management, all the cities depend on non-structural measures (data acquisition, flood forecasting, flood warning andflood response procedures), and therefore varying activities will be undertaken at each city to strengthen these non-structural activities,coordinated by the Provincial Water Resource Department.^ Anhua City subproject has been cancelled (July 2005).** Hengyang City’s Yanfeng Circle and Zhuzhou City’s Qingxiangtian Circle are also proposed for cancellation but have not beendeleted from the above Table (July 2005).





1.1.5 Summary Implementation ArrangementsThe overall implementation of the Project will be handled by Hunan Provincial Government’s (HnPG – theExecuting Agency (EA)) Project Management Office (PPMO), whose office has been established withinthe Provincial Water Resources Department (PWRD). PPMO has been overseeing the preparation of theproject since late 2003, and has been assisted by an ADB PPTA – 4324 PRC: Hunan Flood ManagementProject 4. This preparatory phase included the formulation of a sector development strategy that is alignedto the Hunan Provincial 5 year plan, and the implementation of the project, and each subproject, will be

aligned with the normal annual plan based planning and financing process used in China.Subprojects under the Hunan Flood Management Sector Project (HFMSP) will be implemented primarilyby the municipal and county governments in the Xiangjiang, Zishui, Yuanjiang and Lishui river basins.Part of the proposed development work will be financed from an ADB Loan ($200 million), whilst theremainder will be financed through counterpart funding from the participating local governments ($295million) and the provincial government ($2.5 million). The three primary stakeholders for the project arethe Executing Agency – Hunan Provincial Government; the participating local governments who eachhave a subproject (35 No. – see Figure 1 for location of these subprojects), and the Asian DevelopmentBank (ADB) (see Figure 2 – Project Organisation – Governments, Leading Groups and PMOs, whichillustrates the overall arrangements for the project implementation).

Whilst preparing the model core subprojects and the overall Project, it became apparent that themanagement responsibility for completing the preparation phase for the remaining 27 subprojects, and for

subsequently guiding the implementation of the project through to completion, would place a heavyburden on the participating organizations – notably the Provincial Project Management Office (PPMO)and the individual subproject Local Project Management Offices (LPMOs).

1.1.6 Project ManagementFollowing the PPTA Draft Final Report Review Meeting (April 2005), an additional TA program 5 wasagreed to help formulate a strengthened Project Management Framework (PMF), within an overall ProjectPerformance and Management System (PPMS). Though the PPMS is primarily an ADB developedmanagement approach, it was viewed as being acceptable for HFMSP on the basis that it fully links theproject implementation to the Project Design and Monitoring Framework (PDMF), as agreed between theEA and ADB during Loan Fact Finding (June 2005). However, a primary goal in developing the PPMS forHFMSP has been to ensure not only compliance to ADB safeguards and recommended projectmanagement practice, but to ensure also that the PPMS is adopted as a supplementary managementapproach (and tool) to the existing Chinese Project Management System, which uses the well establishedannual plan (AP) based approach. Under the AP approach, specific development activities and outputsare defined, costed and agreed, in relation to the available funding (budgetary finance) available tosupport the activities in the specific plan year (a calendar year). Thus, for HFMSP, assumingcommencement in 2006, elements of the overall project (stages of several subprojects) would bescheduled and budgeted within 6 APs, through to end 2011.

It is assumed that HFMSP works as indicated in Appendix A will be progressively scheduled withinsuccessive annual plans. The Chinese project implementation is linked to the availability of finance toundertake the work. It is generally understood that where foreign loan funds are provided, the specificloan project activities will be accorded priority for implementation, and the AP will ensure the provision oflocal counterpart funding to ensure the planned work can be implemented. This report outlines furtherdevelopment of an overall PPMS under TA-6219(REG), building on the work completed under the earlierTA’s. It is based on three parts: 1) the Project Design and Monitoring Framework (PDMF) from the Reportand Recommendation to the President (RRP) for the HFMSP; 2) the PMF, which uses an integratedapproach to management systems based on both the Chinese Annual Plan and ADB’s PPMS; and 3) aProject Monitoring and Reporting System (PMR); to support the efficient implementation of the HFMSP.

4 ADB TA-4324(PRC): Hunan Flood Control Project (Fact finding, February 2004; Tendering June 2004;Contract award to Sogreah Consultants, September 2004; implementation from September 2004 to July 2005 (FinalReport); Loan Fact Finding June 2005; project renamed Hunan Flood Management Sector Project (HFMSP))5 ADB Staff Consultancy TA-4324(PRC): Hunan Flood Control Project (Development of a Project ManagementFramework – PMF)





Finance Management Actions

NationalRevenue

MOF NDRC MWR

National River Basins & Projects

ProvincialRevenue

PFD PDRC PWRD

Equipment Suppliers & Consultants Key Project Office

MuncipalRevenue

MFB MDRC MWRB

Civil Works Contractors RCMO

CountyRevenue

CFB CDRC CWRB

Civil Works Contractors RCMO

National ProvincialMOF Ministry of Finance PFD Provincial Finance Department

NDRC National Development and Refrom Commission PDRC Provincial Development and Reform CommissionMWR Ministry of Water Resources PWRD Provincial Water Resources Department

International Municipal / County ADB Asian Development Bank MFD / CFB Muncipal / County Finance Bureau

MFRC / CDRC M / C Development and Reform CommissionLegend MWRB / CWRB M / C Water Resources Bureau

Loan Funds RCMO River Course Management OfficeGeneral Revenue Municipal and County sometimes refered to as Local (Lxxx)Line Agency

Advisory/Coordination

Figure 2: Project Organisation - Governments , Leading Groups and PMO's

Government of the People's Republic of China (GPRC)

State CouncilTechnical Guidance,

National Standards andRegulations

ADB

Hunan Provincial Government (HPG)

Project Leading Group (PLG)Project Selection, Design,

Approval, TechnicalGuidance, Provincial

Standards and RegulationsProvincial Project Management Office (PPMO)

Municipal Local Government (MLG)

Local Project Leading Group (LPLG)Local Supervision, Quality

Control, Approval andCommissioningLocal Project Management Office (LPMO)

County Lo cal Government (CLG)

Local Project Leading Group (LPLG)Local Supervision, Quality

Control, Approval andCommissioningLocal Project Management Offfice (LPMO)

Further information on the organisational structure is presented in Appendix C .





Within the PPMS:1. The PDMF ( Appendix 1 ) is the basic framework that defines the scope, purpose and expected

results to be achieved with the project [as originally presented in the PPTA Final Report(Appendix 2) and finalised in ADB’s RRP (Appendix 1)].

2. The PMF is based on the typical annual plan format adopted for sector development by theChinese authorities. It includes for specific subproject and project activities that are to be

implemented through the life of the overall project. Particular activities are defined in the currentand subsequent annual work programs, with budgetary allocations for progressive flood sectordevelopment and improvement interventions (structural and non-structural measures).

3. The PMR defines the general requirements and procedures for monitoring the development andimprovement activities, with particular attention given to ensuring safeguards compliance as wellas overall timely and effective implementation of the project in accordance with plans, or wherenecessary, revised plans that have been discussed, prepared and agreed. The overallimplementation and monitoring activities are documented in the form of structured quarterlyreporting (see Appendix D ). Specific theme reports (environment ( Appendix E ), resettlement( Appendix F ), and others as needed (e.g. ethnic minority development) are prepared at thesubproject level, and consolidated into an overall subproject quarterly progress report (QPR) forsubmission to the PPMO. The PPMO then consolidates all active subproject QPRs into oneoverall consolidated project QPR for issue to ADB and it’s own domestic agencies (as may berequired). Specific monitoring reports will be prepared by both internal and external monitoringagencies / consultants, as per an agreed schedule for reporting at relevant levels, and key resultsfrom these specialist reports would be incorporated into the regular QPRs.

To facilitate improved management, an integrated project management system approach is beingpromoted that incorporates all the necessary ADB project management and monitoring requirementswithin the basic Chinese annual plan based project development and monitoring procedures. Theobjective, in so far as this may be possible within established constraints, is to streamline projectmanagement, monitoring and reporting systems, to mitigate unnecessary duplication, additional costs,and the potential for delays to implementation of the sector project. A streamlined management approachshould ensure that overall project implementation proceeds as per successive annual plans, and inaccordance with the Loan and Project Agreements. Should the integrated management approach besuccessful, then its replication for other sector projects in other provinces across China should be viable.

A key concern for any developed PPMS is that it ensures all due policy and procedural safeguards areadopted and applied correctly. Regular monitoring, with structured quarterly reporting and half yearlytechnical, financial, management and administrative reviews, will ensure that all necessary legal,regulatory and procedural steps are fulfilled. Proposed arrangements are included as per the PMR andthe associated specialist compliance monitoring requirements for resettlement and environment( Appendix E and F )

1.2 Project Organisation

The Hunan Provincial Government (HnPG) has established a Provincial Project Leading Group (PPLG) toguide and oversee the preparation and implementation of the HFMSP (as shown in the flow chartspresented in Appendix B ). Headed by a Vice Governor, the PPLG includes members from the keyproject stakeholder provincial departments – the Water Resources Department (PWRD – lead agency),the Development and Reform Commission (PDRC) and the Financial Department (PFD). A similarstructure has been adopted by the participating subproject municipal and county level governments, whohave a Local Project Leading Group (LPLG), with members from the local water resources, developmentand reform, and finance bureaus.

The PPLG has established a Provincial Project Management Office (PPMO), located within PWRD, tomanage the overall HFMSP. This includes organising and supervising all the initial project preparatorywork - feasibility studies (FSRs), resettlement plans (RPs), environmental assessments and managementplans (IEEs and EMPs), social and poverty assessments (SPIAs), and where appropriate, ethnic minoritydevelopment plans (EMDPs) for the 35 subprojects. The PPMO has recruited assistance for thispreparatory work from Hunan Hydro and Power Design Institute (HHPDI) and sister institutions at theparticipating municipalities to undertake site investigations and prepare all related reports. These reports





were completed in October 2004, and they are the primary source of detailed information on HFMSP andits subprojects. Eight feasibility studies were selected as the basis for developing Core Subprojects (withrelated RP, SPIA and IEE) as part of the ADB Project Preparatory Technical Assistance (PPTA), andthese core subproject reports were progressively submitted to ADB between December 2004 and March2005. Final reviews were completed in June 2005, and the Project Final Report was completed in July2005 following the Loan Fact Finding Mission (June 2005).

The main works of the project will be implemented at each subproject municipal and/or countygovernment level, with overall project coordination arranged at the provincial government level. The mainmanagement structure will involve one provincial project management office (PPMO) overseeing thedirect activities of 35 subproject local project management offices (LPMOs). Each of these will besupported by their respective government level financial, water resources and development and reformcommittee line agencies. Subproject and project steering committees, made up of representatives fromthese line agencies at the respective government locations/levels have been established to guide thesubproject/project implementation and ensure adherence to approved procedures and regulations. Fromthe financial and technical perspective, the project developments will also be monitored by the centralgovernment agencies and ADB, with ADB implementing periodic review missions to confirm generalprogress and compliance with required ADB guidelines, as per the loan agreement covenants. The localgovernment LPMOs will be charged to make sure the specific subproject proceeds as planned and fulfillsthe expected outcomes for the particular municipality and or county government and its flood affectedcitizens. The PPMO will be responsible to ensure expectations of the provincial and national governmentsand ADB are fulfilled, most notably in monitoring adherence to resettlement and environmental policy,regulations and guidelines, and also in ensuring planned objectives to mitigate poverty and improve levelsof flood protection for disadvantaged communities are achieved as planned .

The project will be implemented in accordance with a sector modality. This will provide significantly moreflexibility for the general planning and implementation of the subprojects within the overall projectframework. Lessons learnt during the preparation and initial implementation stages of the early coresubprojects will be invaluable as a basis for improving the preparatory process and quality control for thelater approval and implementation of other non-core subprojects. Additionally, the application of relevantprocedures for compliance with both Chinese domestic and ADB requirements can be refined andsystematized, so that any initial problems arising during the earlier preparatory activities can be avoided.The gradual improvement of the processes for subprojects preparation and implementation will beenhanced by the establishment and use of a Project Management Framework (PMF).

The PMF outlined hereunder defines all the relevant and necessary steps to be taken to get eachsubproject prepared, approved and implemented, with a clear outline of the required supervisory andmonitoring procedures. The PMF is the second step, following establishment of the PDMF, for developingan effective management system that is structured to facilitate sector project implementation, and providethe means to strengthen project management capability of the participating agencies. The system willalso include a structured monitoring and reporting system – a PMR – so that general performance can beassessed and compliance monitored, as per the established and agreed domestic and ADB safeguardspolicies and requirements. It is the combination of the PDMF, PMF and PMR that should ensure effectiveand timely project implementation by the various organizational parties so that the project will fulfill policyobjectives, legal requirements and safeguards compliance in accordance with sectoral developmentplans.

1.3 Project Management wi th Annual Plans

The overall project objective is to raise the standard of flood management and protection for the selectedflood affected cities, and their urban and rural residents. A key objective is to help the flood affectedpeople to lift themselves out of poverty – a situation that results and persists because of the uncertaintyfor floods to occur and create adverse conditions that influence their lives, work and business. Followingthe provision of improved flood protection, the people will have a better chance to stabilize their lives andbuild their assets. The overall project objective will be achieved through a combination of improved floodmanagement, strengthened infrastructure to mitigate adverse flood impacts, and strengthenedmanagement capability for flood warning, flood control and flood response.

The overall Project will run for up to 6 years (based on current overall planning) but the traditionalChinese system for project implementation is based on budgeted annual plans. The general project





management approach will follow an annual plan cycle, by preparing annual plans within the overallsectoral water resources and flood management plans for the province. These annual plans areformulated based on submitted requests from the local governments – from County, through Municipalityto Provincial Government – and are based on the more general current 5 year plans for sectoraldevelopment priorities. For the most part, the 5 year plans define quite general ‘scope of works’, and thecrucial aspect of these plans is to set the broad targets for each 5year period, and develop an indicativebudget requirement for all the proposed projects to be implemented. Inclusion of projects in a 5 year plan

does not necessarily signify that they will be implemented, but it does confirm broad provincial, municipaland county development priorities.

