Road Improvement Project in the Socialist Republic of Viet Nam (Loan 1272-VIE[SF])

7/31/2019 Road Improvement Project in the Socialist Republic of Viet Nam (Loan 1272-VIE[SF])

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ASIAN DEVELOPMENT BANKOperations Evaluation Department

PROJECT PERFORMANCE AUDIT REPORT

ON THE

ROAD IMPROVEMENT PROJECT(LOAN 1272-VIE[SF])

IN

VIET NAM

In this electronic file, the report is followed by the Chairperson’s summary of adiscussion of the report by the Board of Directors’ Development EffectivenessCommittee.



ASIAN DEVELOPMENT BANK PPA: VIE 25093

PROJECT PERFORMANCE AUDIT REPORT

ON THE

ROAD IMPROVEMENT PROJECT(Loan 1272-VIE[SF])

IN

VIET NAM

April 2004



CURRENCY EQUIVALENTS

Currency Unit – dong (D)

At Appraisal At Completion At Operations Evaluation

(September 1993) (June 2000) (November 2003)D1.00 = $0.000095 $0.000071 $0.000065$1.00 = D10,500 D14,000 D15,500

ABBREVIATIONS

AADT – annual average daily traffic ADB – Asian Development BankEIRR – economic internal rate of return

GDP – gross domestic productHCMC – Ho Chi Minh CityHDM-4 – highway design and maintenance model, version 4IRI – international roughness indexJBIC – Japan Bank for International Cooperationkm – kilometer m – meter MOT – Ministry of TransportNH1 – National Highway Number 1 OEM – Operations Evaluation MissionPCR – project completion reportPMU-1 – Project Management Unit Number 1

PPAR – project performance audit reportSDR – special drawing rightsTA – technical assistanceTEDI – Transport Engineering Design InstituteVRA – Viet Nam Road Authority

NOTES

(i) The fiscal year (FY) of the Government ends on 31 December.(ii) In this report, “$” refers to US dollars.

Director General, Operations Evaluation Department : Eisuke SuzukiDirector, Operations Evaluation Division 2 : David EdwardsEvaluation Team Leader : Lester Neumann

Operations Evaluation Department, PE-641



CONTENTS

Page

BASIC DATA iii

EXECUTIVE SUMMARY iv

MAP ix

I. BACKGROUND 1

A. Rationale 1B. Formulation 1C. Purpose and Outputs 1D. Cost, Financing, and Executing Arrangements 2E. Completion and Self-Evaluation 2F. Operations Evaluation 3

II. PLANNING AND IMPLEMENTATION PERFORMANCE 3

A. Formulation and Design 3B. Achievement of Outputs 5C. Cost and Scheduling 6D. Procurement and Construction 7E. Organization and Management 7

III. ACHIEVEMENT OF PROJECT PURPOSE 8

A. Operational Performance 8

B. Performance of the Operating Entity 11C. Economic and Financial Reevaluation 11D. Sustainability 12

IV. OTHER DEVELOPMENT IMPACTS 12

A. Socioeconomic Impact 12B. Environmental Impact 13C. Impact on Institutions and Policy 13

Lester Neumann, Senior Evaluation Specialist (Team Leader), was responsible for thepreparation of this report, and conducted document reviews, key informant interviews, andguided the fieldwork undertaken by the consultant, William Hopper. Barbara Palacios,Evaluation Officer, supported the team with research assistance from Manila.



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Page

V. OVERALL ASSESSMENT 13

A. Relevance 13

B. Efficacy 14C. Efficiency 14D. Sustainability 14E. Institutional Development and Other Impacts 14F. Overall Project Rating 14G. Assessment of ADB and Borrower Performance 15

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 15

A. Key Issues for the Future 15B. Lessons Learned 16C. Follow-Up Actions 17

APPENDIXES1. Project Cost 182. Traffic Statistics 193. Accidents and Vehicle Numbers 204. Review of Study for World Bank Projects 215. Project Road Maintenance Expenditure 236. Selected Gross Domestic Product Statistics 24



BASIC DATA

Loan 1272-VIE(SF): Road Improvement Project

Project Preparation/Institution Building

TA

No. TA Name Type

Person-

Months

Amount

($’000)

Approval

Date1996 Institutional Strengthening of the Ministry of

Transport ADTA 96 1,900 29 Nov 1993

19971

Second Road Improvement PPTA 53 2,100 29 Nov 19931997

1Second Road Improvement (Supplementary) PPTA 34 850 31 May 1995

Key Project Data ($ million)As per ADB

Loan Documents Actual

Total Project Cost 141.0 131.1Foreign Exchange Cost 120.0 111.1 ADB Loan Amount/Util ization 120.0 111.1

2

ADB Loan Amount/Cancellation 4.8

Key Dates Expected ActualFact-Finding Mission Mar 1991 13–29 Mar 1991 Appraisal Jun 1991 29 Jul–13 Aug 1993Loan Negotiations Oct 1993 21–22 Oct 1993Board Approval Nov 1993 29 Nov 1993Loan Agreement 28 Sep 1994Loan Effectiveness 21 Feb 1994 9 Nov 1994First Disbursement 4 Apr 1995Project Completion 31 Dec 1997 31 Dec 1999Loan Closing 31 Dec 1998 29 Jun 2000Months (effectiveness to completion) 46 62

Rate of Return (%) Appraisal PCR PPAR

Economic Internal Rate of Return 32.3 25.8 —

Borrower Socialist Republic of Viet NamExecuting Agency Ministry of Transport

MISSION DATAType of Mission No. of Missions Person-Days

Reconnaissance 1 31Fact-Finding 1 30 Appraisal 1 48Project Administration

Special Loan Administration 1 3Inception 1 9Review 11 135

Project Completion 1 30Operations Evaluation

31 42

— = not calculated, ADB = Asian Development Bank, ADTA = advisory technical assistance, PCR = projectcompletion report, PPAR = project performance audit report, PPTA = project preparatory technical assistance, TA =technical assistance.1 Financed by the Japan Special Fund.2

The special drawing rights (SDR) exchange rate depreciated during implementation from SDR1 = $1.39 atappraisal to SDR1 = $1.34 in July 2000. That explains the difference in the amount in the ADB loan document andactual.

3The Operations Evaluation Mission comprised L. Neumann (Mission Leader) and W. Hopper (Staff Consultant).



EXECUTIVE SUMMARY

The Road Improvement Project (the Project), one of the first in Viet Nam after the AsianDevelopment Bank (ADB) resumed lending in the country, was to rehabilitate the 435-kilometer (km) section of the main National Highway Number 1 (NH1) from Ho Chi Minh City to NhaTrang. The works mainly comprised pavement overlays, pavement strengthening, shoulder

paving, replacement of some small bridges and culverts, drainage improvement, and two truck-weighing stations. Decades of economic isolation, conflict, and reliance on central planning hadleft Viet Nam with a deteriorated infrastructure, outdated policies and regulations, a small privatesector, and weak government institutions. The Project was part of a coordinated programinvolving ADB, the World Bank, and the Japan Bank for International Cooperation to rehabilitatethe entire main national highway as a start toward addressing those weaknesses. Rehabilitationwas expected to lower transport costs and improve road safety. The weighing stations wouldenhance road administration. All of these improvements were to lead to economic growth.

The project loan of SDR84.5 million (then equivalent to $120 million) to fund the foreignexchange portion of the $141 million project cost was approved in November 1993. At the sametime, two technical assistance (TA) grants were approved. One TA was for $1.9 million to

formulate a road act and strengthen the Government’s institutional capabilities in transportoperations, transport data, and project management. The other TA was for $2.10 million, later increased to $2.95 million, to prepare a second road project involving NH1. The Executing Agency for the Project and the TAs was the Ministry of Transport (MOT), which vestedimplementation responsibility to its Project Management Unit Number 1 (PMU-1). Roadmaintenance after project completion, and transport operations, were the responsibilities of theViet Nam Road Authority (VRA), also part of MOT.

During project implementation, deficiencies were found in the contract documents, andsome of the detailed design, that required modification. The amount of pavement strengthening,as opposed to just pavement overlay, was reduced substantially as a result of the designchanges. These changes, plus lower-than-expected bid prices for the construction contracts, led

to cost savings and subsequent modification of the project scope to include two town bypassesat Phan Thiet and Phan Rang; additional drainage works; widening and rehabilitation of anadditional 41 small bridges; and reversal of a prior decision to reduce the road shoulder width insections with lower traffic. Rehabilitation of severely flooded sections of NH1 north of Nha Trangwas also included.

The Project was completed according to the revised scope, except that only one of twoplanned weighing stations was constructed (the Government had already used its own funds tobuild the other weighing station). The first 25 km is a four-lane divided road with 2.5 meter (m)shoulders (wider, in places). The remainder of the road is a 7.5-m, two-lane carriageway with2.5-m shoulders on each side. The road shoulders are delineated from the carriageway by whitelines so they serve as separate lanes for slow-moving motorcycles and bicycles. At completion,

the international roughness index (IRI) for the road averaged 2.4—an acceptable level of ridingquality for this type of road. One weakness is that not all bridges were replaced or rehabilitated,so load capacity varied from 18 to 30 tons along the road. That makes freight traffic difficult tomanage, and poses a risk of damage to the weaker bridges that, if realized, would hinder movement along the road. A second weakness is that some bridges are narrow, which forcesslow-moving traffic onto the main carriageway, increasing the risk of accidents.

