Project Readiness Financing

Project Administration Manual

Project Number: 53284-001 November 2019

Federated States of Micronesia: Preparing the Chuuk Water Supply and Sanitation Project

CONTENTS

I. IMPLEMENTATION PLAN 1

A. Rationale 1 B. Outputs and Activities under Project Readiness Financing 1 C. Overall Implementation Plan 1

II. PROJECT MANAGEMENT ARRANGEMENTS 2

A. Project Implementation Organizations: Roles and Responsibilities 2 B. Key Persons Involved in Implementation 3

III. COSTS AND FINANCING 3

A. Key Assumptions 3 B. Allocation and Withdrawal of Grant Proceeds 3 C. Detailed Cost Estimates by Expenditure Category and Financier 4 D. Detailed Cost Estimates by Year 5 E. Contract and Disbursement S-Curve 5

IV. FINANCIAL MANAGEMENT 6

A. Financial Management Assessment 6 B. Disbursement 6 C. Accounting 7 D. Auditing and Public Disclosure 7

V. PROCUREMENT AND CONSULTING SERVICES 8

A. Procurement of Consulting Services 8 B. Procurement of Goods 9 C. Procurement Plan 10

VI. SAFEGUARDS 15

VII. PERFORMANCE MONITORING 15

A. Monitoring 15 B. Reporting 15

VIII. ANTICORRUPTION POLICY 15

IX. ACCOUNTABILITY MECHANISM 16

X. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 16

APPENDIX Consultant's Terms of Reference

Project Administration Manual for Project Readiness Financing: Purpose and Process

The project administration manual (PAM) for project readiness financing (PRF) is an abridged version of the regular PAM of the Asian Development Bank (ADB) and describes the essential administrative and management requirements to implement the PRF following the policies and procedures of the government and ADB. The PAM should include references to all available templates and instructions either by linking to relevant URLs or directly incorporating them in the PAM. The Federated States of Micronesia Department of Finance and Administration (DF&A) and the Chuuk Public Utilities Corporation (CPUC) are wholly responsible for the implementation of ADB-financed PRF projects, as agreed between the borrower and ADB, and following the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation, including compliance by DF&A and CPUC of their obligations and responsibilities for PRF project implementation following ADB’s policies and procedures. In the event of any discrepancy or contradiction between the PAM and the grant agreement, the provisions of the PRF grant agreement will prevail. After ADB’s approval of the PRF proposal, changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in this PAM.

ABBREVIATIONS

ADB = Asian Development Bank CPUC = Chuuk Public Utility Corporation CWSSP Chuuk Water Supply and Sanitation Project DF&A = Department of Finance and Administration FMA = financial management assessment NGO = nongovernment organization NRW = nonrevenue water PAM = project administration manual PRF project readiness financing QCBS = quality- and cost-based selection TOR = terms of reference

I. IMPLEMENTATION PLAN A. Rationale 1. The project readiness financing (PRF) will help prepare the proposed Chuuk Water Supply and Sanitation Project and facilitate a smooth transition to project implementation. It will help streamline the initial contract awards and expedite disbursements. The PRF will finance consulting firms and individual consultants, as well as the equipment, to achieve three outputs—(i) creating an enabling environment for the ensuing investment project; (ii) identifying the investment scope, preparing the project, and procuring key project components; and (iii) enabling a smooth transition to implementation by strengthening the Chuuk Public Utility’s (CPUC) water supply network operations. The PRF is included in Asian Development Bank’s (ADB) country operations business plan, 2020–2022 for 11 small Pacific island countries. B. Outputs and Activities under Project Readiness Financing 2. Output 1: Enabling environment for the ensuing investment project created. Output 1 will create the enabling environment for the CPUC to implement the ensuing investment project. Activities will focus on (i) designing and implementing a public awareness and outreach campaign to highlight water and sanitation issues, and foster community understanding and support for the project; (ii) assisting CPUC in reforming its framework for electricity, water supply, and sewerage tariffs, and introducing the tariff adjustment regime recommended under the 2019 CPUC institutional review.1 3. Output 2: Investment scope identified, project readiness prepared, and key project components procured. The PRF team will prepare the sector strategy and other strategic documents for CPUC to deliver sustainable and affordable water supply and sanitation services in Chuuk from 2020 to 2040; identify the project scope; prepare the project due diligence; confirm project financing; and procure project components. Deliverables under Output 2 include the preparation of water supply and sewerage master plans and associated investment plans, feasibility studies for high priority water supply and sewerage investments, due diligence for the ensuing investment project, detailed engineering design and surveys based on the feasibility studies, preparation of bid documents, and procurement assistance. 4. Output 3: Utility’s water supply network operations strengthened. Output 3 will deliver (i) activities to strengthen CPUC’s management of assets and network operations, including demand management and nonrevenue water (NRW) reduction—building on CPUC’s ongoing efforts in this direction; (ii) computer hardware, software, and associated ancillary equipment to upgrade CPUC’s financial management and asset management systems; and (iii) leak detection equipment to support CPUC’s NRW reduction program.

1 The CPUC institutional review is being delivered under ADB technical assistance: ADB. 2017. Capacity Building and

Sector Reform for Renewable Energy Investments in the Pacific. Manila (TA 9425-REG).

C. Overall Implementation Plan

Table 1: PRF Implementation Schedule

Advance Action:

2019 PRF Year 1 2019 - 2020

PRF Year 2 2020 - 2021

Activities J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N

A. Implementation

Output 1

Consultant selection

Advertisements

Selection

Contract awards

Delivery

legislation and regulations

public awareness and community outreach

asset management and operations management

Institutional strengthening

Output 2

Consultant selection

Advertisements

Selection

Contract awards

Delivery

Output 3

Procure materials and equipment

Install smart meters

B. Management Activities

Submission of quarterly progress report

Submission of annual report

Submission of AFS

Projected date of ensuing loan

AFS = audited financial statement, PRF = project readiness financing. Source: Asian Development Bank.

2

II. PROJECT MANAGEMENT ARRANGEMENTS A. Project Implementation Organizations: Roles and Responsibilities

Table 2: Organizations’ Roles and Responsibilities PRF Project Implementation Organizations Management Roles and Responsibilities

A. Executing agencies 1. Department of Finance and

Administration (DF&A) (i) Overall delivery of the PRF and reporting to Government and donors, (ii) Ensure compliance with financing agreement covenants, (iii) Coordinate with CPUC in the preparation of withdrawal applications

and submission to ADB, and (iv) Maintain separate project accounts, have all project accounts audited

annually and sent to ADB. B. Implementing agency

1. Chuuk Public Utility Corporation

(i) Responsible for the overall implementation of the project including the day-to-day project activities and administration of the project by the PMU,

(ii) Ensure compliance with the provisions of the Grant and Project Agreements and government policies and guidelines,

(iii) Issue contract change orders as appropriate, and (iv) Engage the community public awareness activities.

2. Chuuk Public Utility Corporation Project Management Unit

(i) Day-to-day implementation of the PRF; (ii) Prepare overall project implementation plan and consolidated annual

work plan; (iii) Prepare consultant request for proposals to comply with ADB

requirements, evaluate proposals, and award, administer contracts; (iv) Prepare grant withdrawal applications; (v) Maintain project accounts and records; (vi) Serve as the secretariat for the PSC; (vii) Prepare reports as required during the implementation of the PRF

including progress reports (at least quarterly) for the government and ADB;

(viii) Prepare the PRF completion report to the government and ADB; (ix) Ensure compliance with safeguards requirements; (x) Update the project’s resettlement plan following completion of detailed

design of project components; (xi) Carry out environmental assessments; and (xii) Update the project’s environmental monitoring plan following

completion of detailed design of project components. C. Asian Development Bank (i) Monitor and review overall implementation in consultation with the

DF&A and CPUC including: PRF and project implementation schedule; actions required with reference to the summary poverty reduction; timeliness of budgetary allocations and counterpart funding; project expenditures progress with procurement and disbursement, compliance with grant covenants; and likelihood of attaining PRF and project outputs and outcome.

ADB = Asian Development Bank; CPUC = Chuuk Public Utilities Corporation; DF&A = Department of Finance and Administration; DR&D = Department of Resources and Development; PMU = project management unit; PRF = project readiness financing, PSC = project steering committee. Source: Asian Development Bank.

3

B. Key Persons Involved in Implementation Executing Agency Department of Finance and Administration

Officer's Name: Senny Phillip (Ms.) Acting Secretary Telephone: +691 320 2639 E-mail address: senny.phillip@ymail.com

Office Address: Palikir, Pohnpei State, FSM Asian Development Bank Urban, Water Supply and Sanitation Division

Jingmin Huang (Ms.) Director Telephone No.: +63 2 86326181 E-mail address: jhuang@adb.org

Mission Leader Stephen Blaik Principal Urban Development Specialist Telephone No.: +63 2 86326127 E-mail address: sblaik@adb.org

III. COSTS AND FINANCING

A. Key Assumptions 5. The following key assumptions underpin the cost estimates and financing plan:

(i) The official currency of the Federated States of Micronesia is the United States dollar ($). All financial transactions relating to the PRF will be in United States dollars.

(ii) Price contingencies based on expected cumulative inflation over the implementation period are provided in Table 3.