The HFMSP is structured to fit within China’s typical annual plan aligned projects development approach.Therefore, for effective project management, each specific project activity must be correctly identified,quantified and costed for inclusion in each particular years annual plan – especially because such annualplans are largely finance based, and counterpart budgets must be assigned in order for each years workto be implemented and completed as planned. Annual plans are compiled from the bottom (local needs)to the top (province and/or national), with refinements as the compilation moves to each successive levelin relation to available budget and priorities. The local government defines its specific needs, but ifadditional funding is required (e.g. municipal to county, provincial to municipal, national to provincial, orforeign loans/investment via national government) to supplement the investment for a given year, thensupport must be sought from (between competing priorities) municipal, provincial and even nationallevels. Only if local government is wholly self sufficient can any constraint from annual planningprioritization be eased – though even local government will have competing priorities as defined in theirown 5 year plan, and the subsidiary annual plans within that 5 year plan. Project managers will have toreview and finalize their plans each year in a timely and effective way – to be sure that finance isallocated for planned activities so they can be implemented without resource and/or financial hindrance.Due allowance must be made also for ‘natural hazard’ related risks (e.g. flood, drought, etc.)

For annual plan development, the Counties will specify their priority requirements, with more detailedquantification of proposed works, and an associated cost estimate with expected sources of finance. Thesubmissions from the Counties will be assessed at the Municipality, and in conjunction with theMunicipalities own priorities, a consolidated request for project investment in the forthcoming year will besubmitted by the Municipality to the Provincial Government if additional financial support is required. TheProvincial Government will then assess the submissions from the Municipal Governments and prepare anoverall provincial priority investment program for the coming year. This overall process commences inOctober and is generally finalized by January of the plan year.

The provincial government will also examine the overall requirements, options and priorities, both forestablished and on-going plans, as well as for any proposed new developments. A consolidated overallannual plan will be prepared, and considered against the aggregated financing that should be available. Ifthere is a shortfall in provincial and/or local financing available to do the planned priority developments,then the concerned Department, such as PWRD, will examine the need and opportunities, based ondefined national and provincial priorities, and prepare a request to obtain additional national level financialsupport, and the utilization of any approved foreign investment funds (e.g. WB, ADB, EU and otherbilateral support) over the plan year.

Given that there is a need for proportionate counterpart investment, the actual scope of work to becompleted under any given annual plan may have to be rationalized in accordance with availablecounterpart funding. Thus, though in principle a project has been prepared for implementation over agiven period, and projects supported by additional national and foreign funding will have priority, there isno certainty each year that all of the proposed works can be financed and therefore implemented. Theannual planning process is quite complex, and it is typical that not all proposed activities will be includedin that years annual plan, nor that all works (projects) approved in the annual plan will actually becompleted in the year. However, where external foreign funding is allocated, and therefore dedicated toparticular project developments, the likelihood of the necessary funding for all planned works to be donein the year is substantially higher.

Though limitations in funding can be a substantial constraint to projects progressing in accordance withthe initial plans, by far the greater risk to effective progress comes through the overall process – datagathering, preparation, reporting, reviews, approvals and general decision making. This is the more directprocedural management activities – planning, organizing, leading, monitoring and controlling – and with





feedback, re-planning and adjusting as necessary to try and attain project goals to an agreed timeframeand budget. The PMF is intended to better define all the necessary steps and responsibilities to befulfilled by the PPMO and LPMOs, providing them with a reference platform from which the necessaryproject management systems can be strengthened and applied. Without a framework, it is probable thatsome significant item or procedural step will be overlooked during the planning and organizing stages,leading to other critical activities being delayed, and the overall project program being compromised.

Therefore, the PMF should define what has to be done, when, by who, and how. It will be incumbent uponall involved that the PPMO and LPMOs are then given all the necessary support and resources so thatthey can mobilize and lead those resources to complete the project as planned. Monitoring, withapplication of the PMR system, will enable any variance from plan and expected actions to be identified.Reporting will ensure all concerned stakeholders are fully informed of the issues, and viarecommendations, should facilitate the intervention of the stakeholders to review the issues, check projectperformance against the plan, and initiate any required corrective action to mitigate any negative impactsto project activities and outputs.

Overall, the proposed management and monitoring system, built around the existing structure andstrengths of the Chinese national project implementation and management system, should strengthen theability to deliver results – stated outputs and achievements as indicated in the PDMF. Simultaneously, byadopting some of the value added elements of the ADB PPMS approach within the Chinese projectmanagement system(s), concerned institutions, agencies and government departments will benefit fromthe exposure to new management techniques and tools, and will collectively gain in confidence and abilityto more effectively prepare and implement similar foreign and domestically funded projects in the future.





2 Project Scope - Components and Activities

2.1 Projects, Subprojects and Key Components

HFMSP is the overall investment project, related to the development of flood management and protectionmeasures for up to 35 flood prone city 6 sites in Hunan province, distributed across the upper and middlereaches of the four main river basins (see map – Figure 1 ). The Project is managed at the provincial level

by the PPMO. The management will be based on annual plans prepared by the relevant levelgovernments (see Appendix 4 ), consolidated to provincial level – for the project through PPMO, and forthe sector through PWRD. Investment finance will come from a combination of local government revenuesupplemented with a loan from the Asian Development Bank (ADB) for eligible component items. Theprovincial government will provide a limited contribution for PPMO operations.

Each of the 35 city sites is defined as a subproject, and these vary in scale and overall scope of work, asshown in Tables 1 and 2 . Each subproject has one or more specified flood protection areas (circles), andthe protection works will be implemented over two or more dry periods between flood seasons, generallywith one circle being completed each dry period (approximately September to May). The implementationof the subproject will be managed and supervised by the LPMO, whilst the actual implementation of thephysical works will be managed by the appointed River Course Management Office (RCMO) or the UrbanConstruction Management Company (UCMC) as appropriate, under the technical supervision of theLWRB and LPMO. The LPMOs will work with the PPMO to prepare relevant Contracts, but the civil works

contracts will be signed for the LPMO by the ‘legal person’ – RCMO or UCMC.

The Project comprises three main development components, supported by technical assistance tostrengthen integrated flood management. The components are:

1. Flood Management – non-structural warning and response systems2. City and County Flood Control Civil Works - structural measures to upgrade or develop new

dikes and associated structures, with attendant resettlement, land acquisition andenvironmental impacts.

3. Capacity Building and Project Management – strengthen the provincial and local governmentflood management capacity and institutions.

2.1.1 Flood ManagementEach subproject will implement non-structural measures, involving the installation of new data acquisition

equipment to strengthen their ability to monitor, estimate and respond to flood events, and to warn andmobilize the city residents to minimize any detrimental flood impacts. The subproject LPMOs will beassisted by the Hunan Hydrology Bureau (HHB) for the establishment, training and initial operations ofthe equipment, and subsequent data from the equipment will be available to the HHB for their overall riverbasin and provincial wide flood forecasting and drought monitoring. However, the ownership andresponsibility to operate and maintain the equipment will remain with the local city Water ResourcesBureau (WRB).

In conjunction with the provincial Flood Control office, the County and Municipal Flood Control offices willbe receive earlier advice of any developing flood within the overall river basin, and in conjunction with thedata being obtained from their own equipment, should be able to issue earlier warnings of pending floodrisk. Based on pre-prepared plans and strategically placed material and equipment stockpiles, as per thenormal pre-flood preparedness, the flood control and management personnel should be able to forewarnand mobilize people in flood prone areas at an earlier stage than in the past, and therefore mitigate the

6 The term city has a broader meaning than that of a purely urban area. A Municipal City is the seat ofGovernment for both a municipal region as well as a specific municipal city area. The region will include severalCounties, whilst the city area is an autonomous municipal administrative area, which will include predominantlyurban development and residents, but include also some rural residents and agriculturally productive land. A countywithin the municipality will have a local County government, located in the county city (or seat). A County city will

be smaller than a municipal city – physically and economically – but will also have a mix of urban and ruralresidents. Depending on the level of current development, the proportion of urban and rural residents may be quitevaried, and many residents classified as rural may in fact obtain the majority of their family income through non-agricultural employment.





impact of any larger than expected floods, which cannot be safely contained by the installed protectionworks.

2.1.2 Civil WorksGiven the priority need for flood protection in the project cities, based on past flood impacts and attendanteconomic and social impacts, the major investment component of HFMSP is for civil works – dikes,pumping stations, drainage outlet culverts and other related infrastructure necessary to contain, channel

and manage both the enlarged river flows and the localized storm water runoff. The major objective is toprevent inundation of flood prone areas within the cities, protect the people and their assets (mixed urbanand rural land use), and mitigate economic and social disruption, minimizing loss of life and property.

These works will bring direct benefits to the people who are most vulnerable to floods, up to the agreeddesign standard level of protection. These works will also mitigate the uncertain, infrequent butsubstantial financial burden incurred by the city government in dealing with floods when they arise andimplementing reparations thereafter. Social surveys have already confirmed that the general citycommunities, and particularly the most directly affected peoples, are willing to contribute to thedevelopment of the necessary protective infrastructure.

The city governments, in giving priority to implementing flood protection measures, have assessed theirability to make the necessary counterpart contributions, and afford the associated loan repayments overpost construction years, and have put these flood infrastructure developments as their first priority for

future city development, as outlined in their city development plans.2.1.3 Project ManagementEffective implementation of the Project will require strong and concerted guidance by the PPMO for theLPMOs, in order to ensure that all the necessary Chinese and ADB procedures and compliancesafeguards are followed. The PPMO and LPMOs will also be supported by the PPLG and the LPLGsrespectively, as needed to ensure satisfactory resolution of any issues and timely progress of the plannedmeasures. A general indication of the organizational structures for both the PPMO and an LPMO, forproject and subproject respectively, was shown in Figure 2, and is expanded with more detail in theorganization charts presented in Appendix C (Figures C1 to C4). The PPMO and the LPMOs will alsohave to coordinate and direct any required inputs and responses from the appointed contractors,consultants and other technical and compliance support institutions.

Though Hunan has implemented some foreign finance supported projects in previous years, the practiceis not well or universally established, especially at the local government level. To ensure that overallmanagement proceeds effectively and timely, it is foreseen that some additional institutionalstrengthening and capacity building activities will be required. In particular, all stakeholders will need tohave increased understanding of the necessary procedures and communication requirements betweenthe stakeholders, with an appreciation of the mechanisms and scheduling for implementation to progresssmoothly. During the early stages of the project, the existing institutional organization can bestrengthened by ensuring all specific responsibilities have been defined and allocated to the relevantstakeholder groups/subgroups. The PPMO has already undertaken some training initiatives in this regard

– for resettlement planning, for environmental management and for project management – with theassistance of the PPTA and TA staff consultants. Further work will be required to more fully develop andtest the required procedures and communication linkages. Overall project implementation is more likely toproceed as planned if there is improved and strengthened detailed planning, training and establishment ofcommunication channels for effective information processing, record keeping, compliance monitoring,reporting and financial settlements.

The initial planning has included the preparation of a PMF as described in this report. This has helped toidentify gaps in the existing management organization, and particular requirements needed to strengthenmanagement at the various levels. The planned measures include strengthening the communicationslinks between the different stakeholders, through a more structured monitoring and reporting system,which will generally build the understanding and capacity to strengthen overall functionality of themanagement systems.

HHPDI, or their municipal city equivalent offices, will be responsible for completion of the preliminary anddetailed designs for the participating subprojects. Priority will be given to the 8 core subprojects, andthese will be used by the design institutes as models for preparing and updating the remaining subproject





FSRs, RPs, IEEs and SPIAs. The PPMO will be responsible to liaise with ADB and other concernedChinese agencies, to ensure that all necessary preparatory steps are completed and approved in goodtime. The current anticipated schedule for the major steps to be completed is shown in Chart A2 of

Appendix A . This illustrates the timeline for both Chinese and ADB processing requirements through toLoan Approval by the ADB Board and for subsequent initiation of the first construction and supplycontracts.

PPMO will be responsible for reporting to the provincial government and ADB, and keeping themappraised of progress, issues arising, proposed solutions and actions to address these issues, andwhether such action would require additional funding, resources or modification to the agreedimplementation plan in order to complete the agreed project work. Essential to the successful projectimplementation will be regular and effective communication and coordination both upwards to the PPLG(and HnPG) and ADB, and downwards to the LPMOs for active subprojects. PPMO will need to providetechnical, financial, contractual and administrative guidance to the LPMOs, as part of their overallmanagement responsibilities, and monitor the subprojects implementation, giving particular attention tocompliance issues – environmental management, resettlement planning and implementation, andmaintenance of records on social, poverty and ethnic minority issues and impacts. PPMO would need toprovide LPMOs with management guidance, providing instruction, training and relevant reporting formats.

The LPMOs will be responsible for the direct supervision and monitoring of all contracts activity and worksimplementation related to their subproject. They will need to coordinate requirements anddelivery/provision schedules with the PPMO where the PPMO is responsible for any related consolidatedsupply contracts. The LPMOs would supervise their civil works contractors, resettlement plans andenvironmental management implementation, and maintain project progress and financial records forreporting to PPMO. The PPMO would coordinate overall project activities and progress monitoring withthe local Project Management Offices, and would collate subproject progress reports and financialaccounts for submission to ADB and HnPG.

The PPMO will operate within the PWRD offices. Currently, the PPMO has seven staff (some full time,some part time) who have been seconded from respective member departments of the PPLG. The PPMOwill oversee final satisfactory preparation of the HFMSP, and coordinate with ADB as per the loanagreement. PPMO will provide functional guidance to the municipal and county project managementoffices (LPMOs) and will coordinate the provision of other logistical support, training and technicalguidance as required. The PPMO has the following primary responsibilities during project implementation:

(a) overall project coordination, macro-level project management and monitoring;(b) annual budget preparation;(c) project-wide quality assurance;(d) progress reporting to PPLG and ADB, including cost management, impacts assessment and

recommendations for adjustment if deemed necessary;(e) inter-agency coordination and procurement support; and(f) provision of relevant training and logistical support to the LPMOs.