The institutional strengthening TA achieved many of its expected outputs. A draft roadact was prepared, but because of debate at the time about a proposed road fund within the draft



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law, it was not enacted until 2002, and then with assistance from ADB’s Second RoadImprovement Project. The TA consultants helped PMU-1 develop capabilities in internationalcontract management, and VRA received assistance in driver licensing, vehicle registration andinspection, vehicle overloading, and safety. The attempt to establish a computer-basedtransport databank within MOT for better management and planning of the overall transportsector was not successful.

The project preparatory TA completed feasibility studies for two road sections of NH1that were eventually funded under ADB’s second and third road projects, and prepared detaileddesigns for the roads under the second. Problems arose during implementation of the secondproject because of errors traced to a lack of detail in the surveys under the detailed designphase of the TA. These errors caused extra work for the implementation supervision,consultants, and for government staff. That led to some delays—but no substantial costincreases—in the second project.

The Project was completed in December 1999, 2 years later than expected. The costwas $131.1 million, about 7% less than the appraisal estimate. But this actual cost includes$6.8 million used to rehabilitate several short sections of flood-damaged highway north of Nha

Trang; only $124.3 million was spent on the project road. Main reasons for the cost savingsinclude the reduction in pavement strengthening and lower-than-expected construction prices.

Implementation efficiency was marred by problems within the supervising consultantteam, which led to frequent changes of individual consultants, cumbersome governmentprocesses, nonfamiliarity of the Government and PMU-1 with ADB procedures, and initial slowperformance of the construction contractors. These problems caused delay, and negated theadvantages of the approved arrangement for advanced procurement of civil works contracts.The three major construction contracts were awarded to joint venture partnerships of foreignand local contractors. Their initial construction progress was slow because each joint venturehad problems. In two joint ventures, the foreign partners provided no substantial managementor material support. In the third joint venture, the local contractor’s lack of experience led to

frequent partnership disputes. The joint ventures did not result in any significant technologytransfer to the local partners.

By the time of this evaluation, in late 2003, the pavements had been in service for 4–6 years, a significant portion of their 10-year design life. Although 10–20% of the road surfacesuffers from cracking or bleeding, most of the pavement has performed well. The average IRImeasured 2.9 in 2001, with less than 5% of the road measuring more than 4. (At appraisal,resurfacing was deemed necessary when the IRI reached 4). In late 2003, parts of the road hadan IRI of 4 or higher, but long sections of road had relatively good riding surface. The goodpavement performance was despite a steady increase in traffic over the past 6 years to reachlevels exceeding appraisal forecasts.

The road improvements increased vehicle speeds, and shortened travel times by 15–30%. The gains would be larger if compared with the hypothetical “without-Project” scenario for 2003, under which traffic levels would exceed those of before the Project. Improved travel hasled to the expected reduction in operating costs for vehicle owners. The effect on transportprices has been mixed for nonvehicle owners. Some, but not all, bus fares and freight tariffshave lowered. The mixed response of transport prices is because regulation of bus services,and existence of transport associations, limits the effect that competition has on prices.Nevertheless, all transport users benefit from reduced travel times and better travel comfort.



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The limited data show that the number of accidents, injuries, and fatalities along theproject road has increased in recent years, mirroring the overall national performance. Althoughalarming, a rapid increase in vehicle numbers and improved accident reporting are alsosignificant causes of the deterioration in road safety statistics. The Government, concerned withthe worsening situation, recently increased its efforts in improvement of road safety including,for example, in driver and pedestrian education. The preliminary 2003 statistics show some

improvement. The Project’s provisions for improving road safety were limited to physical roaddesign. A broader approach, including other aspects of road safety, might have been better.Road safety conditions were probably improved by the wide paved shoulders and delineation of the shoulders as separate lanes for slow traffic, provision of traffic signs, center lines, lights atstrategic points, and the two city bypasses. However, not all bridges were improved; somenarrow bridges remain, and are potential hazards. In addition, people and businesses along theroad, particularly in urbanized areas, are encroaching on the road’s right-of-way, and travelspeeds have increased. These factors contribute to lower road safety.

An economic analysis was not done for the investment, but comparison with similar roadimprovements funded by the World Bank indicates that the Project is likely to generate afavorable economic internal rate of return. Broader effects of the road improvements on the

economy are apparent around Nha Trang in Khanh Hoa Province, where tourism has grownrelatively rapidly since the mid 1990s and now accounts for about 40% of the provincial grossdomestic product (GDP).

The road has received funding for both routine maintenance and to repair cracking.Nationally, maintenance funds are insufficient, but continued maintenance funding andsustainability of the project investment is likely, considering the importance of NH1.Nevertheless, not all of the cracking was immediately attended to, indicating that funding, whilelikely, may be delayed. The funding of maintenance for NH1 may be at the expense of other roads. Inadequate maintenance on roads feeding into NH1 would limit the spread of benefitsfrom the upgrading of NH1. Equally important, diversion of maintenance funds from other roadsto NH1 can lead to early deterioration and economic loss on such roads.

Overall, the Project is rated as successful. The Project is relevant, efficacious, andefficient. The outcomes are likely to be sustained, and the institutional and other impacts aremoderate. The institutional strengthening TA is rated as successful. The project preparatory TAis considered partly successful. ADB’s performance is assessed as satisfactory. Althoughcumbersome government processes caused delays, the Government’s overall performance isalso rated satisfactory.

Key issues for attention include the need to (i) address the remaining narrow and low-load capacity bridges along the road, (ii) overcome constraints caused by regulation and other anticompetitive arrangements within the transport sector, (iii) enhance maintenance funding sothat roads that feed traffic to the main highway are maintained along with the highway itself,

(iv) improve control of encroachment onto the road right-of-way in order to enhance road safety,and (v) support current efforts to improve data collection and management by developing theregular use of data as part of the decision-making process.

Useful lessons learned from the Project include (i) the importance of timely maintenanceas exemplified by comparing results for areas where cracks were sealed early versus areas of delayed sealing; (ii) the value of wide shoulders, considering the substantial growth in slower-moving traffic; (iii) if funds are limited, a shorter road built according to development needs maybe better than a longer road with low capacity, narrow bridges, and inadequate drainage;



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(iv) care is needed in planning detailed design studies to ensure sufficient funding to enablecompletion of all work at the required level; (v) local contractors can undertake construction of the type that they handled under this Project; (vi) contracts should include provisions to ensuretechnology transfer, if that is an important objective; (vii) hardships for individuals can ariseduring construction when maintenance staff of companies, under the Regional RoadManagement Unions, become temporarily unemployed; and (viii) efficient decision making by

government agencies, based on clear lines of authority and preparedness to make timelydecisions, is necessary to avoid delays in implementation.

The evaluation recommends that, as soon as practical (such as by mid-2004), MOTprepare a detailed list of substandard bridges along the project road, along with details and anaction plan for bringing each bridge to standard. In addition, VRA should investigate anddetermine the cause of cracking before overlaying the rough areas of the road, which willprobably be required in the next few years. If the main cause is weak structure, a simple overlaymight not be the best option.

Eisuke SuzukiDirector GeneralOperations Evaluation Department



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I. BACKGROUND

A. Rationale

1. The Road Improvement Project (the Project) arose during a period of rapid change inViet Nam. Economic isolation, reliance on central planning, and conflict had left the country with

a deteriorated infrastructure, outdated policies and regulations, a small private sector, and weakgovernment institutions. Recognizing these conditions, the Asian Development Bank’s (ADB)country strategy at the time supported improvement of the country’s infrastructure to supportgrowth in agriculture, energy, industry, and trade; and support for policy reform andstrengthening of institutions. Against this background, the Project was conceived as a first stagein a long-term plan worked out in coordination with the World Bank and aid agencies torehabilitate the main national highway, which runs from north of Hanoi to south of Ho Chi MinhCity (HCMC), and improve the sector’s legal framework and institutional capability. Both thelong-term plan and the Project itself were supported by recommendations of a 1990–1992National Transport Sector Review funded by the United Nations Development Programme.

B. Formulation

2. Project formulation, design, and appraisal were from 1990 to1993. During 1990–1991, ADB staff consultants, in conjunction with the Transport Engineering Design Institute (TEDI) of the Ministry of Transport (MOT), completed basic feasibility studies. These studies culminated inproject formulation by an ADB Sector Review Mission in March 1991. Subsequently, from June1992 to August 1993, consultants financed by the Canadian International Development Agencyprepared the detailed engineering designs and tender documents. Appraisal coincided with theend of the detailed engineering design study.