Table 3: Escalation Rates for Price Contingency Calculation

Item 2019 2020 2021 Average

Foreign rate of price inflation 1.5% 1.5% 1.5% 1.5% Domestic rate of price inflation 0.7% 1.5% 1.6% 1.3%

Sources: Asian Development Bank. B. Allocation and Withdrawal of Grant Proceeds 6. The government has requested a grant not exceeding $5.00 million from ADB’s Special Funds resources (Asian Development Fund) to help finance the PRF. The summary financing plan is in Table 4. ADB will finance the expenditures in relation to consulting services, surveys, and the Output 3 pilot activities. The government will contribute $0.42 million toward the costs of the PRF through the exemption of taxes and duties.

4

Table 4: Allocation and Withdrawal of Grant Proceeds ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS

Category Amount Allocated Percentage and Basis for Withdrawal from the Grant

Account

$

1 Consultancy Services and Goods 5,000,000 100% of total expenditures claimed*”

Total 5,000,000

* Exclusive of local taxes and duties within the territory of the Recipient. Source: Asian Development Bank

C. Detailed Cost Estimates by Expenditure Category and Financier

Table 5: Detailed Cost Estimates by Expenditure Category and Financier

Item Cost ADB GoFSM $'000 $'000 % $'000 %

A. Investment Costs a,b

2 Consultancy Services and Goods 4,436 4,436 100.0% - 0.0% Output1 556 556 100.0% - 0.0% Output2 2,384 2,384 100.0% - 0.0% Output3 1,496 1,496 100.0% - 0.0%

3 Taxes and Duties 416 - 0.0% 416 100.0% Subtotal (A): Total Base Cost 4,852 4,436

416

B. Contingencies c

1. Physical 473 473 100.0% - 0.0% 2. Price 91 91 100.0% - 0.0% Subtotal (B) 564 564 100.0% - 0.0%

Total Project Cost (A+B) 5,416 5,000

416

% of Total Project Costs 100.0%

92.3%

7.7%

GoFSM = Government of Federated States of Micronesia. a In mid-2019 prices.

b The costs of auditing the project accounts may be financed by the grant.

c Physical contingencies computed at 6%. Price contingencies computed at average of 1.5% on foreign exchange costs and 1.3% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Source: Asian Development Bank.

5

D. Detailed Cost Estimates by Year

Table 6: Cost Estimate by Year Category Cost 2020 2021 2022

($'000) ($'000) ($'000) ($'000)

A Output 1

556 306 250 - Output 2

2,384 1,311 1,073 -

Output 3

816 286 530 -

Subtotal

3,756 1,903 1,853 -

B. Taxes and Duties 416 205 212

C. Contingencies 564 - - 400

Total Project Cost (A+B+C) 4,736 2,107 2,065 400

% of Total Cost 100% 44.5% 43.6% 8.4%

Source: Asian Development Bank.

Note: Excludes taxes and duties.

E. Contract and Disbursement S-Curve

Figure 1: Contract Awards and Disbursements S-Curve

Note: Excludes taxes and duties.

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022

$ '000

Quarter

Projected Contract Awards and Disbursements

Cumulative Disbursements Cumulative Contract Awards

6

Table 7: Projected Contracts Awards and Disbursements

Year Quarter Disbursements Contract Awards

Cumulative Disbursements

Cumulative Contract Awards

($’000) ($’000) ($’000) ($’000)

2020 Q1 $- 0 0 0 2020 Q2 $717 3,392 717 3,392 2020 Q3 $785 344 1,501 3,736 2020 Q4 $1,066 864 2,567 4,600 2021 Q1 $1,040 0 3,607 4,600 2021 Q2 $581 0 4,187 4,600 2021 Q3 $259 0 4,446 4,600 2021 Q4 $154 0 4,600 4,600 2022 Q1 400 400 5,000 5,000

5,000 5,000 Note: Excludes taxes and duties. Source: Asian Development Bank estimates.

IV. FINANCIAL MANAGEMENT

A. Financial Management Assessment 7. The financial management capacity of CPUC has improved substantially since 2009 and CPUC external entity audits for fiscal years 2017 and 2018 did not identify any material weaknesses or deficiencies in internal financial controls. A financial management assessment (FMA) of CPUC was conducted in October 2019. The assessment concluded that (i) CPUC’s financial management practices are sound, (ii) CPUC staff levels are appropriate for an organization of its size, and (iii) CPUC has well documented processes and procedures. Weaknesses identified by the FMA include: (i) CPUC’s lack of experience in directly implementing investment projects financed by multi-lateral development banks; and (ii) the capacity of CPUC to absorb the significant increase in workload during the implementation of the investment project. To address these weaknesses, consultants with experience in ADB disbursement and procurement guidelines and procedures will be engaged under the PRF. During the implementation of the ensuing investment project, CPUC will engage additional staff and consultants to address the increasing workload. The FMA concluded that CPUC’s financial management risk moderate and its procurement risk is high. B. Disbursement 8. CPUC will disburse the project readiness grant proceeds following the ADB’s Loan Disbursement Handbook (2017, as amended from time to time), and detailed arrangements agreed between the government and ADB. Online training for project staff on disbursement policies and procedures is available.2 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 9. Direct payment and reimbursement procedures will be used for disbursements under the PRF. CPUC will be responsible for (i) collecting supporting documents, and (ii) preparing and sending withdrawal applications to ADB.

2 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning.

7

10. Before submitting the first withdrawal application, the government should submit to ADB sufficient evidence of the authority of the persons who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is stipulated in ADB’s Loan Disbursement Handbook (2017, as amended from time to time). Individual payments below such amount should be paid by the Department of Finance and Administration (DF&A) and CPUC and subsequently claimed from ADB through reimbursement unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements system is encouraged for submission of withdrawal applications to ADB.3 C. Accounting 11. CPUC will maintain separate PRF project accounts and records by funding source for all expenditures incurred on the PRF project, following accrual basis of accounting. PRF project accounts will follow the Government Auditing Standards issued by the Comptroller General of the United States. D. Auditing and Public Disclosure 12. CPUC will cause the detailed consolidated project financial statements to be audited following the International Standards on Auditing by an independent auditor acceptable to ADB. CPUC will present the audited project financial statements together with the auditor’s opinion, in English, to ADB within 6 months from the end of the fiscal year. 13. CPUC will submit the audited entity financial statements together with the auditor’s report and management letter, in English, to ADB within 1 month after approval by the relevant authority. 14. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, following the applicable financial reporting standards; (ii) whether the proceeds of the grant were used only for the purpose{s} of the project; and (iii) whether the borrower or executing agency complied with the financial covenants contained in the legal agreements (where applicable). 15. DF&A will monitor compliance with financial reporting and auditing requirements during review missions and normal program supervision and will follow up regularly with all concerned, including the external auditor. 16. ADB has made the government, DF&A, and CPUC aware of ADB’s approach to delayed submission and the requirements for satisfactory and acceptable quality of the audited project financial statements.4 ADB reserves the right to require a change in the auditor (in a manner

3 ADB’s Client Portal for Disbursements system facilitates online submission of withdrawal applications to ADB,

resulting in faster disbursement. The forms to be completed by the borrower are available at ADB. Guide to the Client Portal for Disbursements.

4 ADB’s approach and procedures regarding delayed submission of audited project financial statements: (i) When ADB does not receive the audited project financial statements by the due date, ADB will write to the

executing agency to inform it that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

8

consistent with the constitution of the borrower) or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB or if the audits are substantially delayed. ADB reserves the right to verify the project’s financial accounts to confirm that its policies and procedures were followed when the share of ADB’s financing was used. 17. ADB’s Access to Information Policy 2018 will guide the public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements. After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on its website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.5

V. PROCUREMENT AND CONSULTING SERVICES A. Procurement of Consulting Services 18. CPUC will recruit all consultants and nongovernment organizations following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration instructions and/or staff instructions. Consulting services will comprise 6 input-based individual consultant contracts, two output-based contracts for firms, and a local nongovernment organization (NGO) as outlined in Table 4. The terms of reference for all consulting services are provided in Appendix 1.

Table 8: Consulting Services Requirements Output Package

No. Assignment Purpose Recruitment

Method 1 1.1 Community Communications

Specialist (3 person-months, input-based, intermittent)

Design the CPUC public awareness and community outreach program.

ICS

1 1.2 Chuuk-based NGO (18-month duration)

Implementation the CPUC public awareness and community outreach program.

QBS

1 1.3 Financial Management Specialist (15 person-months, input-based, intermittent)

Financial Management and tariff reform.

SSS

2 2.1a Consulting Firm - Project Preparation Phase 1 (Output-based contract delivered over 14 months)

Prepare water supply and sewerage master plans, strategic plans, feasibility studies, and due diligence.

QCBS

2 2.1b Consulting Firm - Project Preparation Phase 2 (Output-based contract delivered over 6 months)

Detailed engineering design and procurement assistance.

QCBS

(ii) When ADB does not receive the audited project financial statements within 6 months after the due date, ADB

will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will inform the executing agency (a) of ADB’s actions and (b) that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When ADB does not receive the audited project financial statements within 12 months after the due date, ADB may suspend the loan.