Some of the PPMO staff have some prior experience of working on internationally funded projects (WB,JBIC, KfW) but none have direct experience of working with an ADB project. At the LPMO level, suchinvolvement with internationally financed projects is for the most part a totally ne experience. On severaloccasions, and within the PPTA Final Report, it was noted that several ADB financed sector projects inChina had not commenced the implementation phase particularly well, with substantive delays to gettingmany contracts established and implemented and long delays experienced in completing the preparationof additional subprojects. In order to avoid a similar fate for HFMSP, further emphasis has been placed,with the mobilization of additional TA inputs, to help HnPG identify potential constraints to mobilizing andimplementing the project quickly, and to develop management and monitoring procedures for adoptionwithin strengthened project implementation stakeholders. One aspect that should flow from thedevelopment of these management procedures will be subsequent TA inputs once the project loanbecomes effective to help ensure that all concerned stakeholders are fully aware of the proceduralrequirements. In instances where difficulties arise, the TA personnel should be able to assist the HnPGagencies to overcome such difficulties quickly, and in the process strengthen the overall institutional





management capability that is needed to ensure project progress in accordance with Annual and Projectplans.

2.2 Acti vities and Timeline

2.2.1 PreparationHFMSP includes overall scoping and preparation of the Project, inclusive of feasibility studies and

appraisal of the various subprojects, and appraisal of the overall project and its components within thegeneral 5 year water resources/flood control development plans. The sector analysis has beencompleted, and 8 priority ‘core’ subprojects have been prepared and appraised for implementation. Afurther 27 subprojects remain to be prepared, as per the model ‘core’ subprojects, for final appraisal bythe Chinese authorities and ADB. Experience obtained in preparing the core subprojects has indicatedthat substantial value would be gained if the overall subproject preparation and appraisal process, inreadiness for implementation, could be streamlined. The adoption of a single unified approach tosubproject preparation, that is acceptable to both China and the ADB, would be extremely advantageousto improve project management efficacy.

The 8 core subprojects should commence implementation in early 2006. A further quantity of subprojectsshould be prepared, finalized and approved for start up in late 2006. The balance would be prepared,finalized and approved for start up in late 2007. The proposed schedule is shown in Chart A1 of

Appendix A.

2.2.2 ProcurementProcurement is a critical activity for the project and will require good planning and management. Gettingcivil works contracts prepared, processed, awarded and started, and getting equipment and materialsprocured needs to be initiated as soon as possible if the planned implementation schedule is to beachieved. Consequently, PPMO needs to start earliest training for the LPMOs in regard to preparing thecivil works contracts, as the lead time for the initial contracts to be prepared, processed and approvedready for award could take several months, as shown in Flow Charts B1 and B2 of Appendix B for ICBand LCB contracts respectively. Once the initial activities have been completed, preparing subsequentcontracts will be easier, and PPMO will be able to more effectively guide those subproject LPMOs thatcommence their subproject works later. However, some subprojects that have multiple contracts toprepare and award may be doing this over a longer period if their contracted work is phased over severalyears.

Once contracts have been tendered and awarded, contractors, suppliers and consultants will have tovariously implement the civil works, provide equipment and materials, supervise and monitor the projectimplementation progress, and provide technical assistance. Model civil works contracts will have beenprepared by the PPMO, but the management of these contracts will be the responsibility of the LPMOs.

PPMO will prepare model contract documentation for International Competitive Bidding (ICB), LocalCompetitive Bidding (LCB), International Shopping (IS), Local Shopping (LS) or Technical Assistance(TA) services. The specific use of these model documents will be related to contract value and thresholdsas agreed with ADB. The LPMOs would use the appropriate model documents to prepare their civil worksprocurement packages. The PPMO will be responsible to obtain ADB approval for these modeldocuments, and any subsequent approvals for specific contract packages as per the Loan Agreement.PPMO would be responsible to review all civil works contract documentation prepared by LPMOs (or theirassociated Design Institutes), confirm compliance with ADB and Chinese National / Provincial standards,and then forward them as per agreement to ADB for review and approval/no objection.

The PPMO will also use model contract documents to prepare all the equipment supply and TAprocurement packages that are to be consolidated for several subprojects at a time. The PPMO will alsobe responsible to set up contracts for any required technical assistance services, whether with designinstitutes, monitoring and evaluation companies or consultant companies or individual specialists. ThePPMO would be the overall manager of the project, and would ensure the necessary supply and/orservices are procured in accordance with each and every subproject implementation schedule.

The equipment manufacture and supply contracts will be consolidated packages for multiple subprojects,in order to make each contract package reasonably substantive and therefore competitive. TA servicecontracts will involve domestic consultants (individuals or firms/institutes) to assist project implementation,





including compliance monitoring (resettlement, environment, quality) as the various project works areimplemented, and with institutional strengthening through training and capacity building. Some of theserequirements will initially be supported by an ADB ADTA that has two main components: 1) developmentof PWRD’s integrated river basin management annual planning system; and 2) provision of initial supportfor implementation of the Project Performance and Monitoring System. The PPMO, as overall manager ofthe project, will oversee all procurement, and ensure that tendering, award and implementation ofcontracts is done in accordance with Chinese and ADB policies, laws, regulations and guidelines. Details

on the proposed contract packages to be setup under the project are presented in Appendix B. 2.2.3 ImplementationThe main activities will involve implementing the three key components, with civil works construction andcommissioning as the primary activity (about 90% by value). Each subproject will manage its ownimplementation, as per the overall project implementation schedule. They will be guided and monitored bythe PPMO and their consultants – whether for internal or external monitoring (e.g. resettlement). PPMOwill assist with the preparation of contract documentation and award of the equipment contracts.

The project implementation activities will have to be monitored and reported to both the Chineseauthorities and ADB. There are many similarities in the two monitoring and reporting requirements, butthere are also a number of quite distinct differences – most notably in respect of the safeguards issues ofresettlement, environmental management and ethnic minority development. These differences could leadto a situation where two sets of reports are required – to meet the differing requirements. This may also

involve different approaches and intensity for activity monitoring (timing, detail, record keeping andreporting). This project performance and management system, as described hereunder, seeks to mergethese two sets of requirements by adopting an integrated approach to facilitate efficient implementation ofthe project whilst minimizing any overlap and duplication in the monitoring and reporting requirements.This will ease the reporting demands on the PPMO and LPMOs whilst ensuring all the necessarystatutory and regulatory monitoring and management is undertaken by the relevant participants in theproject. If development of a combined and effective PPMS is successful, it will reduce the needs for pre-approval of various actions in the implementation process, so long as the EA adheres to policy andcomplies with safeguards. It will also enable regularized (say half yearly) review and monitoring againstan agreed annual plan.

The organizational structure will be important to ensure that all necessary steps, inclusive of essentialmonitoring, reporting and policy adherence are fulfilled. Existing flood management facilities (e.g. dikes,dams, pumping stations, culverts and gates) at each subproject city are currently operated andmaintained by either the River Course Management Office (RCMO) [or an Urban ConstructionManagement Company – UCMC], and these will be appointed as the Project Implementation Unit (PIU)under the LPMO. The RCMO (or equivalent) is the physical long term entity established under theleadership of the LWRB (see Appendix C), and is basically the construction and assets management andoperations unit of these bureaux. As such, these PIUs are the designated owner for the purposes of theconstruction and procurement contracts [whereas the LPMOs are a short term management, supervisoryand administration unit specifically established for the project preparation and implementation period].

For each subproject, a Local Project Leading Groups (LPLG) has been established, headed by the localVice Mayor (or Governor). These PLGs include representatives from the local Development and ReformCommission, Financial Department and Water Resource Bureau, and they will be guided by theProvincial PLG (PPLG). Each subproject has a Local Project Management Office (LPMO) establishedwithin the LWRBs, and these will be responsible to undertake the daily management and coordinationbetween the concerned government departments, as well as to oversee the activities of the PIUs,Contractors and Consultants involved with the subproject implementation.

The PIUs will be responsible to plan and supervise the daily implementation of the civil works contractsfor their respective subproject, and to ensure that all the required physical works are constructed andcommissioned according to all relevant laws, regulations and standards. Following completion of thephysical works, the PIU (RCMO or UCMC) will be responsible the long term operation and maintenance(O&M) of the completed works. The RCMO operate within their respective LWRB, but for the subprojectimplementation activities, will be responsible to their respective LPMO. As the LPMOs are alsoresponsible to the PPMO, and in turn all PMOs are responsible to their respective PLGs and government,there will be a consistent and effective line of command for the whole project, with technical, planning andfinancial support from the respective government level departments (water resources, development and





reform commission, and finance). The institutional organisation charts for the HFMSP are shown in Appendix C . More details on the working arrangements between the various entities set up for theproject is presented in the HFMSP PPMO’s own “Management System for Project Implementation”presented in Appendix 2.

The PIU has an established staff who will deployed to undertake the on-site supervision of the subproject,as per their normal construction and operations activities. The LPMO will have a number of staff assigned

to it temporarily from the participating local government departments. The number of staff required by theLPMO is dependent upon size and complexity of the subproject. The LPMO will generally mirror thePPMO organizational structure with functional divisions established to reflect the required responsibilities.These divisions will be:

Administration Procurement Engineering Safeguards – Environment, Resettlement and Ethnic Development Finance

These divisions are shown in Figures C3 and C4 in Append ix C , together with an indication of the rangeof their responsibilities to be fulfilled under the general leadership of a PMO Director and Deputy Director.

The PMOs will organize detailed preparatory works (feasibility studies, design, contracts documentation)

and implementation activities (construction, supervision, monitoring) to be undertaken by third partyorganizations as indicated in the figures presented in Appendix C . Specific service contracts will have tobe prepared, awarded, and supervised for studies, design, monitoring, procurement and auditing. Theresponsibilities for these will be allocated to the relevant divisions under the PMOs, with appropriatesafeguards through the adherence to review and approvals procedures. The PMOs have to ensurecompliance in accordance with both Chinese domestic procedures and ADB’s guidelines. Particular stepsto be followed through the preparatory and implementation stages for both Chinese and ADBrequirements, together with an indicative time frame, are illustrated in Chart A2 in Appendix A , and in theFlow Charts B1 and B2 of Appendix B . Typical implementation activities for a subproject are shown inChart A3 of Appendix A .

Table 3: Summary of Responsibilit y for Subproject Implementation

Component ProjectImplementation

DebtRepayment

Operations andMaintenance Notes

Civil Works andNon-StructuralEquipmentInstallation

LPMO/RCMO(IA/PIU)

MFD or CFD RCMO Borrower to be municipalgovernment or countygovernment

LPMO will be responsible for overall direction, management, coordination and administration of the subproject duringsubproject preparation and implementation stages. RCMO (or UCMC) will be responsible for the daily on-sitesupervision of contractor activities, including relevant adherence to site operation safeguards.

2.2.4 SafeguardsSafeguards are largely related to resettlement and environment management actions – adherence tolaws, rules, regulations and guidelines. Resettlement must precede any civil works construction in thoseareas where land acquisition will necessitate relocation of people and/or redistribution of land amongstvillage communities to mitigate severity of impact on those directly affected. Safeguards will ensure dueprocess is followed, and compensation is paid.

Similarly, environment safeguards will ensure that relevant environmental protection and mitigationmeasures are followed and implemented in accordance with Chinese domestic laws and regulations, and

ADB guidelines.

LPMOs will be responsible to establish appropriate monitoring systems to ensure compliance, andrespond to any recommendations that are made during the course of subproject implementation, in the





light of experience and lessons learnt. Specific details on the activities, monitoring and reporting forsafeguards are presented in the supplementary reports presented in Appendix E and F .

2.2.5 Project Timeline – Phased ImplementationThe HFMSP has an estimated 6 year implementation period – from January 2006 to December 2011. Afew of the selected subprojects will require 5 years to complete all of their construction, but the majority ofthe subprojects require from three to four years. In general (see Chart A1, Appendix A ) the subprojects

will be constructed from about September (once the flood season has passed) to June or July (when theflood season starts) during each year. Implementation plans indicate that by and large, particularprotected areas within a city area will be enclosed over a single year, in order to minimize constructionrisks during the flood periods. Subproject implementation plans, presented in the original HHPDI FSRs,have been developed, often using MS Project, so there is a basis in place to adopt, update andstrengthen these plans, and link them into an overall annual plan based project management framework.

MS Project has also been used to develop summary schedules for the safeguards programs –resettlement and environmental management. Therefore, though continued updating will be required, it ispossible to use these timeline based project management tools that integrate the necessaryproject/subproject activities – preparation, approvals processing, tendering and contracts award,implementation, supervision, monitoring and reporting – to ensure effective linked management. Theoutput tables from MS Project are also useful to facilitate timely monitoring, reporting and if necessaryrescheduling – for specific periods (e.g. the Annual Plan period), and for the whole project.

Provided sufficient data is added on a regular basis, these project timelines will facilitate rapid recognitionof weekly and monthly tasks, as well as indications of when any particular activities are going slow, andmight cause delays to the overall implementation program. More crucially, if a networked version wereadopted and all LPMOs were able to update the information on their subproject each week, then PPMOcan quickly review and monitor progress, and identify those areas where management interventions maybe required with minimal delay. The PPMO will benefit significantly from being ‘wired’ into the overalldistributed project monitoring and management network. It is recommended that PPMO staff shouldadopt an MS Project (or similar programme) based monitoring, scheduling and programme updatingsystem to help them manage the overall project more effectively. In turn, LPMOs should be encouragedto do the same with their subprojects, and enable any changes they make for their subprojects toautomatically be included in the PPMOs overall project management tools.





3 Project Stakeholders – Organisation, Roles and Responsibilit ies

3.1 Project Organisation – Provincial and Local

The subprojects will be managed by a Local (city) Project Management Office (LPMO) under the generalguidance of the Provincial Project Management Office (PPMO) [as illustrated in Appendix C –Organisation Charts]. PPMO has overall management and coordination responsibility for the whole

project. In particular, the PPMO has defined the relevant criteria for management of the project andsubprojects, and will supervise and guide the implementation activities, including institutional capacitybuilding within the LPMOs. As the PPMO will have direct responsibility to ADB, then the PPMO will alsohave to develop a sound working communications and data/information exchange linkage with theLPMOs, in accordance with defined procedures, to ensure all necessary information and resources are inplace or communicated in good time. The LPMOs and PPMO will also have to communicate and workeffectively and efficiently with other involved stakeholders – government departments, local bureaus,contractors, consultants, community groups, design institutes and the people involved with or affected bythe project. The ability to resolve issues quickly, if and when they arise, makes the difference in keepingthe project progress on schedule, or having delays and the project failing to meet the planned objectivesand outputs as indicated in the PDMF ( Appendix 1 ).