C. Purpose and Outputs

3. The Project was classified as an economic growth project. Its main purposes were to

reduce transport costs and improve road safety.1

To achieve this, the Project was to rehabilitate435 kilometers (km) of National Highway Number 1 (NH1) from HCMC north to Nha Trang,mainly by strengthening the pavement where necessary, and applying an asphaltic concreteoverlay that would be good for the next 10 years, with only normal maintenance;2 replacing allsteel culverts; and strengthening the decks of selected bridges along the road. The first 25-kmsection from HCMC, where traffic was highest, was a divided four-lane road. The remainder wasa two-lane road. About 80% of the length of the road was expected to require strengthening byremoving the existing pavement and placing it back as a reshaped, compacted base coursebefore overlaying with asphalt. The existing alignment was to be used, although short bypasseson new alignments around some towns were to be considered during implementation. Wide,paved shoulders of 2.5 meters (m) were to be provided as separate lanes for slow traffic (e.g.,motorcycles and bicycles) along the heavily trafficked road sections. Road signs and markings

were also to be provided to enhance road safety. Fifteen bridges, including all large bridges(more than 20 m long) plus a few shorter ones, were to be replaced through a separate project

1The appraisal report states the Project objectives are to “(i) rehabilitate the road to an economically maintainablestate, (ii) reduce transport costs by facilitating more efficient transport services, (iii) improve road safety, and(iv) strengthen the institutions concerned with road administration.” The first point is interpreted by the OperationsEvaluation Mission (OEM) as a statement about the quality of the output, and the fourth point is attributed partly tothe Project, but mostly to the associated technical assistance (TA) as described in para. 5.

2That is, without periodic maintenance, which was not expected until after 10 years.



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funded by the Japan Bank for International Cooperation (JBIC).3 Two weighing stations wereprovided to help prevent overloading of trucks and to achieve the complementary projectpurpose of strengthening of road administration. International companies were to undertakeconstruction and supervision.

4. The project scope was modified several times to include two town bypasses at Phan

Thiet and Phan Rang; additional drainage works; widening and rehabilitation of an additional41 bridges; increasing the width of shoulders along parts of the road; and rehabilitation of severely flooded sections of NH1 north of Nha Trang.4 The amount of pavement strengthening,as opposed to only pavement overlay, was also reduced (para. 12). The changes conformedwith the general project scope and did not cause the original project cost to be exceeded. Thefavorable cost outcome was because the added works were approved only after cost savingsfrom reduced pavement strengthening and lower bid prices became apparent.

5. Parallel with the Project, road administration was to be improved through one of twotechnical assistance (TA) grants approved along with the Project.5 TA 1996-VIE was to helpMOT reorganize and improve the Viet Nam Road Authority (VRA), one of its recently formedmodal entities, particularly in areas relating to road management, vehicle and driver licensing,

and other complementary operational aspects; drafting of a road act; and strengthening of itsCenter for Statistics and Project Management Unit Number 1 (PMU-1). The second TA, TA1997-VIE, was to fund feasibility and detailed design studies for further sections of NH1.

D. Cost, Financing, and Executing Arrangements

6. The project cost was appraised in 1993 at $141 million, of which foreign exchange wouldcomprise $120 million (Appendix 1). A loan of SDR84.5 million (then equivalent to $120 million)from the Asian Development Fund was approved on 29 November 1993 to fund all foreignexchange costs. MOT was the Executing Agency for the Project and TAs, and gaveimplementation responsibility to its PMU-1. Construction was expected to take about 4 yearsand be completed by December 1997. This was ADB’s first road loan project, so ADB approved

advance action for recruitment of supervision consultants and procurement to minimize the riskof delay.

E. Completion and Self-Evaluation

7. ADB’s project completion report (PCR), prepared in October 2000, reviewed the outputs,including their quality, as well as the implementation performance, schedule, and costs. ThePCR reported that the Project was constructed essentially as designed, although with delay andat a cost lower than anticipated. Delay and cost variation analyses were provided. The PCRassessment of the Project’s achievement of its purpose was done through recalculation of theeconomic internal rate of return (EIRR). Although direct measurement of achievement of thepurposes would have been preferable, three important indicators of purpose achievement—

3Originally the Overseas Economic Cooperation Fund of Japan.

4The sections north of Nha Trang were within the scope of ADB’s Third Road Improvement Project (ADB. 1998.Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Socialist Republic of Viet Nam for the Third Road Improvement Project . Manila [Loan 1653-VIE(SF), for $130 million,approved on 10 December 1998]).

5ADB. 1993. Technical Assistance to the Socialist Republic of Viet Nam for the Institutional Strengthening of the Viet Nam Ministry of Transport . Manila (TA 1996-VIE, for $1.9 million, approved on 29 November 1993); and ADB.1993. Technical Assistance to the Socialist Republic of Viet Nam for the Second Road Improvement Project .Manila (TA 1997-VIE, for $2.1 million, approved on 29 November 1993; a supplementary amount of $850,000 wasapproved on 31 May 1995 for TA 1997-VIE).



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change in traffic, and deemed savings in transport and maintenance costs—are embodied in theEIRR recalculation. The EIRR was recalculated to be 25.8%, less than the appraisal expectationof 32%. Road safety, another important indicator for the project purpose, was not assessedbecause data were lacking, but the completed road improvements were considered to havepotential to improve safety. Although savings in vehicle operating costs were believed to beoccurring, the PCR considered it too early to determine if such savings had led to reduced

freight charges and passenger travel costs. The PCR did not comment on non-price aspectssuch as improved transport reliability, access, and travel times. Nevertheless, on the basis of the good EIRR, the PCR concluded that the Project’s road works had helped promote economicdevelopment. The PCR found that transfer of road construction technology (para. 25) was notachieved to the extent expected because of poor joint venture management and limitedparticipation of the foreign partners. The PCR concluded that the Project was successful, andprovides lessons and recommendations to guide future operations.

8. The PCR also briefly described outputs of the two TAs. Both TAs were completed asplanned, but the PCR did not rate them, and they have no separate completion reports.

F. Operations Evaluation

9. This project performance audit report (PPAR) draws on project records, discussions with ADB staff, and information obtained by an Operations Evaluation Mission (OEM) to Viet Nam inNovember 2003. The OEM inspected the length of the road and met with staff of theGovernment, transport companies, and other beneficiaries, as well as members of the donor community working in the sector. The PPAR assesses the Project’s relevance, its efficacy andefficiency in achieving its outputs and purpose, sustainability of its outcomes, and its institutionaldevelopment and other impacts. The PPAR covers both positive and negative aspects, andidentifies lessons for future ADB operations. This report incorporates comments from Governmentand ADB staff on an earlier draft of the PPAR.

II. PLANNING AND IMPLEMENTATION PERFORMANCE

A. Formulation and Design

10. When the Project was approved, ADB’s operations were guided by the interimoperational strategy of the September 1993 economic review and bank operations in Viet Nam.Viet Nam’s development needs were many (para. 1), but the strategy identified the rehabilitationof road and other transport infrastructure as a particular area where ADB should help. TheProject was highly relevant to the development needs and operational strategy. The stronggrowth in transport—8% per annum since the time of project appraisal—highlights theappropriateness of this strategy. Subsequent country operational strategies retained transportas a priority investment, although emphasis switched to rural areas and regional corridors after all parts of the main highway had been addressed.6

11. The project objectives include statements about improving transport efficiency and roadsafety. But many problems of transport efficiency were not addressed, particularly the lack of competition in bus services (paras. 35–37). Similarly, the project design focused on road designas the sole mechanism for improving road safety, and even then the broad design had negativeaspects (paras. 38–39). In addressing both transport efficiency and road safety, the project

6ADB and the World Bank have funded rehabilitation of the entire highway through several projects. All bridgesmore than 20 m long were replaced through JBIC-funded projects.



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design was focused too narrowly and missed opportunities to introduce other measures whoseeffects might have been synergetic.

12. At appraisal, pavement strengthening through scarifying and breaking up of the existingasphalt and relaying it as a compacted base, followed by new overlay, was planned for about350 km or 80% of the road. The remaining 20% of road was to receive only an overlay, which

would improve riding quality without substantially increasing the pavement’s strength, and wasless expensive than pavement reconstruction. After loan approval, but before constructionbegan, this plan was changed because ADB staff believed that the detailed design missedimportant points, including that part of the pavement was built with large-sized aggregate, andwas not suitable for reworking. Furthermore, further testing, including by an ADB staff consultant, showed less need for pavement strengthening than the detailed design hadpredicted. The revised construction plan provided for pavement reconstruction for only 23% of the road length, a large change from the engineering design estimate of 80%. At projectcompletion, pavement strengthening of the type originally proposed at appraisal comprised only8% of the road length. Most of the road—about 400 km—was found sufficiently sound,structurally, to require only an overlay. The predominance of overlay as opposed to pavementreconstruction, both in the revised plan and as constructed, is consistent with the World Bank’s

first Highway Rehabilitation Project, which started slightly ahead of the Project and coveredother sections of NH1.

13. The major reduction in pavement strengthening indicates that the detailed design, whichwas done by a Canadian aid-funded consultant working with TEDI, was inadequate. Thecontract documents prepared by the detailed design consultant also had to be substantiallyrevised. But the consultant’s performance is not the main cause of the problem. The mainreason is that funds for the detailed design phase were insufficient to achieve the required levelof detail.

14. The original project design seems to have been governed more by cost and loanconsiderations than actual rehabilitation needs. This is apparent from the variability in the

capacity and width of the bridges on the road (para. 15), and the bypasses and drainage worksadded during implementation. The traffic levels and traffic growth expectations at the time of appraisal made the need for bypasses apparent. The bypasses would have been included in theoriginal project scope, had the cost and loan amount been less of an issue. Also, the appraiseddesign included only 5 km of drainage works for each of the three road contracts, a level thatseems substantially inadequate for 435 km of roadway. The extra drainage works and bypasseswere beneficial. Budget considerations also affected the width of road shoulders. Originally, theroad was designed with 2.5-m shoulders on each side. At appraisal, to limit the project cost,shoulder widths were reduced to 1.5 m along parts of the road with less traffic. But as fundsbecame available, full-width shoulders were built over the entire road length. Considering therelatively high traffic over the entire road length, this enhanced road safety. An alternative tolimiting road design to the available budget is to include all necessary improvements and

rehabilitate only the length of road that can be afforded, deferring the balance to subsequentprojects.