5 Such information generally falls under public communications policy exceptions to disclosure (ADB. 2011. Public Communications Policy 2011: Disclosure and Exchange of Information. Manila [para. 97(iv–v]).

9

Output Package No.

Assignment Purpose Recruitment Method

2 2.2 Hygiene awareness and education Specialist (4 person-months, input-based, intermittent)

Design hygiene awareness and education and water conservation awareness program.

ICS

3 3.1a Project Manager / Water supply and Sanitation Utility Specialist (15 person-months, input-based, intermittent)

Lead and manage the CPUC project management unit and water supply and sewerage asset planning.

SSS

3.1b Water Supply Demand

Management Specialist (6 person-months, input-based, intermittent)

Design and implement water supply demand management program.

ICS

3.1c NRW Specialist (6 person-

months, input-based, intermittent)

NRW reduction planning and management.

ICS

CPUC = Chuuk Public Utility Corporation; ICS= individual consultants selection; NGO = nongovernment organization; NRW = nonrevenue water; QBS = quality-based consultant selection; QCBS = quality- and cost-based selection, SSS = single source selection

19. Individual consultants will be recruited using the individual consultant selection method. The NGO will be recruited following the quality-based selection method. 20. Consulting firms will be engaged to deliver Package 2.1a: Project Preparation Phase 1 and Package 2.1b: Project Preparation Phase 2. The firms will be recruited using the quality- and cost-based selection (QCBS) method with a 90:10 quality-cost ratio. Subject to (i) satisfactory performance of the firm selected to deliver Package 2.1a and the quality of the Package 2.1a outputs; (ii) mutual agreement between CPUC and Package 2.1a consulting firm; and (iii) ADB no-objection, the Package 2.1a consulting firm may be directly engaged to deliver Package 2.1b: Project Preparation Phase 2. B. Procurement of Goods 21. All procurement of goods and materials under Output 3, as presented in Table 5, will follow the ADB Procurement Policy (2017, as amended from time to time) and its associated staff instructions. Shopping will be used for all procurement of equipment and materials and individual contracts will not exceed $250,000. All equipment will be procured with a minimum three-year warranty, effective from the date of delivery to CPUC, for timely replacement and repair of defective parts (within 6 weeks of receipt of a defect report from CPUC). All software procured will be provided with software licenses for a minimum of 3 years effective from the date of installation on CPUC computer platforms.

10

Table 9: Goods and Equipment Requirements

Output Package No.

Assignment Component Procurement Method

3 3.2a NRW reduction Leak detection equipment Goods - RFQ 3 3.3a Financial management information

systems Software, computer hardware, ancillary equipment

Goods - RFQ

3 3.3b Asset management system Software, computer hardware, ancillary equipment

Goods - RFQ

3 3.3c Geographic information system (GIS) Software, computer hardware, ancillary equipment

Goods - RFQ

GIS = geographic information system, NRW = nonrevenue water, RFQ = request for quotation

C. Procurement Plan

Basic Data

Project Name: Chuuk Water Supply and Sanitation Project – Project Readiness Financing

Project Number: 53284-001 Approval Number:

Country: FSM Executing Agency: Department of Finance and Administration

Project Procurement Classification: B Implementing Agency: Chuuk Public Utility Corporation

Procurement Risk: High

Project Financing Amount: $5.00 million

ADB Financing: $5.00 million Project Closing Date: 30 December 2022

Date of First Procurement Plan Date of this Procurement Plan: 26 September 2019

Procurement Plan Duration: 18 months Advance contracting: no eGP: no

a. Methods, Review and Procurement Plan

22. Except as ADB may otherwise agree, the following methods shall apply to procurement of goods, works, nonconsulting services, and consulting services.

Procurement of Goods, Works and Nonconsulting Services

Method Comments

Request for quotations (RFQ) The amount funded by the grant under a single contract will not exceed $250,000. (Output 3)

Consulting Services Method Comments

Individual consultant selection (ICS) Applicable for individual consultants (Outputs 1, 2, and 3)

Single source selection (SSS) Applicable for individual consultants (Outputs 1 and 3)

Quality- and cost-based selection (QCBS) Applicable for selection of firms. The quality-cost ratio will be 90:10. (Output 2)

Quality-based selection (QBS) Applicable for selection of a non-governmental organization (Output 1)

11

b. List of Active Procurement Packages (Contracts)

23. The following table lists goods, works, nonconsulting, and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan’s duration.

Goods, Works, and Nonconsulting Services

Package Number

General Description Estimated Value

($) Procurement

Method Review

Bidding Procedure

Advertisement Date

Comments

3.2a Output3 Leak detection equipment

$180,000 RFQ Prior Q2 2020

3.3a Output3 Financial management information system (software and hardware)

$250,000 RFQ Prior Q2 2020

3.3b Output3 Asset management system (software and hardware)

$175,000 RFQ Prior Q2 2020

3.3c Output3 GIS system (software and hardware)

$75,000 RFQ Prior Q2 2020

Consulting Services

Package Number

General Description Estimated Value

($) Selection Method

Review Type of

Proposal Advertisement

Date Comments

1.1 Output 1: Community Communications Specialist

$88,000 ICS Prior Q1 2020 • Type: Individual

• Assignment: International

• Expertise: Community outreach

• Advance Contracting: No

1.2 Output 1: CPUC public awareness and community outreach program

$180,000 QBS Prior BTP Q2 2020 • Type: NGO

• Assignment: National

• Expertise: Community outreach

• Advance Contracting: No

12

Consulting Services

Package Number

General Description Estimated Value

($) Selection Method

Review Type of

Proposal Advertisement

Date Comments

1.3 Output 1: Financial Management Specialist

$288,000 SSS Prior Q4 2019 • Type: Individual

• Assignment: National

• Expertise: Financial management

• Contracting: No

• single source selection of CPUC current financial advisor – Mr. Kelly Keller.

2.1a Output 2: Project Preparation Phase 1

$1,650,000 QCBS Prior FTP Q1 2020 • Type: Firm

• Assignment: International

• Quality-Cost Ratio: 90:10

• Advance Contracting: No

2.1b Output 2: Project Preparation Phase 2

$620,000 QCBS Prior STP Q2 2020 • Type: Firm

• Assignment: International

• Quality-Cost Ratio: 90:10

• Advance Contracting: No

• Possible single source selection of Project Preparation Phase 1 firm.

2.2 Output 2: Hygiene awareness and education Specialist

$114,000 ICS Prior Q1 2020 • Type: Individual

• Assignment: International

• Expertise: hygiene awareness and education, WASH

• Advance Contracting: No

13

Consulting Services

Package Number

General Description Estimated Value

($) Selection Method

Review Type of

Proposal Advertisement

Date Comments

3.1a Output 3: Project Manager / Water supply and Sanitation Utility Specialist.

$416,000 SSS Prior Q4 2019 • Type: Individual

• Assignment: international

• Expertise: Project management / asset management

• Advance Contracting: No

• Single source selection of CPUC current water and sewer advisor – Mr. Paul Howell.

3.1b Output 3: Water Supply Demand Management Specialist

$200,000 ICS Prior Q1 2020 • Type: Individual

• Assignment: International

• Expertise: Water supply demand management

• Advance Contracting: No

3.1c Output 3: Nonrevenue water specialist

$200,000 ICS Prior Q1 2020 • Type: Individual

• Assignment: International

• Expertise: Non-revenue water reduction

Advance Contracting: No

c. List of Indicative Packages (Contracts) Required under the Project

24. The following table lists goods, works, nonconsulting, and consulting services contracts for which the procurement activity is expected to commence beyond the procurement plan duration and over the life of the project (i.e. those expected beyond the current procurement plan’s duration).

Goods, Works and Non-consulting Services

Package Number

General Description Estimated Value ($)

Procurement Method

Review Bidding

Procedure Comments

Nil

Consulting Services

Package Number

General Description Estimated Value ($)

Selection Method

Review Type of

Proposal Comments

Nil

14

d. List of Awarded and Completed Contracts

25. The following table lists the awarded contracts and completed contracts for goods, works, nonconsulting, and consulting services.

Goods, Works and Non-consulting Services Package Number

General Description Contract

Value Date of ADB Approval of

Contract Award Date of

Completion Comments

Nil

Consulting Services Package Number

General Description Contract

Value Date of ADB Approval of

Contract Award Date of

Completion Comments

Nil

e. Non-ADB Financing 26. The following table lists goods, works, non-consulting, and consulting services contracts over the life of the project, financed by non-ADB sources.

Goods, Works and Nonconsulting Services

General Description Estimated Value (cumulative, $)

Estimated Number of Contracts

Procurement Method

Comments13

Nil

Consulting Services

General Description Estimated Value (cumulative, $)

Estimated Number of Contracts

Recruitment Method

Comments

Nil

15

VI. SAFEGUARDS 27. The PRF activities consist of consulting services and goods to build CPUC’s capacity for financial and technical information management and leak detection. Consequently, the PRF activities were not categorized as per ADB’s Safeguard Policy Statement (2009). The safeguard categories of the ensuing project will be confirmed during due diligence. However, the ensuing investment project is expected to be in category B for environment and involuntary resettlement, and category C for indigenous peoples. 28. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth in Appendix 5 of the Safeguard Policy Statement.