Appendix 2 outlines the overall PPMO Management System for Project Implementation. It is specificallyfocused on the key roles and responsibilities of the PPMO and LPMOs for implementation of the 35

subprojects, but does not integrate the broader needs of the overall sector development, in keeping withChina’s annual plan approach One of the objectives for integrating the Chinese projects managementsystem with the ADB PPMS approach is to promote a more holistic integrated approach to sectordevelopment, and in the process strengthen the knowledge and understanding of the concernedinstitutional stakeholders, as a pilot demonstration activity for subsequent broader application acrossChina for ADB style sectoral development projects.

The system presented hereunder helps to define the ‘rules of engagement’ for both the PPMO and theLPMO government levels, and provides an initial timeframe for actions to be implemented, with a cleardefinition of the linkages for communication and resource management between the two levels of theproject organization and other stakeholders. Crucially, the roles and responsibilities of the various partiesfor project planning, preparation, implementation and eventual operation are defined (see “Workshop onPPMS – Appendix 3 ). All concerned stakeholders must be aware of the critical steps, activities anddecisions to be made, with due allowance for the review and decision making processes to be completed

in good time. Many of these key decisions will be made before the first contracts are mobilized, but therewill be many decisions to be made during the life of the project, and it should be clear to all parties as towho has the responsibility and authority to make decisions when they are needed. Key decision pointsare defined as ‘milestones’ in the relevant timeline (Gantt) charts presented in Appendix A .

3.2 Rules and Regulations for Implementati on

3.2.1 PRC Laws, Regulations and StandardsThese have been referred to many times throughout this document and in other related documentation forthe project. It is understood and expected that assigned staff for the PPMO, LPMOs and other agenciesare fully conversant with the relevant laws, regulations and standards applicable in China and HunanProvince. At the preparatory stage, approvals can only be secured when the project plans – feasibilitystudies, designs, financing plans resettlement, environment management, ethnic minority development –are compliant with the relevant laws, rules, regulations and standards. Additionally, for HFMSP, such

plans and related project development documentation must also be compliant with relevant ADBguidelines and covenants, as described in ADB’s standard documentation or the particular loanagreement. It is therefore expected that PPMO and the LPMOs will ensure that the project will beimplemented in compliance with all relevant laws, rules, regulations and standards as applicable in China,and in accordance with ADB’s stated guidelines and covenants agreed between the borrower and ADB.

A schedule of the primary and other related laws, rules, regulations and guidelines to be followed underthe Chinese system are as presented in Appendix 5 .





3.2.2 ADB Policies and Procedures As an essential part of the loan agreement, PPMO, LPMOs and others are obliged to ensure compliancewith relevant ADB policies and procedures, as defined in relevant documentation referred to in the projectpreparatory reports. PPMO must ensure compliance by LPMOs, in accordance with the Loan Agreement,and should monitor progress reports, specialist monitoring reports, and implement site inspections toconfirm that appropriate action has been taken.

The relevant ADB guidelines are referred to in the primary project documentation – the RRP and the Loan Agreement – and details on these guidelines are available from the ADB’s website www.adb.org or theChina Resident Mission. In relation to the specific safeguards of resettlement and environmentmanagement, reference is made to relevant guidelines in the supplementary reports presented in

Appendix E and F .

3.2.3 PRC and ADB Systems Compatibility and IntegrationWherever possible, to minimize reporting needs and duplication, the PRC and ADB management(system) requirements should be merged, whilst at the same time ensuring all requirements for both sidesare duly covered to an adequate level of detail. It is understood that where ADB specifically requiresmonitoring and reporting that is different or additional to the PRC requirements, then special personnelmay be appointed to produce the additional reports (e.g. Tendering and Financial Management Agency;monitoring and safeguards compliance consultants).

Under the aims of the proposed PPMS, as generally adopted for all ADB loan projects, it is expected thatthe management and monitoring systems will be integrated wherever possible to minimize the need forduplicated effort and unnecessary reporting and documentation, but that the adopted ‘integrated ‘ systemshould satisfy both Chinese and ADB requirements in accordance with all prevailing laws, regulations,rules and standards for utilizing of public and foreign funds for infrastructure development and publicsafety.

3.3 Government – 3 levels

The overall Project is established under three levels of government. These are illustrated in Figure C1 (in Appendix C ) with national, provincial and local government levels. The major implementation activitiestake place at the local government level, with guidance and supervision from the PPMO at the provincialgovernment level as they have overall responsibility for the whole project planning, preparation andimplementation, and specifically for coordination with ADB. The PPMO also has to ensure that all national

and provincial government stipulated requirements are fulfilled for the use of foreign investment loans,and therefore they will be responsible to coordinate with central government according to appropriateChinese procedure to ensure compliance.

3.3.1 Central GovernmentThe ADB loan is provided through the Chinese National Ministry of Finance, who on-lend the funds to theprovincial Finance Department (see Flow Chart B5, Appendix B ). The National Development and ReformCommission (NDRC) is responsible to establish overall sectoral development policy, in conjunction withthe major concerned Ministry of Water Resources (MWR), and ensure that proposed projectdevelopments are in compliance with the general policy objectives (see Figure C1, Append ix C ). MWRwill maintain oversight to ensure technical standards are observed and that the overall project objectivemeets with general water resource management and flood control policy, laws and regulations. PPMO willbe responsible to ensure that all necessary review, approval and compliance issues have been fulfilledand approved by the National Government Agencies. In turn, the National Government Agencies have

provision to delegate some specified responsibility, in accordance with defined procedures, scope ofworks and general investment provisions, to the Provincial Government line agencies. This is particularlythe case for each individual subproject, once the overall project scope has been approved. It isunderstood that approval of the project FSR and the resettlement land acquisition has been formallydelegated to the PDRC and PLD respectively.





3.3.2 Provincial GovernmentThe provincial government is the overall project management authority for implementation, and will workclosely with the concerned local governments to ensure proper detailed preparation of the project,observance of relevant compliance issues, and implementation of the participating subprojects inaccordance with plans and available budgetary allocations. The provincial government has establishedthe Provincial Project Management Office (PPMO), with oversight of a Provincial Project Leading Group,made up of key senior representatives from the three Provincial line agencies as described at the

National level – the provincial departments of Water Resources (PWRD), Finance (PFD) andDevelopment and Reform Commission (PDRC). The relationship between these line agencies and otherproject stakeholders, under the provincial government, is shown in Figures C2 and C3 of Appendix C .

The PPMO has been established in the PWRD office, and will undertake planning, preparation andcoordination work with the participating local governments, as well as with ADB and the nationalMinistries, in relation to project progress and finance disbursement. The PPMO will also be responsiblefor procurement and the preparation of relevant contracts, and with the assistance of consultants andprovincial design institutes, will supervise overall project implementation. More crucially, they will beresponsible to ensure compliance with all social safeguard policies relating to resettlement, landacquisition, social impact, use of local labour during construction, environmental management, andspecial social impacts on ethnic minorities and women.

The PPMO will be responsible to review and assess claims for the use of the ADB loan (in conjunction

with the relevant foreign investment department in PFD), to manage the Imprest Account replenishmentand disbursement arrangements, and to ensure the production of periodic (quarterly and annual)consolidated reporting to the ADB. The PPMO will also be responsible to ensure that all necessarypreparatory, contractual and progress documentation is prepared by the subprojects and consolidated bythem for submission to ADB and the Provincial Government. They will also ensure that any obligatoryreporting is prepared and submitted to the National Government agencies.

3.3.3 Local GovernmentThe local governments have established Local Project Management Offices (LPMOs) for their specificsubprojects to be implemented as part of HFMSP. They are guided by a Local Project Leading Group(LPLG) formed from senior representatives from the corresponding local government lines agencies – theWater Resources Bureau (WRB), Finance Bureau (FB) and Development and Reform Commission(DRC). They are organized and relate to other involved stakeholders as shown in Figures C2 and C4 of

Appendix C . The LPMO is responsible for the final preparation of the subproject, includingcommissioning the provincial or municipal design institutes to prepare the preliminary designs, once thesubproject feasibility study has been appraised and approved PDRC. The LPMO will also organize thecivil works contract agreements with the approved contractors that tendered and won the various civilworks contracts prepared by the PPMO, though these will have to be signed by the PIU as the legalentity.

The LPMO will appoint the RCMO of WRB [or the municipal urban construction management company(UCMC)] as the PIU (the legal entity or owner) to plan and supervise the construction activities. Theseunits have the necessary technical expertise and resources to supervise construction detail and quality,and will report progress and issues to the LPMO for their assessment and action. The LPMO will beassisted by relevant local institutes and/or consultants to ensure compliance with all relevant socialsafeguards. They will also assist the LPMO to prepare all necessary records and periodic reports on theproject implementation.

3.4 Government Line Agenci es

3.4.1 TechnicalThe PPMO and LPMO’s are established with representative staff from the core government agencies(xWRy, xFy, xDRC). They will have additional technical support and assistance for subprojectspreparation, contracts preparation and award, implementation, monitoring and reporting from otherappropriate level representatives of the Environmental Protection Bureau (EPB), Hydrology Bureau (HB),Water and Hydropower Design Institutes (DIs), Land Department (LD) and Resettlement ManagementOffice (RMO). These supporting agencies will be required to fully prepare, plan, review, approve,implement and monitor the planned subprojects. The PPMO and/or LPMOs will establish appropriatecontracts and define the Terms of Reference for these agencies to provide the necessary technical,





administrative and regulatory compliance and monitoring support. The objective and responsibility is toensure the subprojects are completed to schedule and quality, in accordance with all relevant socialsafeguards.

These government agencies are staffed by highly qualified specialists in their respective disciplines, andthey will be able to ensure that all the works are completed in accordance with the defined proceduresand standards presented in the relevant subproject and project documentation. Currently, there is some

duplication in terms of the specific requirements to be fulfilled for the Chinese government and ADBproject loan systems. A key aspect for the PPMS is to minimize any such duplication to facilitate thePMOs performance and adherence to rules, regulations and requirements, whilst ensuring effectiveproject progress as planned.

3.4.2 AdministrativeThe government line agencies have a primary administrative role to ensure the various subprojects andthe overall project are implemented in accordance with established procedures. This will include ensuringall necessary documentation and process is observed, approvals are sought and obtained through timelysubmission and presentation of necessary information, and that all relevant resources (people, materials,equipment, finance) are both identified and provided in good time for the project activities to proceed asscheduled.

3.4.3 Regulatory

Besides the main participant agencies, the project monitoring will involve various provincial and localgovernment monitoring and regulatory agencies to observe and approve actions and developmentsrelated to the environment, resettlement, land acquisition, ethnic minority participation and impacts, and ifnecessary, other social and logistical impacts that arise for implementing the projects. The PPM andLPMOs will be responsible to liaise with these other agencies (e.g Environment Protection Bureau, LandDepartment) to ensure that specific actions are taken in accordance with the prevailing laws andregulations, and in good time as per the overall project implementation planning (see Appendix A ).Specific parties involved with the environmental management and resettlement activities are described in

Appendix E and F ).

3.5 Service Providers

3.5.1 ContractorsThe PPMO and/or LPMOs will appoint civil works contractors on the basis of competitive bidding to

undertake the required structural measures. For the most part, the packages are being structured to besuitable for local competitive bidding (LCB), and it is expected that the contractors will be locally qualifiedfirms. As China already has an effective pre-qualification process for civil works contractors, it will not benecessary for contractors to be asked to pre-qualify, but model contract documents will have to beprepared and approved by ADB, prior to any contracts being eligible for financing under the loan. Oncethe model documents have been approved, then specific contract approval will be undertaken based onvalue, and in cases where the value is lower than defined thresholds, approval may be provided postfacto (subject to ADB agreement at loan negotiations). However, the first contract to be tendered andawarded of a particular type will have to undergo the full review and approvals process as shown in FlowCharts B1 to B4 in Appendix B , and a bid evaluation report (BER) will have to be prepared andsubmitted to ADB for their review and approval to confirm the evaluation procedure and associated recordof the bid opening and award has been undertaken in accordance with expected procedures.

3.5.2 Consultants – domestic and international

Though Consultants are often appointed to assist with the loan implementation activities, and particularlyto assist with management and fulfillment of the ADB procedures and requirements, PPMO has indicatedthat no overall loan consultant would be required. However, PPMO and/or LPMOs will appoint specialistinstitutes to assist with the continued needs for planning, design, monitoring and supervision of thesubproject activities and contracts, plus they will also hire external review consultants/instates to ensurefull compliance with safeguards.

3.5.3 Technical InstitutesThe project preparation has been assisted to date by the PPMO and LPMOs hiring the local designinstitutes to undertake the feasibility studies, preliminary and detailed designs, and contractsdocumentation preparation. It is expected that PPMO and LPMOs will continue to use these institutes on





an as needs basis to assist with any further design amendments and resolution of any issues as andwhen they arise.

PPMO and LPMOs will also call upon other specialist agencies to assist them with the monitoring andadherence to safeguards, either for primary on-site supervision of resettlement plan and environmentalmanagement plan implementation, or as external auditors to review the results of such monitoringactivities and verify that all necessary laws, rules and regulations have been followed.