15. The feasibility study noted that 45 bridges showed severe signs of deterioration and, atthe detailed design stage, 129 bridges required strengthening or widening. But to reduce costs,only 24 bridges were included for rehabilitation at appraisal. Another 15 bridges were to bereplaced through a JBIC project. As cost savings became apparent during projectimplementation, more bridges were rehabilitated. The eventual total of project-rehabilitatedbridges was 65. But many bridges remain along the project road with inadequate load-carrying



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capacity, and some are too narrow to carry both the carriageway and the shoulders. Thevariable load capacity presents an awkward arrangement for dealing with truck loading, andprobably results in some bridges carrying excessive loads at times. Furthermore, bicycles andmotorcycles use the shoulders, so narrow bridges force them onto the main carriageway,causing a safety hazard. Ninety-nine bridges along the road still require some form of rehabilitation. All bridges on sections of NH1 rehabilitated with World Bank funds were upgraded

to uniform load capacity and width.

B. Achievement of Outputs

16. The main project output, rehabilitation of 435 km of NH1, was achieved as planned. Thecompleted works include two town bypasses, 65 bridges, and drainage, which exceededappraisal targets. Almost all pavement works included overlays. Pavements were reconstructedon about 8% of the road length, which was less than the revised expectation of 23% of the roadlength for this type of rehabilitation work. Most of the road has a 7.5 m carriageway; the first25 km, the four-lane divided road section, is wider. Sealed shoulders, 2.5-m wide, were formedalong each side of the entire road length. As planned, the shoulders were delineated from thecarriageway by white lines to separate fast-moving traffic from slower motorcycles and bicycles.

The existing rights-of-way were used throughout the road, except for the two new bypasses.7 Traffic signs, lights, and barriers were also provided as planned. Only one of the two plannedtruck-weighing stations was built because the Government had already used its own funds tobuild the other. The truck weighing station built through the Project was larger than originallyplanned, and was built with facilities on both sides of the road, as it was sited along the dividedfour-lane section.

17. At completion in 1999, the international roughness index (IRI)8 over the road averaged2.4, which is an acceptable riding quality for this type of road, and similar to the IRI levels of 2.3to 2.5 for the World Bank’s first and second highway rehabilitation projects. The targetroughness varies with project documents, ranging from 1.8 at the feasibility stage to 2.0 at theearly design stage to “under 3.0” in later documents. In 1992, the feasibility study estimated an

average IRI for the road of 5.1.

18. Not all bridges were replaced or rehabilitated, so load capacities of bridges on the roadvary from 18 to 30 tons. Some are narrower than the combined carriageway and shoulders (i.e.,narrower than 12.5 m). This causes problems for controlling truck loading and road safety (para.15).

19. The TA outputs for institutional strengthening were partly achieved. A draft road act wasprepared, but not enacted, because of debate over a proposed road fund in the draft law. Thelaw was passed after deletion of the road fund, and after further revision with assistance through

ADB’s Second Road Improvement Project.9 The TA consultants also helped PMU-1 developcapabilities in international contract management, and VRA received assistance in areas

concerning driver licensing, vehicle registration and inspection, vehicle overloading, and

7An existing bypass at Phan Rang was widened under the Project (para. 45).

8The lower the number, the smoother the surface.

9ADB. 1996. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the Socialist Republic of Viet Nam for the Second Road Improvement Project . Manila. (Loan 1487-VIE[SF]: Second Road Improvement Project , for $120 million, approved on 21 November 1996.)



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safety.10 The TA was to establish a computer-based transport databank within MOT to better plan and manage the overall transport sector. Although a database was established within theInland Waterways Administration and may have formed the basis for its data managementcapability, neither the broader target encompassing all transport modes nor data collection andmanagement within VRA were achieved. VRA’s database is weak, but the weakness is systemwide, encompassing data collection, storage, and processing, through to data use.11

20. The project preparatory TA completed feasibility studies for two road sections of NH1that were eventually funded under ADB’s second (footnote 9) and third (footnote 4) roadprojects, and prepared detailed designs for the roads under the second. Funding for this TA wasincreased substantially, from $2.1 million to $2.95 million, to enable a sufficient scope of work.Even with extra TA funds, problems arose during implementation of the second project due toerrors traceable to lack of detail in the surveys done under the detailed design phase of the TA.For example, soil survey points were too widely spaced, and alignments were based onmeasurements from aerial photographs with insufficient ground control to ensure accuracy.These errors caused extra work for the implementation supervision consultants and governmentstaff, and led to some delay—but no substantial cost increases—for the second project.

C. Cost and Scheduling

21. At $131.1 million, the actual project cost was less than the appraisal estimate of $141.0 million (Appendix 1). But the actual cost includes $6.8 million used to rehabilitate severalshort sections of flood-damaged highway north of Nha Trang. Only $124.3 million was spent onthe project road.12 Excluding flood damage works, the actual cost of civil works was near theappraisal estimates (i.e., $242,000 per km), despite additions to the scope of works, whichmeant lower-than-expected costs for its individual components (para. 22). The cost of supervision consultants increased from $5.4 million to $8.7 million due to implementation delaysand the resulting need to extend the period of consultant services. The cost of the right-of-wayrose to $8.4 million versus the original estimate of $6.0 million because the additional bypassescaused increased resettlement. About $4.8 million of the ADB loan was unused and canceled.

22. The main reasons for the lower-than-expected costs for civil works include the shift fromthe more-expensive reconstruction to the less-expensive overlay-only rehabilitation (para. 12),and cheaper construction costs than anticipated. Construction prices were lower, partly becauseat appraisal the works were expected to be done by international contractors, but were actuallydone through joint venture partnerships of local and international companies. The lower costswere also partly because costs were overestimated at appraisal. But the appraisal estimateprobably could not have been better because there was no recent experience of open bidding inViet Nam at the time, and lower-cost joint venture arrangements could not be counted on. It isnoteworthy that the appraisal estimate was not much higher than the $218,000 per km13 estimated for rehabilitation works under the World Bank’s Highway Rehabilitation Project, whichwas appraised a few months before the project appraisal. The World Bank project’s

10A detailed list of the outputs is available in ADB. 2001. Technical Assistance Performance Audit Report on Advisory Technical Assistance for Institutional Strengthening in Transport Planning and Administration in Cambodia and Viet Nam . Manila.

11The weak database is to be addressed through consultant inputs under ADB’s Third Road Improvement Project(footnote 4), and through initiatives of other aid agencies. These inputs are titled “Implementation of the Sector Development Policy.”

12The flooded sections were packaged as contract R500. These sections were within the scope of ADB’s Third RoadImprovement Project (footnote 4), but required urgent attention.

13The World Bank estimate was net of taxes. The figure of $218,000 per km includes an allowance of 5% tax tomake it comparable to the project estimate.



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rehabilitation works were predominantly overlays rather than reconstruction, which could explainthe difference between the two appraisal estimates.

23. The Project was completed in December 1999, 2 years later than expected. First, therewas a delay of about 1 year in the preconstruction process, then construction took 4 yearsversus the budgeted 3 years. The first delay was caused by the late appointment of the

supervision consultant and a need to revise the technical designs and contract documents.These problems led to a 19-month gap between construction contractor prequalification andcontract award, and largely negated the approved arrangement for advanced procurement of civil works contracts. Unfamiliarity by the Government and PMU-1 with ADB procedures, theProject being the first in the sector, and cumbersome approval procedures, such as for thesupervision consultant contract, contributed to the pre-construction delay and the inability toutilize the advance procurement facility (para. 28).

24. The 1-year construction delay was caused by a combination of factors, including poor contractor-joint venture performance (para. 25), design changes because of inadequate initialdesigns, time-consuming procedures for approval of variation orders and obtaining permits,delays in resettlement and in relocating utilities, cumbersome handover procedures, poor initial

performance of the supervising consultant (para. 29), and periods of unusually bad weather.

D. Procurement and Construction

25. Three contract packages, R100, R200, and R300, were procured using internationalcompetitive bidding procedures in accordance with ADB’s Guidelines for Procurement . Biddingwas efficient and attracted sufficient bidders. But bidding was preceded by delays inappointment of the supervision consultant and, subsequently, in government approval for awardof contracts. All three contracts were awarded to joint ventures of international and domesticfirms. Although the international partners were lead firms in the joint ventures, the domesticfirms were dominant. The domestic partner for the R100 package, the one closest to HCMC,was the most efficient because it had previous experience in the Lao People’s Democratic

Republic. The foreign partner for this contract did not provide significant managerial input or import any plant and equipment for the works. The lead partner for R300, the contract nearest toNha Trang, mobilized sufficient foreign staff and equipment to complete the work satisfactorily,but the partnership suffered from major conflict between the partners. For contract R200, theforeign partner provided some inputs but the local partner’s lack of experience caused conflictand delay. Work on all contracts progressed slowly at first, largely because of partnershipproblems. About 10–20% of the road appears to have problems of cracking and bleeding (para.33), but it is not yet known if these problems are related to construction. Despite the delay andthe possibility of defects, the quality of work completed by the contractors was mostlysatisfactory.