VII. PERFORMANCE MONITORING A. Monitoring 29. Project readiness financing project performance monitoring. CPUC will monitor PRF project performance semiannually and provide consolidated reports to ADB. These reports will include (i) each activity’s progress measured against the implementation schedule, (ii) key implementation issues and solutions, (iii) an updated procurement plan, and (iv) an updated implementation plan for the next 12 months. To ensure PRF projects continue to be both viable and sustainable, CPUC should adequately review PRF project financial statements and the associated auditor's report. If an ensuring loan is not approved, CPUC will submit a PRF project completion report to ADB within 6 months of physical completion of the PRF project.6 B. Reporting 30. CPUC will provide ADB with

(i) semiannual progress reports on the PRF project in a format consistent with ADB's project performance reporting system;

(ii) consolidated annual reports, including (a) progress achieved by output measured against the performance targets, (b) key implementation issues and solutions, (c) an updated procurement plan, and (d) an updated implementation plan for the next 12 months;7 and

(iii) PRF project accounts, CPUC’s audited financial statements, and the associated auditor’s report.

VIII. ANTICORRUPTION POLICY 31. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy (1998, as amended to date) relating to the PRF project following ADB’s Integrity Principles and Guidelines.8 All contracts financed by ADB will include provisions specifying ADB’s right to audit and examine the records and accounts of the executing agency

6 ADB. 2018. Project Completion Report for Sovereign Operations. Project Administration Instructions. PAI 6.07A.

Manila. 7 The regional departments will present the performance of the completed PRF in the project completion report of the

ensuing loan. 8 ADB. 2015. Integrity Principles and Guidelines (2015). Manila.

16

and all PRF project contractors, suppliers, consultants, and other service providers. This includes the examination of project outputs, assets, and all other information that may be considered relevant for audit or inspection by ADB regardless of project completion, termination, or cancellation. Firms or individuals on ADB’s anticorruption debarment list are ineligible to participate in activities that are financed, supported, or administered by ADB; and may not be awarded any contracts under the PRF project.9 32. To support these efforts, ADB included relevant provisions in the grant agreement and grant regulations and the bidding documents for the PRF project

IX. ACCOUNTABILITY MECHANISM 33. People who are, or may in the future be, adversely affected by the PRF project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted PRF projects can voice and seek a resolution for their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should act in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.10

X. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

9 ADB. Anticorruption and Integrity. 10 ADB. Accountability Mechanism.

17 Appendix

Consultant's Terms of Reference Output 1 1. Consulting services under Output 1 will comprise individual consultants including: (i) a legal draftsperson (international, 5 person-months, intermittent), (ii) a community communications specialist (international, 3 person-months, intermittent); (iii) a Chuuk-based nongovernment organization (NGO) to deliver CPUC’s community outreach program; and (vi) a financial management specialist (international, 15 person-months, intermittent). The outline terms of reference for the consultants are provided below. 2. Package 1.1 - Community Communications Specialist (international, 3 person-months, intermittent). The community communications specialist will prepare the CPUC communications strategy and design CPUC’s public awareness and community outreach campaign. The community communications specialist will have a degree, preferably at a postgraduate level specializing in communications, social development or related disciplines and at least 10 years of practical work experience in communications, stakeholder engagement or related fields. The community communications specialist will report to the CPUC chief executive officer. The community communications specialist will undertake, but not be limited to, the following key tasks:

(i) Conduct a stakeholder analysis to identify and map key stakeholders (including local and international NGOs), their level of influence, communication dynamics and their stake, interest and positions on project issues considering stakeholders’ inputs into the analysis. Conduct communication-based assessments determining: (i) each stakeholder’s communication requirements and project information needs; (ii) their needs and interests in participating in consultations; and (iii) the most appropriate channels to engage them. The assessment will also determine the capacity of CPUC in implementing communication activities; and will also include a review of previous communication activities and identify any gaps that need to be addressed in succeeding communication activities.

(ii) Based on the stakeholder analysis and communication-based assessments, develop the communication strategy. The strategy will include, but not be limited to: (i) how information will be shared and disseminated with both external and internal stakeholders; (ii) an outline of proposed participation channels, consultation activities and the role of project grievance mechanisms; a disclosure plan detailing how information is best shared with each stakeholder, especially NGOs, and in what forms. The consultant will ensure that the strategy and all planned activities are in accordance with and meet CPUC’s communication policies and ADB’s Public Communications Policy and related procedures and guidelines.

(iii) Design a public awareness and community outreach campaign for CPUC focusing on water resource and sanitation issues and foster community understanding and support for the ensuing investment project. The public awareness and community outreach campaign will be delivered by a Chuuk-based NGO over a period of 15 months commencing in the second quarter of 2020. Key messages to be conveyed through the campaign include: (i) the cost to CPUC for delivering water supply and sewerage services and to charge for services; (ii) the importance of conserving water and using water wisely; and (iii) the linkages between access to safe water and sanitation and good health.

(iv) Assist CPUC: (i) to deliver the communication strategy; and (ii) support the Chuuk-based NGO to deliver the CPUC public awareness and community outreach

18 Appendix

campaign. Undertake other activities necessary to deliver the strategy as needed, including but not limited to: (a) coordinating ongoing mechanisms for continued interaction with NGOs, civil society organizations (CSOs), and other stakeholders after the initial consultations; and (b) supervising the design, pretesting and production of communication materials for CSOs, affected people and/or other external stakeholders.

(v) The consultant will support CPUC on external communications, including lending oversight and support to designated CPUC staff in developing a project website and engaging with international and national media.

3. Package 1.2 – Community Outreach Program. A Chuuk-based NGO will be recruited using quality-based selection to implement the CPUC public awareness and community outreach campaign over a period of 18 months commencing the second quarter of 2020. Specific tasks of the NGO will include:

(i) Implement CPUC’s public awareness and community outreach campaign following the communication strategy and the public awareness and community outreach campaign design prepared by the community communications specialist. The program will raise public awareness of the need for safe water, of the costs associated with the operation of water supply systems, the importance of water conservation, and watershed protection, and foster community support for the ensuing Chuuk Water Supply and Sanitation Project (CWSSP).

(ii) Conduct Willingness to Pay Survey. Canvass all communities on Weno and Tonoas, providing information on CWSSP, performing inspections of current water and wastewater practices, and receiving inputs from the consumers as to their perceived needs, and their ability to pay for service. In consultation with the financial management specialist and CPUC, design and implement a simple survey to cover at least 10% of households in Weno and Tonoas. The data collected from this survey will be summarized, and the information provided to the stakeholders for consultation. The information will also be used by CPUC and the financial management specialist in assessing appropriate and affordable CPUC water supply and sewerage tariffs.

(iii) Following CPUC communication strategy and the public awareness and community outreach campaign design, prepare and disseminate water supply awareness materials specific to the Weno water supply and sewerage system and for the Tonoas water supply system, to Weno and Tonoas residents. The awareness materials may include illustrated guides to the various sources of water, details of the equipment used to treat and distribute water, details of the costs to CPUC in delivering water supply and sewerage services and detail the need for water conservation. Water Conservation and Watershed Protection materials that have been produced for other areas, but pertinent to this area, may also be used. Materials should be produced in the local vernacular, where practical.

(iv) Conduct a series of community workshops and seminars to present the information to the public, to get further feedback, and to distribute the Water Conservation and Watershed Protection materials.

(v) Prepare and submit to CPUC monthly reports outlining activities over the previous month and listing participants, proceedings, and outcomes of workshops, seminars, and meetings to be submitted to the project manager for dissemination.

Appendix 19

4. Package 1.3 - Financial Management Specialist (international, 15 person-months, intermittent). The financial management specialist will strengthen CPUC’s financial management capacity and assist CPUC and the PMU to establish and maintain the PRF accounts and to prepare the PRF financial documentation. The financial management specialist will have a degree in accounting, finance, or a related field, and will have a recognized professional accountancy qualification and at least 15 years’ experience in financial management including experience in building the financial management capacity of power or water utilities. The financial management specialist will report to the CPUC chief executive officer. Specific tasks and responsibilities of the financial management specialist will include:

(i) Review current revenue collection, receipting, and banking procedures; implement strengthened internal financial control procedures as required and train CPUC staff thoroughly in their use;

(ii) Review CPUC’s financial management and financial record keeping procedures. Prepare guidelines for financial record management and monitor the implementation of the guidelines.

(iii) Review the current financial accounting and reporting tools (including adequacy of software and computer hardware) and design and implement improved procedures, including establishing and monitoring financial indicators, as required;

(iv) Assist CPUC to establish and maintain separate project accounts and records for all expenditures incurred under the PRF.

(v) Assist CPUC to prepare and submit PRF grant withdrawal applications and associated documentation to ADB.

(vi) Monitor the PRF grant financial activities project. Review the project accounts quarterly and identify project financial risks and recommend corrective actions to ensure the project accounts follow international accounting principles and practices.

(vii) Prepare guidelines for quarterly and annual financial reporting and train CPUC staff in the use. Assist CPUC finance personnel in the production of routine, quarterly, and annual financial reports and accounts, including the PRF accounts, required for internal and external use, including the CPUC Annual Report;

(viii) Assist CPUC to prepare an action plan to progressively enhance CPUC’s financial and operating systems to improve its collection of accounts receivable over the course of PRF targeting 95% by 30 September 2022.