3.6 Benefits from adopti ng a PPMS

Under this Promotion of Effective Water Management Policies and Practices, the introduction of anintegrated PPMS approach for project implementation is expected to help strengthen the overalloutcomes that are attained from sector project activities, whilst also strengthening the overall capability ofthe concerned institutions to implement the project on time in accordance with plans. Particular benefitsthat is anticipated will be realised from the adoption of an integrated project performance andmanagement system are:

a. Integration of the current strengths of both the Chinese and ADB management systems,specifically in terms of developing a unified approach around the centralized annual planningsystem that is used in China for all project activities.

b. The current requirements of the Chinese and ADB management systems, if maintained

separately, will require substantial duplication of effort in order to meet the two sets ofrequirements. A concerted effort to merge the systems into an integrated system for theHFMSP should minimize such duplication, and provide a model for replication for similarprojects around China.

c. Though there is variance between the Chinese and ADB project management systems, there isnevertheless agreement on attainment of the eventual project outcomes. It therefore would beprudent to develop an integrated and systemic approach for the planning, preparing andimplementation of ADB (and perhaps other international donor) supported projects to achievecost effective outcomes.

d. An integrated approach to project management and delivery will much more effectively supportthe concept of results based outcomes.

e. In introducing and developing an integrated project performance management system, theactivity will help to strengthen institutional project management capability and understanding.

f. A critical factor in developing improved management and monitoring procedures will be toencourage and ensure that project planning, preparation and implementation will be achievedin accordance with plan, and costly time delays can be minimized if not fully averted.

There is no guarantee that these benefits can be fully achieved under HFMSP, but provided there isconsensus from both the Chinese and ADB to promote and encourage such outcomes, lessons learnedduring the implementation of HFMSP can be assessed and improvements made for any subsequentprojects implementation. In fact, many lessons will be learnt and improvements will be made through the6 year life of the HFMSP.





4 Management Systems

4.1 Annual Planning and Preparation

The Chinese management system is based on a process of prepared annual plans, whereby physicalworks are identified, costed and prioritized in order to secure budgetary allocations so the developmentactivities can be implemented in the particular year. This process is initiated in the first instance by the

preparation of the 5 year development plans – prepared at local, provincial and national governmentlevel. The 11 th 5 year plan will run from 2006 to 2010, coinciding with the implementation of the HFMSP.

Each year, the respective government levels have to prepare their specific annual plans, within theframework of the 5 year plan. It commences with the County local government preparing and submittingtheir initial plan to the municipal government (local) in October. The municipal government consolidatesthe requests from all those counties in their jurisdiction with their own municipal needs, and develops aprioritized plan for submission to the provincial government (by line agency) in December. In turn, theProvincial Government line agencies rationalize all the plans received from the municipal governments,and establishes priorities and financing requirements (for those elements of the plans that cannot befinanced directly by the municipal and/or county governments) This whole process takes several months,and may not be completed until March, when all finance provision is confirmed. Future finance allocationsmay be dependent upon performance over the previous year.

Planning will determine the estimated financial requirements for a given year. Where this exceeds thefunds available from the local budget, each County (subproject) can request support for their plans fromthe municipal government. If the municipal government cannot fully support its own or the counties prioritydevelopments, then the municipal government may request financial support from the provincialgovernment. Similarly, for significant priority requirements (e.g. flood protection, power generation, roads)the province may seek financial support from either the river basin authority or central government. Theprovincial government can also request, by presentation of appropriate proposals, the provision ofinternational donor and/or loan support, in accordance with national and provincial policy provisions andpriorities. However, the establishment of international finance for project developments often takes fromtwo to three years.

Under normal annual planning, it may be well be mid-year before all or a proportion of the financialrequirements are confirmed or rejected. Therefore, any development work that commences in the earlypart of the year will be based on the availability of local funds that can be provided, or on an anticipated

proportion of the requested additional ‘external’ funds being provided. The annual planning approachdoes not allow for previous years allocations to be rolled over into successive years.

These arrangements also relate to the provision of counterpart funds in those cases where a foreigncapital loan has been arranged to cover part of the planned project costs (e.g HFMSP). The annual planswill build in the contributions to come from foreign capital loans, and where counterpart funding is limited,these foreign financed project activities will be given priority for counterpart contributions over thoseprojects that are wholly domestically financed.

The PPMO will plan and guide the overall implementation of the HFMSP, which will be supported by an ADB (foreign) loan. PPMO staff will guide the project preparation, as the majority of the preparatory workis undertaken either at the subproject (LPMO) level, or is contracted out to design institutes and/orconsultants. For implementation, the PPMO resources (people, facilities, equipment) will be increased toensure the capacity is in place to manage all remaining aspects of project planning, preparation,

tendering, contract supervision, monitoring, reporting and auditing, through to final completion,commissioning and certification of the finished works. Similarly the LPMOs resources and capacity toimplement their subproject will be increased according to need.

The PPMO and LPMOs will be responsible to prepare the annual plans for their respective project /subprojects, identifying and confirming the key activities to be implemented, and the related costs to beincurred. The LFB and / or the PFD will then review the proposed works and costs, and in conjunctionwith the respective local government and / or provincial line agencies (xWRD; XDRC), will refine the plansand confirm the scope of works to be confirmed in that specific years annual plan. In general, foreign loanfunded projects will be accorded priority, in accordance with the agreed plans for the overall project.Thus, the development and financial requirements for HFMSP will be incorporated within a specific year’s





annual plan, with the annual planning process confirming the scope of works to be undertaken in the planyear, together with the allocation of the counterpart funding (at respective government levels) to becombined with the planned loan utilization during the year.

Priority will therefore be accorded to the HFMSP in order to complete all the works within the overallproject period, but annual planning will be used to define the annual counterpart funding to support theproject development plans, or allow for future adjustments. Once the project and/or subprojects have

been completed satisfactorily, and all final documentation and payments have been completed / settled,the PPMO (and the LPMOs for each subproject) would be disbanded, with people, facilities andequipment being returned to / distributed between the relevant parent line agencies – xWRy, xFy andxDRC.

The PPMO and LPMOs personnel will have benefited from the project through training and relatedexperience in managing the project / subprojects through the 6 year project period – developing annualplans and integrating these with the overall project plan and international loan financing. Under the projectmanagement component of the project, staff would participate in a range of management training,capacity building and institutional development initiatives, that would strengthen the overall skills baseavailable to the respective line agencies over the long term. Further description for this is given in Section6, and is also reflected within the PPMO and LPMO’s own management systems approach as presentedin Appendix 2 .

4.2 Project Planning – use of a proprietary system tool An effective way to plan the project and improve communications between all stakeholders about theplans is to use structured methods for both planning and reporting the project activities. MS Project (aproprietary software management tool) has already been used to define work plans (see Appendix A )and this same program can be used to monitor progress. The initial plan, as defined at project (orsubproject) start up, provides the baseline for overall future management and monitoring of the project /subproject. Information can be extracted from the plan to prepare annual plans. The MS Project plan canbe updated on a quarterly basis (with quarterly reporting) and would provide the basis for successiveannual plans as they fall due. If the plans are used by PIUs and Contractors for monthly monitoring, theseprogressive updates will quickly highlight where potential delays may arise, especially wheredependencies have been correctly identified and defined, and related issues that may affect projectprogress and completion to schedule can be quickly resolved. Each subproject should have anadequately detailed MS Project structured implementation plan to assist overall subproject management,and these subproject plans should be linked to the PPMOs overall MS Project master plan to help thePPMO staff monitor and manage the overall project civil works, non-structural measures and projectmanagement activities. Additional supplementary plans for procurement, resettlement, environmentalmanagement and technical assistance / training programmes should also be linked so that PPMOmanagement can quickly gain a rapid overview of the project situation at any time – particularly forreviews and assessments during ADB missions.

These MS Project based plans, if fully established with resource, equipment and finance trackingcapability, should enable the LPMOs (for subprojects) and the PPMO (for the project) to easily track andmanage the various aspects of the project. This would include keeping a track of individual contracts oncethese have been established, using the contractors work plans and costings to plan financialdisbursements and monitor financial expenditure to verify claims for reimbursement against completedand approved works. From this, LPMOs can submit their request for settlement of accounts and orreplenishment of their accounts, whilst PPMO can quickly check status and develop updated reports fromMS Project in support of their claims to ADB to replenish the Imprest Account.

The use of a program such as MS Project can be extremely effective, but time and training is required toboth set up the specific project and subproject details, and to also manage, interpret and produce therelevant output from the program for the review and decision making by the managers. An addedadvantage of the program is that for the most part, it is able to support the specific needs for both theChinese and ADB systems, by tailoring the particular output to be produced from the same basicinformation input to the program.

If the integrated use of a project management tool such as MS Project is not adopted, to the degreeenvisaged above, then the program still can be used to assist individual LPMOs and the PPMO to monitor





general progress against the plan, and provide sufficient information to the managers to forewarn them ofa need to consider making adjustments for successive annual plans, and for the planned financing anddisbursement requirements. More limited tables and charts can be adopted from the program to supportthe more traditional reporting that will be required for either the Chinese or ADB project progressreporting. Over time, managers may then grow their skills through use of the program and develop theircapability to use such management tools in the future.

4.3 Contracts Supervisi onLPMO and supporting agencies should have sufficient people and resources in place to fully supervisethe civil works and flood management components as scheduled. The workload will be variable over time,both within a particular subproject, and also between subprojects. Key resident LPMO staff can besupported and possibly supplemented by consultants and/or monitoring agency personnel, but detailedplans will be required to quantify requirements for external inputs, and to develop appropriate terms ofreference. Ideally, mobilized staff will be locally sourced, but consultants should be hired through atendering process. If consultants are required from day 1 of subproject startup, then sufficient lead timemust be allowed to prepare TOR, invite tenders, evaluate them, select a winner, finalise contracts, andmobilize the required personnel. Depending on the scope of the proposed services, these activities maybe undertaken by the LPMOs for review and approval by the PPMO, or by the PPMO for review andapproval (in the first cases) by ADB. External personnel to be appointed for supervision should be fullybriefed about their role and responsibilities, and their performance should be monitored and managed by

relevant LPMO and/or PPMO staff.PPMO will need to review and check both the works packaging to be completed under each annual plan(see Appendix 4 ), and also the overall packaging for contracts, to ensure it can be logically done asplanned. Experience for year 1 will provide a basis to refine plans and packaging for subprojects in Year 2and thereafter, for the same subproject and other subprojects. Risks such as weather, access and landuse permits, materials and equipment supply, and general contractor capacity can be monitored andfactored into future project activity planning, together with any related financial adjustments (i.e.modifications to drawdown against the loan).

4.4 Progress Measurement and Quality Contro l

A key part of the LPMOs supervisory and contractor management responsibilities will be to ensureeffective progress, timely measurement of the completed works, and overall quality control in accordancewith regulations and standards. Only when the completed works are deemed to be satisfactory will theLPMO be able to authorise payment to contractors and consultants. All contracts should be clear in termsof what will constitute measurement procedures and quality assessment/acceptance procedures, and allsupervising personnel should be fully aware of the stated requirements. All reports on progress and stageof completion should be based on contracted works items and the expected quality of the completedworks, through to commissioning and satisfactory initial performance (where relevant and tested). Part ofthe overall project monitoring and audit process will be to safeguard the accuracy of works measurementand the acceptability of completed works.

4.5 Financial Management

Payments for startup (Advance), progress and completion will be subject to Audit, and must beundertaken in accordance with the contract provisions, loan agreement and Chinese domesticregulations, prior to final acceptance and payment for the completed works. Annual plans shouldincorporate any estimated withdrawals and disbursements, in line with the schedule foreseen in the ‘Useof Foreign Capital Funds, which will be overseen and monitored by the PFD and the MOF. Requests forreplenishment of Imprest Accounts will have to be prepared by the PPMO with PFD assistance, based onthe satisfactory preparation and timely presentation of relevant progress reports and financial statements.Therefore, all project personnel involved in progress monitoring, completed works measurement, generalactivity reporting and financial management must be conversant with the financial managementrequirements.

The ADB loan will be on-lent to the Province (through the PFD) by MOF, and the PFD will then on-lendappropriate proportions of the advance loan funds to those city LFD’s where subprojects are active. AnImprest Account will be established at the Provincial level, whilst individual subproject accounts will be





required at the City level. The Imprest Account will be in $ but the local accounts will be in Renminbi(RMB). The Imprest Account will be used to disburse funds to individual subprojects upon presentation ofeither an appropriate request for an initial advance, relevant acceptable request for payments tocontractors (based on measured and approved progress, in accordance with contract terms, or as areplenishment against approved payments already made. The subproject account will be used to pay payrelevant local costs against acceptable documentation. For large payments, the LPMO can request thatthe PPMO/PFD make a direct payment of the loan proportion from the Imprest Account to the contractor,

consultant or supplier, subject to satisfactory completion of the related works and full written authorizationby the LPMO/LFD.

The following are indicative diagrammatic representation of to show the arrangements for financial flowsduring both the implementation (financing) and operation and maintenance (repayment) phases of theproject are shown in Figures 3 and Figure 4 respectively.

4.6 Financing Sources – Government , ADB, Benefic iaries

4.6.1 GovernmentThe primary financing agencies are the ADB loan (foreign investment) and the local government(counterpart funds). The counterpart funds are obtained through local tax revenue, and special leviesrelated to flood management needs. The foreign funds are provided through the central government, whoon-lend the funds to the provincial government for further on-lending to the concerned local governments.

The provincial government also provides a small operating budget (counterpart funds) for the PPMO. Theflow of funds is shown in Flow Chart B5 of Appendix B and in Figures C2 to C4 in Appendix C .

4.6.2 ADB ADB has reviewed the scope of the planned HFMSP, and has indicated a willingness to provide a loan ofUS$ 200 million, to assist Hunan Provincial Government (HnPG) to implement the proposed works andsupporting components for the project. The provision of this loan will be subject to HnPG’s PPMO and therespective subproject LPMOs fulfilling specific requirements as defined in the Project RRP, and in theLoan Agreement (still to be concluded). Provision of loan tranches will be dependent upon PPMO (withLPMOs and Finance Department support) providing relevant reporting and documentation to ADB oncurrent status of the project and assurances that relevant safeguards have been fulfilled.

4.6.3 BeneficiariesThe beneficiaries will undertake to provide, though their local government taxes and other specific levies,

relevant contributions in support of the proposed project works. LPMOs will be responsible to account forand confirm, with the assistance of their local finance departments, that the agreed proportion ofCounterpart funds have been obtained to finance the proposed works, and that such funding will continuein the future to ensure progressive repayment of the loan (capital plus interest).