26. The contract for the flooded sections north of Nha Trang, packaged as contract R500,

was procured through local competitive bidding in accordance with ADB’s Guidelines for Procurement . All work was completed satisfactorily. The civil works for two bridges on the PhanThiet bypass, contract R400, were also procured using local competitive bidding procedures inaccordance with ADB’s guidelines. The works were completed satisfactorily.

E. Organization and Management

27. Different agencies under MOT undertook the design, implementation, and subsequentoperation and maintenance of the project road. Consultants aided by TEDI prepared the



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technical road designs. PMU-1 was responsible for implementation of the Project and itsaccompanying TAs. PMU-1 was also responsible for implementation of other World Bank and

ADB projects. Upon completion of construction, VRA became responsible for normal operationand maintenance, with actual maintenance operations done by companies under two of VRA’sregional road management unions located along the highway. These arrangements workedsatisfactorily, except for implementation of the institutional strengthening TA. The main

outcomes of that TA were to have been enhanced VRA capabilities, including for datacollection, storage, and analysis. Achievements were mixed, and the result, particularly in datacollection and management capabilities for roads, might have been better had VRA rather thanPMU-1 been the implementing agency for the TA, or at least parts of it.

28. The Government’s decision making was sometimes slow because of the many layers of bureaucracy, and a lack of understanding of ADB procedures. International contractingarrangements and specific aspects of construction, such as the engineer’s role, were alsopoorly understood at first. This is understandable because this was one of ADB’s first projects inViet Nam after the resumption of lending, and the country was just emerging from a long periodof central planning. Many of these problems have been overcome, some through the experienceof implementation of this and other internationally funded projects, the institutional strengthening

TA, and other ADB TAs. The loan covenants, including those related to maintenance, weregenerally complied with.

29. A consultant for supervision of the civil works, except for those under contract R500, wasengaged under ADB’s Guidelines on the Use of Consultants . The consultant’s earlyperformance was less than satisfactory, particularly because of conflict within the team anddifficulties in providing adequate and experienced foreign staff. The project manager wasreplaced three times and the pavement engineer, five times. These problems caused almost a1-year lapse of the civil works contracts before the consultant gave guidance to the contractorson pavement design, which also contributed to the overall delay. Also, road defects related tothe bitumen mix appear to have been caused by inconsistent construction that the consultantsdid not detect.

30. Supervision of contract R500, for the flooded sections north of Nha Trang, was by theconsultant engaged for the feasibility and detailed design under TA 2636-VIE: Third RoadImprovement. The OEM did not inspect this section, and the consultant’s performance was notassessed. However, PMU-1 reported that the works were completed satisfactorily.

III. ACHIEVEMENT OF PROJECT PURPOSE

A. Operational Performance

1. Traffic and Road Performance

31. At the time of the OEM in late 2003, average annual traffic levels ranged from 2,200 to12,500 vehicles14 per day on the two-lane sections of the project road, and about39,000 vehicles per day on the four-lane section (Appendix 2). The statistics generally show a

14Vehicles are defined in this report to include all cars, buses, and trucks (i.e., all motorized vehicles exceptmotorcycles). Motorcycles are commented upon separately.



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steady increase in traffic since 1997. Current traffic exceeds forecasts at appraisal.15 Traffic hasalready reached levels estimated at appraisal for 2017 for the four-lane section near HCMC,and parts of the two-lane section near Phan Thiet, a major town about halfway along the road,at the intersection with highway 55. The data show strong growth since 1997 for cars, pickups,large trucks with more than three axles, and buses over the entire road length, and trucks of allsizes near HCMC.

32. Motorcycles and bicycles are common along the road, with counts of 1,700 to3,000 motorcycles per day over most of the road. But the number increases to 7,700 near PhanThiet, and to 80,000 near HCMC. Bicycle traffic is typically about 500 to1,500 per day, but is9,000 per day near HCMC. Motorcycles and bicycles move relatively slow, and can create aroad safety problem when they mix with faster-moving vehicles. The large number of motorcycles and bicycles at all counting stations justifies the construction of wide shoulders,which create separate lanes for slower traffic over the entire road length.

33. The first road section was finished in 1997 and the entire road, by late 1999. By the timeof the OEM, the pavements had been in service for 4 to 6 years. This is a significant portion of their nominal design life of 10 years, particularly considering the high traffic volumes, which

shorten road life. Since completion of construction, about 10–20% of the road surface hassuffered bleeding or cracking. Bleeding is a construction defect, but cracking may be caused byconstruction problems, or damage from truck overloading, or both. Many of these pavementproblems became apparent early on, but not all were addressed quickly. The riding surfaces didnot deteriorate badly in sections where problems were addressed rapidly, mainly sections under Regional Road Management Union Number 7. But the riding surfaces deteriorated far faster onsections where the problem was not addressed immediately. Nevertheless, pavementconditions for most of the road were good. The average IRI measured in 2001 was 2.9, with lessthan 5% of the road measuring higher than 4. At appraisal, resurfacing was deemed necessarywhen the IRI reached a level of 4. In 2003, some parts of the road had an IRI of 4 or higher, butlong sections of road had relatively good riding surface.

2. Travel Times, Speeds, and Transport Costs

34. The road improvements reduced travel times by 15–30%. For example, at the time of theOEM, normal bus travel time between Nha Trang and HCMC, the towns at both ends of the435-km road, was reported to have decreased from about 14 hours to 10 to 12 hours.Reductions in travel time, percentage-wise, were similar for shorter journeys. Gains would begreater if compared with the hypothetical “without-Project” situation for 2003, where traffic levelswould be higher than before the Project. Travel speeds for light vehicles at the time of inspection were around 60–70 km per hour in the heavily trafficked sections near HCMC andimmediately near major towns, but were higher at 70–90 km per hour over most of the roadlength. Anecdotal evidence from transport operators indicates that the faster travel has notalways led to more trips or savings in crew time because of how trips were scheduled, but that

fuel and repair costs had decreased since road rehabilitation. The conclusion from this limitedevidence is that vehicle owners have benefited from lower vehicle operating costs. Thatconclusion is supported by a study by World Bank consultants hired in early 2003 to review its

15These are the OEM’s best estimates based on available statistics. But there is a possibility for error because manylocations where traffic counts are made have changed over time, and large and unexplainable discrepancies existin the data. For the project road, only seven stations appear consistent over time, and provide the estimates for 1997–2003. But it is not known if any are the same stations used at appraisal.



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first two road projects in Viet Nam.16 Those projects included sections of NH1 with similar pre-existing conditions, traffic levels, rehabilitation treatments, and improved surface conditions asfor the Project. The consultants reviewed vehicle ownership and operating data extensively, andconcluded that vehicle operating costs had decreased in real terms.

35. For nonowners of vehicles, some transport prices decreased, but others did not. Some

transport prices even increased. Bus transport is still regulated, despite the existence of manyprivate operators. For example, licenses are given for routes with specific origin and destinationtowns; buses that do not originate or terminate in a specific town cannot accept passengersthere; all companies that operate between the origin and destination towns must agree tochanges in bus fares; and the provincial transport authorities must approve such changesbefore they go into effect. Partly because of limitations these regulations place on competition,changes in bus fares are not strongly correlated with changes in road conditions. Changes infares were widespread in 1997, before completion of the road. The changes mostly increasedbus fares along the project road and around HCMC, but fares decreased for some routes, likefrom Phan Thiet to Phan Ri. Most bus fares have remained unchanged since 1997. Some pricesalso rose, for example, due to a company’s investment in new buses, which increaseddepreciation costs. The introduction of new services, especially luxury class buses, also was not

due to road improvements, but was in response to new government regulations, and generallyhappened across Viet Nam.

36. Freight prices are of two types. The Government has a schedule of rates that apply togoods transported by private carriers for the Government. The other type of price is betweenprivate carriers and owners of private goods. The government rate varies with type andcondition of each road. Because the project road was improved, it was reclassified from level 2to level 1, which lowered the freight price.17 The OEM could not clearly determine the effect onprivate freight tariffs, other than that the effect appeared mixed. The World Bank’s consultants,in their 2003 study of various completed World Bank road sections (footnote 16), reached thesame conclusion. The private sector’s inconsistent response is thought to be due, partly, totransport operator associations that guide tariffs. That reduces the effect of competition in

driving down prices in response to improved road conditions.

37. True competition does not exist in Viet Nam’s bus and freight operations, so nonvehicleowners do not benefit fully from reductions in vehicle operating cost that result from roadimprovement. But nonvehicle owners, like vehicle owners, benefit from shorter travel anddelivery times, and more comfortable journeys.

3. Road Safety

38. The number of accidents, injuries, and fatalities has increased rapidly across Viet Nam(Appendix 3). But the reasons include not only an increased accident rate, but also theincreasing number of vehicles and better accident reporting. The Government, concerned about

the situation, recently increased efforts to improve road safety through, for example, driver andpedestrian education. Preliminary 2003 statistics indicate some improvement.

16Asia Pacific Engineering Consultants in Association with Maunsell Group. June 2003. Report on Project Monitoring and Evaluation Study. Study done for the World Bank.