(ix) Conduct annual reviews of CPUC power, water supply, and sewerage tariffs in relation to sustaining full cost recovery (operations and maintenance costs, depreciation, and debt servicing). Recommend amendments to the CPUC tariff framework for CPUC Board consideration, to ensure CPUC’s financial sustainability.

Output 2 5. Consulting services under Output 2 will comprise (i) a firm to deliver the Project Preparation Phase 1 contract (output-based contract), (ii) a firm to deliver the Project Preparation Phase 2 contract (output-based contract); and (iii) an individual consultant to design water, sanitation, and hygiene awareness specialist (international, 4 person-months, intermittent). The outline terms of reference for the consultants are provided below. 6. Package 2.1a - Project Preparation Phase 1 (Output-based contract). The contract deliverables will include: (i) an assessment of water supply and sanitation in Chuuk state focusing of CPUC operations; (ii) a condition assessments of all CPUC water supply and sewerage assets and the preparation of a GIS platform and GIS database covering the physical attributes of CPUC water supply and sewerage assets, condition, and recent maintenance history; (iii) a strategic

20 Appendix

environmental assessment of Weno and Tonoas to guide the preparation of the water supply and sewerage master plans; (iv) preparation of CPUC water supply and sewerage master plans with a 20-year horizon (i.e. 2020-2040) including a prioritized and costed investment plan; (v) preparation of water supply and sewerage asset management plans; (vi) preparation of the CPUC 20-year water supply and sanitation strategic plan presenting the agreed strategy to achieve the least cost and least risk of owning and operating assets over their life cycle while meeting the agreed service standards; (vii) prepare feasibility studies for selected investments identified in the CPUC water supply and sewerage masterplans; and (viii) social, environmental, economic and financial due diligence of selected investments identified and agreed by CPUC in CPUC’s 20-year water supply and sewerage master plans. Further details of the contract deliverables are provided below.

(i) Inception. In consultation with key stakeholders and with the guidance of CPUC, prepare an inception report setting out the findings of the inception phase tasks as outlined below and including a detailed workplan and any proposed changes to the terms of reference for review by key stakeholders. The inception phase tasks shall include, but not limited to:

a) Lessons Learned. Using the lessons of past experience to increase the

likelihood of project success, (i) search the ADB's Independent Evaluation Department’s Evaluations Information System,1 past relevant project completion reports and project performance evaluation reports to identify lessons from previous Pacific water supply and sanitation projects; (ii) review the findings of ADB’s Independent Evaluation Department’s relevant publications;2 and (iii) review other donor agencies’ evaluations relating to past or ongoing water sector activities in RMI.

b) Existing Documentation and Reports. Review relevant water supply and sanitation documents in Chuuk State. Conduct initial discussions on water and sanitation issues on Chuuk with key stakeholders including the National and Chuuk State governments, community services organization and non-governmental organizations, educational and faith institutions, and local businesses.

c) Policy and Regulatory Frameworks. Review the policy and legislative framework for water supply and sanitation in Chuuk including proposed amendments to the CPUC legislation and associated regulations.

d) Review Health Statistics. Obtain and analyze statistics on water related disease (typhoid, cholera, gastroenteritis and other water borne diseases as appropriate) in Weno and Chuuk State over the last 10 years with a focus of waterborne disease on Weno. Identify trends in the incidence of water-borne disease in Weno and Chuuk State and correlation with other factors such as availability of safe water and sanitation and drought.

e) Climate Change. Undertake a literature review and identify potential impacts to water supply and sanitation in Chuuk resulting from potential climate change and disaster impacts and the FSM and Chuuk State governments climate change adaptation policies. Determine the implications for the formulation of

1 Available at http://www.adb.org/evaluation/. 2 Such as the following: ADB, 2003, Special Evaluation Study on ADB’s Capacity Building Assistance for Managing

Water Supply and Sanitation to Republic of the Fiji Islands, Kiribati, Papua New Guinea, and Republic of the Marshall Islands. ADB, 2004, Majuro Water Supply and Sanitation Project Completion Report. ADB. 2007. Success Rates: Successful Projects in the Health and Water Supply, Sanitation, and Waste Management Sectors 2001-2006. Available at http://www.adb.org/site/evaluation/main.

Appendix 21

the proposed project and identify the appropriate design parameters to account for climate change. Further data capture and predictive modeling of potential climate change impacts through this contract are not proposed.

f) Water Supply and Sanitation Sector Assessment: Prepare a report describing the arrangements for water supplies and sanitation in Chuuk, with a focus on CPUC operations. The report will identify the factors, such as assets and asset condition, legislation, user charges and affordability, and institutional arrangements which impact on safe and continuous CPUC water supply and sewerage services. The report will also identify development partner assistance for development of water supply and sanitation services in Chuuk since 2010.

g) Inception Report and Inception Workshop. Prepare an inception report presenting the findings of inception phase activities and including a detailed work plan and proposed changes to the terms of reference, if required, for review by stakeholders. Present the findings of the inception phase tasks at a stakeholder workshop. Within 2 weeks of receipt of comments from key stakeholders but not later than 3 weeks after the inception phase workshop, finalize the inception report addressing stakeholder comments and suggestions. The inception report will also detail changes to the scope of the Package 2.1a contract proposed by the Package 2.1a consultant.

Deliverables: 1.1 Draft inception report 1.2 Inception workshop 1.3 Final inception report

(ii) Existing CPUC Water Supply and Sewerage, Asset Mapping and Condition

Assessment. In consultation with key stakeholders and with the guidance of CPUC, locate, map and assess the condition of existing water supply and sewerage, assets. Tasks required to map and assess the condition of CPUC water supply and sewerage assets will include, but not limited to:

a) Asset Condition Parameters. Identify and agree on the nature of CPUC

water supply and sewerage asset data to be captured by the condition assessment (excluding assets which are not readily accessible such as buried pipes and cables). The data capture is anticipated to be at a mezzo scale (e.g. valves, pumps, pipes, generators, bores, desalination equipment, sewage treatment reactors, etc.). Please note that limited data is likely to exist on CPUCs assets. Develop a regime, following international best practice, to assess the condition of such assets.

b) Survey. Capture the location and attributes (type, dimensions, material, and condition) of all CPUC water supply and sewerage fixed assets (both serviceable and unserviceable) located on Weno and Tonoas. Where necessary, expose pipelines to determine, the pipeline alignment, material, size, and depth. Construct a GIS database of these assets. The GIS software, software licenses, computer hardware platforms and ancillary equipment will be delivered by CPUC under Output 3.

c) Asset Valuation. Provide a valuation of the depreciated value and the replacement cost of existing assets.

d) Asset Condition Report. Prepare the draft asset condition report on the condition of CPUC’s water supply and sewerage assets. The draft report will

22 Appendix

include plans showing the location, alignment, and attributes (size, material, etc.) of the CPUC assets and tables estimating their depreciated and replacement costs. Within 2 weeks for receiving comments from CPUC, finalize and submit the final water supply and sewer asset condition report to CPUC.

Deliverables: 2.1 Draft water supply and sewer asset condition report 2.2 Final water supply and sewer asset condition report

(iii) Water Safety Plan. In consultation with key stakeholders including the Chuuk State Environmental Protection Agency and the Chuuk Department of Health, prepare draft water safety plans for Weno and Tonoas. The water safety plans will be in accordance with the World Health Organization (WHO) Guidelines for Drinking-water Quality (2008) and WHO’s Water Safety Plans, Managing drinking-water quality from catchment to consumer (2005). Within 2 weeks of receipt of comments from CPUC on the draft water safety plans, finalize the water safety plans and submit the final water safety plans to CPUC.

Deliverables: 3.1 Draft water safety plan for Weno 3.2 Draft water safety plan for Tonoas 3.3 Final water safety plan for Weno Island 3.4 Final water safety plan for Tonoas

(iv) Strategic Environmental Assessment. Prepare a strategic environmental

assessment to guide the preparation of the CPUC water supply and sewerage master plans for Weno and Tonoas.

Deliverables: 1.4 Draft strategic environmental assessment 1.5 Final strategic environmental assessment

(v) Water Supply and Sewerage Master Plans. In consultation with key stakeholders and with the guidance of CPUC, Chuuk State Environmental Protection Agency and the Chuuk Department of Health, prepare water supply and sewerage master plans for Weno and Tonoas, including prioritized and costed investment plans as outlined by, but not limited to, the tasks set out below:

a) Water Supply. In consultation with key stakeholders including CPUC, the

Chuuk Leadership, and the municipal officials determine appropriate water supply levels of service for (i) CPUC water supplies, and (ii) communities without access to CPUC services.

• Assess the existing average daily demand including average daily per capita demand, for the CPUC water supply network on Weno and on Tonoas. Prepare demand forecasts for the period 2020 to 2040 for high-, medium-, and low-demand population growth scenarios. The demand forecasts will account for changes in per capita demand resulting from (i) water supply charges, and (ii) water conservation public awareness campaigns.