HFMSP Management Systems Promoting E

ADB Staff Consultancy, October 2005 27

Government Provisions - can be any of:• Natioan• Provincial• Municipal• County• Town

Figure 3 – Financ ing Arrangement Chart f or HFMSP

Collected Funds - levies, local taxes:• Government employees• Enterprises in flooded area• Farmers in flooded area• Other (includes voluntary)

ADB Loan

Local Bank Loan (commercialarrangement )

Other (private contributions etc.)

SOURCES OF FUNDS

LPMOs(through Local Financial Departmen

Contracts for C

Pumping WorksConstruction & O&M

Dam & O&M

Operation of LPMOs

USE OF FUNDS





4.7 Safeguards Compliance, Monitor ing and Management

Specific monitoring procedures for safeguards are described in Appendix E and F . General monitoringwill be accomplished through a process of measurement of the completed civil works and other relatednon-structural measures and project management activities. Actual progress will be confirmed throughthe approvals of completed works and the associated payments made on the basis of the works beingcompleted. Separate periodic reviews by ADB and/or other external monitors will review the standard andquality of finished works, and if necessary, more detailed monitoring may be instituted prior to payments

being authorized.

4.7.1 EnvironmentThe requirements for this are well covered by the Chinese laws and regulations, with the LocalEnvironment Protection Bureau (LEPB) and/or the Hunan Environment Protection Bureau (HEPB)available to undertake ‘external’ monitoring to ensure stated environmental mitigation measures areadopted and/or enforced. At project preparation, the Chinese domestic procedure has called for a fullEnvironmental Impact Assessment (EIA) to the Chinese standards, whilst ADB has categorized theproject as Category B. Under this categorisation, IEE’s and EMPs have been produced for 8 coresubprojects, and these will also be required on a ‘no objection’ basis for the remaining 27 coresubprojects (following the same format and considerations). Similarly, and overall project ConsolidatedIEE and EMP have been produced, and a summary SIEE has been posted on the ADB website. Thesedocuments confirm all the necessary provisions to be followed for implementation of each subproject and

the overall project, and are fully compliant with the Chinese domestic policies and requirements, as wellas the ADB guidelines. A full description of the requirements and the roles and responsibilities of allparties engaged in the implementation of the project are presented in Appendix E .

Generally, the anticipated environmental impacts are ones of change (for the better) rather than any thatwould be detrimental to a naturally pristine natural condition. Most of the riverine environment in thevicinity of the proposed works is already influenced by prior development and land use. The LPMO will beresponsible to ensure adherence to all relevant laws and regulations by the concerned partiesimplementing the approved flood management and mitigation measures.

Figure 4 – Repayments Arrangement Chart for HFMSP

Local Banks

County Finance

Department

Other

Municipal FinanceDepartments

Provincial FinanceDepartment

Ministry of Finance ADB

Sources of fund:• Local Tax• Flood Control Levy• City Maintenance Levy• Government Provision





4.7.2 ResettlementResettlement has to be completed ahead of land acquisition for construction. LPMO will be responsible toensure all necessary procedures have been fulfilled in readiness for civil works contract startup – or atleast have matters in progress for a phased civil works startup. Contractors should not proceed withoutdue written authorization, stating that all resettlement activities have been completed. LPMO will managethe process, monitor the developments, and coordinate arrangements to ensure full compliance with

appointed external monitors. PPMO will oversee the LPMOs participation in this process. Full details ofthe resettlement and related monitoring and compliance arrangements are described in Appendix F .

4.8 Risk Assessment and Management

An essential part of project implementation will be the observance and management of risks that couldaffect overall implementation according to plan. It is important that project managers (LPMOs and thePPMO) are fully aware of the potential risks, monitor their likelihood of occurrence, and make plans todeal with any adverse risks should they arise. The PDMF ( Appendix 1 ) outlines some of the foreseenrisks that could arise and jeopardise the overall project. For example, the possibility that inter-agencycoordination (particularly in the early stages of project implementation) is less than adequate will need tobe minimized – and PPMO is already trying to address this risk through the introduction of relevanttraining (see Section 6).

Subproject managers should be alert to any direct risks that might arise in relation to their own particularsubproject, such as:

i. delays to approvals,ii. reluctance for people to be resettled,iii. disaffection over compensation,iv. unforeseen environmental impacts,v. poor contractor performance and/or failure to deliver quality output,vi. constraints on provision of finance,vii. ineffective monitoring,viii. unforeseen natural calamity (early flood, late flood or other eventuality),ix. late delivery of key equipment (pumps, gates) etc.

Many of these risks relate to the very essential need for coordinated action and decision making betweenthe various stakeholders and project implementing agencies. The lack of coordination, and any resultantdelays to project activity implementation may not only delay the completion of physical works, but mayincrease the risk of works being ‘seriously’ at risk from any forthcoming flood event, and an increased riskthat perceived project benefits will not be realized as planned, thus jeopardizing the financial viability ofthe project through increased costs and delayed benefits. In turn, should local governments incurincreased and unforeseen costs, subsequent years plans may be unable to allocate sufficient finance tosupport the remaining development activities as planned. Therefore, being alert to risks and havingstrategies in place to develop with them, should they eventuate, is an essential part of good managementpractice.

Therefore, all potential risks should be considered, and management should have provisional plansprepared to deal with the situation if necessary. The use of MS Project (or similar programs) will enablemanagers to define and monitor the critical path for those dependent activities that specifically define the

overall duration of their subproject. In the event that a risk event actually occurs, the manager can quicklycheck the impact (say 2 or 3 weeks delay) and then test scenarios by adjusting the plans to see if there isany realistic way for the lost time to be recovered. Ideally, PPMO and LPMOs should also ensure thatthey have implemented sufficient detailed training so that key staff are able to fully appreciate and monitorthe risks through the use of appropriate project management tools.

Most probable risks should have been identified during the preparatory stage for the subproject by theLPMOs (or their Design Institutes / Consultants), and these risks should have been advised to andreviewed by the PPMO. Some risks are outside the direct control of the subproject manager, as they aredependent upon third parties involved in the process for seeking and subsequent granting of approvals





for aspects such as resettlement planning and implementation, environment impacts assessment andmanagement and overall project preparation and implementation – establishment of contracts,procurement of equipment, supplies and services, and physical works development and completion. Themanagers will need to be aware of the potential risks, and examine ways to mitigate their developmentand thus likely impact on project development (e.g. protracted delays in obtaining approvals for specificcritical stages of project implementation). It will be important that management training alerts managers tothe range of potential risks, and outlines ways that managers can deal with and mitigate these risks.





5 Monitoring and Reporting Systems

5.1 Perfor mance Indicator s

Initial and primary performance monitoring indicators were outlined in the PDMF (see Appendix 1 ). Morespecific indicators have been identified as per Table 4 (from the RRP). Effective performance indicators

are those which enable a definite impact and/or change to be validated against initial baseline datacollected before the project (or subproject) commences. The overall impact of the planned measuresmust be to:

a. Facilitate improved floodwater management as it passes through the river and drainagenetwork within the city areas (up to the planned design standard);

b. Facilitate earlier warning to the city people and mobilization of those people that are athighest risk of inundation, if the new flood control infrastructure is unlikely to offer assuredprotection due to the estimated magnitude of the flood;

c. Facilitate the stockpiling and rapid mobilization of resources and materials to protect thosepeople and property from potential loss (life, personal effects, property, livelihood);

d. Provide flood prone peoples and areas with more assured protection from regular sub-designstandard flood events so that they can plan and operate their socio-economic activities withmore confidence, and in due course offset the poverty inducing impacts of floods.

Besides the clear physical measures of actual works completed for each subproject, the LPMOs andPPMO need to collect primary socio-economic data to confirm the status of the flood affected area beforethe works are implemented, and use this data as the reference base against which indicators for projectimpact can be assessed in the future. PPMO and LPMO’s should adopt a range of verifiable indicators,and monitor the situation annually against such indicators, as shown in Table 4 .

Table 4: Verifi able Indic ators to Assess Beneficial Changeas a result of Project Measures.

Ref. Indicator Baseline Monitoring Mechanism

1. Economic growth (IMPACT Level)1.1 Number of newly established industrial enterprises in the

project areasCount before eachsubproject implementation

Registrar of Companies

1.2 Number of newly established commercial enterprises in theproject areas

Count before eachsubproject implementation

Registrar of Companies

1.3 Land values in project areas TBC by subproject beforeimplementation

Municipal and County Land &Resources Bureau and CountyConstruction Bureau

1.4 Incidence of urban poverty 6.7% (2003) Hunan Provincial Statistical Yearbook

2. Effectiveness of structural and non struct ural flood protection measures (OUTCOME level)2.1 Total of direct economic loss from floods and water-logging CNY1.5bn (2002) Hunan Statistical Yearbook2.2 Amount of disaster relief operations as reflected in the

aggregate provincial expenditures of the human resourcecapital fund

TBC by subproject Hunan Flood Control and Drought ReliefHeadquarters

3. Accompl ishment of project implementation measures (OUTPUT level)3.1 Warning time for potential floods in project areas Current: one day or less Hunan Hydrological Bureau3.2 Percentage of accurate data for forecasting and warning TBC by subproject Hunan Hydrological Bureau3.3 Flood control level of county level cities 1 in 4 year return flood

recurrenceHunan Flood Control and Drought Reliefreports

3.4 Flood control level of municipal cities 1 in 10 to 20 year returnrecurrence

Hunan Flood Control and Drought Reliefreports

3.5 Satisfaction level of 14 000 project affected persons interms of restored income and livelihoods to pre-resettlement levels

Pre resettlementsocioeconomic surveys,compensation rates,

Household tracer surveys, governmentand third party resettlement monitoringand evaluation reports, records of sub-





Ref. Indicator Baseline Monitoring Mechanismentitlements and targets ineach subproject RPs

project compliance with PRC and ADBsafeguards

3.6 Percentage of EMP monitoring targets achieved Initial environmentexaminations, surveys andmanagement plan targetsin each sub project

Local government EPB monitoringreports. Third party environmentmonitoring, records of sub-projectcompliance with PRC and ADB

safeguards3.7 Proposed items for future flood management sector plan

agreed upon by key authorities ADTA recommendationson FWS and FloodInsurance

PWRD and ADTA reports

3.9 Number and percentage of reports from LPMOs that aresubmitted on time and containing acceptable level of detailon project implementation in line with agreed Assurances

TBC 3 months after projecteffectiveness

Subproject management and monitoringreports; ADB’s PPRs

3.10 PPMS operational TBC 3 months after projecteffectiveness

AWPB, Project M&E records

TBC = to be collected by PPMOSource : Report and Recommendation to the President (RRP)

5.2 Progress and Quality Monito ring and Evaluation

Key progress should be measurable and appropriate quality control monitoring and evaluation proceduresshould be adopted. A special feature of the HFMSP is to place an emphasis on monitoring actualimplementation performance against the Chinese annual plans, through a range of monitoring activitiesand associated reporting. Detailed monitoring systems have been described for addressing the impact ofenvironment measures, resettlement plans and the adoption of an ethnic minority developmentframework (where this is appropriate). Monitoring of actual implementation will also include monitoringand mitigation of the key outputs and risks identified in the PDMF.

Under a sector loan, there is much greater scope to use the inbuilt flexibility for subprojectsimplementation to apply adaptive management approaches. The use of feedback and the analysis oflessons learned (for example, from the core subprojects which start up in the first year of the Project)should be an integral part of the project management process. While the use of observations andrecommendations from external reviewers is necessary and beneficial, it is equally important to ensure

that both internal and external feedback is used by the project management to improve the quality andsafeguard compliance for subsequent subproject implementation. PPMO will have a duty to ensureLPMOs are fully aware of requirements and will undertake to monitor and manage the safeguards policyapplication and practice to ensure that all agreed safeguards are fulfilled in accordance with Chineseregulations and ADB guidelines.

5.3 Monito ring Systems and Adherence to Safeguards

The monitoring system will, to the extent possible, be based on the PRC management and reportingguidelines for similar projects and subprojects. The monitoring system will also contribute to moreeffective project management by:

providing adequate practical and operational guidance on monitoring project performance andimplementation on areas not covered by the Project Design and Monitoring Framework (PDMF);

ensuring that ADB safeguards on resettlement, ethnic minorities and environment managementare complied with;

capturing unintended negative or positive impacts of the Project to the extent possible, and complementing the annual plan based management systems, which would include work planning

and activity tracking and tracking of financial, construction and staff management.

The monitoring system is based on the agreed PDMF and relevant and available baseline information.This will include existing data; first measurements made at or soon after project start-up; or forsubprojects, data that is collected when the subproject starts up. A sample matrix of the monitoring





system for civil works and data acquisition systems for the Project is illustrated in Table 5 , which supporta monitoring and management approach related to the related output indicators in the PDMF.

PPMO will undertake (or initiate) regular progress inspections, monitoring and evaluation of thesubproject developments as they proceed, and critically analyse reported progress and requests forprogress payments against the observed works on site. It is anticipated that in accordance with Chineseregulations, all works will be checked and verified as complete to a satisfactory standard before paymentsfor the work are authorized. LPMO’s will be responsible to ensure that periodic reporting is true and fair,and where any constraints are noted and/or corrections are required, recommendations will be given andany approvals withheld until the outstanding issues are settled in accordance with contract. The PPMOwill carefully review and deal with any issues that arise or are tabled in reports, keeping ADB suitablyadvised of developments with an assessment of potential impacts, and proposed remedy to be adopted.

5.4 Communications and Report ing Requirements

In accordance with all rules, regulations and financial management requirements, the Chinese systemhas relevant communication and reporting requirements. The use of foreign capital for development addsa further dimension to the communication and reporting requirements, as LFD, PFD and MOF are allinvolved in keeping the foreign lending agency fully informed of progress, issues and adjustments. Theuse of foreign loans increases the communication and reporting work load that has to be managedbetween all key stakeholders and levels of government. In particular, there are quite specific needs formonitoring and reporting on the adherence to and implementation of safeguards for resettlement andenvironment (the former not a key part of the domestic procedures) as explained in Appendix E and F .The adoption of the PPMS as described hereunder, with simplified and structured reporting forms, shouldhelp to alleviate undue duplication for communications and reporting, but as the Chinese and ADBrequirements differ at the present time in the level of detail required for various aspects of projectimplementation, there is a larger work load for a foreign loan supported project than occurs with thedomestically funded projects.