17The government schedule was also revised in 2000. Because of improved conditions, the tariff for the project roadwas reduced from D518/ton per km, the new rate for a level 2 road, to D435/ton per km, the new rate for a level 1road.



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39. The data provided to the OEM is too limited in time frame covered and of comparativeinformation from other road sections to draw a relationship between road improvement and roadsafety. The limited data show that the number of accidents, injuries, and fatalities along theproject road has increased in recent years, mirroring overall national performance. On thepositive side, the road was built with wide, 2.5-m paved shoulders along its full length, withpainted lines to delineate the shoulders from the main carriageway, forming separate lanes for

slower traffic. This, along with traffic signs, center lines, lights at strategic points, and two townbypasses, should have improved road safety. But not all bridges were improved. Some narrowbridges continue to be potential hazards because slow traffic must move to the maincarriageways to pass over them. Also, people and businesses along the road, particularly inurbanized areas, are encroaching on the road right-of-way, and travel speeds have increased.Both factors could decrease road safety.

B. Performance of the Operating Entity

40. VRA responsibilities include road maintenance and supporting transport operations,such as driver and vehicle licensing and control of truck overloading. VRA’s support functioncapabilities were to be improved through the institutional strengthening TA and vehicle weighing

stations were to be constructed under the Project to help VRA combat truck overloading.Various reports, including assessment by World Bank consultants (footnote 16), indicate thatvehicle overloading has not been reduced. The attempt under the institutional strengthening TAto establish a database for road information was unsuccessful, mirroring the lack of success, sofar, of other international agencies in installing working pavement and bridge managementsystems. Consequently, maintenance planning is not objective. Instead, the works are selectedfrom needs that field staff identifies.18 Nevertheless, the project road is maintained, althoughwith occasional delays (para. 43), and the work of VRA’s regional road management unionsappears adequate. The OEM could not assess VRA capabilities in other areas.

C. Economic and Financial Reevaluation

41. Data on vehicle operating costs and other parameters needed to recalculate theProject’s EIRR were limited, and the reliability of those data was questionable. That constrainedthe accuracy of any economic analysis, based primarily on secondary data. But in early 2003,the team of consultants for the World Bank’s review (footnote 16) completed detailedevaluations for parts of the first two World Bank highway improvement projects. All dataproblems were addressed, where necessary, through new surveys. Features of two of the WorldBank-evaluated NH-1 road sections were similar enough to those of the Project to use their results as a proxy. Key similarities were found in improvement works; investment costs per km;the investment period; and effects of improvements on riding quality, traffic volumes, and trafficgrowth (Appendix 4). The World Bank analysis produced EIRRs of 21–30% for these two roadsections. Reduction in future traffic growth rates from 8 to 4% per annum, considered low andunlikely, still produced EIRRs higher than 19%. The high traffic volumes and reasonable

maintenance on both the project road and the World Bank road sections intuitively suggest thathigh EIRRs, as indicated in the analyses, are probable. The PCR reestimated the Project’sEIRR as 25.8%.

42. The good project EIRR depends upon adequate future road maintenance. Maintenancefunds for the project road will probably be adequate—but at the expense of maintenance of

18Assistance under ADB’s Third Road Improvement Project (footnote 11) will also address objective selection of maintenance treatments and maintenance planning.



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other roads. The resulting early deterioration and increase in vehicle operating costs on theother roads represent an economic loss attributable to the Project—which will reduce the EIRR.

Additionally, early deterioration on roads connecting to the project road may limit the use of better buses and trucks on the project road, which would further reduce the project benefits. Theextent of such benefit reductions have not been estimated, but are pointed out for a balancedview of both the EIRR and maintenance funding.

D. Sustainability

43. Since project completion, the Government has funded routine maintenance through itsnormal budget process. In 2002–2003, about D10 million per km was provided for routinemaintenance, the standard amount for highways. Based on the OEM observations, routinemaintenance appears adequate. The regional road management unions also requested fundsfor resealing pavement cracks, which is not part of routine maintenance. The Governmentprovided about D10 billion for this in 2001–2003 (Appendix 5). Not all of these requests weremade immediately after the resealing problem was detected, and some road surfacedeterioration had already occurred. The delay in resealing will bring forward the need for resurfacing in some areas. The cost of resealing is low compared with the cost of an overlay to

restore riding quality, estimated at about D2 to 3 billion per km. More road sections will needresealing soon. For Viet Nam as a whole, the funds provided for road maintenance are only athird to half of the amount required. Given NH1’s importance, the Government will probably giveit priority, providing the necessary funds for overlays, although later than would be optimal. Theroad will probably be sustained, albeit suboptimaly. But the limited maintenance funds will meanthat other roads, including those linking with the project road, are less likely to be adequatelymaintained.

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

A. Socioeconomic Impact

44. The road improvements probably contributed to the relatively rapid growth in tourismsince the mid-1990s in Khanh Hoa province and Nha Trang, its main city. This growth isreflected in figures for the provincial gross domestic product (GDP), which have risen faster thanthose for Viet Nam as a whole (Appendix 6). The area boasts many resorts and other facilities,and tourism now accounts for about 40% of the provincial GDP. Nha Trang is also connected byrailway and air, and the northern continuation of NH1, which have also contributed to the growthof tourism. The GDPs of other provinces along the project road also seem to have grownsimilarly to that of Viet Nam as a whole. There are no clearly identifiable effects of the roadimprovement on economic activity in these provinces, other than those indicated by trafficgrowth.

45. Almost 10,000 households lost small portions of land to widen the rights-of-way, but

were not relocated or affected otherwise. Another 175 households required resettlementbecause of construction of the two town bypasses and the widening of a third bypass at NhaTrang. About half of the affected households relocated voluntarily. The other households wererelocated on nearby land. Another 880 households had some adjustment of their houses or thearea they used because these infringed upon the right-of-way. Compensation was provided inall cases.

46. The road works created short-term employment, particularly for unskilled workers. Buton the negative side, some less-skilled staff of maintenance companies under the regional road



13

management unions became unemployed because road maintenance was transferred to theconstruction contractors.

B. Environmental Impact

47. The Project had no major environmental impact. Apart from two short town bypasses,

the existing alignment was used. Most earth works were relatively simple, involving shoulders,culverts, drains, and small bridges. Problems that are sometimes associated with soil movementand disposal in road development were not noted. Widening of the paved section of the roadand drainage works improved control of dust and rainwater.

C. Impact on Institutions and Policy

48. Institutional impact was to be mainly through the Project’s associated institutionalstrengthening TA. Institutional support through the Project itself was limited to the supply of vehicle weighing stations. A 2001 evaluation of the TA’s outcomes (footnote 10) concluded, withrespect to VRA, that many, but not all, of the expected TA outputs were achieved. Also, whileVRA had improved capabilities, it remained a relatively weak part of MOT. The study found that

development of the database for the transport sector was poor, and covered only part of thesector, but that ratification of the Road Act and issuance of the VRA Regulation provided a legalbasis for the sector. In addition, the PMU-1’s capabilities in international contract managementwere improved, which benefited subsequent projects. The OEM confirmed the study’sconclusions about the database, legal framework, and PMU-1. About the database: VRA lacksthe capability and funding for data collection, storage, and processing. This partly seems to bebecause of the lack of need for road data to help higher government levels plan and makedecisions.19 VRA’s control of truck overloading was limited and ineffective.

49. Because joint venture partnerships of international and local companies won theconstruction contracts, some transfer of modern road construction techniques and managementpractices to the local partners was expected. The foreign partners provided sufficient inputs in

only one of the three contracts to provide meaningful technology transfer but, even in that case,disputes between the partners made such transfer minor. Technology for the processing of oldbituminous surfaces was introduced, and is being adopted for some town areas where old roadsurfaces must be removed before laying new surfaces.

V. OVERALL ASSESSMENT

A. Relevance

50. At appraisal, Viet Nam’s road infrastructure was deteriorated and its road laws andinstitutions were weak—a condition not conducive to economic growth and change to a market-based economy. Thus, the assistance was very relevant to the country’s needs, and was in line

with ADB’s development priorities as set out in the interim strategy at the time. This situationcontinues today. The focus on relatively low cost rehabilitation and the road section selected for improvement also were appropriate. However, the project design could have provided a broader range of initiatives to address transport efficiency and road safety. The Project is rated asrelevant.

19The World Bank and the Department for International Development of the United Kingdom have new programs toimprove data collection for roads and bridges, and its use in asset management.



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B. Efficacy

51. The main purposes of the Project were to reduce transport costs and improve roadsafety. For vehicle owners, transport costs, that is, vehicle operating costs, were reduced. For nonvehicle owners, some transport costs, such as bus fares and freight tariffs, were reduced,but others were not, because of regulations and a lack of competitive forces in the industry.

Nevertheless, all road users benefit from shorter travel times and more comfortable journeys.The relative performance of the road in terms of road safety is not known. The number of roadaccidents, injuries, and fatalities along the project road has increased, mirroring those problemsfor Viet Nam as a whole. Road safety remains an issue but, overall, the Project is ratedefficacious.

C. Efficiency

52. All indications are that the Project has a high EIRR despite some reservationsconcerning maintenance and the diversion of maintenance funds from other roads. Thus, theinvestment was an efficient use of development funds. Nevertheless, the process by which theProject was prepared and implemented was not so efficient. Weaknesses in the process

included the requirement to revise the road design and contract documents prepared at thedetailed design stage, the slow appointment of the supervision consultant, and constructiondelays. These all contributed to a 2-year delay in project completion. But on balance, the Projectis rated as efficient.