Appendix 23

• Assess the security of water resources currently available on Weno and Tonoas for the various demand growth scenarios and considering predicted climate change impacts to 2050 under a worst-case climate change scenario (RCP8.5). Identify opportunities to supplement the existing water sources such as increased rainwater harvesting.

• Based on the findings of (a) the asset condition assessment and (b) water resource security assessment, identify improvements to the CPUC water supply network (including distribution mains, service connections, service reservoirs, booster pumps etc.) required to efficiently deliver potable water at the agreed level of service under the existing and future demand scenarios. Identify quick gains arising from small improvements to the system that will have significant benefits and could be implemented immediately. Minimization of physical losses from the water supply system is critical. Introduction of bulk supply and universal consumer metering is essential.

• Prepare the Weno and Tonoas Water Supply Master Plan 2020 – 2040 for review and comment by key stakeholders. The master plan must be aligned with the Chuuk State strategic development plans as well as meet the potable water supply needs of Chuuk State. The master plan will include a costed, prioritized, and scheduled investment plan spanning the master plan period (2020-2040). Present the water supply draft master plan at stakeholder workshops. The final master plan, addressing stakeholder comments, will be submitted within 3 weeks of receiving comments.

b) Sewerage. Review and assess the environmental and potential health

impacts of the current arrangements for collection and disposal of sewage in Weno.

• Review appropriate options for the collection (e.g. on-site vs centralized), treatment (e.g. primary, secondary, tertiary) and disposal of sewage (e.g. outfall, infiltration gallery) on Weno. Prepare a brief working paper outlining the findings of the review for consideration and endorsement by CPUC and ADB.

• In consultation with key stakeholders including CPUC, the Chuuk Leadership, and the municipal governments on Weno, and with reference to the results of the household survey, determine appropriate levels of service to the residents of Weno.

• Assess the existing average daily sewer loading including average daily per capita sewer loading, for the CPUC sewerage network on Weno. Prepare sewer loading projections for the period from 2020 to 2040 for high-, medium- and low-demand population growth scenarios.

• Based on the findings of the: (a) asset condition assessment, (b) environmental and health impact assessment of the existing sewer outfall, and (c) the review of sewage collection, treatment and disposal options, identify improvements to the Weno sewerage system required to effectively and efficiently collect, treat, and dispose sewage at the agreed level of service under the existing and future demand scenarios. Identify quick gains arising from small and/or incremental improvements to the system that will have significant benefits and could be implemented immediately.

• Prepare separate sewerage master plan for Weno. The planning horizon for the sewerage master plan will be from 2020 – 2040. The master plan must be aligned with the Chuuk State strategic development plans. The master plan will include costed, prioritized, and scheduled investment plans spanning the

24 Appendix

master planning horizon. Present the draft sewerage master plan (and water supply draft master plan) at a stakeholder workshop. The final sewerage master plan, addressing stakeholder comments, will be submitted within 3 weeks of receiving comments.

Deliverables: 4.1 Draft CPUC water supply master plan 4.2 Draft CPUC sewerage master plan 4.3 Final CPUC water supply master plan 4.4 Final CPUC sewerage master plan

(vi) Water Supply, and Sewerage Strategic Plan: Prepare the draft CPUC water supply and sewerage 20-year strategic plan which present the strategy to achieve the least cost and least risk of owning and operating assets over their life cycle while meeting the agreed service standards for residents of Chuuk. Within 2 weeks of receipt of comments from CPUC on the draft strategic plan, finalize and submit the strategic plan to CPUC. The strategic plan will address (but not be limited to) the following topics:

a) CPUC’s corporate intent and goals. b) CPUC’s policies for: (a) asset planning based on demand forecasts and

targeted service levels; (b) preparing and maintaining integrated asset records that facilitate good governance; (c) asset maintenance, renewal and replacement based on life cycle costing, condition monitoring and risk assessment; and (d) asset acquisition, security, operation, inspection, maintenance and disposal.

c) The agreed level of service and long-term service standard targets and the indicators to gauge service delivery standards.

d) Demand projections. e) Descriptions of CPUC’s assets and their assessed condition. f) Asset risks and mitigations measures to enable CPUC to sustain its service

levels and not incur significant additional costs. g) Techniques and processes to be followed to determine when assets will be

renewed or replaced and maintenance scheduling (e.g. life-cycle cost analysis).

h) Operational strategies and plans. i) Maintenance strategies and plans including disaster management plans. j) The capital works strategy and investment plans covering the span of the

strategic plan (20years). k) Financial and funding strategies. l) Human resources management and capacity development plans. m) Systems to (a) facilitate cost effective asset management (b) achieve efficient

customer service (c) enable good management of contractors and outsourced services and (d) provide reliable reporting and analysis.

n) Quality assurance and continuous improvement.

Deliverables: 5.1 Draft CPUC strategic plan 5.2 Final CPUC strategic plan

Appendix 25

(vii) Feasibility Studies. No later than 2 weeks after the workshops presenting the draft

CPUC water supply and sewerage masterplans, CPUC, in consultation with key stakeholders, will identify water supply and sewerage investments to be delivered under the ensuing investment project (“selected investments”). The selected investments will be high priority investments identified in the CPUC water supply and sewer masterplans. Prepare feasibility studies for each the selected investments. The feasibility studies will include the following tasks:

a) Conduct reconnaissance and surveys and identify suitable locations and

alignments (where appropriate) considering topography, geotechnical conditions, flood risks, existing land use and land tenure, environmental, and capital and operations and maintenance costs.

b) In close consultation with CPUC, recommend suitable standards to be adopted for the design of the selected investment.

c) Identify and assess options for the physical attributes of the selected investments (e.g. raw water intake arrangement, screens, pumping requirements and pump configurations, site access and electricity supply, raw water transmission main alignment and sizes etc.).

d) Prepare site layout concepts and assess the land acquisition requirements. e) Prepare preliminary capital cost and life cycle cost estimates for the various

options. Assume a design life of 50 years for pipelines and structures and 15 years for mechanical and electrical equipment.

f) Prepare a risk assessment covering the construction and operations and maintenance.

g) Identify and assess options for delivery and operations and maintenance (e.g. design-build-operate, design-build-own-operate, extended defects liability periods, etc.).

h) Prepare a draft feasibility report covering all the selected investments. The report will detail the findings of the feasibility studies and include drawings, diagrams, costs estimates and recommendations. Within 3 weeks of receipt of comments on the draft feasibility report, finalize and submit the feasibility report to CPUC.

Deliverables: 6.1 Draft feasibility report 6.2 Final feasibility report

(viii) Investment Project Due Diligence: Undertake the following tasks in consultation

with key stakeholders and with the guidance of the CPUC:

A. Resettlement and social analysis

a) Review government laws, policies and guidelines/procedure on land acquisition and resettlement and identify any gaps between ADB’s Safeguard Policy Statement (SPS) 2009 and the Government’s laws and policies; and, where necessary, propose measures to bridge the gap.

b) Prepare a stakeholder analysis to identify the beneficiaries and other stakeholders of the project and ensure their needs, priorities and perceptions are consistent with the project’s objectives, and are adequately reflected in the

26 Appendix

design, in line with ADB's Poverty and Social Analysis Handbook (2012). A working paper will be prepared presenting the findings of the stakeholder analysis.

c) Undertake social surveys and analyses and assess the project’s impacts on affected people, particularly the poor, minorities, and other vulnerable groups, including willingness and ability to pay for improved water supply and sanitation services.

d) Assess if the project will involve land acquisition/resettlement or impact on indigenous peoples and develop a resettlement framework (RF), resettlement plans (RP) for each of the project’s core sub-projects, and an indigenous peoples plan, if required, in accordance with ADB’s SPS. The RF and RP should include information of affected persons (APs), an inventory of losses, an entitlements matrix, consultations with APs and stakeholders, a detailed budget, implementation schedules, a management and monitoring framework, and grievance and appeals procedures. Where an RP is not required, prepare a due diligence report summarizing consultation process and findings of the due diligence, including a compliance audit of existing facilities in line with the SPS, Appendix 4 paragraph 12.

e) In consultation with stakeholders, develop suitable options to acquire land, compensate APs and to facilitate community “ownership” of the project.

f) Prepare cost estimates to supervise and monitor the RP implementation. g) Based on the stakeholder consultation and participation plan, prepare a

stakeholder communication strategy with detailed activities for stakeholders’ information and involvement in the design and implementation of each project component.

h) Consult with and provide relevant project information, including disclosure of the RP and RF, to APs and other stakeholders in accordance with ADB’s SPS and Public Communication Policy (2011).

i) Prepare the poverty and social assessment and summary poverty reduction and social strategy for the project.

Deliverables: 7.1 Stakeholder analysis 7.2 Draft resettlement plan 7.3 Final resettlement plan 7.4 Stakeholder communication strategy 7.5 Summary poverty reduction and social strategy

B. Gender Analysis

a) Conduct a gender analysis of the project in accordance with the guidelines provided in ADB's Handbook on Poverty and Social Analysis (2012).

b) Prepare a Gender Action Plan (GAP) to maximize the participation of women in the design and implementation of the PPTA and ensuing project. Gender considerations will include: (a) hardware options, such as women and men’s preferences in the number, location and type of latrines, types of taps, water pumps and water storage systems, (b) financing options, such as preferential treatment for very poor and vulnerable women (as defined by the survey analysis), , (c) community participation based on gender-inclusive and culturally sensitive participatory strategies and modalities, (d) training options

Appendix 27

for women as hygiene and health advocates, in mechanics and operation and maintenance, gender training for project staff and executing agency officials, and (e) gender equity based indicators and targets for monitoring project implementation. A gender checklist for gender mainstreaming in water and sanitation projects may be obtained from https://www.adb.org/publications/gender-checklist-water-supply-and-sanitation.