In the case of HFMSP, the overall project management organization is established primarily at two levels – provincial and local. For both the Chinese and ADB communication and reporting requirements, it ismore efficient and effective if the various management and service activities are implemented using anintegrated management approach (method), whereby duplication of effort, communications and reportingcan be minimized, and project administrative and management formalities are simplified and streamlinedto the greatest extent possible. The attainment of this outcome will be dependent upon the projectimplementation stakeholders being fully aware of the necessary obligations to be fulfilled, and theseobligations being fulfilled satisfactorily and on time. Effective communications will be essential for this tobe achieved, and will be more effectively accomplished if undertaken within a structured and agreedmanagement system. The PPMS is an attempt to provide the basis for such a system.

If the PPMS, management framework and related systems are accepted, and all stakeholders try toensure their effectiveness, then it is probable, once the systems are in place, activated and fullyfunctional, that ADB will be able to consider progressively increasing the level of delegated responsibilityto be undertaken at the Project rather than from Manila. It would still be necessary to have appropriateand sufficiently frequent review and assessment of project performance and management as per thePPMS, but with effective communications, regular reporting, such review and assessment would be less

onerous, and overall project progress would proceed smoothly and in accordance with the project plans.





Output 2:Flood protection works are completed in priority locations as part of Hunan's River Basin Flood Control Plans and 11 th Five Year Plregulations and ADB safeguard policies: Civil Works subcomponent

Performance Targets Information Needs Baseline InformationRequirements and Status

Data Gathering Methods andResponsibilities

Planning, Training, Data ManageExpertise, Resources, Responsib

8. zz qty of waterresources and rainfall

monitoring equipment,communicationsequipment and datamanagement systemsinstalled in 35 cities.

9. xx No. of localgovernment agency stafftrained to implement andmanage flood controlworks and monitoringsystems in 36 cities.





5.5 Reporting Procedures

For the project to progress smoothly, regular reporting and measurement of actual works completedwill have to be implemented. Monitoring of the reports will facilitate comparison of actual achievedoutputs (completed works) against the agreed plans (km of dike finished, number of culverts and/orgates installed etc.). This is often based on a target % completion by a certain time, with an overallaggregated estimate of progress against plan based on the relative value of works approved for

payment. As works are approved, and payments are made, the available funding in theproject/subproject accounts will be drawn down, and the PPMO, assisted by the Provincial FinanceDepartment, will then have to arrange for replenishment of the Imprest Account by submitting claimsagainst certified completion for reimbursement. To ensure this process runs effectively and is timely,particularly for successive tranches of finance to be replenished, ADB will need to receive overallproject reporting that fully appraises them of the project status, issues and actions being taken toalleviate any prevalent issues affecting progress.

The use of a tabular summary reporting style is to be encouraged, whereby rapid comparison betweenprevious status and latest situation can be appraised. The monitoring element of reporting shouldhighlight if and where problems have arisen, and what action management (PPMO, LPMO) is taking,has initiated or is actually implementing to overcome these, and keep the project on track (schedule).The proposed streamlined and integrated Project Performance and Management System will providea basis for simplified reporting utilizing tabular forms wherever possible and as agreeable to PPMO

and ADB. A primary objective would be to minimize the workload for translating information by havingan easily understandable structured format that can be produced in both languages – tabular formsproduced once in each language, and specific quarterly information presented in readilyunderstandable summarized form, translated as necessary.

As part of developing the overall reporting process, it is foreseen that Loudi subproject (one of the 8core subprojects) could be adopted as the initial trial baseline. The process to be used will generallyfollow the Chinese reporting system in accordance with prevailing regulations, particularly for financialreporting, when the “Infrastructure Financial Regulations” will be followed. The LPMO (financedivision) will prepare an investment plan for the subproject (basically a tabular form) for trackingfinancial progress. The LPMO (engineering division) will prepare an updated implementation plan,based on the detailed design and contractor’s bid, to track implementation progress of the projectactivities. This plan would ideally be structured as per a proprietary project management softwarepackage (e.g. MS Project – see Appendix A , Chart A1 for a simplified version of the implementationplan for Loudi, which can be expanded to show more detail as required). These plans (such as forLoudi) will form the basis for periodic reporting. The subproject LPMO will appoint civil workscontractors, based on bidding documentation prepared by PPMO, assisted by a procurement agencyappointed by the PPMO, for all 35 subprojects. The procurement agency will also be responsible forpreparing all relevant reports on bidding and bid evaluation, and on finance withdrawals anddisbursements, for submission to ADB.

In the case of Loudi, Appendix E and F illustrate the nature of the quarterly reporting to be adopted forenvironment and resettlement activities respectively. Loudi LPMO will then be responsible toconsolidate that reporting into its own project implementation and monitoring quarterly report for theoverall subproject, which would then be submitted to the PPMO. The Loudi subproject quarterly reportwould therefore include sections for actual physical progress (against plan), financial statements,monitoring of contractor and monitoring / supervision consultants / institute performance, adherence tocompliance covenants, management of risks, prevalence of issues, constraints and actions taken, andan indication of proposed activities and achievements for the next quarter. The report should alsoinclude a weighted assessment of actual progress against plan as illustrated in Appendix D .

Chart 2 in Appendix D shows an example of how progress of Loudi subproject can be evaluatedusing the implementation plan as shown in Appendix A (Chart A3), and applying assigned weights forthose elements that have progressed (the example is for Q3 of 2006). Thus, in this case, the overallproject progress at the end of Q3 2006 is 12%. Using proprietary software (e.g. MS Project), thedevelopment of these charts can be structured for inclusion in quarterly reports, whereby the LPMOstaff would simply need to update the actual progress (based on work value completed or estimated tobe done), prior to generating an updated chart. The specifics of utilizing this approach will need somefurther development ahead of loan effectiveness, or shortly thereafter. The proposed ADTA may beable to assist PPMO and LPMOs in this regard.





5.6 Project Reporting

The PPMO will have overall responsibility to prepare a consolidated quarterly progress report (QPR –see Appendix D ) covering all active subprojects, through on-going preparation, contractsimplementation and financial utilization to subproject completion. Though there is a total of 35subprojects, not all will commence at the same stage, and the number of active contracts and financialdisbursement for each will be varied through the overall project implementation period. PPMO will be

responsible for management of the consolidated equipment procurement contracts, appointment ofthe Tender Agency and supervision of its activities, and general management and supervision of thesupervisory and monitoring consultants and agencies/institutes, where these are appointed to provideservices for multiple subprojects (as compared to when LPMOs hire such services directly for theirparticular subproject). Consolidated project contracts will be signed for PPMO by PWRD as the ‘legalperson’. Civil works contracts and specific subproject service contracts will be signed for LPMOs bythe representative line agency office (e.g. River Course Management Office or Urban ConstructionManagement Company) as the relevant ‘legal person’.

The following summarises the reporting requirements for the subprojects and the Project (additionaldetails are presented in Appendix D ):

5.6.1 SubprojectThe subproject development – planning, design, evaluation, approval, implementation, completion and

closure – will be documented through periodic progress reporting. The initial planning and designinvolves specific reports – feasibility study, resettlement plan, environmental impact, social andpoverty impact, and ethnic minority – and these form the basis for the eventual approval of the project.It then remains for preliminary design and detailed design reports, implementation and managementplans, foreign funds utilization plans, and contracts to be prepared or established.

Once the subproject contracts are mobilized, it will be necessary to monitor the activities and preparereports for these on a regular basis – monthly, quarterly and annually. It is anticipated that direct on-the-ground implementation activities will include monthly reporting by Contractors and Consultants tothe LPMO. For each Contract, the reports would encompass sections on physical works progress,issues and action taken, plus any details of substantive variation to the works, reasons andconfirmation of approval for the change.

Contracts will include those for civil works; equipment procurement, delivery and installation; anddomestic consultancy services (for design, supervision, monitoring, quality control, environmentalmanagement) as may be appropriate. Each contract will need to be monitored, and personnel willhave to be assigned to undertake supervision and monitoring, and prepare periodic reports to theLPMO (via the relevant responsible division – engineering, finance, safeguards, procurement andadministration). The reports content would need to be appropriately structured for ease of use by therecipient, who in the case of LPMO, LFD and the Tender Agent, will need to consolidate theinformation received, together with that for other activities, to create a consolidated subproject reportfor issue to PPMO (with financial information only to PFD). The Tender Agent would receiveinformation on contracts status and finance utilization, in order to prepare appropriately structuredconsolidated reports on these aspects for ADB.

The LPMO will appoint domestic consultants and/or monitoring institutions to supervise the civil works,resettlement, environmental management and any other specific issues (e.g. impacts on orparticipation by ethnic minorities, affected peoples and women). These appointees will be responsiblefor periodic reporting (predominantly monthly, but otherwise in relation to when specific activities are inprogress) to the LPMO. The LPMO, through its respective divisions, will review and collate thesereports into a consolidated subproject report on a quarterly basis, except in relation to financialreports, which will be submitted monthly to the local finance department and to the PPMO. In general,the reporting chain of command is from county local government to municipal local government toPPMO. The approximate timeframe for reporting is within 1 week from the end of each month orquarter from county to municipal level, and within another week from municipal level to PPMO.

Financial reporting will be the responsibility of the local finance department (LFD), who will beresponsible for the disbursement of project funds – counterpart and ADB – based on submitted claimsreviewed and approved by the LPMO. The LFD will then prepare a Chinese system report to theprovincial finance department (PFD) with copy to PPMO. The financial reporting will also be





coordinated with the specialist agency, appointed by the PPMO, to prepare relevant financial reportingin accordance with the ADB requirements for all 35 subprojects.

The LPMO will compile structured quarterly progress reports, incorporating relevant information anddetails as obtained through the monthly progress and monitoring reports from consultants, contractorsand monitoring agencies assigned by the LPMO. The LPMO will have up to 5 divisions 7 for managing,reviewing and guiding the project implementation, and each division will be responsible for preparing

report inputs for their respective areas of responsibility. The LPMO Director and Vice Director,assisted by the administration division, will review and consolidate the component parts into theoverall quarterly report. This report will be then forwarded to the PPMO, who will review it and makearrangements to address any issues that may be highlighted in the reports. Where appropriate, LPMOmay submit part of all of the quarterly reports to other relevant local agencies, particularly whereassistance to resolve prevailing issues may be required.

5.6.2 ProjectThe PPMO has similar divisions to those indicated for the LPMO, and these divisions would haveoverall responsibility to ensure activities in their area of responsibility proceed according to plan, andthrough the monitoring procedures, are being implemented in compliance with safeguards (though thespecific overall responsibility for this at each subproject will rest with the relevant division of theLPMO). The PPMO will from time to time need to provide guidance to LPMOs if and as requested, oras and when they see particular requirements not being fulfilled. The primary monitoring supervision at

PPMO level will be enacted in response to the information provided in (or left out of) periodic reports.The PPMO, with its respective divisions, will review the submitted quarterly reports from the LPMOs,and after dealing with any pertinent issues, will compile a consolidated project quarterly report for the

ADB and its own records. The base Chinese version will be prepared to fulfill PRC statutoryrequirements, and will wherever possible be compiled to a format that also meets overall quarterlyreporting requirements for ADB. Once the relevant divisions have consolidated the information in theirarea of responsibility, the PPMO Director / Vice Director will review the submitted component parts,and assisted by their administrative staff, will compile the quarterly report, adding in relevantinformation on management actions, notable variations to program, actions initiated to addressspecific individual and grouped subproject issues, and an assessment of likely impacts if such issuesare likely to disrupt the planned progress of the project. This may be appropriately summarized bypresentation of subproject implementation plans, with baseline and actual progress barcharts (e.g.Microsoft Project). Provincial Finance Department will provide the relevant financial status and actionreports, in parallel with a report in the required format prepared for ADB by the Tender and FinancialManagement Agent appointed by PPMO, so that these can be incorporated by PPMO into therespective quarterly progress report(s) for HnPG (PPMO) and ADB. [Alternatively, the FinancialReports may be provided as a supplementary appendix, but PPMO should verify consistency inrelation to the overall quarterly report].

The Tendering Agent will also provide relevant information in relation to the status and progress oftendering procedures, approvals applied for and/or received, bid invitations issued, bids received,opened and evaluated, and contracts prepared and awarded. Once contracts are mobilized, it will bethe responsibility of the LPMOs to report on their progress for those directly managed by the LPMOs,and the responsibility of the PPMO to monitor and report on the progress of any consolidatedcontracts with suppliers and/or consultants and monitoring agencies/institutes, if these have beenarranged to support multiple LPMOs. The Agent will have responsibility to manage all the contractspreparation through to award for all 35 subprojects, and will also obtain relevant financial informationfrom all LFDs and/or PFD to prepare the financial statements and reports for ADB.

Subproject Quarterly Progress Reports (QPRs) will be consolidated at PPMO, with specific issue to ADB on a timely basis (estimated as within 1 month of the end of each quarter, allowing for theprogress of reporting from county level to municipal level to PPMO). The Chinese version of theconsolidated reports will be retained on file by PPMO, and would be available for review by relevantprovincial and national line agencies if required, but would not be produced and forwarded as arequired course of action. PWRD, PFD and PDRC representatives on the PPMO would be aware of

7 The PPMO and LPMOs will have identical subdivisions, under a Director and Deputy Director. Thesedivisions are administration, engineering, safeguards (resettlement, social and environment), finance and

procurement.





any developments, issues and proposed remedial actions, and could appraise their departmentalcolleagues of any specific issues as required. The overall project progress would be overseen andguided by the Provincial Leading Group, on behalf of Hunan Provincial Government and itsparticipating line agencies.

PPMO would be responsible for keeping ADB appraised of project developments, with reference asneeded to any specific subproject issues, should this be necessary to obtain clarification and/or

actions approval, beyond the specific activities which are necessary as per ADB’s relevant guidelines.This may be particularly necessary in the case of some emergency situation that could necessitate achange of scope or significant contract variation. Such communication would be accomplished byemail, fax or telephone as appropriate, supported by the provision of any relevant documentation, overand above periodic reporting and other regular information provision to ADB.