D. Sustainability

53. The road has performed satisfactorily since completion, despite higher-than-expectedtraffic. Considering its importance, NH1 will probably receive funds for maintenance. For example, the cracking or bleeding problems that affect about 10–20% of the road are beingaddressed. But given the general inadequacy of the Government’s maintenance budget,maintenance may be later than optimal (this happened in the case of cracking). The low load

capacity of some bridges is also a potential problem area. The replacement or upgrading of thebridges has not yet been provided, so there may be damage that interferes with smooth trafficflow and future benefits. Overall, sustainability of the Project is likely.

E. Institutional Development and Other Impacts

54. Previous studies, and the OEM’s limited information concerning VRA, indicate that theinstitutional strengthening TA produced mixed results. VRA still requires substantialstrengthening, and the road database is a particular sector weakness. But the legal frameworkfor the sector was established (although with delay), and some capabilities of both VRA andPMU-1 were improved. There were no significant negative impacts. Overall, the performanceunder this criterion is rated as moderate.

F. Overall Project Rating

55. Based on the combination of achievements under the five criteria, the Project is rated assuccessful. As a result of this and subsequent ADB projects, and assistance from the WorldBank and JBIC, the entire length of the NH1 has been upgraded.20

20A tunnel to bypass a winding section on NH1 at Da Nang is currently being built.



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56. The successful rating for the institutional strengthening TA given by the 2001 study(footnote 19) is considered appropriate. Considering the problems experienced with the designof ADB’s Second Road Improvement Project, the project preparatory TA is considered partlysuccessful.

G. Assessment of ADB and Borrower Performance

57. Staff continuity and frequent short missions in the early years after loan approval werenotable features of ADB’s supervision. The frequency of missions was high in view of theProject being the first in the sector for Viet Nam, and given that the Government was in a stateof transition and needed regular advice and support. Although the early missions addressedmany issues, they could not overcome all sources of delay. ADB also fielded a staff consultantto review in detail the technical designs, and provided other general support through advisoryTA to improve the Government’s systems of tendering and procurement. ADB’s performance isconsidered satisfactory.

58. Continuity is also seen in ADB’s efforts to support institutional development in the roadsector. One output of the institutional strengthening TA was defining an institutional

strengthening component funded under ADB’s Second Road Improvement Project. Thatcomponent involved preparation of an action plan that identified activities, physical needs,human resource development needs, and policy requirements for a wide range of managementand technical areas in VRA. Important among these were road network planning, needsidentification for planning of road infrastructure, information management systems for user andinfrastructure activities, guidance and control documents for maintenance, modernization of technical standards and specifications, and quality assurance systems. Implementation of theaction plan is funded under ADB’s Third Road Improvement Project (footnote 4). Detailed termsof reference for technical consultant inputs for that project were being prepared at the time of the OEM. The institutional strengthening component under ADB’s Second Road ImprovementProject also defined further institutional strengthening activities for development of fundingarrangements for road maintenance, resettlement procedures, and further legislative

improvements. These are to be implemented under ADB’s fourth road project.21

59. The Government’s procurement and decision-making procedures were cumbersome,and caused delays. But many of the problems were subsequently addressed. All loan covenantswere complied with, and the Government’s overall performance was satisfactory.

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A. Key Issues for the Future

1. Low-Capacity Bridges

60. More than 50 small bridges on the road have load capacities of 18–25 tons. The larger bridges, and the road in general, have 30-ton capacity. These small bridges either will restrictfreight operations by limiting vehicle loading to the lowest capacity in the section beingtraversed, or are at risk of being damaged, which, if it occurs, would hamper the smooth flow of traffic and realization of project benefits. Some other bridges are narrower than the carriageway

21Loan 1888-VIE(SF): Provincial Roads Improvement Sector Project, for $70 million, approved on 18 December 2001.



16

and shoulders and thus, pose safety risks. All of the low-capacity and narrow bridges should beupgraded.

2. Regulation of Transport

61. The regulation of transport operations limits the size and spread of the Project’s

development impact by weakening the link between road condition and transport prices. Greater freedom for bus and truck operators to set prices and to organize their operations, and allowingtransit buses to pick up passengers in towns they pass through, would probably produce a pricestructure more responsive to changes in road conditions.

3. Sustainable Maintenance Funding

62. Maintenance funds are limited, and funds are prioritized to maintain foreign-fundedroads such as the project road. Thus, it is likely that some roads will not be adequatelymaintained. But for full benefits of road improvement to be realized, the entire network, includingprovincial and other roads that feed into or off the main highways, should also be maintained.Increased funding is clearly needed.

4. Accidents

63. Like narrow bridges, encroachments onto the right-of-way are avoidable hazards thatcan contribute unnecessarily to accidents. These encroachments can and should be corrected.Other actions to improve safety could include review of speed limits, better enforcement of roadlaws, and continued educational programs for drivers and residents.

5. Databases

64. Proper road and bridge management requires comprehensive, accurate, and up-to-datedata. Thus, efforts to acquire specialized software for this purpose, such as Bridgeman, Rosy,

and the highway design and maintenance model, version 4 (HDM-4) are in the right direction.But there must be a perceived need for data collection if it is to be sustained, with accuracyassured. Thus, upper management must support the use of Bridgeman, Rosy, and HDM-4 sothey will become integral parts of VRA’s and MOT’s management systems. The databasecomponent of the institutional strengthening TA may have failed because of the lack of aperceived need for the data and, thus, low interest in continuing data collection and ensuringaccuracy.

B. Lessons Learned

65. Lessons learned through the Project include:(i) Early resealing of areas of cracked pavement by Regional Road Management

Union Number 7 limited deterioration of road quality. But treatment was delayed,and road quality deteriorated, in sections under Regional Road ManagementUnion Number 5. This demonstrates the benefits of timely maintenance.

(ii) The wide paved shoulders were justified by the growth in motorcycle and other slower-moving traffic. Wide shoulders should be considered in other roadprojects in Viet Nam, and in similar traffic environments.

(iii) Available funds seem to have largely dictated the road design. Thus, the originalscope of work included little drainage, no town bypasses, and rehabilitation or replacement of only 24 of the more than 100 small bridges. Also, the width of the



17

paved shoulders was reduced in areas of low traffic because of fears that thetender prices might exceed the budget. Fortunately, cost savings allowedwidening of all shoulders, the addition of drainage works, rehabilitation of morebridges, and two town bypasses. But not all weak and narrow bridges werereplaced. An alternative, if the budget is limited, would be to include all necessaryworks in the design, but to reduce the length of road to be improved.

(iv) Weakness was apparent in the detailed design studies for both the Project and ADB’s Second Road Improvement Project. In both cases, the major cause of weakness seems to have been insufficient funds for the studies. That indicates aneed for greater care in planning for detailed design.

(v) If technology transfer was important, then the joint venture contracts should haveincluded provisions to ensure more foreign personnel and equipment in jointventures.

(vi) Quality of the completed road was acceptable, with little input from foreignpartners in most cases. That indicates that local contracting companies arecapable of such work. But supervision and monitoring to avoid delay may berequired.

(vii) During construction, many maintenance staff of the companies under the

regional road management unions may lose employment. Future projects shouldconsider this potential hardship for individuals.

(viii) Efficient decision making by government agencies, based on clear lines of authority and preparedness to make timely decisions, is necessary to avoidimplementation delays.

C. Follow-Up Actions

66. As soon as practical, such as by mid-2004, MOT should prepare a detailed list of substandard bridges along the project road; details of work required to bring each bridge up tostandard; and an action plan for implementation. Even under a relatively efficient program of identification, design, and construction, bringing the road up to a uniform load capacity would

take 2–3 years.

67. Before overlaying rough areas of the road, which will probably be necessary in the nextfew years, VRA should investigate and determine the causes of cracking. A simple overlaymight not be the best option, if weak structure is the main cause of cracking.



18 Appendix 1

Civil Works 95.00 10.50 105.50 100.70 11.50 112.20Contract R100 33.83 3.74 37.57 26.08 2.90 28.98Contract R200 30.77 3.40 34.17 30.60 3.71 34.31Contract R300 30.40 3.36 33.76 37.59 4.18 41.77

Contract R400(Phan Thiet Bridges)

0.00 0.00 0.00 0.29 0.03 0.32

Contract R500(Flooding Sections)

0.00 0.00 0.00 6.14 0.68 6.82

Right-of-Way 0.00 6.00 6.00 0.00 8.40 8.40

Consulting Services 5.20 0.20 5.40 8.55 0.20 8.75

Physical Contingencies 8.70 1.50 10.20 0.00 0.00 0.00

Price Contingencies 8.90 2.80 11.70 0.00 0.00 0.00

Interest During Construction 2.20 0.00 2.20 1.84 0.00 1.84

Total 120.00 21.00 141.00 111.09 20.10 131.19

Source: Asian Development Bank loan financial information system data.