Deliverables: 8.1 Draft gender action plan 8.2 Final gender action plan

C. Environment Assessment

a) Assess the project’s environmental impact in accordance with ADB’s Safeguard Policy Statement (SPS) 2009, ADB’s environmental health and safety guidelines, and the environmental laws and policies of the Federated States of Micronesia and Chuuk State. The assessment process will include: (i) fieldwork, consultations, surveys, and where required quantitative sampling of areas affected by the proposed investments, to provide sufficient data for the description of the existing environment (baseline conditions). The baseline will also include; (i) based on information gathered for the poverty and social assessment present socio-cultural and economic characteristics, including identification of possible physical and cultural resources; (ii) undertake consultations with affected people, beneficiaries and stakeholders in the project area to explore their perceptions, suggestions, and acceptance of the project, and the preparation of a record of the public consultations; (iii) linked with the resettlement plans, identify and establish a grievance redress mechanism; and (iv) identify the potential impacts on physical, biological and socio-economic environment during pre-construction, construction and operation of the investments. Baseline data should be up to date and quantified, consultation is to be meaningful, and impact assessment must be quantified.

b) Assess the institutional capacity of: (a) CPUC to monitor implementation of the EMP, and (b) Chuuk State EPA and other concerned agencies in clearing and monitoring environmental assessments and issuing licenses and/or permits.

c) Prepare the project environmental assessment and review framework (EARF) and initial environmental examinations (IEE) for the core subprojects, including environmental management plan appropriate for each investment, and an environmental assessment and review framework in accordance with ADB’s SPS. The EARF will be prepared in accordance with SPS and follow the format as set out in Annex 1 to Appendix 4. The IEEs will be prepared in accordance with SPS and follow the format as set out in Appendix 1 paragraph 9. Assess potential impacts of climate change on the project and recommend adaptation measures for resilience to climate change or variability in project design. The EARF also include a section presenting the findings of the environmental institutional capacity assessment and with recommendations to build capacity.

Deliverables: 9.1 Draft project environmental assessment and review framework (EARF)

28 Appendix

9.2 Draft initial environmental examinations (IEE) 9.3 Final project environmental assessment and review framework (EARF) 9.4 Final initial environmental examinations (IEE)

D. Financial Assessment: In accordance with ADB requirements3 and based on the project scope, undertake the financial due diligence, including a financial analysis of the project consistent with the economic analysis, as outlined below:

a) Conduct a financial management assessment of the executing and

implementing agencies, including (a) assessing whether previous financial management assessments have been conducted by ADB or other agencies and, if so, reviewing the results and ascertaining whether these can be used as input, (b) assessing capacity for planning and budgeting, management and financial accounting, reporting, auditing, internal controls, and information systems (c) reviewing proposed disbursement and funds-flow arrangements, and (d) concluding on the financial management risk rating and identifying and confirming measures for addressing identified deficiencies.

b) Prepare cost estimates and the project financing plan based on verifiable data and that are sufficient to support project implementation.

c) Conduct financial evaluations (financial cost-benefit analyses) including sensitivity analyses of project components that have a cost-recovery objective

d) Conduct a financial risk assessment. Where significant risks are identified to project financial sustainability or viability, recommend relevant financial performance indicators to be incorporated in financial covenants.

e) Recommend financial reporting, auditing and public disclosure arrangements for the project.

f) Prepare the project’s financial assessment report presenting detailed findings of the financial assessment as described above.

Deliverables: 10.1 Draft financial assessment report 10.2 Final financial assessment report

E. Economic Assessment: Undertake the economic due diligence using the methodology and covering the 10 key areas of economic analysis presented in ADB Guidelines for the Economic Analysis of Projects (2017). 4 The analysis will address:

a) Country context analysis b) Sector analysis c) Rationale for public intervention d) Demand analysis e) Alternative analysis

3 ADB. 2014. Financial Management, Cost Estimates, Financial Analysis, and Financial Performance Indicators.

Operations Manual. OMG2/BP. Manila. Relevant guidance is available at https://www.adb.org/about/financial-management-resources. 4 . Available from https://www.adb.org/documents/guidelines-economic-analysis-projects.

Appendix 29

f) Cost-benefit analysis g) Sustainability analysis h) Sensitivity and risk analysis i) Distribution analysis j) Design and monitoring framework

Deliverables: 11.1 Draft economic assessment report 11.2 Final economic assessment report

F. Procurement Capacity and Risk Assessment Conduct a procurement risk assessment of CPUC following ADB’s Guide on Assessing Procurement Risks and Determining Project Procurement Classification (2015). Structure contract packages and prepare the project procurement plan.

Deliverables: 12.1 Draft procurement capacity and risk assessment report 12.2 Final procurement capacity and risk assessment report

7. Package 2.1b - Project Preparation Phase 2 (Output-based contract). Outputs will include: (i) detailed engineering design and preparation of bidding documents for selected investments following feasibility studies prepared under Package 2.1a; and (ii) assist CPUC to procure the investments including bid evaluation and preparation of bid evaluation reports and awarding contracts. Note: subject to: (i) satisfactory performance of the firm selected to deliver Package 2.1a and the quality of the Package 2.1a outputs; (ii) mutual agreement between CPUC and Package 2.1a consulting firm; and (iii) ADB no-objection, the Package 2.1a consulting firm may be directly engaged to deliver Package 2.1b: Project Preparation Phase 2.Package 2.1b will require, at a minimum, the following tasks:

(i) Preparation of bidding documents. For the selected investments: a) Drawing on the climate change literature review (under Package 2.1a), ensure

that design parameters to maximize the climate change resilience while maintaining the economic feasibility are incorporated in the design of infrastructure to be developed under the project.

b) Identify information required and organize for surveys and capture of all data necessary for the detailed design and preparation of bid documents, including (but not limited to) topographic and cadastral data, and geotechnical conditions and geotechnical design parameters, environmental baseline surveys as required, and additional socio-economic surveys if required for social and gender assessments, and inventory of losses surveys for resettlement plans.

c) Prepare and complete technical designs including recommendations for modifications to the preliminary designs resulting from the due diligence, including bills of quantities, provision of detailed cost estimates and scopes of work for subprojects.

d) Assist the CPUC to prepare specifications for the purchase of equipment and materials.

30 Appendix

e) Prepare draft bidding documents for subprojects following ADB’s procurement procedures and using standard bidding documents and guidelines.

f) Based on the updated and approved safeguards documents and plans, ensure that selected investment specific EMP, gender, and social mitigation measures are incorporated into bid documents and comply with the laws of the Federated States of Micronesia, Chuuk and ADB’s SPS.

g) Submit the draft bid documents to the CPUC and ADB for review and update the bid documents to address comments and suggestions.

Deliverables: 1.1 Draft bidding documents 1.2 Final bidding documents

(ii) Procurement Support. Assist CPUC to procure the selected investments. Specific tasks will include:

a) Assist CPUC to invite bids for the selected investments including preparation

of procurement notices, arranging advertising in the FSM and international media, and issuing bidding documents to interested parties.

b) Assist CPUC to address requests for clarifications and requests for information relating to the selected investments and to prepare addendums and notices to bidders.

c) Assist CPUC in organizing and conducting pre-bid meetings and site inspections and preparation and distribution of pre-bid meeting minutes.

d) Assist CPUC in arranging and conducting bid opening meetings for the selected investments and preparation of minutes of bid opening meetings.

e) Assist CPUC in evaluating bids for the various selected investments including detailed evaluation of bids, participation in bid evaluation committee meetings, and preparation of bid evaluation reports.

f) Assist CPUC in awarding contracts for the selected investments including preparation of letters of acceptance and preparation of contract documents for execution by CPUC and the successful bidders.

8. Package 2.2 – Hygiene Awareness and Education Specialist (international, 4 person-months, intermittent). The hygiene awareness and education specialist will have a degree in environmental science or other appropriate qualification from a recognized university and at least 10 years’ experience in designing and implementing hygiene awareness and education or WASH programs. The hygiene awareness and education specialist will design a long-duration hygiene awareness and education program which is aligned and complementary with ongoing hygiene awareness programs in Chuuk. The hygiene awareness and education specialist will report to the CPUC Chief Executive Officer. The hygiene awareness and education program will be delivered under the ensuing investment project. Tasks required to design and implement the hygiene awareness and education will include, but not limited to:

(i) Review of previous hygiene awareness programs Chuuk State. Review hygiene awareness activities conducted in Chuuk over the past 10 years and (a) assess the effectiveness of the programs, and (b) identify strengths and weaknesses of the various programs.

Appendix 31

(ii) Identification of key stakeholders and preparation of engagement plan. Identify the key stakeholders amongst beneficiaries including community groups, schools and health centers, youth and/or women’s groups, NGOs and CSOs, business associations and the like. Prepare the stakeholder engagement plan showing the main forms of engagement, communication and participation of each stakeholder at stage of the project (including during implementation).