6 Institut ional Strengthening and Capacity Build ing

7.1 Institut ional Needs Assessment

The PPMO and LPMOs have been established with an initial suitably trained and qualified staff tohandle the various project preparation activities – each xPMO has five similar divisions (as shown in

Appendix C ) – Administration, Engineering, Procurement, Finance and Safeguards. Prior toimplementation, not all of the required staff have been mobilised, and more staff will have to bemobilized as the subproject implementation activities commence. Procurement and Finance will havea strong association with the relevant Finance Department personnel (xFD), whilst all will need to beactive in preparing and following annual plans. The main issue for the “Institutional Needs

Assessment” is to ensure that the organization is setup with sufficient capable personnel with thenecessary technical, administrative and financial knowledge to ensure all managerial, supervisory,technical and administrative tasks can be implemented effectively in accordance with the plans.

7.2 Institut ional Linkages

To manage floods and minimize flood impacts and risk, the various responsible line agencies andinstitutions are linked via a line of command between the various flood control headquarters – fromcounty to municipal to provincial to state levels.

Institutional linkages for project implementation and management will be via the various levels ofPMO, upwards from the PIUs, through their respective LPMOs to the PPMO.

Financial management institutional linkages will be similar, through the Ministry of Finance, PFD to theLFDs (where the Municipal FDs have official oversight and management of actions undertaken by theCounty FDs, who report under the financial control system regulations through the Municipal FD to thePFD.

7.3 Instituti onal Strengthening and Training

An objective of the project is to strengthen and build the overall foreign loans and general projectsdevelopment capability at the provincial and local government levels. For many staff, this may be thefirst time that they have had involvement with such a large and complex project, using foreign capitalinvestment. A range of additional procedures will have to be learnt, and the integration of these withthe normal Chinese project implementation procedures will be required. To make the overall projectimplementation more effective, many staff will require additional specialist training to help them withtheir new and in many cases expanded responsibilities. A number of specific training activities willhave to be defined and scheduled – with a mix of inception workshop, on-the-job experience andspecialist training courses (variously in Changsha, China or in some cases, if deemed appropriate tomake project implementation more effective, then overseas). Specific requirements should arise fromcompletion of an “Institutional Needs Assessment” at the commencement of the project.

The PIU and LPMO staff do not have ADB project preparation and implementation relatedadministration and procedural experience. LPMOs will receive training in relevant projectimplementation and management procedures from PPMO in order to strengthen their overall capabilityto manage their subproject within the HFMSP. PPMO will initiate training through seminars andworkshops for:

Project Management procedures; Bidding procedures for ADB projects; Project Sustainability, Operation and Maintenance; and Personnel Development and Succession Planning.

6.3.1 LPMO Training NeedsThe following training will be provided to each LPMO, either directly by the PPMO, or with theassistance of domestic consultants, assisted as and when necessary by inputs from ADB and or otherthird parties:





Table 6: LPMO Training Needs

Area of Training Staf fto be

Trained

TrainingDays perperson

TotalDays

Method ofDelivery(see Key)

Project Implementation Related Training ADB procurement procedures 8 3 24 L ADB reporting procedures 8 3 24 LStandard Contract Documents for ICB 8 3 24 JResettlement monitoring 6 3 18 LEnvironmental impact monitoring 4 3 12 LProject Management 2 2 4 LProject Planning and Control 2 2 4 LFinancial Control of Projects 2 2 4 JStandard Contract Documents for LCB Civil Works 2 2 4 JConstruction Supervision (general) 2 2 4 JSite Records and Control 2 2 4 JSite safety 2 2 4 JQuality control in construction 2 2 4 JEvaluation of Contract Claims 2 2 4 JProject Benefits Monitoring and Evaluation 2 2 4 LManagement TrainingStrategic planning 2 2 4 LBusiness/corporate planning 2 2 4 LCapital Investment planning & appraisal 2 2 4 LTraining Needs Assessment 1 2 2 LPerformance measurement 2 2 4 LPersonal Management skills development 5 5 25 JStudy Tour PPMO will organize 2 groups to visit another Chinese City that

already has experience in implementing similar ADB supportedFlood Management Projects. Each PPMO will provide at least 5persoonel to join a group, which will take about 10 days tocomplete the tour.

Method of Delivery Key:L: Lectures and Workshops by Consultants in Changsha.J: On-the-job training by assigning staff to similar projects in China.O: On-the-job training by assigning staff to similar projects overseas.

6.3.2 PPMO Training NeedsThe PPMO will need training in ADB management procedures for project preparation andimplementation as follows:





Table 7: PPMO Training Needs

Area of Training Staf fto be

Trained

Trainingdays perperson

TotalDays

Method ofDelivery

(see Key)Management Training (Preparation Stage)Management procedures and requirement 4 2 8 L

ADB procurement procedures 4 3 12 L ADB reporting procedures 4 3 12 LFinancial Management 4 3 12 LStudy Tour to other Chinese City with similar ADBproject implementation experience

4 10 J

Overseas Study Tour 5 10 OManagement Training (Implementing Stage)Project Management 4 2 4 LFinancial Management 4 2 4 LStudy Tour to other Chinese city with similar ADBproject implementation experience

4 10 J

Overseas Study Tour 4 10 O

7.4 Management Performance Indicators

The most directly measurable performance indicator will be to observe and confirm project/subprojectimplementation proceeding according to plan. More specific indicators will be the timeliness ofreporting, limited or no incidence of need for significant subproject or project adjustments, containmentof costs and adherence to budgets, and strengthening of the institutions and numbers of personnelthat have successfully undergone relevant training. On safeguards, the successful implementation ofresettlement without delays, and the satisfactory completion of all environmental mitigation measureswill be solid indicators, especially where these can be clearly quantified.





8 Recommendations and Next Steps

The project is proceeding into the implementation phase, with loan approval expected in early 2006,and loan effectiveness three months later. The PPMO will continue with preparatory activities in theinterests of having initial LCB and possibly ICB contracts established and ready for mobilization assoon as possible (see Chart A2, Appendix A ), but the time required to process ICB contracts (seeFlow Chart B1, Appendix B ) indicates that an earliest start is necessary in order to accomplish all the

necessary processing steps in good time (up to 50 weeks may be required). Even for LCB contracts(Flow Chart B2), the processing steps may only just be ready (at least 24 weeks required for the initialcontracts) for a start up of implementation in early to mid 2006. These are critical aspects for theestablishment of the initial contracts, but the commencement of these procedures is also subject to thesatisfactory completion of various steps under the Chinese system – notably PDRCs approval of theFeasibility Study Report for the whole project (and associated subprojects) and the submission,appraisal and approval of the Foreign Loans Utilisation Plan (FLUP) to be granted by Ministry ofFinance, which will also require agreement from the Ministry of Water Resources and the NationalDevelopment and Reform Commission. [At end of October 2005, it is understood the FSR approval byPDRC is on hold until HEPB has confirmed approval of the overall project EIA] .

The following is a summary of the expected steps to be fulfilled by the PPMO, LPMOs and ADB beforeproject / subproject implementation can be started.

7.1 Steps to be taken by PPMO PPMO has still to secure approval of the overall project feasibility study from PDRC.

Subsequently, they can finalise the FLUP and submit this to MOF, MWR and NDRC for reviewand approval. Once approval has been granted, PPMO can initiate arrangements for loannegotiations with ADB.

PPMO can also initiate the commencement of preliminary designs and preparation of modelcontract documents for the 8 priority core subprojects.

Once the loan is approved, and the preliminary designs and model contract documents havebeen approved internally and by ADB, PPMO can mobilize LPMOs to seek tenders for theircivil works contracts (if LCB), or they can initiate actions to secure tenders for any ICBcontracts, most notably the consolidated subprojects equipment contracts.

For the ICB procedures, PPMO would most likely seek tenders for the appointment of atendering agency to assist them with the contracts detailed preparation, tendering, evaluationand award procedures, and subsequently, for contracts management activities.

PPMO can also initiate action to secure all required domestic consultants to assist withcontracts supervision and safeguards monitoring.

PPMO should also finalise its own personnel structure and organization, and initiate allrequired training to ensure knowledge and competency to administer, organize and fulfill theassigned duties of the PPMO staff. PPMO may choose to seek domestic consultantassistance to fulfill the training needs assessment and delivery of training, as well as tosupport PPMO with some of the required management tasks.

PPMO should also secure and finalise the loan agreement with ADB, and then make allnecessary arrangements to fulfill agreed loan covenants, and subsequently monitor and reporton project progress (QPR) to ADB once contracts implementation commences.

7.2 Steps to be taken by LPMOs

LPMOs should undertake to structure and organize sufficient administrative, technical andfinancial staff within their office in readiness for their subproject implementation.

LPMOs should ensure that the initial steps and planning for land acquisition and resettlementare agreed and approved so that civil works contracts (LCB) can commence as planned (referto Appendix F ).





Similarly, LPMOs should ensure agreement and approval for the implementation of theenvironmental management plans (EMP – see Appendix E ), and the appointment of anydomestic consultants, institutes or monitoring agencies to assist LPMO with the futureimplementation and safeguards monitoring.

If necessary, LPMOs should make similar arrangements for the preparation and

implementation of the ethnic minority development plan, in accordance with the agreed ethnicminority development framework.

LPMOs should make arrangements with the relevant ‘legal person’ (RCMO or UCMC) for thesigning of approved Contracts and their subsequent implementation, inclusive of theinstallation of the data acquisition systems (to be assisted by Hunan Hydrology Bureau).

If required, LPMO should also determine any consultants requirements and makearrangements to appoint them to assist with any supervisory and subproject managementactivities, inclusive of training and capacity building requirements.

7.3 Steps to be taken by ADB

ADB has completed the internal ADB processing of the pre-loan negotiations requirements,

subject to any last minute specific requests for any additional information or clarifications. ADB can arrange the scheduling of loan negotiations once it is clear PPMO has completed all

necessary internal domestic procedures and is now approved to request loan negotiations.

Once loan negotiations have been satisfactorily concluded, ADB will undertake the relevantprocedures to make the loan effective (90 days after completion of loan negotiations).

Once the schedule for loan and project implementation becomes clear, ADB can commenceplanning schedules for periodic review of civil works, resettlement, environment managementand project management implementation and safeguards monitoring activities.

7.4 Conclusions and Recommendations

Detailed scheduling of activities to be undertaken by all stakeholders has been indicated in the Chartspresented in Append ix A . These will need to be updated periodically (at key milestones like loannegotiations, loan effectiveness and periodic reviews) to reflect actual developments against theoriginal baseline project implementation estimated schedules. PPMO should be responsible for thisupdating of these charts, assisted as necessary by appointed Design Institutes, Consultants orsupervisory / management agencies. Effective project management will ensure that any initial delayscan be addressed through effective measures to ‘recover time lost’ if at all possible.

The development and adoption of an integrated project management system, whereby the Chineseannual plan based approach is enhanced by the integration of the ADB’s project performancemanagement system (PPMS), is still at an early stage. To be made fully acceptable and functional, itwill require further refinement, based on comment and adjustment to be made by the concernedstakeholders. However, this report, complete with substantive Appendix, presents an outline for theintegration of the two project management systems, taking into account the concerns andconsiderations for its use. As this is still a ‘work in progress’, it is proposed that any further refinementof the outlined approach could be undertaken as part of the ADTA 8 activities that are planned forimplementation at the commencement of the loan and project implementation phase. However, furtherdevelopment of this integrated project management system will require pro-active involvement from allconcerned stakeholders, if the overall goal of an effective and practical integrated managementsystem that can serve as a model for other future projects is to be successfully established anddemonstrated as a pilot program under HFMSP.

8 Proposed Advisory TA to be piggybacked to the HFMSP Loan Implementation Program. Refer to the RRP,Appendix 12.





The proposed advisory TA (ADTA) has an initial focus to help PWRD develop it’s integrated riverbasin flood management strategic planning capabilities, related annual planning, and to facilitate theincorporation of priority flood management activities – non-structural as substantive compliments tothe major structural works. The TA will support therefore the overall planning for integrated floodsector development, whilst simultaneously helping PWRD to review, plan and implement future floodmanagement interventions within a holistic integrated river basin development strategy. An objectivewill be to ensure that any proposed flood control and management activities would not impact

adversely on other parts of the river basin, and that the proposed interventions adhere to and arecompliant with established laws, regulations, safeguards policies and procedures. The TA will alsoexamine and recommend mechanisms to coordinate the project annual plans within the overall waterresources and flood management works annual plans, as compiled by PWRD.

The ADTA will also provide additional startup support, particularly to the PPMO, and general supportthrough PPMO to LPMOs if required, to promote and implement effective management systems forthe project and subprojects development. This would primarily focus on the environment andresettlement management and monitoring requirements, but if funding were available, this supportcould be extended to further assist with the refinement and implementation of the integrated projectperformance and management system for the project. The objective would be to ensure take up of theproposed system, including addressing any initial problems and requirements to ensure stakeholdersparticipation, so that after a limited period of initial project operations, PPMO and LPMOs would beable to better fulfill their roles and responsibilities. Additionally, once the systems have been testedand refined with technical assistance, it is anticipated the overall workload for PPMO and LPMO staff,in terms of routine monitoring and reporting, would be more effectively organized to meet bothChinese and ADB requirements, more efficient, and more crucially exceptionally effective in mitigatingduplication of effort and the occurrence of delays to implementation plans.

It is therefore recommended that this integrated system approach be reviewed by all concernedstakeholders, and following further discussion, perhaps in the form of a workshop, the details befurther refined in readiness for implementation on a trial basis at the start up of the project. It is alsorecommended that Loudi subproject undertake the initial participation for the trials, as that subprojectis well organized and ready for earliest implementation. Following the initial trials, if it provessuccessful, then the integrated PPMS can be progressively introduced with the start up of othersubprojects. In this way, it is foreseen that many of the initial problems that have beset sector projectsin the past can be quickly overcome and HFMSP would then have a realistic chance for beingimplemented in accordance with plans.



HFMSP Management Systems Appendix

PRC PDA: Preparation and Adoption of a Comprehensive Management Framework for the Hunan Flood...

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