PROJECT COST

($ million)

Actual

Total

Cost

Foreign

Exchange

Local

CurrencyItem

Foreign

Exchange

Local

Currency

Total

Cost

Appraisal Estimate



Appendix 2 19

Item R100-4 Lane

1551 1613 1687 1750 1816 1832 1879

1997 2,837 2,113 2,148 9,913 3,805 4,585 15,471

1998 3,544 1,879 6,560 6,129 6,686 4,828 18,816

1999 3,401 2,070 7,035 5,997 6,063 5,094 24,927

2000 3,183 2,029 6,023 7,590 5,568 5,206 36,302

2001 3,263 2,469 6,930 8,325 5,205 5,885 60,122

2002 3,805 2,497 7,499 11,938 6,784 6,320 42,102

2003 Estimatea

3,629 2,199 7,998 12,545 6,276 8,597 39,051

2017 Estimateb

8,205 4,972 18,083 28,363 14,189 19,437 88,291

package for 2017c

38,143

B. Motorcycles

1997 1,515 1,363 4,495 4,028 3,905 1,016 36,571

1998 1,729 1,136 4,356 3,934 2,918 1,240 35,384

1999 2,027 1,354 4,819 4,032 3,248 2,314 36,538

2000 2,716 1,686 5,155 4,057 2,063 2,583 52,129

2001 1,918 1,958 7,066 3,797 1,776 2,407 67,960

2002 1,716 2,177 7,736 3,825 2,128 3,023 84,857

2003 Estimatea

1,816 2,624 7,752 2,988 2,323 1,729 80,021

C. Bicycles

1997 903 834 2,672 2,766 852 547 2,870

1998 1,111 669 2,728 2,203 1,914 426 3,892

1999 1,454 914 2,541 3,340 1,787 1,152 5,228

2000 1,625 1,190 2,070 2,842 1,213 829 11,789

2001 1,211 1,143 1,920 2,764 344 312 22,482

2002 1,197 1,237 1,445 3,125 756 186 12,389

2003 Estimatea

1,083 998 1,452 2,861 1,509 488 9,039

cBased on ADB, 1993. Report and Recommendation of the Presdient to the Board of Directors on a Proposed Loan and

Technical Assistance Grant to the Socialist Republic of Viet Nam for the Road Improvement Project. Manila.

Source: Viet Nam Road Authority.

A. Cars, Buses, and Trucks

Annual Average Daily Traffic (AADT)

12,5376,498

R300 R200 R100-2 Lane

TRAFFIC STATISTICS

Note: Construction contract R300 was the furthest from Ho Chi Minh City and was between kilometer posts 1455 and 1615;

R200 was between kilometer posts 1615 and 1786, and R100 was between 1786 and 1888.a

Mission estimates based on data for January–June 2003.b

Mission estimates.

5,645

Construction Contract Package and Kilometer Post

Appraisal estimate for

each construction contract



No. of No. of No. of No. of No. of

Year Accidents Fatalities Injuries Vehicles Motorcycles Accidents Fatal

1992 8,165 2,755 9,040 270,036 1,704,225 3,024 1

1993 11,678 4,350 12,590 292,899 2,427,163 3,987 1

1994 13,118 4,533 13,056 330,000 3,000,000 3,975 1

1995 15,376 5,430 16,920 340,779 3,578,156 4,512 1

1996 19,075 5,581 21,556 386,976 4,208,274 4,929 1

1997 19,159 5,680 21,905 417,768 4,827,210 4,586 1

1998 19,975 6,067 22,723 443,000 5,200,000 4,509 1

1999 20,733 6,670 23,911 465,000 5,586,000 4,459 1

2000 22,486 7,500 25,400 486,608 6,478,954 4,621 1

2001 25,040 10,477 29,188 557,092 8,359,042 4,495 1

Rate of Increase

1992–2001 (% p.a.) 13 16 14 8 19 5

no. = number, p.a. = per annum.

Note: Vehicles include all motorized vehicles except motorcycles.


No. per 100,0

ACCIDENTS AND VEHICLE NUMBERS



Appendix 4 21

REVIEW OF STUDY FOR WORLD BANK PROJECTS

1. During the first half of 2003, consultants engaged by the World Bank conducted surveysand completed economic analyses for several of the road improvement components under theWorld Bank’s First and Second Highway Rehabilitation Projects.1 Two components—the 292-kilometer (km) Vinh-Dong Ha portion of National Highway 1 (NH1) under the first project, and

the 289-km Dong Ha-Quang Ngai section of NH1 under the second project—have similar features as the Project.

2. Comparative features of the two road components of the first and second World Bankprojects and the Project are outlined in Table A4. Compared with the Vinh-Dong Ha roadworks,the Project was slightly less expensive per km and carries heavier traffic over part of its length.Both roads were constructed to the same standard, involved almost the same type of work, andhad similar roughness levels just after construction. The Dong Ha-Quang Ngai road was built toa slightly lower standard than the Project by having narrower shoulders. Otherwise, the workwas similar and involved some strengthening of the base and subbase courses, even thoughthis work was labeled as periodic maintenance. Compared with the Project, the unit cost per kmwas significantly less, but so too are the traffic levels over much of its length.

3. The consultants evaluated the World Bank project road components using the highwaydesign and maintenance model, version 4 (HDM-4). As benefits, they identified vehicleoperating cost and maintenance cost savings in the same manner as used in the AsianDevelopment Bank (ADB) road evaluations. In addition, there were benefits from theimprovements to otherwise flooded sections and from passenger time savings, which do notalways appear in ADB road evaluations. The passenger time savings were calculated on thebasis of different values for work-related travel and other travel. Other travel was accorded aminor economic value. The split between the two types of travel was determined from origin-destination surveys.

4. Future traffic, after 2003, was expected to increase at 8% per annum. This is higher than

the 5–6% per annum growth rates assumed in ADB’s project completion report for the Project.However, actual traffic during 2000–2003 for the Project’s road (Appendix 2) exceeded thelevels predicted by the project completion report and, for parts of the road near to Ho Chi MinhCity, exceeds even the 8% per annum growth rate predicted by the World Bank’s consultants.

5. In their report, the consultants indicated the many problems with data from availablesources. To overcome these weaknesses, they conducted traffic surveys and collected newdata on vehicle ownership and operation to enable them to use the HDM-4 computer model for evaluating the roads.

6. The resultant economic internal rate of return (EIRR) for Vinh-Dong Ha was 21.6%, andfor Dong Ha-Quang Ngai, it was 30%. Sensitivity results showed that slower traffic growth of 4%

reduced the EIRRs to 17.8% for Vinh-Dong Ha and 26.6% for Dong Ha-Quang Ngai. Excludingall passenger travel time savings from the benefits reduced the EIRRs to 13.6% for Vinh-DongHa and 20.5% for Dong Ha-Quang Ngai.

1Asia Pacific Engineering Consultants in association with Maunsell Group. June 2003. Report on Project Monitoring and Evaluation Study.



ADB Road World Bank First Wor

Parameter Improvement Project Highway Rehabilitation Highw

Vinh-Dong Ha Portion Dong Ha

Road Construction Period 1996–1999 1999–2001

Length 437 km 292 km 240.5

Pavement Width 7 m + two 2.5 m shoulders 7 m + two 2.5 m shoulders 7 m

Pavement Type Asphaltic concrete Asphaltic concrete

Inclusions Minor bridges Minor bridges

Cost per Kma

$299,000/km $324,000/km

IRI after Construction 2.4 2.3

Traffic on Two-Lane Sections

- 1999 Vehicles (vpd) 2,070–7,035 1,700–2,400

- 2003 Vehicles (vpd) 2,199–12,545 2,200–3,100

- 1999 Motorcycles (mpd) 1,354–4,819 1,550–3,500

- 2003 Motorcycles (mpd) 1,716–7,736 2,000–4,500

ADB = Asian Development Bank, IRI = international roughness index, km = kilometer, m = meter, mpd = motorcycle per day, vpd = vehicl

motorcycles) .a

Civil works for asphalt sections only, plus provision for 5% tax. Does not include consultants or resettlement. Adjusted to 2003 prices.

Table A4: Comparative Road Data

Source: The Operations Evaluation Mission for the ADB Road Improvement Project; and the Project Monitoring and Evaluation Study, Jun

Engineering Consultants for World Bank projects.



Appendix 5 23

Year Routine Resealing

Maintenance

2000 2,906 0

2001 3,777 760

2002 4,135 7,118

2003 4,699 1,966


PROJECT ROAD MAINTENANCE EXPENDITURE

(D million)



24 Appendix 6

Year

1995 195,567 2,991 1,417 926

1996 213,833 3,260 1,476 1,022

1997 231,264 3,589 1,577 —

1998 244,596 3,866 1,687 1,119

1999 256,272 4,022 1,745 1,176

2000 273,582 4,446 1,922 1,252

2001 292,535 4,926 2,082 1,367

2002 313,135 5,508 2,275 1,512

— = not available, GDP = gross domestic product.

Sources: Asian Development Bank. 2003. Key Indicators 2003 . Manila; and Provincial Transport

Departments of Khanh Hoa, Binh Thuan, and Ninh Thuan.

SELECTED GROSS DOMESTIC PRODUCT STATISTICS

(D billion, constant 1994 prices)

Viet Nam Khanh Hoa

Province

Ninh Thuan

Province

Binh Thuan

Province

Road Improvement Project in the Socialist Republic of Viet Nam (Loan 1272-VIE[SF])

Documents

Transcript of Road Improvement Project in the Socialist Republic of Viet Nam (Loan 1272-VIE[SF])