(iii) Household survey.

a) Design a household survey targeting at least 200 households on Weno and Tonoas to: (a) identify and assess the prevalent hygiene practices on Weno, (b) gauge awareness and perceptions on waterborne disease, and (c) gauge expectations of delivery standards for CPUC water supply and sewerage services. The survey will capture a range of basic socio-economic data for each household for disaggregation purposes and all data will be disaggregated and analyzed by sex, age, and income group.

b) Prepare and submit to CPUC, a household survey working paper presenting: (a) the finding of the review of previous hygiene awareness programs, (b) the proposed survey questions and the rationale behind the questions, (c) the proposed approach to conduct the survey including the survey schedule (including time allocated for data entry, data analysis and preparation of working paper), and (d) the methodology proposed to analyze the survey responses. Address any comments within 2 weeks of receipt of comments and resubmit to CPUC for approval.

c) Upon receipt of CPUC approval of the household survey working paper, implement the survey and analyze the results.

d) Prepare and submit to CPUC a working paper presenting the findings of the household survey and analysis of the survey responses.

(iv) Hygiene Awareness and Education Program.

a) Based on the findings of the review of previous hygiene awareness programs (and associated lessons) and the household survey analysis, design a hygiene awareness and education program (HAEP) with the goal of increasing hygiene awareness and fostering sustained improved hygiene behavior. The HAEP will be delivered under the ensuing investment project.

b) Prepare a draft report, for review by the CPUC, outlining: (a) the HAEP design, (b) methodology to deliver the HAEP, and (c) the HAEP implementation schedule.

c) Within 2 weeks of submitting the draft HAEP design report, convene a stakeholder workshop to present the draft HAEP design.

d) Within 2 weeks of receipt of comments from key stakeholders but not later than 3 weeks after the stakeholder workshop, address stakeholder comments and suggestions and finalize and submit the HAEP report to CPUC.

Output 3 9. Consulting services under Output 3 will comprise individual consultants including: (i) project manager / water supply and sanitation utility specialist (international, 15 person-months, intermittent), (ii) water supply demand management specialist (international, 6 person-months, intermittent); and (iii) a non-revenue water specialist (international, 6 person-months, intermittent). The outline terms of reference for the consultants are provided below.

32 Appendix

Package 3.1a - Project Manager / Water Supply and Sanitation Utility Specialist (international, 15 person-months, intermittent). The project manager / water supply and sanitation utility specialist will manage the CPUC project management unit, oversee the delivery the implementation of the PRF, and build CPUC’s project management capacity. The project manager / water supply and sanitation utility specialist will have a degree in civil, environmental, or mechanical engineering from a recognized tertiary institution and at least 20 years’ experience. The project manager / water supply and sanitation utility specialist will report to the CPUC Chief Executive Officer. Specific tasks of the project manager / water supply and sanitation utility specialist will include:

(i) Project Management a) Establish the project management unit (PMU) through the development and

implementation of project management processes, tools, and systems. b) Develop prioritized workplan to deliver the PRF and the ensuing Chuuk Water

Supply and Sanitation Project (CWSSP). c) Lead and manage PMU personnel; d) Manage PRF procurement for the duration of the PRF. Ensure full compliance

with ADB and CPUC (where applicable) procurement policies and regulations. e) Manage consulting firms engaged to deliver the PRF Package 2a – Project

preparation Phase 1 and PRF Package 2B – Project Preparation Phase 2 to ensure the PRF outputs are delivered within program and to the agreed standards.

f) Lead CPUC coordination with National and State agencies to facilitate implementation of the PRF and delivery of PRF outputs.

g) Ensure appropriate safeguards and governance controls are in place,

managed and reported as required. h) Maintain strong relationships with key PRF stakeholders. i) Attend and report to the CPUC as required by the CPUC Chief Executive

Officer. j) Provide coaching and mentoring to CPUC staff managing design and

construction projects using best practice project management. k) Provide knowledge transfer to CPUC staff.

(ii) Water Supply and Sanitation Utility Specialist

a) Provide day-to-day assistance and technical advice to the CPUC’s water supply and sewerage Manager and CPUC water supply and sewerage personnel in relation to CPUC water supply and sewerage systems, including surface water and groundwater resources, water and wastewater treatment plants, water supply and wastewater network components, and customer connections. Ensure that the agreed water supply and sewerage service standards are met (in terms of water quality, quantity, and access).

b) Provide strategic advice and direction for the development of CPUC’s water supply and sewerage services, including for the CPUC water supply and sewerage masterplans and advice to CPUC relating to the selection of priority projects to be delivered under CWSSP, focusing building financial and technical sustainability and resilience to natural disasters and climate change impacts;

c) Monitor the performance of the PRF Package 2a – Project preparation Phase 1 and PRF Package 2B consultants. In consultation with CPUC personnel, review the PRF Package 2a – Project preparation Phase 1 and PRF Package 2B deliverables and ensure the deliverables fully meet with CPUC

Appendix 33

expectations and are aligned with CPUC strategies for development of its water supply and sewerage services.

d) Review the design and construct contractor’s drawings and calculations to check arrangements for optimized operation and maintenance and verify compliance with contract specifications;

e) Process claims, prepare change orders and non-conformance notices, for the PRF Package 2a – Project preparation Phase 1 and PRF Package 2B consultant contracts;

f) respond to requests for information form the PRF Package 2a – Project preparation Phase 1 and PRF Package 2B consultant in all matters related to interpreting contract documents, ground survey controls, quality control testing, and other matters relating to the contracts;

g) Lead improvements to and regular updating of CPUC’s water supply and sewerage asset management system.

h) Provide technical support to CPUC’s water supply and sewerage operations teams.

i) Support Water Supply and Sewerage Manager in preparation of reports on business performance.

Package 3.1b - Water Supply Demand Management Specialist (international, 6 person-months, intermittent). The water supply demand management specialist will assist CPUC to identify measures to optimize water supply operation of the Weno and Tonoas water supply systems and provide inputs for the preparation of the Chuuk Water Supply Master Plan 2020 – 2040. The water supply demand management specialist will have a degree in civil, environmental, or mechanical engineering from a recognized tertiary institution and at least 20 years in water supply utility planning and operations. The water supply demand management specialist will report to the project manager / water supply and sanitation utility specialist. Specific tasks of the water supply demand management specialist will include:

(i) Review and develop appropriate and realistic design criteria for input towards the preparation of the Chuuk Water Supply Master Plan 2020 – 2040 and for use in the design of priority water supply components to be delivered under CWSSP.

(ii) Ensure suitable demand management techniques are incorporated into the Weno and Tonoas Water Supply Master Plan 2020 – 2040.

(iii) Review and validate water supply demand projection prepared for the Chuuk Water Supply Master Plan 2020 – 2040.

(iv) Review CPUC’s water supply customer data base and prepare water audits for each of demand management zone in Weno. Prepare a strategy for the identification and removal of illegal connections and replacement with legal connections.

(v) Model an optimal scheme for future water supply to all potential users on Weno and Tonoas from all potential water sources. Prepare the CPUC water demand management strategy and policies targeting maximizing access to CPUC water supply networks on Weno and Tonoas and optimizing water supply technical operations;

(vi) Provide inputs to the design and implementation of the water conservation elements of CPUC’s public awareness and community outreach campaign.

34 Appendix

Package 3.1c – Non-revenue Water Specialist (international, 6 person-months, intermittent). The non-revenue water specialist will assist CPUC to develop CPUC’s non-revenue water (NRW) reduction strategy and a detailed 5-year NRW reduction plan. The non-revenue water specialist will have a relevant qualification and at least 10 years’ experience in non-revenue water reduction planning and implementation. The non-revenue water specialist will report to the project manager / water supply and sanitation utility specialist. Specific tasks of the non-revenue water specialist will include:

(i) Data collection on existing CPUC water supply assets and customers (from CPUC’s water supply customer database).

(ii) Evaluate the current production, transmission and distribution service performance.

(iii) Prepare current water balance as per International Water Association (IWA) methodology.

(iv) Establish current annual levels of NRW with breakup of commercial and physical losses and evaluate the economic loss to CPUC.

(v) Develop a strategy for the control and reduction of NRW in a phased manner (short term, Midterm and long term) to enable provision of continuous pressurized water supply services to all CPUC water supply customers. The strategy will present short-, medium-, and long-term NRW targets and will compare the costs of achieving the NRW targets against the potential revenue lost and / or operational cost savings that would result from the target NRW reduction.

(vi) Prepare a detailed 5-year NRW reduction plan (yearly activity plan) based on reduction of losses proposed. Assess the losses in each demand management area in Weno and the Tonoas supply zone. Identify the causes of water losses and suggest specific solutions for each area. Prepare detailed physical and commercial loss reduction forecasts for the detailed plan. In preparing the NRW strategy and NRW reduction plan

(vii) Identify and assess options for achieving the NRW reduction targets including strengthening CPUC NRW reduction teams and / or outsourced NRW reduction through performance-based contracts.

(viii) Provide on-the-job training for CPUC NRW reduction teams in NRW identification and reduction techniques.